When rules really make a difference:
The effect of specific and general rules on ethical behavior.
University of Groningen
Faculty of Economics and Business
Master of Science in Human Resource Management
DENNIS STEGGINK Nieuwe Blekerstraat 133 9718 EH Groningen +31 (0)652520523 S1548417@student.rug.nl Student number: 1548417 Supervisor/ university: dr. L.B. Mulder
Second supervisor/ university: dr. J. Jordan
Abstract
To make individuals comply with rules and codes of conduct, it is important to know how rules are described and communicated. This research investigated the effect of certain types of rules (i.e. general rules, specific rules or a combination of general and specific rules) and how these differ in term of their effects on people. Simultaneously, the moderating effect of the presence or absence of monitoring was tested. It was hypothesized that individuals will be more likely to behave unethically when they are monitored than when they are not monitored, but this effect will be less strong when a general rule is communicated than when a specific rule is communicated. The results showed indeed that the presence of monitoring decreases unethical behavior, but this was not moderated by type of rule. With regard to the effect of rules, specific rules were more effective in steering the behavior of individuals. Also, the results suggest that specific rules are more successful in increasing mindful compliance behavior compared to general rules. Implications of this are discussed.
When rules really make a difference:
The effect of specific and general rules on ethical behavior.
In the past, unethical conduct was more or less perceived as a rare event that only occasionally attracts the attention of the media. Currently, however, unethical activities are taking place at almost every organization, every business (Anand et al., 2004). Recent examples of unethical activity such as the Madoff scandal have plagued the news and stock markets all over the world. The increase in the media’s attention to incidents of unethical behavior illustrates the importance of the topic of business ethics. In addition, the management literature has also increased their attention to the area of ethical and unethical behavior (Jones and Ryan, 1997; Robin et al., 1996). According to Street et al. (2001), the need for a greater understanding of the ethical decision making process has been recognized by academics and practitioners. As such, organizations are nowadays investing millions of dollars on ethics and compliance management (Treviño et al., 1999). Yet, despite this increased attention, much remains to be investigated about how and under what conditions individuals pursue unethical activities (Kish-Gephart et al., 2010).
According to Tenbrunsel et al. (2003), the increase in unethical activities has damaged confidence in employees, leaders and businesses. In order to regain the trust that is lost, organizations must develop an ethical infrastructure that expresses the ethical values to which organizational members should be held. In this way, organizations could show that they are a sound, responsible company. According to Merchant and Van der Stede (2007), ‘good ethics
is the glue that holds organizations and societies together’. Most organizations have already
Rules and codes of conduct
Rules and codes of conduct are developed/used for several reasons. These may be external and/or internal to the organization (Pater and Van Gils, 2003). Reasons that are external to the organization are the requests of shareholders, the government, suppliers, society and customers who call for responsible behavior of organizations. According to Izraeli and Schwartz (1998), the adoption of codes of conduct continues to increase since several institutions (e.g. government, industry associations, special interest groups) increasingly demand such codes. Also, organizations may formulate rules and regulations to enhance the promotion of the public image and ensure avoidance of legal consequence. Internal reasons for adopting organizational ethics and rules originate from the leaders and employees of organizations. They call for clarity on ethical issues and ask for codification of the ethical values of the organization (Pater and Van Gils, 2003). After all, the most important purpose of rules appears to be to influence/guide the behavior of individuals in order to ensure that their behaviors and decisions are ethical and as such bolster performance.
Rules and codes of conduct are more or less prevalent in most organizations. An ethical code can be defined as a written, distinct and formal document which contains moral principles used to guide the behavior of the employees or of the organization as a whole (Schwartz, 2001). As said by several authors (e.g. Byrne, 1988; Cleek and Leonard, 1998), codes of conduct are among the most common strategies that organizations consider to foster ethical behavior in the organization. As an example, a survey of Fortune 1000 firms showed that 98 per cent of the responding firms address ethics or conduct issue in formal documents (Treviño et al., 1999). Likewise, in the United States, 90 per cent of the large organizations have implemented an ethical code (Schwartz, 2001). As stated by several authors (e.g. Pierce and Henry, 1996; McCabe et al., 1996), codes of conduct can produce significant encouraging differences in ethical and unethical behavior. Tenbrunsel et al. (1997) acknowledged that a lack of rules and regulations may result in harmful practices since individuals and corporations may abandon their social responsibilities. Similarly, Kish-Gephart et al. (2010) state that codes of conduct in general can and does produce positive outcomes.
regulations may provide only limited guidance to employees given that the rules can never prescribe all possible ethical issues. Therefore, as a complementary control system, an organizational climate is important, i.e. an ethical climate may make individuals aware of the ethical values of the organization and let them behave appropriately. The presence of an organizational code may influence the perceived ethical climate since the code illustrates the ethical orientation of the organization (Fritz et al., 1999; Marnburg, 2000). Likewise, for regulations to be influential, leaders within an organization should act as role models and so should pay serious noticeable attention to ethics (Treviño et al., 1999; Merchant and Van der Stede, 2007). As such, a code may then also indirectly influence the behavior of an individual (Schwartz, 2001). As an example, an employee, who has recently stumbled upon the organizational regulations, may warn another employee when his or her behavior seems to be unacceptable.
Nevertheless, the effectiveness of rules and codes of conduct is often overestimated. As mentioned, organizational regulations may also not work (e.g. Badaracco and Webb, 1995; Marnburg, 2000). A danger may, for example, be that an organizational code is perceived as merely ‘window dressing’ (Raiborn and Payne, 1990; McCabe et al., 1996). According to Merchant and Van der Stede (2007), a code should illustrate that the organization goes beyond ‘just’ adopting several organizational rules. Furthermore, rules and regulations may be perceived by individuals as contrary to their personal ethical values or may be perceived as simply common sense (Pater and Van Gils, 2003).
Therefore, to make employees comply with organizational regulations, it is imperative to know how rules are described, communicated and perceived (see also Bowman, 1981). According to several authors (e.g. Tenbrunsel et al., 2003; Merchant and Van der Stede, 2007), a weak ethical infrastructure could lead to severe unethical behavior that can figuratively damage or destroy an organization. According to Schwartz (2001), there exists a gap (a ‘black-box’) in the knowledge of the influence of an organizational code on the behavior of employees. Hence, research is needed to investigate in more depth the differences among corporate codes of ethics (e.g. implementation strength, embeddedness, specificity) and their differential impact on the behavior of individuals (see also McCabe et al., 1996; Weaver, 1995). It seems vital that codes of conduct consist of rules that actually steer the behavior of individuals. Research is therefore valuable that investigate which features of organizational rules may positively influence the behavior of individuals. The type of organizational regulation (i.e. general or specific) plays a different, yet important, role in this.
General and specific organizational rules
Specific or general regulation may have an (different) influence on individuals to perceive their behavior and/or the situation in a way that could make unethical behavior more or less likely. Organizational rules and regulations can be described and communicated in a way that specifically prescribes the desirable behavior. Alternatively, since organizations might not be able to specifically prescribe all the possible desirable and undesirable ethical behavior within an organization, an organization may adopt more general rules. To clarify the difference, imagine the situation in which an organization communicates a specific rule that an employee is obliged to ‘refuse money or gifts from a client’. This rule obviously describes the (un)desirable behavior of the individuals. Conversely, an organization may communicate a more general rule like ‘avoid conflicts of interest’. Both rules more or less attempt to influence/guide the (same) behavior of individuals in order to ensure that their behaviors and decisions are ethical and as such enhance organizational performance. But what type of rule is the most effective?
Regarding the specificity of organization codes, according to Raiborn and Payne (1990), clarity, comprehensiveness and enforceability are the key characteristics of a code of conduct in order to be considered as a usable, viable and well-written document. Clarity means that the organizational code should be written in an understandable, specific and concise way. It should exclude words and expressions that induce ambiguity, doubt and/or vagueness. Comprehensiveness refers to the fact that the code should be applicable to broad ranges of conduct. This means that the underlying purposes of the rules should be clear to the employees. In addition, this may possibly be achieved by thoroughly detailed/specific organizational codes or by extremely general regulations (Weaver, 1995). With enforceability, an organization develops specific descriptions regarding expected ethical behavior and punishments for violations of this behavior.
unethical behavior by the organization.Individuals may then also see a more clear connection between their behavior and the specific rules. Consequently, individuals may feel responsible for their behavior as these (specific) rules make it easier to identify whether their behavior is considered as appropriate or not (Treviño and Youngblood, 1990). According to Schwartz (1997), this responsibility activates moral norms and hence, is negatively related to unethical behavior.
Despite these expected positive effects of specific rules, they may also have disadvantages. Only very few codes describe the specific, acceptable behavior under certain situations (Raiborn and Payne, 1990). According to Treviño et al. (1999), it is impossible for employees to be familiar with all of the regulations that are relevant to their work. Besides, an extraordinarily specific organizational code may become so unmanageable that it will be ignored by most individuals (Weaver, 1995). Also, the adoption of specific organizational rules may have negative side effects, i.e. it can create suboptimal outcomes (Tenbrunsel et al. 1997, 2000). A suboptimal outcome arises when individuals primarily focus on compliance with the organizational rules and as such do not perceive the underlying purposes of the rules. According to Raiborn and Payn (1990), this difference may also be described as the distinction between legality (letter of the law) and morality (spirit of the law). The organizational codes become a goal itself and may replace the intrinsic motivation of an employee with an extrinsic motivation and may create self-interested behavior. This is also stated by Treviño et al. (1999), who state that this behavior will lead to legal compliance rather than ethical aspirations/internalization of the rules.
As an example, take the situation in which a hospital should reduce the number of patients who die after an operation. Therefore, a rule has been designed that states that no more than five per cent of the operated patients may die. However, this rule may in fact create a predominant, more superficial focus on how to meet the standard, rather than a focus on how to optimally administer the underlying purpose (i.e. carefully, sound acting during an operation and increasing the quality of health care to reduce the death rates). The hospital may then for example take fewer patients who are in a perilous condition and/or the hospital may become less likely to operate. Hence, the rule is taking on a life on his own and so a suboptimal outcome has been created. The employees are more preoccupied with acting in accordance with the letter of the rule than with internalizing its spirit.
monitoring the rules and regulations and so the behavior of individuals seems to be essential in order to ensure that the behavior and decisions of individuals are ethical. The presence of monitoring decreases the unethical behavior since individuals do not like the risk of being caught and subsequently being punished. As such, monitoring may enforce, and ensure compliance with, the organizational ethics and rules and so may be perceived as important to achieve desirable organizational performance. According to Lindsay et al. (1996), ‘failure to
seriously monitor the performance of individuals on the ethical plane will leave codes of conduct operating in a vacuum, of little use in actually promoting ethical behavior’.
However, the internalization of rules may be essential when there is no monitoring. In general, organizations are simply not able to (constantly) monitor everything. They neither have the time nor the capacity to monitor and process all the activities of the employees. In addition, organizations may choose not to monitor since it may produce undesirable effects (Tenbrunsel and Messick, 1999). Monitoring system may create an external pressure to behave ethically and as such reduces the intrinsic motivation of individuals. It may also decrease the creativity, cognitive flexibility and positive emotions of individuals and may lead to lower self-esteem (Deci and Ryan, 1987). Furthermore, monitoring may send a signal of mistrust to individuals. This may induce aversion toward management and may lead to suspicious relationships (Cialdini, 1996). Therefore, certain rules and regulations should also work even when there appears to be no monitoring.
Hence, a general rule may increase the intrinsic motivation. As such, individuals may also behave ethically even when there appears to be no monitoring. To illustrate this, take the situation on the Dutch highways. The government communicates that it is not allowed to drive faster than a certain speed limit. If you nevertheless do so you risk being caught or flashed by the police or speed cameras and you will subsequently receive a fine. Therefore, you might be extrinsically motivated to drive in accordance with the maximum speed limit and as such you behave according to the letter of the law. Alternatively, if you understand and adhere to the underlying purpose of the speed limit (i.e. ensuring/increasing your own safety and the safety of others around you; avoiding harmful accidents) you will drive appropriately because you perceive the behavior as the morally right thing to do, even on roads where you are quite sure you will not be caught or flashed. Since the spirit of the law is known to you and you adhere to this, it turns out that you have internalized the rules and are intrinsically motivated to behave ethically. Hence, it appears that for rules to be really effective, the regulations should reflect the spirit of the law. In accordance with several authors (e.g. Lingle et al., 1977; Cialdini, 1996), rules that reduce the intrinsic motivation may have no effect or increase the unethical behavior when there is no monitoring. It seems to be important that rules and regulations should ultimately lead to conscience-based rules/behavior. In this research the effect of certain types of rules (general rules, specific rules or a combination of general and specific rules) will be investigated and as such how this depends on the appearance of monitoring.
Hypothesis:
Individuals will be more likely to behave unethically when they are not monitored than when they are monitored. However, this effect will be less strong when a general rule is communicated than when a specific rule is communicated.
Method Design and participants
Participants were 180 people (96 male, 84 female; Mage = 38.39, SDage = 12.84) from the Netherlands, who voluntarily filled out a paper-and-pencil questionnaire. Participants were individuals from financial institutions, a hospital, an organization that operates in the high-tech manufacturing industry and a construction company. Also, relatives, friends, fellow students, (old) school teachers and other acquaintances were asked to participate. Participants were randomly assigned to one of the six conditions of the 3 (rule: general, specific or combination of general and specific) × 2 (monitoring versus no monitoring) design experiment.
Procedure
Two moral dilemma scenarios were presented to participants. The order of the two situations was counterbalanced. Each scenario outlined a hypothetical situation, which included an ethical problem that the participant may encounter in reality. In the first situation participants were asked to imagine that they worked for an accounting firm in which they face the question of whether they would accept a gift from a client (for the full scenario, see Appendix A). In the second situation participant were asked to imagine as well that they worked for an accounting firm. Yet, in this situation they find out that his or her sister is a creditor of one of their clients who has financial problems and may possibly go bankrupt in the future. Participants there face the question of whether they would inform their sister (for the full scenario, see Appendix B). In the two scenarios the type of organizational regulation (i.e. general rules, specific rules or both rules) and the presence or absence of monitoring were manipulated and participants were asked what they would act like in these scenarios.
After this, participants answered a number of questions and filled in their gender and age. Finally, they handed in the questionnaire and were thanked.
Manipulations
Gift scenario. In the general rule condition participants were told that they
should not end up in a conflict of interest’. Alternatively, in the specific rule condition participants were told that they remembered from the rules and regulations of the accounting firm that as an accountant ‘you should not accept gifts from clients’. In the condition were both the general and specific rule are included participants were shown that they remembered from the rules and regulation of the accounting firm that as an accountant ‘you should not end up in a conflict of interest and should not accept gifts from clients’.
In the monitoring condition participants were told that ‘the accounting firm has regular contact with clients. As such, there is a good chance that the accounting firm finds out whether gifts were given and accepted’. On the other hand, in the no monitoring condition participants were told that, ‘except themselves, no one of the accounting firm has contacts with their clients. As such, the accounting firm does not know whether gifts were given and accepted’.
Inform sister scenario. In the general rule condition participants were told that they
know from the rules and regulation of the association of accountants that as an accountant ‘you should not put clients at a disadvantage’. The specific rule condition told the participants that they know from the rules and regulation of the association of accountants that as an accountant ‘you should not tell information about your customers to persons outside the organization for which you work’. In the condition were both the general and specific rule are included participants were shown that they remembered from the rules and regulation of the association of accountants that as an accountant ‘you should not put clients at a disadvantage and should not tell information about your customers to persons outside the organization for which you work’.
In the monitoring condition participants were told that ‘it is well known that your sister is the owner of ‘Forever Fit’. As such, in case a bankruptcy is pronounced (and your sister entered her money back) this may give rise to a further investigation’. Alternatively, in the no monitoring condition participants were told that ‘it is not generally known that your sister is the owner of ‘Forever Fit’. As such, in case a bankruptcy is pronounced (and your sister entered her money back) this will not lead to a further investigation’.
Dependent measures
Behavior. Participants indicated, once they were finished reading the scenario and
Likewise, in the inform sister scenario participants indicated to what extent they would intend to inform their sister that one of her debtor called ‘DEMI Sports’ may possibly end up in a difficult financial situation.
Moral norm. The extent to which participants judged accepting the tickets as morally
wrong was measured by eleven items on a six point response scale (1 = completely disagree,
6 = completely agree). All items started with ‘Accepting the tickets…’ (or, in the inform sister
scenario: ‘Telling the information about ‘DEMI Sport’ to my sister…’) and finished like ‘…is wrong’, ‘…is not that bad’ (reverse coded), ‘…I morally disapprove’, ‘…is something I do not object to’ (reverse coded), ‘…is not done’, ‘…is something I would feel guilty about’, ‘…is something I would feel ashamed about’. The items had an alpha of 0.94 in the gift scenario and an alpha of 0.92 in the inform sister scenario.
Understanding the underlying purpose of the rule. To check whether participants
understand/perceive the purpose behind the rule, one item in the gift scenario and two items (alpha = 0.42) in the inform sister scenario were used. In the gift scenario the question ‘Accepting gifts creates a conflict of interest’ was used. In the inform sister scenario the items measuring the understanding of the underlying purpose of the rule were ‘If I tell information about clients, it will not affect my clients’ (reverse coded) and ‘By telling information about clients you put clients at a disadvantage’. The items were accompanied with a six point answering scale, ranging from 1 (completely disagree) to 6 (completely agree).
Rule clarity. With two items (alpha = 0.51) in the gift scenario and one item in the
inform sister scenario the clarity of the rule was measured. Both items in the gift scenario started with ‘The rules and regulations of the accounting firm…’ followed by the opinion ‘…are clear’ and ‘...can be interpreted in different ways’ (reverse coded). In the inform sister scenario only the statement ‘The rules and regulation of the association of accountant are clear’ was included. Participants answered on a 6 point answering scale to what extent they agreed with the items, with responses ranging from 1 (completely disagree) to 6 (completely agree).
Results
Behavior
It was hypothesized that when there appears to be monitoring individuals are less inclined to behave unethically as compared to when there appears to be no monitoring. Yet, this effect is hypothesized as more pronounced for specific rules than for general rules.
Gift scenario. A 3 (type of rule) × 2 (monitoring) ANOVA on the extent to which
of type of rule, F(2, 174) = 6.02, p < 0.01. A specific rule (M = 2.50, SD = 1.37) and the combination of a general and specific rule (M = 2.35, SD = 1.34) induced individuals to accept the tickets to a lesser extent than a general rule (M = 3.22, SD = 1.67). Furthermore, a significant effect of monitoring, F(1, 174) = 4.158, p < 0.05, was found. This effect indicates that the presence of monitoring makes individuals less likely to accept the tickets (M = 2.47,
SD = 1.38) than when there appears to be no monitoring (M = 2.91, SD = 1.60). The found
effects could not be further qualified by an interaction effect, F(2, 174) = 0.003, p = 1.00. Hence, while the presence of monitoring appears to be effective in order to decrease unethical behavior, this effect is not influenced by the type of rule (i.e. a general rule, a specific rule or a combination of a general and specific rule) an organization communicates (see also table 1).
Inform sister scenario. A 3 (type of rule) × 2 (monitoring) ANOVA was also
performed on the extent to which participants would intend to inform their sister about the financial situation of one of her debtors called ‘DEMI Sports’. There was a significant effect of monitoring, F (1, 174) = 4.82, p < 0.05. The absence of monitoring persuades individuals to inform their sister to a greater extent (M = 3.17, SD = 1.58) compared to the presence of monitoring (M = 2.67, SD = 1.45). However, there was no effect of type of rule, F (2, 174) = 0.35, p = 0.71, neither was there an interaction effect, F (2, 174) = 0.19, p = 0.83. Hence, monitoring again decreased unethical behavior. However, the outcome of type of rule did not reach significance and so the effect that individuals will be more likely to behave unethically when they are not monitored than when they are monitored can once more not be considered as more pronounced for certain type of rules (see also table 2).
Moral norm
Gift scenario. A 3 (type of rule) × 2 (monitoring) ANOVA was performed to
investigate the moral norm with regard to the acceptance of the gift. This showed a significant effect of type of rule, F(2, 174) = 4.56, p < 0.05. Accepting the tickets was judged as more morally wrong in the specific rule condition (M = 3.99, SD = 1.09) and the both general and specific rule condition (M = 4.02, SD = 0.94) compared to the general rule condition (M = 3.50, SD = 1.11). There was no effect of monitoring, F(1, 174) = 0.004, p = 0.95. Neither was there a significant interaction effect, F(2, 174) = 0.02, p = 0.98.
Inform sister scenario. Again, a 3 (type of rule) × 2 (monitoring) ANOVA was carried
out to investigate the moral norm with regard to telling the confidential information to their sister. The analysis revealed however no significant effect of type of rule, F(2, 174) = 0.15, p = 0.86 and/or of monitoring, F(1, 174) = 1.40, p = 0.24. There was also no interaction effect,
Understanding the underlying purpose of the rule
Gift scenario. A 3 (type of rule) × 2 (monitoring) ANOVA was performed for the
statement ‘Accepting gifts creates a conflict of interest’. Analysis of this item showed a significant effect of type of rule, F(2,172) = 3,71, p < 0.05, but not of monitoring, F(1, 172) = 0.23, p = 0.64. This effect of type of rule indicates that individuals to a greater extent understand/perceive the underlying purpose of the rule when an organization communicates a specific rule (M = 4.18, SD = 1.28) or both a general and specific rule (M = 4.06, SD = 1.27) than when an organization only communicates a general rule (M = 3.55, SD = 1.46). The found effect of type of rule could not be further qualified by an interaction effect, F(2, 172) = 0.12, p = 0.89.
Inform sister scenario. Another 3 (type of rule) × 2 (monitoring) ANOVA on the
understanding/perceiving of the underlying purpose of the rule showed no significant effect of type of rule, F(2, 173) = 0.16, p = 0.86, nor a significant effect of monitoring, F(1, 173) = 0.32, p = 0.58. Also, no interaction effect between type of rule and monitoring could be found, F(2, 173) = 0.09, p = 0.91.
Rule clarity
Gift scenario. A 3 (type of rule) × 2 (monitoring) ANOVA was executed to investigate
the clarity and interpretability of the rule. There was a significant effect of type of rule, F(2, 174) = 7.14, p < 0.05. A specific rule (M = 4.66, SD = 0.89) and the combination of a general and specific rule (M = 4.63, SD = 0.77) was perceived as more clear and less likely to be interpreted in different ways than a general rule (M = 4.13, SD = 0.91). There was no effect of monitoring, F(1, 174) = 0.046, p = 0.83. Neither was there a significant interaction effect,
F(2, 174) = 0.23, p = 0.80.
Inform sister scenario. A 3 (type of rule) × 2 (monitoring) ANOVA was used to assess
the clearness of the rule. The ANOVA on the extent to which participants agreed with the question ‘The rules and regulation of the association of accountant are clear’ showed a significant effect of type of rule, F(2, 174) = 4.11, p < 0.05. Participants indicated to a greater extent that the rule was clear in the specific rule condition (M = 5.03, SD = 0.86) and the both general and specific rule condition (M = 4.90, SD = 0.90) than in the general rule condition (M = 4.52, SD = 1.23). No effect of monitoring (F(1, 174) = 0.005, p = 0.94) and no interaction effect (F(2, 174) = 0.70, p = 0.50) could be found.
Mediation analyses
Gift scenario. So far, the data show that a specific rule decreases the likelihood of
moral norm was stronger than in the general rule condition. Was this decrease in the probability of acceptance of the tickets a result of the stronger moral norm? Personal moral norms may mediate the impact of different type of rules on the extent to which participants would intend to accept the tickets and as such engage in a particular ethical (or unethical) behavior. For a variable to function as a mediator several conditions should be met and as such a series of regression models should be estimated (Baron and Kenny, 1986). Type of rule was coded as 1 (specific rule and general and specific rule) and 0 (general rule).
Mediator moral norm. First, a regression analysis on the behavior of participants (i.e.
the extent to which participants intended to accept the tickets) with type of rule as a predictor was executed. This analysis showed that type of rule is negatively related to the acceptance of the tickets (b = -0.79, t = -3.42, p < 0.01). Second, type of rule should be related to the mediator moral norm. The regression analysis confirmed that type of rule is (positively) related to moral norm (b = 0.50, t = 3.05, p < 0.01). At last, moral norms should predict the acceptance of the tickets and the relationship between type of rule and behavior should become less or non-significant when moral norm is included in the model. The regression analysis also confirmed this, i.e. moral norms significantly predicted the behavior (b = -1.04, t = -14.90, p < 0.001), while the effect of type of rule disappeared and became non-significant (b = -0.27, t = -1.67, p = 0.096). Further, the decrease of the effect of type of rule as a result of the inclusion of the mediator moral norm, was significant (Sobel test statistic = -2.99, p = 0.003). Hence, support was found for mediation as moral norm mediated the effect of type of rules on the extent to which participants would intend to accept the tickets (see also table 3).
Mediator understanding the underlying purpose of the rule. In a similar way, a
which participants would intend to accept the tickets and so support is found for partial mediation (see also table 4).
Mediator rule clarity. Rule clarity may also mediate the relationship between different
type of rules and behavior. As shown above (and in table 3), there exists a relationship between type of rule and behavior (b = -0.79, t = -3.42, p < 0.01). Also, type of rule significantly predicts the clarity of the rule (b = 0.52, t = 3.81, p < 0.001). Moreover, the relationship between type of rule and behavior becomes non-significant when rule clarity is entered into the regression analysis (b = -0.43, t = -1.94, p = 0.054), whereas rule clarity remains significant (b = -0.71, t = -6.08, p < 0.001). The decrease of this effect of type of rule as a result of the addition of the mediator rule clarity, was significant (Sobel test statistic = -3.22, p = 0.001). So, the clarity of the rule mediates the effect of type of rules on the extent to which participants would intend to accept the tickets (see also table 5).
Inform sister scenario. Likewise, a mediation analysis could be executed for the
inform sister scenario. However, inasmuch as there has already been shown that type of rule is not significantly related to behavior (i.e. the extent to which participants would intend to inform their sister about the financial situation of one of her debtors called ‘DEMI Sports’), it can be concluded that there was no mediation. Therefore, further steps to investigate mediation are not necessary.
Discussion
The purpose of this study was to increase the knowledge of how to design sound organizational regulation that will increase the behavior of employees in a positive way. More specifically, this research investigated the influence of certain types of rules (i.e. general rules, specific rules or a combination of general and specific rules) on the likelihood of compliance of individuals to the ethical values of an organization. Simultaneously, the moderating effect of the presence or absence of monitoring was tested. It was hypothesized that individuals will be more likely to behave unethically when they are not monitored than when they are monitored, but less strongly when a general rule is communicated than when a specific rule is communicated. This hypothesis was tested in a scenario study in which the types of rules and the presence or absence of monitoring were manipulated.
Tenbrunsel et al., 2003; Pater and Van Gils, 2003; Tyler and Blader, 2005; Merchant and Van der Stede, 2007) the potential value and capability of monitoring to decrease unethical behavior and as such to promote ethics. After all, from theories about the cognitions and behaviors of individuals to theories about the behavior of firms, it is stated that monitoring (and sanctioning) the behavior of individuals, managers and organizations is essential to reduce unethical behavior and to achieve organizational success (Pfeffer, 1994; Tenbrunsel and Messick, 1999). However, one should constantly keep in mind that monitoring may not always be desirable or possible.
The results further do not show that the effect of monitoring is more pronounced for certain types of rules (i.e. general, specific or both rules). So, unlike the expectation, it appears that when there is no monitoring, general rules do not lead to more ethical behavior compared to specific rules. This may suggest that general rules do not make people more mindful than specific rules. The research in fact demonstrated that a specific rule more effectively influences/guides the behavior of individuals. Specific rules seem to be more able to reduce destructive behavior and thus are more likely to actually steer the behavior of individuals. Moreover, the combination of a general rule and specific rule also appears to decrease unethical behavior to a greater extent compared to only a general rule. So, the outcome of this research suggests that the installation of specific rules really makes a difference. As specific rules rather than general rules affect behavior, a code of conduct which consists at least of specific rules (whether or not in combination with general rules) is better to decrease unethical behavior. Yet, a note of caution should be made here. There were only effects of rules in the gift scenario and not in the inform sister scenario. A possible explanation of this is discussed later on this section.
norms as the rules make it easier to identify whether the (exhibited) behavior is ethical or not (Treviño and Youngblood, 1990; Schwartz, 1997). Individuals therefore judge their behavior as more morally wrong and so internalize the specific rules and are intrinsically motivated to behave ethically. At the same time, as argued by Vansteenkiste et al. (2006), this promotes the deeper engagement and understanding of the behavior and rules. Besides, the clarity of the rule might ensure that individuals discern the appropriate (underlying) message from the words and the rule as a whole (Raiborn and Payne, 1990).
An alternative explanation for why a general rule does not lead to more ethical behavior compared to a specific rule may be found by looking to possible deficiencies of the general rule. General rules are more described in broad terms about truth, honesty and rights. As such, according to several authors (e.g. Marnburg, 2000; Pater and Van Gils, 2003), these rules are often simply common sense and so their codification will not improve ethical decision making. Also, general norms may be so undefined that it risks being biased or ambiguous, which hinders the understanding and application of the rules (Weaver, 1995). This is in accordance with Cleek and Leonard (1998), who acknowledge that poorly worded ethical codes is one of the reason they might not work. Moreover, Pater and Van Gils (2003) argue that general rules provide individuals with rather standard solutions, which do not always consider the complexity of specific ethical dilemmas. Specific rules then again could counteract this. Beck (2006) for example already showed that specific rules are essential in the coordination of an organization that has grown in complexity.
Practical implications
Furthermore, the outcomes indicate that, if desirable and possible, monitoring may be an option to reduce unethical behavior. An organization could for example implement formal as well as informal monitoring systems to monitor and detect ethical and unethical behavior (Tenbrunsel et al., 2003). However, these systems should, as mentioned in the introduction, not be weak. An organization should implement a strong ethical infrastructure since individuals then also obviously perceive that they have to behave ethically (Tenbrunsel et al., 2003). Even so, the possibilities of monitoring should not be overestimated. After all, an organization can only to a certain degree monitor the behavior of individuals. Therefore, organizations are advised to monitor at least the most important, possible or desirable processes/activities. Monitoring may thus be only part of the solution to stimulate ethical decision making.
Limitations
Every research has its limitations. To some extent, a shortcoming of this research is that the hypothesis was tested using scenarios. Although this has the advantage that the perceptions of participants of the manipulations can be controlled, the scenarios lack real behavioral decisions and so may be exposed to demand characteristics. Also, the results of this research may be biased by social desirability answers since participants may have answered the questions in a politically correct way.
Furthermore, the results from the mediation analysis suggest that specific rules increase ethical behavior because they evoke moral norms, the understanding of the purpose behind the rule and rule clarity. However, moral norms, the perceived purpose of the rule and rule clarity were asked after participants’ behavioral decision. It may also be possible that these measures were influenced by participant’s chosen behavior. So, a specific rule could have decreased directly the extent to which individuals intended to engage in a particular unethical behavior and participants may have answered the questions in a way that was consistent with their behavior. In further research, participants should answer a number of questions about moral norms, the perceived purpose of the rule and rule clarity before they make their behavioral decision.
strong situations the behavior of individuals is mainly influenced/guided by the constraints of the situations and so result in uniform expectancies regarding the appropriate behavior (de Kwaadsteniet et al., 2006; Van Dijk et al., 2009). In contrast, in weak situations behavior is more influenced/guided by traits and dispositional factors and so generate more interpersonal differences in the reactions of participants (de Kwaadsteniet et al., 2006; Van Dijk et al., 2009). In this research it may have been the case that the inform sister scenario acts like a strong situation. It is likely that individuals have a rather uniform, clear opinion about the situation because the norms (i.e. helping your family and confidentially handling information) may be perceived as quite evident and respected. So, individuals may already have a strong opinion about what is appropriate and what not. In the gift scenario, on the other hand, the norms may be less clear. The scenario is more ambiguous and so acts more like a weak situation. Therefore, in the gift scenario rules have more surplus value because people have no strong opinion yet about what is appropriate. The rule then is more likely to steer the behavior of individuals. This could implicate that for this research the gift scenario is appropriately designed, whereas the inform sister scenario contains some shortcomings.
Further research
The findings of this research may stimulate further research in the field of organizational regulations and codes of conduct. Although this research expands the knowledge about rules and regulation, further research is important in order to advance the understanding of the results in this research and to attain deeper understanding of rules and codes of conduct and their relationship with ethical behavior. It may be interesting to investigate when rules achieve the desired effect and when not. As mentioned above, rules do not always add value. In certain situations (i.e. weak situations) rules may be more important than in other situations (i.e. strong situations). Organizations then do not necessarily have to adopt and communicate several regulations. Further research could therefore focus on the influence and types of situations. This may provide a valuable contingency framework for understanding when rules make sense and when they do not.
To conclude
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Appendix A
Gift scenario
Stel je werkt bij een accountantskantoor en je houdt je bezig met het controleren van de boekhouding van verschillende bedrijven. Zodoende ben je ook verantwoordelijk voor het afgeven van de accountantsverklaring voor deze bedrijven. Nu komt er op een dag dat je voor een bepaald bedrijf de accountantsverklaring hebt goedgekeurd, een verantwoordelijke van het bedrijf naar je toe die je twee kaartjes voor een concert van je favoriete muziek aanbiedt omdat je al jaren goed werk voor hen verricht. Je zou dolgraag naar dat concert willen.
Afhankelijk van conditie:
Open regel: je herinnert je nog uit de regels en voorschriften van het accountantskantoor dat
je als accountant niet in een belangenverstrengeling terecht mag komen.
Specifieke regel: je herinnert je nog uit de regels en voorschriften van het accountantskantoor
dat je als accountant geen geschenken van klanten mag aannemen.
Open en specifieke regel: je herinnert je nog uit de regels en voorschriften van het
accountantskantoor dat je als accountant niet in een belangenverstrengeling terecht mag komen en geen geschenken mag aannemen.
Toezicht: het accountantskantoor heeft regelmatig contact met klanten. Hierdoor is er grote
kans dat voor het kantoor bekend zal zijn of er geschenken worden gegeven en aangenomen.
Geen toezicht: behalve jijzelf, hebben andere medewerkers van het accountantskantoor geen
Appendix B
Inform sister scenario
Je hebt een zus met een eigen bedrijf (‘Forever Fit’) dat gespecialiseerd is in sportartikelen. Nu weet je dat er nog een behoorlijk aantal ondernemingen (de zogenoemde ‘debiteuren’) schulden bij haar hebben. Zelf ben je als registeraccount werkzaam bij een accountantskantoor. Zodoende ben je verantwoordelijk voor het controleren van de boekhouding en het goedkeuren van de accountantsverklaring voor verscheidene bedrijven.
Op een zeker moment moet je een verklaring afleggen over de jaarrekening van een bedrijf genaamd ‘DEMI Sports’. Je komt er echter achter dat de onderneming in zodanige potentiële financiële problemen terecht kan komen dat een faillissement in de toekomst niet ondenkbaar is. Tevens kom je te weten dat het bedrijf een (kleine) debiteur van ‘Forever Fit’ is en dus nog schulden bij je zus heeft.
Een faillissement heeft tot gevolg dat, zodra het faillissement wordt uitgesproken over een bedrijf, het geld dat dat bedrijf op dat moment nog wel heeft, gelijkmatig over de schuldeisers van het bedrijf wordt verdeeld. Met andere woorden: als jou klant (‘DEMI Sports’) failliet gaat, betekent dat je zus hoogstens een klein gedeelte van haar toebehorende geld zal terugzien.
Wanneer je dit aan je zus bekend maakt zal ze mogelijk per direct achter het geld aangaan en zodoende opeisen van de onderneming. ‘DEMI Sports’ zal echter door deze zaak financieel nog meer onder druk komen te staan.
Afhankelijk van conditie:
Open regel: je weet dat in de regels en voorschriften van de vereniging van accountants staat
dat je als accountant klanten niet mag benadelen.
Specifieke regel: je weet dat in de regels en voorschriften van de verenging van accountants
staat dat je als accountant geen informatie over je klant mag vertellen aan personen buiten de organisatie waarvoor je werkzaam bent.
Open en specifieke regel: je weet dat in de regels en voorschriften van de vereniging van
Toezicht: het is algemeen bekend dat de eigenaar van ‘Forever Fit’ jouw zus is. Mocht er een
faillissement worden uitgesproken (en je zus achter haar geld zijn aangegaan), zou dit aanleiding kunnen geven tot een nader onderzoek.
Geen toezicht: het is niet bekend dat de eigenaar van ‘Forever Fit’ jouw zus is. Mocht er een
Table 1
The extent to which participants would accept the tickets (means and SD’s) as a function of type of rule and monitoring, Gift scenario
General rule Specific rule General and specific rule
No monitoring 3.43b (1.76) 2.73a (1.55) 2.57a (1.38) Monitoring 3.00b (1.58) 2.27a (1.14) 2.13a (1.28)
Table 2
The extent to which participants would inform their sister (means and SD’s) as a function of type of rule and monitoring, Inform sister scenario
General rule Specific rule General and specific rule
No monitoring 3.03a (1.63) 3.40a (1.75) 3.07a (1.36) Monitoring 2.63a (1.56) 2.70a (1.32) 2.67a (1.49)
Table 3
Table 4
Regression results for test of the understanding of the underlying purpose of the rule as mediator between type of rule and behavior, Gift scenario
The understanding of the underlying purpose b Unethical behavior b Model 1 Specific rule 0.57** -0.79** Model 2 Specific rule
The understanding of the underlying purpose
-0.37* -0.71***
***
Table 5
