ambiguous allure the value pragmatics

Business and Society Review

114:1

1–29

© 2009 Center for Business Ethics at Bentley University. Published by Wiley Periodicals, Inc., 350 Main Street, Malden, MA 02148, USA, and 9600 Garsington Road, Oxford OX4 2DQ, UK.

Blackwell Publishing IncMalden, USABASRBusiness and Society Review0045-36090045-3609© 2008 Center for Business Ethics at Bentley CollegeXXXOriginal Article

BUSINESS AND SOCIETY REVIEW

GEORGE W. WATSON, ROBYN A. BERKLEY, ET AL.

Ambiguous Allure: The Value–Pragmatics Model of Ethical Decision Making

GEORGE W. WATSON, ROBYN A. BERKLEY,

AND

STEVEN D. PAPAMARCOS

ABSTRACT

Research in organizational ethics emphasizes those disposi-tional factors that are expected to foster positive ethicalbehavior. We seek to contribute to this literature by includ-ing personal values that are in contention with moraloutcomes. Specifically, we combine the values of hedonismand power with benevolence and universalism. Our underly-ing premise of this value–pragmatics model is that nonmoral,as well as moral, dispositional characteristics simultaneouslyinfluence ethical decision making. We further contributeto the existing research by investigating how these con-tending values interact with situational factors, such asperformance rewards and punishments for unethicalconduct. We administer an experiment to subjects (N = 177)and analyze their decisions regarding the likelihood theywould act unethically. Results indicate that both morallyrelevant and nonmoral variables have direct effects on thesedecisions, and that nonmoral as well as moral values interactwith situational factors to significantly influence decisions.Implications for practice and research are discussed.

George W. Watson is an associate professor at the Department of Management and Marketing,Southern Illinois University Edwardsville, Edwardsville, Illinois, USA.Robyn A. Berkley is an assistant professor at the School of Business, Department of Managementand Marketing, Southern Illinois University Edwardsville, Edwardsville, Illinois, USA.Steven D. Papamarcos is the Dean at Tobin College of Business, Saint John’s University, New York.

2 BUSINESS AND SOCIETY REVIEW

O

rganizational moral behavior is addressed by a numberof theories. At the center of any theory, however, is theassumed moral nature of the agent. Yet, as others have

argued: “. . . this problem is so generally neglected that it has beenpossible to make off with its very name almost without beingnoticed and, evidently, without evoking any widespread feeling ofloss” (Frankfurt 1971:6). Our goal in the present research is tocontribute to the specification of this moral nature by examiningthe influence of negative dispositional characteristics in the person–situation interaction model simultaneously with positive influences.This is the core of the value–pragmatics approach.

Organizational ethicists have historically evaluated the person’sability to reason out moral problems in ways that result in accept-able justifications for a choice of action (Kohlberg 1984; Piaget 1965;Rest et al. 1999). Other theories claim that humans develop anethical ideology that is predictive of moral judgment and theyexamine these ideological inclinations along the consequentialistand formalist dimensions (Forsyth 1980; Forsyth and Berger 1982;Forsyth and Nye 1990). Still others see moral reasoning as acognitive predisposition (Brady and Wheeler 1996) more likely to beautonomously generated than an acquired ideology.

Other organizational moral behaviorists, however, see limitationsin the dispositional and rational approaches described previously,because they are individualistic and do not account for the differ-ences in contextual circumstances (Ashkanasy et al. 2006; But-terfield et al. 2000; Church et al. 2005; Trevino 1986; Trevino andYoungblood 1990). One approach in bridging this gap is theperson–situation interaction model (Trevino 1986). This modelholds as its primary hypothesis that: “. . . ethical decision makingin organizations is explained by the interaction of the individualand the situational components [such that] . . . individual andsituational variables interact with the cognitive component todetermine how an individual is likely to behave in response to anethical dilemma” (Trevino 1986: p. 602).

The problem of competing moral motivations, although broadlyrecognized in ethical dilemmas as conflicts of interest, is rarelyexplicitly analyzed in models of moral decision making. As organi-zational ethicists, we tend toward understanding humans as havingthe capacity to transcend self-interests that create conflicts of interest.Empirical evidence, however, demonstrates time and again that we

GEORGE W. WATSON, ROBYN A. BERKLEY, ET AL. 3

are just as likely to indulge our personal interests at the expenseof others (Batson and Thompson 2001; Batson et al. 1999; Batsonet al. 2002).

Consequently, our present goal is to further elaborate upon thisambiguous aspect of human moral character. We examine charac-teristics and factors that simultaneously inhibit and encourage moralconduct. We believe that this, more comprehensive depiction of thecontentious nature of personal motivations will assist us in betterprofiling the person who is interacting with contextual contingen-cies. We begin by reviewing the pertinent introductory material onthe person–situation interaction model and the value–pragmaticsapproach. We then pose several testable questions aimed at clarify-ing the dualities of moral nature. We then test these propositionsand discuss their implications for further research and practice.

VALUES IN THE PERSON–SITUATION INTERACTION HYPOTHESES

Theories of ethical reasoning in organizational contexts build uponthe Cognitive Moral Development paradigm (Kohlberg 1984; Piaget1965; Rest et al. 1999). In the principal formulation of this cognitivemodel a person is thought to encounter a four-step process of; (1)becoming aware of a moral issue, (2) making a conscious and delib-erate judgment about that issue, (3) experiencing moral intentionand motivation, and (4) carrying out morally related action. Thesesteps are the central cognitive processes of the rational approach tomoral reasoning (Sonenshein 2007). Influential variations on therational theme have developed in recent decades. For example, theperson–situation interaction model investigates more explicitly howvarious social-structural factors found in the surrounding contextof the dilemma influence moral behavior. Moreover, the issue con-tingency model has attempted to isolate the effects of factors thatare specific to a particular ethical issue. Importantly for the presentresearch, the person–situation perspective characterizes the envi-ronment within which a person is embedded and is expected toreason and act. This research has been an effort to distinguishthe effects of personal characteristics from those of contextualcharacteristics—or separating the apple from the barrel (Zimbardo2004). The general outcome of this research has been to recognize


that situations powerfully influence behavior and the moral agenthas few resources with which to resist these forces.

Although the person–situation model has been impactful, it hasnot been especially fruitful. In our view, a handful of studies ade-quately describe the dependent and independent variables as wellas the key moderators in this vein of research (Ashkanasy et al.2006; Butterfield et al. 2000; Church et al. 2005; Greenberg 2002;Trevino 1986; Trevino and Youngblood 1990). Table 1 contains asummarized review of this literature.

Our hypotheses leverage the several themes threading throughthe articles identified in Table 1. The first theme is in the role thatthe magnitudes and expectancies of reward (and/or losses) play inexplaining the variance in the dependent variables (Ashkanasyet al. 2006; Church et al. 2005; Trevino and Youngblood 1990). Forexample Church et al. (2005) report direct effects for the magnitudeof financial reward for ethical wrongdoing. Trevino and Youngblood(1990) measured vicarious rewards and punishments and foundsome indirect influence for vicarious reward on ethical decisionmaking. Ashkanasy et al. (2006) measured the expectancy of rewardfor unethical behavior and found that cognitive moral developmentmoderated the effect of reward expectancies on moral decisionmaking. Clear precedence for incentives and disincentives forunethical behavior as components of the situation are offered inthese findings. Although we did want to replicate the results of thesestudies we felt it was important to include variables for rewardand punishment as factors in the present models.

A second theme is the inclusion of a measure for cognitive moraldevelopment (Ashkanasy et al. 2006; Church et al. 2005; Greenberg2002; Trevino 1986; Trevino and Youngblood 1990). Although thesame measure is not used across all studies, each measure ofCognitive Moral Development (CMD) relies on the quality of thejustification for a particular decision to derive a moral reasoning score.In all empirical cases identified in Table 1, the moral reasoningscore emerged with significant direct effects. Moreover, combinedeffects with the just world illusion, and outcomes expectancieshave also been reported (Greenberg 2002). As a result of the longand convincing argument that moral reasoning influences morallyrelevant outcomes generally, and the role for moral reasoning inthe person–situation model in particular, we include CMD as anadditional control variable in the present study (Trevino 1986).

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TABLE 1 Overview of Exemplar Literature

Study and primary question Dependent variable Situational factors Dispositional factors Reported results

Butterfield et al. (2000) Moral awareness Consequences of the issue

Perception that there is a social consensus on a response

Significant effects for consequences

What are the factors influencing moral awareness in organizations

Framing marginally significant

How the issue is framed.

Social consensus is significant

Is the industry aggressively competitive

Aggressive competition significant

Greenberg, J. (2002). What are the combined effects of personal and situational variable on employee theft

Employee theft Ethics programs Cognitive moral development (CMD)

Ethics program interacts with CMD and previous victim

Previous victim of theft

Significant direct effects for all dispositional and situational factors

6B

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INE

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Church et al. (2005): What are the factors influencing a person to act honestly?

Misrepresenting product quality

Magnitude of rewards and losses

Cognitive moral development

Reports significant direct effects for magnitude of outcomes, gender, CMD and significant interaction between CMD and magnitudes of loss/gain

Trevino and Youngblood (1990): What are situational factors influencing ethical decision making?

Ethical decision making

Vicarious reward Locus of control High LOC exhibits significantly higher ethical behavior

Vicarious punishment

CMD Outcome expectancies significantly affect decisions

Expectancy of outcomes

Higher rewards yield significantly higher ethical conduct

Ashkanasy et al. (2006): Does the organizational reward system influence decisions through expectancy outcomes

Unethical decision making

Exposure to unethical practices

CMD Significant CMD by just world beliefs interactions


TABLE 1

(Continued)

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Just world beliefs Significant CMD by just world interactions

Outcome expectancies Significant expectancy by CMD interaction

RewardTrevino (1986): Outline of the person–situation interaction model

Theoretical Organization culture CMD N/A

Job context LOCWork characteristics Ego strength

Field dependency


TABLE 1

(Continued)


Other dispositional variables have been investigated in thisliterature. For example Trevino (1986) theorized, and Trevino andYoungblood (1990) empirically tested, the role of locus of control inethical decision making (Rotter, 1966). The latter paper reportsthat a person with a higher internal locus of control will makemore ethical decisions. The role of personal values, however, hasnot been tested. The present study examines this role.

Value–Pragmatics

We investigate the prospect that a person is pulled in more than oneethically relevant direction through the application of the value-pragmatic hypothesis (Hodges and Geyer 2006). This model recog-nizes that contending values obligate a person to differing actions.At the theoretical level, the value contention hypothesis is anapproach that depicts human moral nature as being of two mindsabout how to proceed in an ethical dilemma. In fact, it is claimedthat a circumstance is ethically dilemmatic psychologically (asopposed to morally) only because of the ambivalence one feelstoward alternative solutions. One’s ambivalence may be experi-enced because of the nature of expected outcomes, with regard tothe principles and values expressed in the means used to achievethose outcomes, or in some combination of both. Nevertheless, if itis true that people making ethical decisions can be naturally moti-vated by the multiple obligations levied by values, then models ofethical decision making are compelled to reflect this nature.

Two assumptions underlie this proposition. First, the personalimportance of fulfilling an obligation resulting from a value rests inpart with the perceived situation one faces. That is, situationalfactors invoke contending values. This suggests that values shouldinteract with these situational factors in systematic ways. For thisreason we rely on the person–situation interaction model foradvancing and testing these hypotheses. The second assumptionis that the motivation derived from values is experienced simulta-neously. We posit that values that contend with each other will bothbe cognitively cued in an ethical dilemma. This aligns our researchmore closely with Schwartz’s conception of values. From a practicalview, Schwartz’s model suggests that values of hedonism andbeneficence contend such that it is possible for hedonism to bethe principal motivating factor in one set of circumstances, and


beneficence to be the motivating factor in another. This is consistentwith the value system justification approach outlined by Kristiansenand Zanna (1988) and the ego affirmative role of values forwardedby Watson et al. (2004) and Grube et al. (1994).

It has long been recognized that the role of personal values is toallow for the regulation of one’s behavior (Rokeach 1973). Accordingto Rokeach (1973) values stem from our unique personal needs, suchthat, if we have a need for affiliation we will value friendship. Incon-sistencies between values and behaviors are expected to createdissonances that are detectable through negative emotions such asguilt or shame (Festinger 1957; Watson et al. 2004). Yet, people alsohave values that are not linked to moral needs, but rather, needsthat encourage self-oriented satisfactions. In addition, there are cir-cumstances in which we make decisions contrary to our betterjudgment (Davidson 1984), and the experience of dissonance-inducedself-dissatisfaction is a possible response to our behavior. Conse-quently, values are expected to assist us in making appropriate moraldecisions (Grube et al. 1994; Rokeach 1973). Beyond values’ directeffects, however, come the more intriguing aspects of human moralnature, namely the understanding that what makes a situation anethical dilemma for us is the recognition that any one course ofaction yields desirable and undesirable outcomes (Tetlock 1986).This occurrence is, in itself, a tacit recognition that we hold con-tending inspirations for what counts as valuable and desirable.

In the broader construct of values, moral values are those thatinvoke a prescription or proscription about what one should or shouldnot do relative to other’s best interests. The origins of these values,although not uncontroversial, accounts for their motivating potential.Some scholars find moral values to be much like deontological rules(Baron and Spranca 1997)—if one values a world of beauty, for example,one is personally prohibited from acting in ways contrary to that value.Others have recognized that these moral values can be traded offaccording to the contextual circumstances (Tetlock et al. 1994; Tet-lock et al. 1996). At a minimum, the literature acknowledges thatvalues may conflict, and more than one value may compete in themind of the decision maker attempting to choose a course of action.

No definitive list of moral values has yet been agreed upon, andfor any list that may be formulated, there remain controversiesregarding a value’s definition, universality and measurement. Yet thesocial sharing of values, particularly moral values, is relied upon by


members of a collective in order that we may reasonably trust in aminimum threshold of social tolerance and support, as well as accep-tance for our personal eccentricities and needs. As classical socialcontract theory recognizes, persons gather in collectives, organizationsor otherwise, for their mutual advantage of avoiding Hobbesian chaos(Hobbes 1561/1962). Sharing the value of equality, for instance,will help to ensure that each member

should

have as much accessto a promising life as any other (Rawls 1971; Donaldson 1982).

In addition, moral values have been central to our constructionsof moral agency in that they provide us with the frameworks for becom-ing aware of moral issues, reasoning through those issues, and providingjustifying grounds from which to embark upon a course of action(Greenberg 2002). Currently, however, controversy still exists regard-ing functional purpose of value systems in general or the motiva-tional content of moral values in the person–situation model inparticular (Hauser 2006). In organizational ethics, the dominantview of values’ purpose is still derived from Rokeach (1973) andKluckhohn (1951): values and value-systems are moral motivatorsthat contain trans-situational ends of varying importance and relativestability, serving to prescribe or proscribe behavior (Schwartz 1996).

We posit that there are values that will encourage us to render asocially optimal solution that meets the criteria for a moral deci-sion. Nevertheless, people also hold values that encourage us tomake personally optimal decisions that do not meet the criteria fora moral decision. The classical dilemma for this circumstance is aconflict of interest. Other dilemmas, however, have these qualitiesas well, as when deciding whether to blow the whistle, pay a bribe,dump toxins off-shore, or misrepresent revenue figures. We furtherargue that situational contingencies, such as rewards and punish-ments, will interact with contending moral and nonmoral values(e.g., values for pleasure, power, prestige or status versus benevolence,and universalism) to influence outcomes in decisions and behavior.

Schwartz (1996) has constructed ten categories of values thatdifferentiate individuals. This list of values does contain both moraland nonmoral value categories. The general categories for nonmoralvalues are hedonism (containing values like pleasure seeking) andpower (containing values like social influence and domination).Although each of us will weigh values differently, the substantivemeaning of a particular value type can be in direct opposition to thesubstantive meaning of another value type. In Schwartz (1996) the


values that contend with hedonism and power are listed as benevo-lence and universalism, respectively. In seeking out the role ofvalues in the person–situation hypothesis we hypothesize that bothvalue types are important in explaining the variance in morallyrelated judgments and will interact with situational factors.

Schwartz’s definition for these value types are: (1) universalism,defined as an appreciation for the welfare of all people, (2) benevo-lence, defined as having the qualities of helpfulness, forgivingness,honesty and enhancement of people with whom one is in frequentcontact, (3) hedonism, defined as seeking pleasure and sensualgratification for oneself and, (4) power, the seeking of social prestige,status, and control. Universalism and benevolence are categories ofself-transcendent, moral values that involve how one conceives,and behaves toward, other people. In contrast, power and hedonismare self-enhancing and inwardly oriented values that involve howone behaves in reaching privately held, personally satisfying, goalsand objectives. Consequently, and as depicted in Figure 1, our firsthypotheses are as follows: We propose that the nonmoral value type

FIGURE 1 Hypothesized Effects of Contending Values in the Person-Situation Model.

*C = control variables


of “hedonism” will be significantly and positively related to unethicaldecisions in an organizational vignette; the nonmoral value type of“power” will be significantly and positively related unethical decisionsin an organizational vignette; the moral value type “benevolence”will be significantly and negatively related to unethical decisions inan organizational vignette; the moral value type of “universalism”will be significantly and negatively related to unethical decisionsin an organizational vignette; and both morally relevant andnonmoral values will simultaneously explain significant variance inthe unethical decisions.

Interactions and Ethical Decisions

Previous efforts at unveiling person–situation interactions havepredominantly evaluated ways the cognitive moral developmentmoderates the relationships between situational forces and decisionoutcomes. A weakness of this approach is the high emphasis it placeson a person’s willingness to morally reason through dilemmas in spiteof contending desires and values (Gilligan 1982). We agree that con-textual factors can make for unethical or immoral behavior, but featuresof this situation are expected to interact with a person’s character toentice people to ignore the moral impact of their decisions. Certainly, abad barrel is an important factor in individual behavior, but badapples, or bad features of otherwise good apples, play a role in decisionmaking as well. Consequently, for the present study we focus on therelationships between value types, situational factors and unethicaldecisions. Once again, Figure 1 depicts these relationships, indicatingthat values of moral and nonmoral types will moderate the relation-ship between situational variables and unethical decisions.

Hedonism, reward, and punishment.

Patterns in values forhedonism, or pleasure seeking, would be expected to vary with thepresence of a means for achieving pleasure—monetary rewards.Responses to hedonism can reasonably be expected to combinewith patterns in situational factors that may satisfy or stifle thehedonistic desires in ways that significantly explain variance inunethical judgment. For example, if hedonism is defined as theseeking of pleasurable self-gratifications of various types, then onewould anticipate that a person who values hedonistic outcomes willbe anxious to avoid unpleasant punishments. Or conversely, a person


who values hedonistic outcomes would be expected to respondfavorably to situational factors that result in rewards. As a result wehypothesize that the situational factor of punishment will interactwith the personal value of hedonism to influence unethical decisionmaking and the situational factor of reward will interact with thepersonal value of hedonism to influence unethical decision making.

Power, reward, and punishment.

Persons who value control andprestige are expected to be similarly influenced by rewards andpunishments. The effect of rewards and punishments on unethicaldecision making is expected to be moderated by a desire for power.Conventional morality will play a lesser role among those thatdesire power. Consequently, the desire for power will moderate therelationship between situational power-related factors and theoutcome decision (Sidanius and Pratto 1999). For example, aperson who values prestige and control is expected to be positivelyinfluenced by rewards and negatively influenced by punishments.This would include rewards and punishments attached to ethicallyrelevant decisions. As a result we test the following hypotheses: Thesituational factor of punishment will interact with the personalvalue of power to influence unethical decision making and thesituational factor of reward will interact with the personal value ofpower to influence unethical decision making.

Universalism, reward, and punishment.

Universalism, accordingto Schwartz (1996), includes ideals of understanding, tolerance,enhancement, and protection of the welfare of others as well as anappreciation for a world of beauty. Universalism stands in virtualopposition to the value of power. Universalism appears to sharemany of the characteristics that are equally important in the sche-matic frames of Rest’s moral reasoning at the higher levels (stages5, 6, and 7). These higher stages are often described as concerningsocial welfare and universal ideals of human justice (Rest et al., 1999;Fisher and Lovell, 2006). For this reason we hold similar hypothesesfor universalism as has previously been posited for moral reason-ing. Specifically, higher levels of universalism should reduce theinfluence of situational factors on ethical decisions, and we offerthe following hypotheses: The situational factor of punishment willinteract with the personal value of universalism to influence unethicaldecision making and the situational factor of reward will interact


with the personal value of universalism to influence unethicaldecision making.

Benevolence, punishment, and reward.

Our last set of hypothe-sis address values that, according to Schwartz (1996), reflect for-giveness, loyalty, responsibility, and friendship. These notions ofbenevolence do not map directly to moral reasoning in Kohlberg’s orRest’s sense, but they are reflective of notions of caring for thosethat one has important relationships with (Gilligan 1982). Never-theless, it is likely that those situational factors that are perceivedas advancing the core meaning of benevolence will be more influen-tial among those that score high on benevolence. The empiricaldifficulty is determining which situational variables will be per-ceived as advancing the cause of benevolence. We hypothesize thatpunishments for wrongdoing will be understood as contrary tobenevolence, as it does not reflect forgiveness or loyalty. Moreover,rewards of the type we have included in this study (rewards foraccomplishing work goals) are likely to be perceived as consistentwith benevolence. Consequently, we hypothesize that the situationalfactor of punishment will interact with the personal value ofbenevolence to influence unethical decision making. In addition,the situational factor of reward will interact with the personal valueof benevolence to influence unethical decision making.

METHOD

Our sample consisted of 177 undergraduate and graduate students ata medium-sized university in the Midwest United States. Fifty two per-cent of the sample was female, 11 percent of the students were fromminority ethnic backgrounds, and the mean age was 22. One hundredand ninety one surveys were administered, and 14 were not usable eitherbecause of incomplete data (12 subjects) or illegible responses.There were no decipherable patterns of differences between the 14that were dropped from the sample and the 177 retained for analysis.

Design

We used a policy-capturing experimental design to craft the businessvignettes. In applying this approach the term “policy” becomes


understood as the importance an individual places on a particularsituational factor. Consequently, in diagnosing the situationalreasons for a morally relevant decision, it is useful to understandhow decision makers weight situational cues. Policy capturing “. . .has provided a powerful way of thinking about policies and hascontributed greatly to our understanding of how decision makersuse policies” (Beach and Connoly 2005).

Procedure

Data collection took place in two phases. In the first phase subjectswere administered measures for moral reasoning, a demographicsquestionnaire and value priorities. In the second phase, initiatedseveral weeks later, subjects were given the eight vignettes andasked to make a judgment about how likely they would be to act asin the same way as the person in the vignette. As a result there were1,416 different decisions about how one would act. Respondents’answers were matched using names, and because responses werenot anonymous the surveys were held strictly confidential.

Measures

Personal values.

The Schwartz Value Survey was administeredto subjects in phase 1 of the data collection. This survey presentsthe subject with 57 different values and asks the subject to ratethem according to the importance the value holds in their life. Forexample, the overall characteristic of hedonism is measured by thevalues of “pleasure,” and “enjoying life.” In addition, the constructof power is measured by the values of “prestige” and “dominance.”Conversely, universalism and benevolence are measured by valueslike “social justice” and “forgiving” respectively. The subject ratesthese values on an eight-point Likert type scale ranging from“supreme importance” (7) to being “opposed to my values” (–1).Related values are then clustered into 10 value categories.Schwartz’s categories include universalism, hedonism, benevolence,achievement, stimulation, self-direction, tradition, conformity, power,and security.

Moral Reasoning.

The Moral Judgment Test (MJT) (Lind, 1975)was administered to subjects in phase 1 of data collection. We


chose the MJT for several reasons. First, it is considered a validmeasure of the consistency of one’s moral judgments across situa-tional differences. Second, it is available free of charge from theauthor, whereas dominant measure (the DIT-2) must be purchasedand scored by a proprietary service. Third, it is considerably shorterthan the DIT-2 having two scenarios to the DIT-2’s five. Becausethe values instrument contained 57 questions, response fatiguefor subjects in this study was a concern. The composite score, or“C-score,” is an indicator of how consistent the subject was inapplying principled or situational perspectives. Moral reasoningwas included as a control variable in each model.

Situational Factors.

As described previously, three separatefactors were orthogonally varied on two levels. A full factorial design,therefore, included eight different vignettes for all combinations ofthese three factors. Each subject responded to all eight vignettes.In other words, each subject provided eight judgments, each judg-ment based on a differing combination of these three variables. Thethree factors were: (1) the nature of the situation (environmentaldumping or sales revenue falsification), (2) the benefit of actingunethically (staying on track in performance expectations, versus apersonal bonus), and (3) the punishment or costs (reprimand, nopunishment). A sample vignette is contained in the Appendix.Significant factors were entered into each model.

Dependent Variable

Because we are endeavoring to discover whether a person will forman intention to act unethically under conditions of balanced situa-tional and dispositional variables, we asked subjects to respond tothe following question after reading the scenario: “Answering ashonestly and thoughtfully as possible, how likely do you think youwould be to make the same decision as Terry?” Subjects were askedto rate on a seven-point Likert-type scale how likely they think theywould be to act the way the person in the scenario did. For example:Responses ranged from “very unlikely” (1) to “very likely” (7). Conse-quently, higher scores indicate a higher intention to act unethically.All managers in the vignettes made the morally negative decision.A decision is morally negative if the manager shipped toxic sub-stances to locations where he/she knew it would harm others, or if


the manager falsified sales reports. All managers’ names were meantto be gender neutral and were altered in each vignette.

RESULTS

Because higher scores on the dependent variables indicated thatthe subject was more likely to be motivated to act unethically,we expect to see positive correlations with the values of power andof hedonism. We also expect to see subjects’ responses correlatenegatively with values of universalistic welfare or benevolence.Moreover, moral reasoning correlated power and universalism values.

Preliminary analysis was conducted on the demographic vari-ables of age and gender. Although gender did seem to be a factor inreports of moral judgment, age did not. This finding is consistentwith the previous findings in the field. Neither of these variables,however, reached significance in the initial regressions that includedall hypothesized variables (Gender; ß = –0.014,

p

≤

0.69. Age;ß = –0.013,

p

≤

0.72). Consequently, these demographic variableswere removed from further analysis as we focused on the hypothe-sized relationships.

Hypothesized Relationships

Table 2 displays the independent variables, beta weights,

r

2

s and

F

scores for changes in

r

2

resulting from testing the hypotheses.We first asked whether hedonism and power as nonmoral valueswere simultaneously significant with the moral values of benevo-lence and universalism. To test these hypotheses we entered thesituational factors of rewards and punishments and the disposi-tional factor of moral judgment into the base equation (model 1).We then stepped in the values of benevolence, universalism,hedonism, and power. As indicated in Table 2, models 1 and 2, thevalues of hedonism, universalism, benevolence, and power addsignificantly to the explained variance over and above the controlvariables (

F

= 37.580,

r

2

= 0.184,

p

≤

0.001). Moreover, each issignificant and each is in the expected direction. As a result wehave support for hypothesis that tests the value–pragmaticspremise: that all contending values simultaneously influencedecisions.

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TABLE 2

Regression Models, Beta Weights,

r

2’

’s and F-Ratios

Variable Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7 Model 8 Model 9 Model 10

Reward 0.178*** 0.172*** 0.171*** –0.105 0.173*** –0.074 0.173*** 0.0192 0.185*** 0.056Punishment –0.287*** –0.286*** 0.084 –0.297*** 0.097 –0.298*** –0.585*** –0.286*** 0.040 –0.286***Moral Reasoning –0.222 –147*** –0.147*** –0.148*** –0.147*** –0.149* –0.153*** –0.147*** –0.134*** –0.147***Power 0.153*** 0.159** 0.159*** 0.241*** 0.114** 0.158*** 0.154*** 0.138*** 0.153***Hedonism 0.142*** 0.227*** 0.089* 0.142*** 0.151*** 0.145*** 0.142*** 0.129**** 0.142***Universalism –0.084** –0.094** –0.094** –0.084** –0.108** –0.155*** –0.080† –0.061* 0.084**Benevolence –0.128*** –0.130*** –0.131*** –0.127*** –0.122*** –0.122*** –0.128*** –0.107** 0.144***Punish x Hedonism –0.397**Reward x Hedonism 0.288*Punish x Power –0.403***Reward x Power 0.250*Punishment x Universe 0.304*Reward x Universe –0.023

ns

Punishment x Benev0.Reward x Benevolence –0.241†

0.118

nsF

Δ

r

2

290.225*** 80.646** 40.523* 100.399** 40.036* 40.287* 0.024

ns

30.048† 0.375

nsr

2

0.158*** 0.245*** 0.264*** 0.261*** 0.252*** 0.267*** 0.256*** 0.245*** 0.225*** 0.245***

***

p

≤

0.001.**

p

≤

0.01.*p ≤ 0.05.†p ≤ 0.10.


The remaining models evaluate the moderating effects of valueson the relationship between situational factors and decision out-comes. Model 3 tests whether hedonism moderates the relationshipbetween punishment and unethical decisions. As the model indi-cates, the interaction is significant. The graphical representationsof all the significant interactions are presented in the Appendix.Interestingly, and as model 3 indicates, those high in hedonism areless likely to act unethically when the punishments are high thanthose low on hedonism. Model 4 tests the moderating effects ofpower on the relationships between reward and unethical decisions.As expected, those high in hedonism are more likely to be influ-enced to act unethically if the rewards are high than those lowon hedonism.

Model 5 examines the moderating effects of power on the rela-tionship between punishment and ethical outcome. As the modelindicates, those with a high value for power are likely to act moreunethically than those with a low value for power when the punish-ments are low. Similarly, those with a high value for power are likelyto act more unethically when the rewards are high (model 6). Model7 tested the moderating effects of universalism on the relationshipbetween punishment and ethical decision making. As anticipated,those low in universalism are more likely to act unethically whenthe punishments are low than those who are high in universalism.Model 8 tested the moderating effect of universalism on the rela-tionship between rewards and ethical decision. No significant effectwas discovered, thus this hypothesized relationship was not sup-ported. The moderating effect of benevolence for the relationshipof punishments to ethical decisions was marginally significant(model 9). Those high in benevolence were less likely to decideunethically in the high punishment condition. Finally, model 10tested the moderating effects of benevolence of rewards on unethi-cal decisions, but no significant interaction was revealed.

DISCUSSION AND CONCLUSIONS

Our models indicate that that the situational factors of rewardand punishment have significant influence on the decision maker.Moreover, in support of previous research, moral judgment is asignificant dispositional factor in decisions. Importantly, model 2


demonstrates that both moral and nonmoral values are simulta-neously influencing decisions. We also located significant interac-tions in six out of the eight tests. Together these tests reveal anumber of significant interactions. In short, the value pragmaticsposition of multiple contending values simultaneously influencingethical behavior was supported. Moreover, the person–situationinteraction model was further bolstered as the situational factorsinteracted with a number of dispositional factors to demonstratestatistically significant influence. Furthermore, all control variables(reward, punishment, and moral reasoning) were significant, align-ing this study with previous research on these variables.

Overall, these results support our assertion that there are multipledispositional factors and multiple situational context factors thatare in contention and influencing our moral judgments. As ourliterature review indicated, the range and frequency of tests fordirect and indirect effects for both dispositional and situationalvariables has been somewhat constrained to moral reasoningcapacities. Consequently, our study contributes support for thedirect and indirect effects of moral and nonmoral values. It furthersupports previous findings that punishments and rewards influenceethical decisions.

Both the moral values of benevolence and universalism, as wellas the nonmoral values of hedonism and power, were eachsignificantly correlated with and predictive of ethical decisions. Weconclude, consistent with a depiction of human nature madeambivalent by contentious personal goals, nonmoral values areamong the dispositional variables that will predict ethically relevantjudgments. Moreover, the nonmoral values of hedonism and powermoderated the relationship between situational factors and deci-sion outcomes. This presents further evidence of direct and indirecteffects for nonmoral dispositional factors significantly influencingjudgments of morality in varied situational contexts of punish-ments and rewards. In fact, the indirect effects of moral values,although demonstrating some significance, was less influential theindirect effects of nonmoral values.

Our goal has been to build upon the person–situation interactionmodel by investigating how competing dispositional factors andsituational factors may interact to significantly influence ethicaljudgments. We found evidence supporting the person–situationhypothesis and value–pragmatics model. Furthermore, both


nonmoral and moral values significantly contribute to the variance inethical decision making simultaneously. In addition, to augmentprevious literature that has found interactions between situationalfactors and morally relevant dispositional characteristics, we havefound significant interactions between situational variables andthe nonmoral values characteristics of hedonism and power. Goingforward, research should reflect both the positive dispositionalinfluences on ethical decision making and the negative influencesto portray a more realistic picture of the decision maker.

As with all empirical studies we confront several limitations.Multiple factors converge to influence a decision maker—the multi-ple social mechanisms that encourage or discourage behavior com-bine to make the presence or absence of reward and punishmentmeaningful. In full factorial designs, however, including just oneadditional variable (for example raising the number of factors fromthree to four) literally doubles the number of scenarios the subjectmust read, detect differences in, and respond to. Thus includingmore situational factors comes at a significant cost in responsefatigue and ultimately reliability. Fractional factorial designs havebeen applied to overcome this problem, but they too come at a price;specifically, the inability of analyzing higher-order interactionsamong the factors.

In addition to the limits on a reasonable number of factors, is theissue of whether the scenarios adequately reflect reality. We thinkthe combination of how one is compensated, the policies directed atpunishing unethical behaviors, and the overall nature of the ethicalviolation is a realistic reflection of the business environment. Somemight argue that it is unlikely to find punishments for ethicalbehavior in an environment that compensates an employee solelyon sales revenues. Nevertheless, we see no reason to expect thatboth punishments and rewards cannot coexist in the way we haveoperationalized them in this study.

There are several other interesting questions from the researchperspective. The question of how some contextual factors emerge assignificant and others do not lead us to question the role of nationalculture in factor weightings; would shame play a greater role inEast Asia? Would prospective feelings of guilt play a larger role inthe northern Mediterranean regions than in North America?

A second research stream might examine why one contextualvariable would have only direct effects, or why another would have


only indirect effect and a third with have both direct and indirecteffects on moral judgments. Is there a relationship between globalvariables such as moral intensity of the issue itself and cognitivecapacities for moral reasoning? In other words, is the evaluation ofthe broader moral issue conducted with deontological rules, whilethe impact of reward and punishment are evaluated with utilitarianrules? Conversely, will a situational variable such as a companypolicy show more direct effects due to the cognitive efficiencies oflinking less ambiguous factors (such as rewards or punishments) toethical judgments?

Punishments were weighted at surprisingly high levels of directand indirect significance. There are, however, multiple attenuatingpossibilities for implementing a deterrence strategy, including; theprobability of one’s actions being discovered, the consistency withwhich punishments are administered, the effectiveness of commu-nicating that punishment is administered while still maintainingprivacy, and the severity of the punishment. Assuming that allthree of these factors are high, there is still the possibility that ahigh tolerance for risk will mitigate their effects.

We think punishments, however, have something to say tomanagers as well, and that the factors of surveillance, communi-cating the results, consistent punitive responses with adequateseverity will strongly influence ethical judgments. Each of these,however, deserves careful deliberation so that principles of organi-zational justice remain intact. Unreasonably severe punishmentswill appear unjust, and meager punishments may be interpreted astacit tolerance for unethical behavior.

A second factor important to practice is that the moral intensityof a situation is likely not to be immediately felt, but that situationalfactors motivating behavior are likely to be to have immediateimpact. The business outcomes of a decision often take time to developand are sometimes quite ambiguous at the time the decision is made(Bazerman 2006). Moreover, these situational factors may cue non-moral considerations, such as nonmoral values of hedonism or power,to moderate the relationship between the factor and the ethical judg-ment, and offset one’s moral reasoning capacities. This further empha-sizes the importance of shared values, organizational culture, andethical climate in providing the employee with prescriptive guidance.

This study adds some clarity to the often blurred relationshipbetween personal values and organizational performance. Advocates


of a “shared values” approach to managing ethics programs maytake heart in the findings that values do matter. But they matter inboth directions: That is, a shared value of “achievement” may bedetrimental to ethical behavior in some organizational cultures.This problem was well documented by Elkind and McLean (2004) intheir analysis of Enron’s collapse.

Human moral nature does seem to be wholly determinate. Insome cases nonmoral factors win out, and on other occasionsmoral values holds sway. It remains a formidable challenge ofemerging applied theories to help us to better understand thecontingent and dispositional factors that will allow us to betterpredict and understand how humans will behave within a givenstructural context and how they are constrained by their uniquedispositions.

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APPENDIX

The analytical approach used in this study is called Policy Captur-ing or Judgment Analysis. Policy capturing is reported to have sev-eral advantages over other types of data collection methodologiesroutinely used in the analysis of ethically related decisions. Onealternative, for example, would be to ask subjects how importantthe factors rewards for performance and punishments for unethicalbehavior are in an ethically relevant decision (Batson et al. 1999;Batson et al. 2002; Batson et al. 2006). In subject responsesregarding right and wrong, however, social desirability bias hasbeen an important impediment (Judge and Bretz 1992; Karren andBarringer 2002). Rating or ranking the attributes that effect out-comes also requires more self-insight than is necessary whenresponding to vignettes. In fact, it is not unheard of that decisionmakers sometimes act solely on intuition. Moreover, vignettes arethought to be more reflective of reality and context than alternativemethods (Karren and Barringer 2002). This is an important featurefor the person–situation interaction model. An additional advantagerests in the ability to orthogonally manipulate variables of interest.Intercorrelations between variables are zero or near zero. Thisallows the researcher to gain an appreciation of the importance ofany one variable for decision makers.

Scenarios have been routinely used in studying the effects of var-ious factors on ethical decisions and motivations (Butterfield et al.2000; Cavanagh and Fritzsche 1985; Weber 1981). In the presentcase regression is applied to assess the impact of these factors. Wealso measured several demographic variables and the dispositionalvariables of values and moral reasoning and expect interactionsbetween the experimental variables and the dispositional variables,supporting the person–situation hypothesis.

With this in mind we developed three factors that the literature haspreviously indicated as important situational factors. The ethicalsituation itself is expected to have more or less moral intensity (seee.g., Jones 1991), as do both rewards (e.g., Trevino and Youngblood1990) and punishments (e.g., Trevino and Youngblood 1990). Becausethere are three such factors to be orthogonally varied at two levels,a full factorial design requires (23) eight vignettes. As table A1 illustrates,however, the moral situation did not significantly relate to the decisionoutcome, and we dropped that factor from further analysis.


Descriptive Statistics and Alpha Coefficients

Table A1 reports the means, standard deviations, and correlationsfor the study variables. The table displays the relationships betweenthe target situation, moral reasoning, potential rewards andpunishments, universalism, power, hedonism, and benevolence aswell as the outcome variable of judgment.

The alpha coefficients for multi-item value scales are listed onthe diagonal. The alpha coefficients for power and benevolenceare marginally acceptable for our sample. Alpha coefficients wererecently reported by Schwartz (Schwartz 2006). Schwartz’s Alphacoefficients for traditionalism ranged between 0.61 and 0.71 and foruniversalism ranged between 0.61 and 0.75. Some alpha coefficientsfor the Schwartz factors average lower than the broadly acceptedlevel of 0.70 but meet the base criteria of 0.60 (Nunnally 1978). Incloser examination of these value constructs Schwartz is askingsubjects to indicate how much they value diverse characteristicssuch as “responsibility” and “friendship.” Power values are similarlydiverse, asking the subject to rate both “dominance” and “prestige.”This is to say that value categories such as benevolence, universalism,hedonism, and power are constituted by a diverse set of ideals.

Results of Interactions

Figure 1A contains illustrations of the nature of the interactionsfor those that were significant (models 3 through 7 and model 9).These figures assist the analyst in understanding the ways in whichvarious values moderate the relationship between the situationalfactors and the decision outcome.

Figure A2 is an illustration of the scenarios we used in this study.The alternate wordings are in parentheses.

FIGURE 1A Analysis of Interactions.

FIGURE 1A1 Hedonism as a Moderator of Rewards.

FIGURE 1A2 Hedonism as a Moderator of Punishment.

FIGURE 1A3 Power as a Moderator of Reward.

FIGURE 1A4 Power as a Moderator of Punishment.

28

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TABLE A1 Descriptive Statistics, Correlations, and Cronbach Alpha Coefficients

Variable Mean S00.D00. 1 2 3 4 5 6 7 8 9

100. Moral Issue 00.50 000.50 00.000200. Reward 00.50 00.50 00.000 00.000300. Punishment 00.50 00.50 00.000 00.000 00.000400. Decision (DV) 200.84 100.60 –00.031 00.18*** 00.27*** –500. Moral Reasoning 300.64 100.59 00.001 00.001 00.001 00.10** –600. Universalism 400.48 00.953 –00.001 –00.001 00.003 –00.12** –00.12** (00.748)700. Power 300.99 00.939 00.002 00.002 –00.002 00.22*** 00.16*** 00.00.22*** (00.647)800. Hedonism 500.02 100.01 00.002 00.002 00.000 00.21*** 00.06 00.21*** 00.55*** (00.711)900. Benevolence 500.33 00.729 00.000 00.000 –00.002 –00.189*** –00.08 00.47** 00.002 00.09* (00.620)

†P ≤ 0.10.*P ≤ 0.05.**P ≤ 0.01.***P ≤ 0.001.


FIGURE 1A5 Universalism as a Moderator of Punishment.

FIGURE 1A6 Benevolence as a Moderator of Punishment.

Example Scenario(Alternate wordings and factors are in parentheses)

Situation: (Moral Issue) sales revenue shortfall (environmentaloff-shore dumping)

The Problem: As Tyler reviewed the sales figures for the thirdquarter it was clear that they fell short of the quota the sales teamswere given. However, Tyler reasoned that next quarter would bemuch better, and things would even out. The trouble was, every-body had a short-term perspective and wanted immediate results.Tyler considered whether the numbers should be made to lookmore positive than third-quarter results indicated.

The Alternatives: Tyler considered the two alternatives. The firstwas to report the numbers the way they were. The second was toship some of the products that were going to be sold next quarter tothe company’s largest customers. Although these items would notbe paid for until next quarter, they would appear to have been soldin this quarter.

The Facts: 1. (Reward) This move would keep Tyler and the salesforce out of hot water (Tyler would receive a $30,000 bonus for mak-ing sales quotas). 2. (Punishment) Last year someone had donesomething similar (insert) and was given a stern reprimand and wasalmost fired (but it was swept under the rug).

In the end Tyler decided to ship the products to several good cus-tomers with the understanding that they would not have to pay forthe product until they needed it.

(Decision) Answering as honestly and thoughtfully as possible,how likely do you think you would make the same decision as Tyler?

Very unlikely Unlikely

Somewhat unlikely

I am not sure

Somewhat likely Likely

Very likely

1 2 3 4 5 6 7

ambiguous allure the value pragmatics

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