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We explored whether employees in smaller, younger firms would be more ethically compromised, and whether employee identification moderates this relationship. We collected survey data from 154 working professionals enrolled in an MBA program in the southeastern United States. We found that employees of smaller, younger firms selected more compromised ethical choices than employees of larger, older firms. Contrary to our expectations, employee identification had no effect in smaller, younger, firms, yet in larger, older firms, identification actually reduced ethical compliance, suggesting that there is not a simple relationship between identification and ethical compliance.
Keywords: small business; ethical compliance; employee identification; ethical decision making
In this age of colossal global corporate ethical disasters worldwide, thought leaders of many disciplines are desperately searching for clues to understand the underlying pressures that affect ethical choices made every day inside all organizations- small and large, young and old. Executives are eagerly and anxiously instituting corporate codes of ethics to formalize behavioral guidelines (e.g., Schwartz 2001; Somers 2001;Stansbury and Barry 2007).Whole careers are emerging in the compliance and ethics field (e.g., Murphy and Leet 2007; Weber and Fortun 2005). From a judicial perspective, the U.S. Sentencing Commission amended the Federal Sentencing Guidelines in 2004 to allow firms that create "effective compliance and ethics programs" to receive better treatment if prosecuted for fraud. In the academic realm, management scholars are more systematically investigating the ethical decision-making context in organizations to determine if there are identifiable pressures that enable or impede organizational efforts to improve the ethical choices of all employees (e.g., Neubaum, Mitchell, and Schminke 2004; Schminke 2001).
Despite the attention paid to improving corporate ethics, we suggest that smaller and younger firms experience constraints that may limit their ability to systematically imbed compliance and ethical routines into their organizations. Both smaller and younger firms typically lack resources for full-time compliance officers, formal ethics programs, or sophisticated structural procedures addressing compliance and ethical issues (Ciavarella 2003;Eisenhardt 1988). If these resources are genuinely beneficial for instilling ethical behavior in organizations, then it follows that smaller and younger firms may suffer in their efforts to institute such ethical climates, or that smaller and younger firms must rely on other tactics. Consequently, we believe that a more rigorous understanding of the effects...