-
7/26/2019 A Conceptual Model of Corporate Moral Development
1/12
Conceptual Model of Corporate
Moral Development
R Eric Reidenbach
Donald P Robin
ABSTRACT: The conceptual model presented in this article
argues that corporations exhibit specific behaviors that signal
their true lev el of m oral development. Accordingly, the
authors identify five levels of moral development and discuss
the dynam ics that move corporations from one level to
another. Examples of corporate behav ior which are indica-
tive of specific stages of moral development are offered.
The recent and continuing revelations concerning
the ethical wrongdoing of corporate America have
occasioned a studied examination of the dynamics of
ethical decision making in business. Several note-
worthy effors, particularly those by Trevino (1986)
and Ferrell and Gresham (1985), have attempted to
model the ethical decision making process in organi-
zations.
The Trevino model relies heavily on the idea that
an integral part of the ethical decision making
process involves the individual s stage of moral
development interacting with, among other factors,
the organization s culture. It is this complex admix -
ture of individual moral developme nt and corporate
culture which leads to the proposition that, just as
individuals can be classified into a stage of moral
development, so too can organizations. In other
words, corporations can be classified according to
R. Eric Reidenbach is Professor of Marketing and Director of the
Center or Business Development and Research at the University
of Southern Mississippi. He has written extensive ly on business
and marketing ethics.
Donald P. Robin Professor of Business Ethics and Professor of
Marketing at the Universi ty of Southern Mississippi is coauthor
with R. Eric Reidenbach of two recent books on business ethics
with Prentice-Hall. He is a frequent lecturer on business ethics
and is the author o f severaI articleson the subject.
their particular stage of moral development. Such a
typology is useful for better understanding the
dynamics that c ontribute to ethical decision making.
T h e role of corpor te culture in mor l
deve lopment
The moral development of a corporation is deter-
mined by the organizafon s culture and, in recipro-
cal fashion, helps define that culture. In essence, it is
the organization s culture that undergoes moral
development.
Among the array of definit ions of corporate
culture are those that focus on the shared values and
beliefs of organ izational me mbe rs (e.g., Sathe, 1985;
Deal and Kenn edy, 1982), specifically, beliefs about
what works within an organization, and values about
preferred end states a nd the instru menta l approaches
used to reach them. Among the constellation of
beliefs and values that comprise an organization s
culture are those that speak to its beliefs and values
about what is right and what is wrong. This is the
focus o f this article.
The principal sources for cultural beliefs and
values are from (1) individual organizational mem-
bers, especially top ma na ge me nt (e.g., Schein, 1983;
Wiener, 1988), and (2) the reinforcing effect of the
organization s success in prob lem solving and
achiev ing objectives (e.g., Schwa rtz an d Davis, 1981;
Sathe, 1985 ). Cen tral to this latter s ource is the
organization s selection of a mission from which the
more specific objectives and reward systems flow.
One mission of profit-making organizations is
economic. Howe ver, society, with increasing concern
and concomitant pressures, is also demanding that
they achieve certain social goals. The moral develop-
ment of a corporation can be classified according to
.Journal ofBusiness Ethics
1O: 273--284, 1991.
1991 KluwerAcademic Publishers. Printed in the Netherlands.
-
7/26/2019 A Conceptual Model of Corporate Moral Development
2/12
274
R. E. Reidenbach and D. P. Robin
the degree to which this required social mission is
recognized and blended with the econom ic mission.
Several studies and articles have focused on the
importance of the organization's culture in deter-
mining the morality of corporate actvities (Robin
and Residenbach, 1987; Trevino, 1986; Hoffman,
1986). Of particular relevance is the work of Victor
and Cullen (1988) whi ch measures wor k climate.
W or k climates are define d as perceptions th at are
psychologically meaningful molar descriptions that
people can agree characterize a system's practice and
procedures (Schneider, 1975). Th e ethical climate
questionnaire is designed to measure the ethical
dim ension s of organizational culture. Thes e items,
developed within the limited research context of
four firms, measure five ethical climate dimensions
characterized as caring, law and order, rules, ins tru -
mental, and independence.
The recognition that culture is an important
determ inant in ethical decision making has accept-
ance outside academic manag eme nt circles. W he n
asked about Drexel Burnham Lambert's recent
guilty plea and the reasons behind it, Edward
Markey, U . S. Representative (D. Mass.) repli ed tha t
there was a solid foundation of criminal activity
behind their success. And wh en asked if this crim in-
ality was pervasive in the financial industry during
this time, Mark ey responded, there was definitely a
culture that tolerated it Wall StreetJournal (1988) p.
B1).
A n o v e r v i e w o f t h e m o d e l
The mo del of organizational moral de velopm ent is a
conceptual model built by the study of a large
nu mb er o f cases of organizations and t heir actions in
response to a diverse number of situations. The
classificatory variables include ma nag em ent philoso-
phy and attitudes, the evidence of ethical values
manifested in their cultures, and the existence and
proliferation o f organizational cultural ethics and
artifacts (i.e., codes, o mb udsm en, reward systems). By
observing the organization's actions, the researcher
can deduce differences in the m oral develo pm ent of
organizations am ong t he sample of cases. These
differences fo rm the hierarchical stages in t he mode l.
Evidence involving specific cases supporting the
classification schema is provided.
Five stages comprise the mod el. Each stage is
given a label based upon the types of behavior or
organizations that are classified within that stage.
This prod uced the follow ing classificatory schemata:
the amoral organization; the legalistic organization;
the responsive organization; the emergent ethical
organization; and the ethical organization. The
mo del is depicted in Figure 1.
Fig. 1. A model of corporate moral development.
The model is inspired by the work on individual
moral developm ent by K ohlberg (1964, 1976). Ho w-
ever, direct application of Kohlberg's work is not
possible. Organizations simply do no t develo p in the
same man ner and under the same circumstances as
individuals. As was mentioned earlier, individua:l
moral deve lopm ent does contribute to the mo nll
developm ent of an organization but is not deter-
minant.
There are several propositions which make the
mo del operational:
Proposition 1:
Not all organizations pass through all
stages of m oral development. Just as not all ind i-
viduals reach level six of Kohlberg's mo del, not all
corporations are destined to be ethical organizations.
The ultimate moral dev elopm ent destination of a
corporatio n is a function o f several factors inc luding
top management, the founders of the organization
and their values, environmental factors (threats and
opportunities), the organization's history and mis-
sion, and its industry, to name a few (Robin and
Reidenbach, 1987).
-
7/26/2019 A Conceptual Model of Corporate Moral Development
3/12
C o r p o r a t e M o r a l D e v e l o p m e n t M o d e l
2 7 5
Propos i t ion 2: A n o r g a n i z a t i o n c a n b e g i n i t s l i f e i n
a n y s t a ge o f m o r a l d e v e l o p m e n t . A g a i n , t h e d e t e r -
m i n i n g f a c t o r s a r e s i m i l a r t o t h o s e m e n t i o n e d i n
p r o p o s i t i o n 1 . T h e k e y t o t h e b e g i n n i n g p o i n t i s a n
o v e rt m a n a g e m e n t d e c i si o n c o n d it i o n e d b y a n u m -
b e r o f s i t u a t e d f a c t o r s .
Propos i t ion 3:
M o s t o r g a n i z a t i o n s i n s t a g e o n e d o n o t
l e a v e st a g e o n e . A m o r a l o r g a n i z a t io n s , b y t h e i r v e r y
n a t u r e a n d o p o r t u n i s t ic p h i l o s o p h y p r o d u c e a c u l -
t u r e t h a t c a n n o t a d a p t t o t h e v a l u e s a n d r u l e s o f
s o c ie t y. T h u s a m o r a l o r g a n i z a t i o n s a r e e i t h e r f o r c e d
t o c e a s e o p e r a t i o n s o r , r e l a t i v e l y q u i c k l y r u n t h e i r
l i f e c y c l e s . T h e s e o r g a n i z a t i o n s t h a t d o e v o l v e p a s t
s t a g e o n e d o s o a t t h e c o s t o f s i g n i f i c a n t s t r u c t u r a l
a n d c u l t u r a l c h a n g e .
P r o p o s i t i o n 4 : A n
o r g a n i z a ti o n c o m p r i s e d o f m u l t i p l e
d e p a r t m e n t s , d i v i s io n s , o r S B U s c a n o c c u p y d i f f e r e n t
s ta g es o f m o r a l d e v e l o p m e n t a t t h e s a m e t i m e . T h a t
i s , o n e o p e r a t i n g a r e a o f t h e o r g a n i z a t i o n c o u l d b e
c l a s s i f i e d i n s t a g e o n e w h i l e o t h e r a r e a s c o u l d b e
l o c a t e d i n s t a g e t h r e e . T h i s m u l t i p l e c l a s s i f i c a t i o n i s
b a s e d o n s u b c u l t u r a l d i f f e r e n c e s w i t h i n t h e o r g a n i -
z a t i o n . E a c h s u b c u l t u r e w i l l h a v e e m b r a c e d , t o
g r e a t e r o r l e s s e r e x t e n t s , t h e f o r m a l c u l t u r e . I n t h o s e
c as es w h e r e t h e f o r m a l c u l t u r e d o m i n a t e s a l l o p e r a t -
i n g a r e a s , a m u l t i p l e c l a s s i f i c a t i o n i s u n l i k e l y . H o w -
e v e r , w h e n t h e i n d i v i d u a l s u b c u l t u r e s d o m i n a t e a n
o r g a n i z a t i o n , m u l t i p l e c l a s s i fi c a t io n s a r e p o s s i b le .
Propos i t ion 5:
C o r p o r a t e m o r a l d e v e l o p m e n t do e s n o t
h a v e t o b e a c o n t i n u o u s p r o c e ss . I n d i v i d u a l c o r p o r a -
t i o n s c a n s k i p s t a g e s . N e w m a n a g e m e n t o r m e r g e r s
a n d a c q u i s i t i o n s c a n i m p o s e n e w c u l t u r e s o n a n
o r g a n i z a t i o n . T h e s e n e w c u l t u r e s m a y b e r a d i c a l l y
d i f f e r e n t f r o m t h e p r e v i o u s c u l t u r e w i t h r e s p e c t t o
t h e i r e t h i c a l c o n t e n t i m p e l l i n g a n o r g a n i z a t i o n t o a
h i g h e r s t ag e o f m o r a l d e v e l o p m e n t .
Propos i t ion 6:
O r g a n i z a t i o n s a t o n e s t a g e o f m o r a l
d e v e l o p m e n t c a n r e g r e ss t o l o w e r s ta ge s. R e g r e s s i o n
t y p i c a l l y o c c u r s b e c a u s e t h e c o n c e r n f o r e c o n o m i c
v a l u e s i s n o t a d e q u a t e l y c o u n t e r b a l a n c e d b y t h e
c o n c e r n f o r m o r a l v a l u e s. I n t i m e s o f o r g a n i z a t i o n a l
s tr es s th e p u r s u i t o f e c o n o m i c v a l ue s m a y w i n o u t
r e g a rd l e ss o f t h e m o r a l i t y o f t h o s e v a lu e s . In a d d i -
t i o n , n e w m a n a g e m e n t o r m e r g e r s a n d a c q u i s i t i o n s
c a n a l s o p r o v i d e a n i m p e t u s f o r r e g r e s si o n .
Propos i t ion
7 : T h e r e i s n o t i m e d i m e n s i o n a s s o c i a t e d
t o t h e m o r a l d e v e l o p m e n t o f a n o r g a n iz a t io n . S o m e
o r g a n i z a t i o n s w i l l s t a y i n a p a r t i c u l a r s t a g e l o n g e r
t h a n o t h e rs . A g a i n , th e l e n g t h o f s t a y i n a p a r t i c u l a r
s t a g e w i l l b e a f u n c t i o n o f t h o s e f a c t o r s c i t e d i n
p r o p o s i t i o n 1 .
Propos i t ion 8: T w o o r g a n i z a t i o n s c a n b e i n t h e s a m e
s t ag e b u t o n e m a y b e m o r e a d v a fi c ed . T h u s , i t is
p o s s i b l e t h a t a c o r p o r a t i o n w h i c h i s c l a s s i f i e d a s a
l e g al is t ic c o r p o r a t i o n m a y a ls o m a n i f e s t c e r t a in c h a r -
a c t e r i s t i c s o f a r e s p o n s i v e c o r p o r a t i o n . T h i s i s a
f u n c t i o n o f t h e d y n a m i c s o f m o r a l d e v e l o p m e n t .
T h e s t a g e s
o f o r g n i z t i o n l m o r l
d e v e l o p m e n t
Stage one the amo ral organiza t ion
T h e A m o r a l O r g a n i z a t i o n h a s a c u l t u r e t h a t i s
e a r m a r k e d b y a w i n n i n g a t a n y c o s t a t t it u d e .
T y p i c a l o f o r g a n i z a t io n s i n t h i s st a g e o f m o r a l
d e v e l o p m e n t i s a c u l t u r e t h a t i s u n m a n a g e d w i t h
r e s p e c t t o e t h i c a l c o n c e r n s . P r o d u c t i v i t y a n d p r o f i t -
a b i l it y ar e t h e d o m i n a n t v a lu e s f o u n d i n t h e c u l t u r e .
C o n c e r n f o r e t h i c s , i f i t e x i st s a t a ll , i s u s u a l l y o n a n
a f t e r - t h e - f a c t b a s i s w h e n t h e o r g a n i z a t i o n h a s b e e n
c a u g h t i n s o m e w r o n g d o i n g . A t t h i s p o i n t t h e c o n -
c e r n f o r e t h i c s , i f a t al l e v i d e n c e d , b e c o m e s m o r e o f a
c y n i c a l j u s t i f i c a t i o n o r a p o s t h o c r a t i o n a l iz a t i o n o f
b e h a v i o r s t r i c t l y f o r d a m a g e c o n t r o l p u r p o s e s . C o m -
m o n t o m o s t m a n a g e m e n t p h i lo s o p h i e s is t h a t b e i n g
c a u g h t i n a n u n e t h i c a l s i t u a t i o n i s c o n s i d e r e d a s a
c o s t o f d o i n g b u s i n e s s . T h i s c u l t u r e i s s h a p e d b y a
s t r o n g b e l i e f i n A d a m S m i t h ' s in v i s i b le h a n d a n d t h e
n o t i o n t h a t t h e o n l y s o c i a l re s p o n s i b i l it y o f b u s i n e ss
i s t o m a k e a p r o f i t . U n l i k e F r i e d m a n ' s o r i g i n a l
c o n t e n t i o n , t h a t r e s p o n s i b i li t y is s e l d o m c o n d i t i o n e d
b y t h e c a v e a t o f a n e e d f o r l a w a n d e t h ic .
T o p m a n a g e m e n t r u l e s b y p o w e r a n d a u t h o r i t y
a n d e m p l o y e e s r e s p o n d b y a c q u i e s c i n g t o t h a t
a u t h o r i t y a n d p o w e r t h r o u g h a re w a r d s y s t e m w h i c h
s u p p o r t s a g o a l o n g t y p e o f b e h a v i o r . O b e d i e n c e
i s v a l u e d a n d r e w a r d e d . D i s o b e d i e n c e , o n a m o r a l
b a s i s , i s p u n i s h a b l e t y p i c a l l y b y e x p u l s i o n f r o m t h e
o r g a n i z a t i o n . T h e r e i s l i t t l e c o n c e r n f o r t h e e m -
p l o y e e s o t h e r t h a n f o r t h e i r v a l u e a s a n e c o n o m i c
u n i t o f p r o d u c t i o n .
T h e e t h i c a l c u l t u r e o f a s t ag e o n e o r g a n i z a t i o n
c a n b e s u m m e d u p i n t h e i d e a s t h a t t h e y 'l l n e v e r
-
7/26/2019 A Conceptual Model of Corporate Moral Development
4/12
276
R. E. Reidenbach and D. P. Robin
know, everybody does it, we won 't get caught,
and there's no way anyon e will ever find out. Rules
can be broken if there is an advantage in breaking
them. I f we are n ot caught, the n wh o is to say it 's
unethical?
At the basis of this culture is the philosophical
position th at business is not subject to the same rules
that individuals are and that owners are the most
imp orta nt stakeholders. In essence, belief in a value-
less business env iron men t produc es a valueless busi-
ness.
FR S A Portrait of the Amo ral Corporation ~
Film
Recovery Systems, previously located in Elk Grove
Village, Illinois, exhibited ma ny of the characteristics
of an amoral organization. The co mpany was organ-
ized to extract silver from old x-ray film which
utilized a chemical process involving cyanide. Be-
cause of the potentially acu te toxicity of the process,
the safety of the workers should have been a princi-
pal concern.
On February 10, 1983, Stefan Golab, a worker at
FRS became weak and nauseated. He was working
near a foaming vat of hydrogen cyanide. Fellow
employees helped him outside and urged him to
breathe deeply in the cold fresh air. At that point,
Mr. Golab became unconscious and did not respond
to efforts to revive him. He was rushed to a nearby
hospital where he was declared dead on arrival.
Cause of death - cyanide toxicity.
The investigation of this case reveals a company
that is typical of stage 1 organizations. Inspectors
f rom the Cook County Depar tme nt of Environ-
mental Control had previously cited the plant for 17
violations that we re labeled as gross violations and
were ordered to be rectified immediately. Typical of
these violations was a lack of a cyanide antidote,
legible warning signs, a respirator, and other safety
equipm ent that was judg ed to be mandatory for a
compa ny engaged in this type of work. The plant
itself, wh ich was described as a drab, one-story
structure contained 140 vats of foaming hydrogen
cyanide among which the workers performed the
extraction process. Testimony of many of the work -
ers indicated that nausea, nose bleeds, and rashes
were commonplace. That same testimony revealed
that employees were ordered to remove the skull
and cross bones signs from the containers of cyanide
and th at the owners o f FRS had flatly refused to buy
what was described as routine safety equipment. In
addition, many of the employees who worked
around the vats were illegal immigrants from
Mexico and Poland (as was the case of Mr. Golab)
and did not speak English well. This hiring practice
was adopted, according to the testimony of a book-
keeper, because illegal aliens would be less apt to
complain.
The response of FRS to the investigation involved
laying off workers and closing dow n the plant in
mid-1983. The investigation, and ultimate criminal
prosecution of three FRS executives centered around
the question Can two legitimate corporations form
a third (FRS), set it up to engage in a recHess and
dangerous activity, ignore legal requirem ents - and
get off scot-free? Prosecutors referred to the FRS
case as novel bu t qualified it by saying It's an old
story of poor, uneducated people being exploited by
people who were more educated, more privileged,
and m ore wealthy.
This is a company whose formal culture valued
productivity and profits. Costs, especially those that
wer e morally justifiable in caring for employees,
were not incurred. To do so would have reduced the
profitabili ty of the company. Mana gement operated
on the basis that we wo n't get caught and it's ok
to break rules as long as we profit from it. Thei r
regard for individuals is readily apparent in their
hir ing practices and their treatment of their employ-
ees. Internally, employees were to obey rules which
emphasized productivity and failure to do so meant
dismissal and even perhaps prosecution as an illegal
alien.
Stag e two the legalistic corporation
Stage 2 is the legalistic corporatio n so named because
of the preoccupation the corporation exhibits for
compliance with the
letter
of the law as opposed to
the
spirit
of the law. Organizations in this stage
exhibit a higher level of moral development than
organizations in stage 1 because stage 2 cultures
dictate obedience to laws, codes, and regulations, a
value missing in the cultures of stage 1 organizations.
Corporate values flow from the rules of the state,
and that is why management is principally con-
cerned with adhering to the legality of an action
rather th an the m orality of the action. If it 's legal,
-
7/26/2019 A Conceptual Model of Corporate Moral Development
5/12
C o r p o r a t e M o r a l D e v e l o p m e n t M o d e l
277
i t' s o k an d i f w e ' r e n o t s u re , h av e t h e l aw y e r s ch eck i t
o u t t y p i fi e s t h e o p e r a t i n g d i c t u m o f s t ag e 2 o r g an i z -
a t ions . M ore tha n jus t a des i r e to o bey socie ty ' s l aws
- t h ey t ak e an
internal
l aw l i k e ap p r o ach t h em s e l v es .
T h e co r p o r a t e l eg a l s t a ff o p e r a t e s a s a ch eck
ag a i n s t w r o n g d o i n g a s in t e r p r e t ed b y l eg a l st at ut e. I n
t h i s cu l tu r e , l aw eq u a t e s w i t h ju s t i c e a n d t h e r e i s n o
d i f f e r en ce b e t w een w h a t i s l eg a l an d w h a t i s r i g h t
an d ju s t . T h e e t h i c s o f an ac t i o n , i f co n s i d e r ed a t a ll ,
i s g en e r a l ly co n s i d e r ed o n a p o s t h o c b asi s.
C o d es o f C o n d u c t r e f l ec t t h i s l eg a l i s t i c t h i n k i n g .
A 1 9 89 a r t i c le o n co d es o f e t h ic s c l u s t e r ed co d es in t o
t h r ee ca t eg o r i e s ( R o b i n et al . , 1 9 8 9 ) . T h e l a r g est
c l u s t e r w as o n e ch a r ac t e r ized b y a D o n ' t d o an y -
t h i n g u n l a w f u l o r i m p r o p e r t h a t w i l l h a r m t h e
o r g an i za t i o n , s u g g es t i n g t h e p e r v as i v en es s o f t h i s
e t h o s . C re s s y an d M o o r e ( 19 8 3) f u r t h e r s u g g es t t h a t
m o s t co d es g i v e t h e ap p ea r an ce o f b e i n g l eg a l i s t i c
d o cu m en t s . I t i s p e r h ap s n o t s u r p r i s i n g t h a t t w o o f
t h e l a r g est t o b acco co m p an i e s , R . J . R ey n o l d s an d
Ph i l i p M o r ri s , h av e l eg a li s ti c co d es o f co n d u c t . T h es e
co d es a r e v e r y co n ce r n ed w i t h , an d l i m i t ed t o ,
u n l aw f u l o r i m p r o p e r b eh av i o r .
T h e p r i n c i p a l em p h as i s is s t il l o n p r o f i t ab i li t y b u t
t h e d i f f e r en ce b e t w een s t ag e 2 an d s t ag e 1 o r g an i za -
t i o n s is t h a t t h e l a t t e r is co n ce r n ed w i t h t h e l eg a l i ty
o f t h e p r o f i t s , n o t n eces s a r i l y t h e m o r a l i t y o f t h em .
O w n er s a r e s t i ll t h e p r i n c i p a l s t ak eh o l d e rs .
C o n t r a r y t o t h e w i n - a t - a l l - co s t a t t i t u d e u n d e r -
ly ing o rgan iza t ional behav io r in s tage 1 , s tage 2
o r g an i za t io n s ad h e r e t o a n o t i o n o f r ec i p ro c i t y . T h a t
i s , c o m p l i a n c e w i t h t h e l a w w i l l p r o d u c e g o o d
resu l t s . By ex tens ion then , s tage 2 o rgan iza t ions ar e
fo l lower s and no t soc ia l l eader s . Socie ty can expect ,
f o r t h e m o s t p a r t , o r g an i za t i o n s t h a t ad h e r e t o t h e
l aw b u t d o l i t t l e a s f a r a s o p e r a t i n g i n t h e i r o w n
en l i g h t en ed s e l f in t e r e s t i s co n ce r n ed .
Ford m otor o f 1973 - a por tra i t o f the legal i st ic corporat ion 2
W h i l e t h e n o t o r i o u s P i n t o ca s e h a s b een d i s s ec t ed
f r o m n u m er o u s v an t ag e p o i n t s , fa r le s s a t t en t i o n h as
b e e n f o c u s e d o n t h e d e f e n s e th a t F o r d M o t o r u s e d i n
i ts b eh a l f d u r i n g t h e E l k h a r t , I n d i an a t r ia l i n 1 9 8 0 . I n
i ts d e f en s e can b e s een m a n y o f t h e ch a r ac t e ri s ti c s o f
an o r g an i za t i o n i n s t ag e 2 o f i ts m o r a l d ev e l o p m e n t .
I t i s i m p o r t a n t t o p o i n t o u t t h a t t h e F o r d M o t o r
C o m p a n y o f 1 9 73 a n d n o t t h e F o rd M o t o r C o m p a n y
of 1988 , i s c i ted as an exam ple .
T h e t r i a l f o cu s ed o n Fo r d ' s cu l p ab i l i t y i n t h e
d e a t h o f t h r e e t e e n a g e rs w h o w e r e s t r u c k f r o m
b eh i n d i n t h e i r 1 9 7 3 P i n t o . T h e g as t an k o f t h e P i n t o
e r u p t ed , b u r s t i n t o f l am es , r e s u l t i n g i n t h e b u r n i n g
d ea t h o f t h e t h r ee t e en ag e r s. A c r i m i n a l h o m i c i d e
i n d i c t m e n t w a s b r o u g h t a g a i n st F o r d o n t h e g r o u n d s
t h a t t h e a u to c o m p a n y h a d e n g a g e d i n p l ai n , c o n -
s c i ou s an d u n j u s t i f iab l e d i sr eg a r d o f h a r m t h a t m i g h t
r esu l t ( f rom i t s ac t ions ) and the d i s r egard invo lves a
s u b s t an t i a l d ev i a t i o n f r o m accep t ab l e s t an d a r d s o f
co n d u c t .
In i t s defense , Ford ' s a t to rney , Jam es F . Nea l ,
a r g u ed t h a t t h e P i n t o me t a l l f ederal , s ta te , and local
g o v e r n m e n t s t a n d a r d s c o n c e r n in g a u t o f u e l s y s te m s . T h i s
co m p l i an ce , Fo r d ' s a t t o r n ey f u r t h e r a r g u ed , w as
co m p ar ab l e t o o t h e r s u b co m p ac t s p r o d u ced i n 1 9 7 3 .
H e c o n t i n u e d b y s a y i n g t h a t F o r d did every th ing to
recal l the Pin to as quick ly as poss ib le as soon as the
N H T S A N a t i o na l H i g h w a y T ra ffi c S a f et y A d m i n i st r a -
t ion) ordered i t to
( emph as is added) .
M a r k D o w i e , t h e n G e n e r a l M a n a g e r f o r
M o t h e r
J o n e s ,
c l a i m ed t h a t t h e P i n t o w as i n v o l v ed i n 5 0 0
b u r n d e a t h s a n d t h a t b u r n i n g P i n t o s h a d b e c o m e
s u c h a n e m b a r r a s s m e n t t o F o r d t h a t J . W a l t e r
T h o m p s o n , t h e a d a g e n c y t h a t h a n d l e d t h e P i n t o ,
d r o p p ed a l i n e f r o m i t s rad i o s p o t th a t s a id , P i n t o
le av es y o u w i t h t h a t w a r m f e el in g . M i c h a e l H o f f m a n
r a i s e s an i n t e r e s t i n g an d ce r t a i n l y r e l ev an t p o i n t i n
l i g h t o f th e m o u n t i n g e v i d e n c e o f th e P i n t o 's d e f e c -
t i v e f u e l s y s t em w h e n h e a sk s , E v en t h o u g h Fo r d
v io la ted n o f ede ra l saf e ty s tandards o r l aws , shou ld i t
h av e m a d e t h e P i n t o s af er i n te r m s o f r ea r - en d
co l li s io n s , e s p ec i a ll y r eg a r d i n g t h e p l ac em en t o f t h e
g as t an k ? I n Fo r d ' s la ck o f re s p o n s e t o t h i s q u es t i o n
an d t h e i r s t e ad f a s t r e f u s a l t o r eca l l t h e i r p r o d u c t
v o l u n t a r i l y can b e s een a s o n e o f t h e i n h i b i t i n g
e f fec t s o f s t ag e 2 b eh av i o r . B ecau s e o f i ts p r eo ccu p a -
t i o n w i t h co m p l i an ce t o l aw s an d r eg u l a t i o n s ,
cu l t u r a l v a lu es f o cu s i n g o n w h a t i s ri g h t r a t h e r t h a n
o n w h a t i s l eg a l a r e e i t h e r n o n ex i s t en t o r u n d e r -
d ev e l o p ed . A s a co n s eq u en ce , th e o r g an i za t i o n d o es
o n l y w h a t i t is req u i r ed t o d o r a t h e r t h an w h a t i t
s h o u l d d o . T h i s i s s y m p t o m a t i c o f t h e l eg a l i s t i c
o rgan iza t ion .
M o r eo v e r , Fo r d ' s co n ce r n f o r t h e s i ze o f t h e
b o t t o m l i n e r a t h e r t h a n t h e m o r a l it y o f t h e b o t t o m
l i n e i s ev i d en ced i n t h e i r co s t - b en e f i t ana ly s is c o n -
ta ined in a r epo r t en t i t l ed Fata li ti es Associa ted w i th
C r as h I n d u ced Fu e l L eak ag e an d F ir es . T h e $ 1 1 co s t
p e r c a r f o r t h e i m p r o v e m e n t d e s i g n e d t o p r e v e n t g a s
-
7/26/2019 A Conceptual Model of Corporate Moral Development
6/12
278 R. E. Reidenbach and D. P. Robin
tank ruptures was not cost effective. Ford estimated
that benefits would run to $49.5 million, while the
costs associated with the improvement would total
$137 million. Stage 2 organizations, like their coun-
terparts in stage 1, maintain a preeminent concern
for profitability, especially when it involves a trade-
off with doing what is right .
Stage three - the responsive corporation
Unlike their legalistic counterparts in stage 2,
responsive corporations begin to evolve cultures that
contain values other th an prod uctivi ty and a sense of
legality. Responsive organizations begin to strike a
balance between profits and doing right. However,
doing right is st il l more of an expediency rather than
an end unto itself. Social pressures are such that these
stage 3 corporations must respond to those pressures
or face censure or worse. The managem ents of these
corporations are more sensit ive to the demands of
society than the managements in the previous stages.
Managements begin to recognize that the organiza-
tion's role exceeds a purely economic one and that it
has certain social duties and obligations.
Codes of ethics take on greater importance and
their focus begins to reflect a greater societal
orientation. As an example, consider the codes of
ethics of the Bank of Boston, whic h are typical of
stage 3 organizations. Among the codes include
standards, values, and prescriptions concerning
integrity, confidentiality, quality, compliance, con-
flict of interest, objectivity, personal finances,
decency, and accountabil i ty. The standard concern-
ing social responsibility reads, Seek opportunities to
participate and, if possible, to play a leadership role
in addressing issues of concern to the communities
we serve. Th e ma jor part of the codes, however, is
still designed to identify behaviors that will bring
potential har m to the Ban k of Boston (e.g., compli-
ance, conflict of interest, personal finances, con-
fidentiality). In that sense they are interna lly directed.
Concern for ethical conduct is evidenced in the
accountabili ty statement which reads, Report ques-
tionable, unethical, or illegal activity to your m anage r
wit hou t delay (Bank of Boston). It is interesting to
point out that these codes were published at about
the same t ime that the Bank of Boston pleaded
guil ty to charges of m oney laundering.
Studies indicate that about 75% of all U. S. firms
have codes of conduct. Those same studies also
indicate that the most common i tems mentioned in
the codes are conflict of interest provisions, political
contributions, use of insider information, illegal
payments, bribery and kickbacks, improper relat ion-
ships, proprietary information, use of corporate
assets, gifts and favors, and unrecorded or falsely
recorde d funds or transactions, most of which, like
their stage 2 counterparts, have an internal focus
designed to pro tect the or ganization (Raelin, 1987, p.
177; Ro bin et al. 1989).
Concern for other stakeholders begins to manifest
itself as managements being to realize the import-
ance of employees and the co mm unity in which they
operate. Again, this nascent concern is not motive-
ated by a sense of doing right for right's sake, but
rather as a recognition of the organization's greater
social role.
Movement from stage 2 to stage 3 is often
initiated by outside events. Some potentially damag-
ing occurrence to the organization or other organiz-
ations may happen forcing the organization to react
by countering with some apparent ethical response.
The intention is to sway opinion of different state-
holders by doing good. A do wh at we gave to do,
not because it 's right but because it 's expedient
dominates the responsive organization's ethical
system.
P G reacts to the Re ly Tam pon problem. The reaction
that Proctor & Gamble made to the Rely Tampon
problem is indicative of an organization that has de -
veloped a stage 3 responsive level of morality. It is
decidedly different from the type of thinking and
actions one finds in the stage 2 legalistic type of
organization. P & G management made an enlight-
ened decision to act in the best interests, not only of
themselves, but also with respect to a number of
different publics.
In the summer of 1980, Proctor & Gamble was
first ma de aw are, by the C enters for Disease Control,
that there might be a possible linkage between the
incidence of toxic shock syndrome and the use of
tampons. No indication existed that there was any
linkage between toxic shock and the specific use
of P & G's Rely product. Dur ing this s am e period
of time, P & G began an investigation into the
alleged linkage. Initial informa tion ind icated no rela-
-
7/26/2019 A Conceptual Model of Corporate Moral Development
7/12
Corporate M oral D eve lopment Mode l 279
t ionsh ip be tw een tox ic shock syndrom e and tam pon
usage.
O n Sep tember 15, 1980 , the C enters fo r Disease
Co n t r o l i n f o r m ed P & G th a t i n t h e i r s t u d y o f 4 2
cases o f tox ic shock syndrome, 71% of the women
wer e Re ly user s. T h is p u t P & G m an ag em en t i n t h e
posi t ion o f dec id ing to defend the i r b rand aga inst
what P & G sc ien t i s t s consdered ra ther ske tchy
evidence. O n Septe mbe r 18, 1980, three days af ter
the s tudy resu l ts w ere announ ced , P & G m ade the i r
d ec i s io n to w i th d r aw th e p r o d u c t f r o m th e m ar k e t
an d to h a l t p r o d u c t io n o f Re ly T am p o n s . T h e
decision, according to Edward G. Harness, chairman
and c h ief execu t ive o f P & G, h inged on th e
d i l em m a , W e d id n ' t k n o w en o u g h ab o ut to x ic
shock to ac t, and ye t , we k new too m uch no t to ac t .
(Gatew ood and Carroll , 1981, p . 12)
P & G ha d b egun pu l l ing 400 ,000 cases o f the i r
p r o d u ct . Un d e r an ag r eem en t w i th t h e FDA, P & G
was abso lved of any v io la t ion of federa l law or
l iab il i ty fo r p rod uct defec t. H owever , the remarkab le
aspect of the response was yet to come. P & G
bought back a l l unused products , inc lud ing $10
mil l ion in f ree p romo t ional samples . Moreover , they
volun tar i ly p ledged research assistance to th e Ce n-
ters for Disease Co ntro l for the study of toxic shock
and agreed to f inance and in i t ia te an educat ional
campaign about the d isease . The educat ional cam-
paign was remarkab le in bo th the speed and the
scope of inform ation dissemination.
P & G m an ag em en t r eco g n ized th e l o n g e r t e r m
value o f ma king this type o f response . Al thoug h 20
years o f research and market ing expendi tu res were
t ied up in what would u l t imate ly be a s ign i f ican t
loss, their action demonstrates a greater balance
between prof i t s and e th ics than would be seen in
ear l ie r s tages o f corpora te mora l development .
Cynics migh t respond tha t P & G d id th is ou t o f
eco nom ic reasons. In part, that is probably true. Yet,
un l ike Ford w hose so le in te res ts we re economic , P &
G recognized tha t the i r long te rm econ om ic wel l -
be ing was inex tr icab ly in te r twined wi th the m ora l i ty
of the i r dec is ion . Th is i s the ha l lm ark of the resp on-
sive organization.
Stage three is a pivotal point in the moral
development o f most corpora t ions . I t i s a learn ing
stage where in managements tes t the e f f icacy of
socially responsive b ehavior and b egin to und erstan d
the econom ic va lue o f mo ra l behav ior . Th is a t t i tude ,
however, moves the organization beyond a str ict ly
legalistic focus and, in so me cases, has the effect o f
making the organization a social pioneer . Sti l l , i t
must be emphasized tha t cu l tu res o f s tage th ree
corpora tions a re d om inated by a reac tive menta l i ty ,
not a proactive mentali ty .
Stage o u r the emergentethical o rganizat ion
The emergen t e th ica l o rgan iza t ion i s one in which
management ac t ive ly seeks a g rea ter ba lance be-
tw een profits and ethics. Th ere is an ov ert effort to
man age the o rganizat ion 's cu l tu re to p rod uce the
desi red e th ica l c l imate . Th is change in the cu l tu re
involves a recognition of a social contract between
the business and society. Management approaches
prob lem so lv ing wi th an awareness o f the e th ica l
consequence of an action as well as i ts potential
profitability.
On e of the mo re v isib le manifes ta tions o f s tage 4
organizations is the proli ferat ion of ethics vehicles
th roug hout the o rgan iza tion. Codes o f conduc t
becom e more ex terna lly o r ien ted and bec ome l iv ing
docum ents ins tead of lo f ty idea ls to be read once and
then pu t away or h igh ly l imi ted ru les tha t a re
designed primarily to protec t the organization. In
addit ion, and typical of stage 4 corporations, is that
handbooks, po l icy s ta tements , comm it tees , om buds -
men , and e th ics p rogra m d i rec to rs beg in to re in force
the existence o f codes. This signals stronger m ana ge-
me nt co mm itm ent to e th ica l behav ior .
For example, at Boeing, an emergent ethical
corpora tion , g rea ter CEO involvem ent in e th ics , and
l ine management invo lvement in e th ics t ra in ing
programs are two aspec ts o f the i r cu l tu ra l concern
for mora l i ty . In add i t ion , the i r e th ics commit tee
repor ts to the board an d m anag em ent has ins ta lled a
to l l - f ree number fo r employees to repor t e th ica l
violations.
General Mills has developed guidelines for deal-
ing with vendors, competitors, and customers.
Recru i t ing focuses on the h i r ing o f ind iv iduals tha t
share the same cultural values and an emphasis on
open dec is ion making ha l lmark the i r concern fo r
ethic al behavior.
Whi le responsive corpora t ions beg in to develop
ethical mechanisms to increase the probabil i ty of
-
7/26/2019 A Conceptual Model of Corporate Moral Development
8/12
280 R. E. Reidenbach and D. P. Robin
ethical behavior, these organizations are not yet fully
comfor table with their implementat ion. Organiza-
tional actions are still characterized by ad hoc
attempts to develo p and instill organizational values.
These at tempts of ten lack direct ion in both the
select ion of the values and their implementat ion.
Top management recognizes the impor tance and
value of this type of behavior but lacks the experi-
ence and expertise to make it work effectively.
Dynamics has recently (1988) been indicted on
further charges of defense contractor fraud. The
process has been revised at General Dynamics to
include a squeal clause whic h is designed to both
reward and protect employees who repor t on co-
workers who have broken c ompa ny s tandards .
Consider the following excerpts from Sara Lee's
codes which recognize the im por tance of balancing
profits and ethics:
Examples of emergent ethical organizations A growing
number of organizations can be classified as the
emergent ethical. Boeing and General Mills were
cited earlier for their ethical efforts . Boeing's pro-
grams have been in place since 1964 but the mere
existence of ethical programs does not insure that
the emergent ethical organization will behave ethi-
cally. In 1984, a unit o f Boe ing was cit ed for illegally
us ing ins ide information to secure a government
contra ct, a case of regression.
Often cited for unethical behavior, General
Dynamics has an extensive ethics program. A publi-
cation by the giant defense contractor asks 10
questions about the program. These questions in-
clude:
1. W ho is my Ethics Progr am Director?
2. Ho w can the Ethics Directo r help me?
3. Ho w can I contact my Ethics Director?
4. Do I need my supervisor's permissio n to talk
with the Ethics Director?
5. Ho w does the ethics hotlin e work?
6. How do I kno w what General Dynamics ' eth ics
standard s really are?
7. Wh at is my responsibility if I beco me aware of
some one wh o is violating the standards?
8. Wh at hap pens ifI violate the standards?
9. Ho w does the ethics prog ram apply to me?
I 0. Wh at should I do if I am dire cted to do some -
thing that I believe is a violation of company
standards?
The publication goes on to answer each question.
For example, in response to the question concerning
how an employee contacts the Ethics Director,
General Dynamics has created a hotline complete
with answering machine. In addition, the Ethics
Director can be reached by mail, EMOS, o r by direct
contact.
Does the system work? Not perfectly. General
Business has a role beyond the generation of profits. By
investing their good will, time, and money, companies
can - and should - serve as catalysts in helping deal with
significant social issues.
Perhaps one of the best examples of the emergent
ethical corporatio n is that of Joh nson & Johnson.
Johnson & Johnson is an advanced stage 4 corpora-
tion as suggested both by their CREDO and their
actions in the wake of the Tylenol tamperings. First
consider the CREDO.
The CREDO represents a strong balance between
ethical concern and profitability. However, what
really signals John son & John son as an advanced
stage 4 corporation is foun d in the response of one o f
their senior executives who was asked about the
decision concerning the massive recall of Tylenol
products . We never real ly thought we had muc h of
a choice in the matter of the recall. Our Code of
Conduct CR ED O) was such a way of life in the irm that
our employees, including me, would have been scandalized
had we taken another course (emphasis added). We
never seriously considered avoiding the costly re-
call. (Will iam and Mu rph y, 1988).
What can be seen in all of these examples is
a management that is wres t l ing with a growing
realization that the corporation must develop a
mechanism to balance the organization's concern for
profits and ethics. Some attempts are clumsy, some
work, some don' t . What is important is that there is
among stage 4 organizations a shift in the culture,
one th at gives increasing emphasis to the morality of
the bottom line.
Stage ive - the ethical organization
The final s tage of organizational moral development
is the ethical organization. We kn ow o f no examples
of organizations which have reached this level of
development .
-
7/26/2019 A Conceptual Model of Corporate Moral Development
9/12
orporate M oral Development M odel 281
Exhibit 1
John son Johnson's Corporate Credo
O U R C R E D O
W e b elieve our first responsibility is to the d octors,
nurses and patients,
to m others and all others wh o use our products and services.
In meeting their needs everything we d o
m ust be o f high quality.
W e m ust constantly strive to reduce ou r costs
in ord er to ma intain reasonable prices.
Customers' orders m ust be serviced prom ptly and accurately.
Ou r suppliers and distributors mu st have an opportunity
to m ake a fair profit.
W e are responsible to our employees,
t he m en and wom en who work wi t h u s
throughout the world .
Everyone m ust be considered as an individual.
W e mu st respect their dignity and recognize their merit.
Th ey m ust have a sense of securi ty in their jobs.
Compensation mu st be fair and adequate
and w orking conditions clean, orderly and safe.
Employees mu st feel free to m ake suggestions
and complaints.
The re m ust be equal oppo rtunity for employment,
development and advancem ent for those qualified.
W e must provide com petent management ,
and the ir actions must be just an d ethical.
W e are responsible to the communities in wh ich we l ive
and work a nd to the world com mu ni ty as wel l.
W e mu st be good cit izens - support good works
and c harities and bear o ur fair share of taxes.
W e m ust encourage civic improvements
and be tter health and education.
W e m ust maintain in good order
the property w e are privileged to use,
protecting the en vironm ent and natural resources.
S t a g e f i v e b e h a v i o r i s c h a r a c t e r i z e d b y a n o r g a n i -
z a t i o n - w i d e a c c e p t a n c e o f a c o m m o n s e t o f e th i c a l
v a l u e s t h a t p e r m e a t e s t h e o r g a n i z a t i o n ' s c u l t u r e .
T h e s e c o r e v a lu e s g u i d e t h e e v e r y d a y b e h a v i o r o f a n
i n d i v i d u a l ' s a c ti o n s . D e c i s i o n s a r e m a d e b a s e d o n t h e
i n h e r e n t j u s t n e s s a n d f a i rn e s s o f th e d e c i s i o n a s w e l l
a s t h e p r o f i t a b i l i t y o f t h e d e c i s i o n . I n t h i s s e n s e t h e r e
i s a b a l a n c e b e t w e e n c o n c e r n s f o r p r o f i t s a n d e t h i c s .
E m p l o y e e s a r e r e w a r d e d f o r w a l k i n g a w a y f r o m
a c t io n s i n w h i c h t h e e t h ic a l p o s i ti o n o f t h e o r g a n i z a -
t i on w o u l d b e c o m p r o m i s e d .
A t t h e h e a r t o f th i s o r g a n i z a t i o n i s a p l a n n i n g
s y s t e m m u c h l i k e t h e o n e d e s c r ib e d b y R o b i n a n d
R e i d e n b a c h ( 1 98 7 , 1 9 89 ). T h e c o n c e p t o f a p a r a ll e l
p l a n n i n g s y s t e m w h e r e i n i d e a s a n d c o n c e p t s f r o m
t h e n o r m a t i v e m o r a l p h i l o s o p h i e s a r e u s e d i n t h e
a n a l y s is o f p o t e n t i a l o r g a n i z a t i o n a l a c t iv i ti e s .
A n e x a m p l e o f p a r a ll e l p l a n n i n g i s s e en i n t h e
d e l i b e r a t i o n m a d e S i r A d r i a n C a d b u r y ' s g r a n d f a t h e r
( C a d b u r y , 1 9 8 7 ) . S i r A d r i a n ' s g r a n d f a t h e r , t h e n C E O
o f C a d b u r y ' s w a s c o n f r o n t e d w i t h a p r o f i ta b l e p r o -
p o s i t i o n t h a t h e f o u n d m o r a l l y r e p u g n a n t . I t c o n -
c e r n e d a c o n t r a c t t o f u r n i s h E n g l i s h s o l d i e r s i n t h e
B o e r W a r w i t h a C h r i s t m a s t i n o f c h o c ol a te s . H e w a s
o p p o s e d t o t h e w a r o n m o r a l g r o u n d s b u t w a s
c o g n i z a n t o f t h e e c o n o m i c r e p e r c u ss i o n s t o h i s
e m p l o y e e s t h a t r e f u s a l o f t h e c o n t r a c t w o u l d b r i n g a s
w e l l a s t h e m o r a l e i m p a c t o n t h e s o l d i e r s . H i s
d e c i s io n i n v o l v e d p r o d u c i n g t h e c h o c o l a t e a t c o s t so
t h a t h i s e m p l o y e e s w e r e c o m p e n s a t e d , t h e s ol d i er s
r e c e i v e d t h e c h o c o l a t e , b u t S i r A d r i a n p e r s o n a l l y d i d
n o t p r o f i t f r o m a s i t u a ti o n h e f o u n d u n e t h i c a l .
I n i m p l e m e n t i n g t h e p a r a ll e l p l a n n i n g s y s te m , th e
o r g a n i z a t i o n m a y b e v i e w e d a s a f a m i l y w i t h c e r t a i n
e t h ic a l f a m i l y v a lu e s t h a t g u i d e d e c i s i o n m a k i n g .
T h e s e c o r e v a l u e s c a n b e t r a n s l a t e d i n t o e t h i c a l
a c t i o n s t a t e m e n t s s u c h a s:
O ur final responsibility is to our stockho lders.
Business m ust m ake a sound profi t .
W e mu st experiment wi th new ideas.
Research mu st be carried on, innovative programs developed
and mistakes paid for.
New equipm ent m ust be purchased, new facili ties provided
and ne w products launched.
Reserves m ust be created to provide for adverse times.
W he n we operate according to these principles,
the stockho lders should realize a fair return.
J o h n s o n J o h n s o n
Treat customers with respect , concern, and honesty, the
way you yoursel f would w ant to be t reated or the w ay
you w ould w ant y our fam i ly t reated.
Make and market products you would feel comfortable
and safe having y our o wn fami ly use.
Treat the envi ronment as though i t were your own
prop erty (Robin Reidenb ach, 1987, p. 55).
W h a t m a k e s a n e t h i c a l o r g a n i z a t i o n w o r k i s t h e
s u p p o r t o f a c u l tu r e t h a t h a s a s t r o n g s e n se o f m o r a l
d u t y a n d o b l i g a t i o n i n h e r e n t w i t h i n i t . T h i s c u l t u r e
-
7/26/2019 A Conceptual Model of Corporate Moral Development
10/12
282
R E Reidenbach and D P Robin
TABLE I
A summa ry of the moral developm ent of corporations
Stage in Moral
Development
Management Atti tude
and Approach
Ethical Aspects of
Corporate Culture
Corporate Ethics
Artifacts
Defining Corporate
Behavior
Stage I
The Am oral
Organization
Stage II
The Legalistic
Organization
Stage III
The Responsive
Organization
Stage IV
The Emerging
Ethical
Organization
Get away with al l you
can; It's ethical as long as
we're not caught; Ethical
violations, when caught,
are a cost of doing
business
Play within the legal
rules; Fight changes that
effect your economic
outcome; Use damage
control through public
relations whe n social
problem s occur; A
reactive concern for
damage to organizations
from social problems
Management understands
the value of not acting
solely on a legal basis,
even though they believe
they could win; Manage-
me nt still has a reactive
mentality; A growing
balance between profits
and ethics, although basic
premise, still ma y be a
cynica l ethics pays ;
Managem ent begins to
test and learn from m ore
responsive actions
First stage to ex hibit an
active concern for ethical
outcomes; We want to
do the 'right' thing ; Top
management values
becom e organizational
values; Ethical pe rceptio n
has focus but lacks or-
ganization and long term
planning; Ethics manage-
men t is characterized by
successes and failures
Outlaw culture; Live
hard and fast; Damn the
risks; Get what you c an
and get out
If it's legal, it's OK;
Work the gray areas;
Protect loopholes and
don't give ground
without a fight;
Economic performance
dominates evaluations
and rewards
Ther e is a growing
concern for other
corporate stakeholders
other than owners;
Culture begins to
embrace a more
responsible citizen
attitude
Ethical values become
part o f culture; These
core values provide
guidance in some
situations but questions
exist in others; A
culture that is less
reactive and mo re
proactive to social
problems when they
o u r
No meaningful code of
ethics or oth er
documentation; No set
of values other than
greed
The Code of Ethics, if i t
exists, is an intern al
document; Don't do
anything to harm the
organization ; Be a
good corporate ci t izen
odes
are more
externally oriented and
reflect a concern for
other publics; Other
ethics vehicles are
undeveloped
Codes of Ethics bec ome
action documents; Code
items refle ct tile core
values of the organiza-
tion; Handbooks, policy
statements, committees,
ombudsmen are
sometimes used
Film Recovery Systems;
Numerous Penny
Stock Companies
Ford Pinto
Firestone 500
Nestle Infant Formula
R.J. Reynolds
Philip Morris
P & G (Rely Tam pons)
Abbott Labs
Borden
Boeing
General Mills
Johnson & Johnson
Tylenol)
General Dynamics
Caterpillar
Lev i Strauss
-
7/26/2019 A Conceptual Model of Corporate Moral Development
11/12
orporate M oral Developm entModel 283
Tabl e I C ont i nue d)
Stage in M ora l
D e v e l o p m e n t
M a n a g e m e n t A t t i tu d e
a n d Ap p r o a c h
Ethical Aspects of
Co r p o r a te Cu l tu r e
Corpo ra te Eth ics
Artifacts
Def in ing Corpora te
Behavior
Stage V
The Eth ica l
Organization
A balanced concern for
ethical and econo mic
outcomes; Ethical analysis
is a fu lly integrated
par tner in deve loping
both the mission and
s tra teg ic p lan ; SW O T
analysis is used to
ant ic ipate
p r o b le ms a n d
analyze alternative
o u tc o me s
A total ethical profile
with carefully selected
core va lues which
reflect that p rofile
directs the culture;
Corpo ra te cu l ture is
p lanned and m anaged
to b e ethical; Hir ing
training f ir ing and
rewarding all ref lect the
ethical profile
Do c u m e n ts f o c u s o n
the ethical profile and
core values; All phases
of organizational
documents re f lec t them
??????
h a s b e e n designed a n d managed b y t o p m a n a g e m e n t
t o p r o d u c e t h e w o r k c l i m a t e n e ce s sa r y t o s u p p o r t a n
a s s u r a n c e o f t h e b a l a n c e b e t w e e n p r o f i t a b i l i t y a n d
e t h i c s . R e w a r d s y s t e m s a r e d e v e l o p e d w h i c h s u p p o r t
i n d i v i d u a l s w h o m a k e th e r i g h t d e c i s io n , e v e n a t
the expense of prof i t ab i l i ty . Sanc t ion sys tems ex i s t t o
p e n a l iz e a n d c o r r e c t th e b e h a v i o r o f th o s e m a k i n g a
w r o n g d e c i s i o n . E t h i c s t r a i n i n g is a n o n g o i n g c o n -
c e r n o f t h e s t a g e f i v e o r g a n i z a t i o n , w h i c h i n t e g r a t e s
t e c h n i c al t r a in i n g w i t h a f o cu s o n t h e m o r a l i t y o f th e
j o b . H i r i n g p r a c t ic e s e m p h a s i z e n o t o n l y t h e a p t i t u d e
a n d s k il l o f t h e p o t e n t i a l e m p l o y e e b u t a ls o h o w t h a t
e m p l o y e e i s l i k e l y t o b e h a v e i n m o m e n t s o f s t r e s s .
A n o r g a n i z a t i o n a l m e n t o r p r o g r a m e x i s t s w i t h t h e
p u r p o s e o f p r o v i d in g w o r k a n d m o r a l g u i d a n c e f o r
t h e n e w e m p l o y e e . T h i s p a r al le l s y st e m w h e r e i n
p r o f i t s a n d e t h i c s g o h a n d - i n - h a n d i s t h e h a l l m a r k
o f t h e e t h i c a l o r g a n i z a t io n .
T h e p r i n c i p a l d i f f e r e n c e b e t w e e n s t a g e f o u r a n d
s t a g e f i v e o r g a n i z a t i o n s i s s e e n i n t h e c o m m i t m e n t
t h a t t h e o r g a n i z a t i o n m a k e s t o e t h i c a l b e h a v i o r .
S t a g e f o u r o r g a n i z a t i o n s h a v e n o t f u l l y p l a n n e d f o r
a n d i n t e g r a t e d e t h i c a l v a l u e s t h r o u g h o u t t h e i r c u l -
t u r e . I n s t e a d , t h e y r e l y o n m e c h a n i s m s t o g u i d e
e t h i c a l b e h a v i o r . T h e r e i s s ti ll a n i m b a l a n c e b e t w e e n
t h e g o a l s o f p r o f i t a b i l it y a n d e t h i c s so t h a t i n t i m e s
o f s t r e s s , i t i s n o t u n c o m m o n t o s e e t h e p u r s u i t o f
p r o f i t a b i l i t y p r o d u c e u n e t h i c a l b e h a v i o r . I t i s h e r e
w h e r e a n o r g a n i z a t i o n i n s t a g e f o u r , i n s p i t e o f t h e
e t h i c s v e h i c l e s e x i s t e n t i n a n o r g a n i z a t i o n , c a n
r e g r e s s t o a n e a r l i e r s t a g e o f m o r a l d e v e l o p m e n t .
T h i s i s u n l i k e l y t o o c c u r i n t h e s t a g e f i v e o r g a n i z a -
t i o n . T h e e t h i c a l e m p h a s i s i n t h e c u l t u r e o f t h e
o r g a n i z a t i o n i s s o s t r o n g t h a t t h e i n d i v i d u a l i s n o t
p l a c ed i n a d i l e m m a i n w h i c h h e o r s h e m u s t c h o o s e
t h e c o r r e c t a c t i o n . T h e c o r r e c t a c t i o n i s a l w a y s t h e
j u s t a n d f a i r a c t i o n . O f c o u r s e , o r g a n i z a t i o n s w i l l
m a k e m i s t a k e s i n t h e i r p l a n n i n g . H o w e v e r , t h e s e
m i s t a k e s , o n c e i d e n t i f i e d , w i l l b e c o r r e c t e d s o t h a t
t h e f i n a l o u t c o m e c o r r e s p o n d s t o a n e t h i c a l o u t -
c o m e .
o m e c o n c l u d i n g c o m m e n t s
O r g a n i z a t i o n s a r e s t r u g g l i n g w i t h t h e i r r e c o r d s o f
e t h i c a l b e h a v i o r . T h i s s t r u g g l i n g i s i n d i c a t i v e o f
m o r a l g r o w t h w h e r e i n o r g a n i z a t i o n s m o v e f r o m
o n e l e v e l o f m o r a l d e v e l o p m e n t t o a n o t h e r .
T h i s c o n c e p t u a l m o d e l o f o r g a n i z a t i o n a l m o r a l
d e v e l o p m e n t i d e n t i f ie s f i v e s ta g es o f g r o w t h . T a b l e 1
s u m m a r i z e s t h e s a l ie n t fe a t u r e s o f t h is d e v e l o p m e n t
p r o c e s s . N o t a l l o r g a n i z a t i o n s w i l l e v o l v e t o t h e
h i g h e s t s t a g e . A n d , n o t a l l o r g a n i z a t i o n s b e g i n a t
s ta g e 1 . I t is o u r o p i n i o n t h a t m o s t o r g a n i z a t io n s a r e
cur ren t ly in the l ega l i s t i c and respons ive s t ages of
m o r a l d e v e l o p m e n t . M o r e a n d m o r e o r g a n i z a t i o n s ,
h o w e v e r , a r e b e g i n n i n g t o m a n i f e s t t h e c h a r a c t e r i s -
t ic s o f s ta g e f o u r o r g a n i z a ti o n s . C o r p o r a t e e m p h a s i s
o n p r o f i t a b i li t y s t il l fa r o u t w e i g h s c o n c e r n f o r e t h ic s .
M o r e o v e r , m a n y m a n a g e m e n t s h a v e n o t y e t l e a r n e d
t h a t c o r p o r a t e c u l t u r e s c a n b e m a n a g e d t o p r o d u c e
-
7/26/2019 A Conceptual Model of Corporate Moral Development
12/12
284 R. E. Reidenbach and D. P. Robin
the desired ethical behaviors . What we are seeing are
cu l tu res tha t a re unmanaged , and when unmanaged ,
evolve in their own direct ions , usual ly in the direc-
t ion pointed out by the reward system. Thus,
cul tures devoid of ethical concerns or in whic h
ethical values are absent , wi l l normal ly grow in the
direct ion of product iv i ty and profi tabi l i ty , two
values typical ly embraced by management .
While the conceptual model presented in this
art icle requires confi rmat ion and possible respecif-
icat ion, i t represents a s tart in the s tudy of the
dynamics o f co rpora te mora l development . Fur ther
s tudy is sure to provid e a clearer view o f the process
by whic h organizat ions change and develop their
own moral characters .
o t e s
Abstracted from McClory, R.: 1986, 'Murde r o n the Shop
Floor',
Across heBoard
(June), pp. 2 9-32 .
2 Abstracted from Hoffman , W. M.: 1984, 'The Ford Pinto',
in W. M. Hoffman and J. Mills Moore (eds.),
Business Ethics
(McGraw-Hill Boo k Co., Ne w York).
eferences
Cadbu ry, Sir Adrian: 1987 , 'Ethical Managers Make The ir
Own Rules', Harvard Business Review (September-
October), pp. 69-73.
Cressey, D. R. and C. A. Moo re: 1983, 'Managerial Values
and C orporate Codes of Ethics', California Management
Review 25(4) (Summer), pp. 53--77.
Deal, T. E. and A. A. Kennedy: 1982, Corporate Cultures: The
Rites and Rituals of Corporate Li fe ,
(Addison-Wesley,
Reading,/VIA).
Ferrell, O. C. and L. Gresham: 1985, 'A Continge ncy Fr ame -
work for Understanding Ethical Decision-Making in
Marketing ,Journal ofMarketing (Summer) pp. 87-96.
Gatewood, E. and A. B. Carroll: 1981, Fhe Anatom y o f
Corp orate Social Response: The Rely, Firestone 500, and
Pinto Cases', Business Horizons 24 (September-October),
pp. 9-16.
General Dynamics Ethics Programs, published by General
Dynamics.
Hoffma n, W. M.: 1984, 'The Ford Pinto', in
Business Ethics,
W. M. Hoffman and j. Mills Moore (McGraw-Hill Book,
Co., New York), p. 419.
Hoffman, W . M.: 1986, 'Developing the Ethical Corpo ra-
don', Business nsights (Fall), pp. 10-- 15.
Kohlberg, L.: 1964, 'Developm ent o f Moral Character and
Moral Ideology', in L W. Hoffman, ed., Review of Child
Development Research (Russell Sage Foundation, Ne w
York).
, 19 76, 'Mora l Stag es and Moralization: The Cognitive
Develop ment Approach', in T. Lickona, ed .,
Moral
Development and Behavior: Theory Research and Social Issues
(Holt Rinehart & Winston, Ne w York).
Raelin, J. A.: 1 987 , 'The Professional as the Executive's
Ethical Aide-de-Camp',
The Academy of Management
Executive 1, No. 3, pp. 171-18 2.
Robin , D. P. and R. E. Reidenbach: 1987, 'Social Respon si-
bility, Ethics, and Marketing Strategy: Closing the Gap
Between Concept and Application',
Journal o f Marketing
January).
-- , 1989, Business Ethics: Where Pr~ ts Meet Value Systems.
Engle wood Cliffs, NJ: Prentice-Hall.
Robin, D. P., M. Gialloura ds, F. R. David and T. E. Moritz:
1989, 'A Different Look at Codes of Ethics',
Business
Horizons
(January-February).
Sathe, V.: 1985, Culture and Related Corporate Realities.
Hom ewoo d, IL: Richard D. Irwin.
Schein, E.: 1983, 'The Role of the Founder in Creating
Organizational Culture', Organizational Dynamics 12, No.
1, pp. 13 -28.
Schwartz, H. and S. M. Davis: 1981, 'Matc hing Corpo rate
Culture and Business Strategy',
Organizational Dynamics
(Summer), pp. 30--48.
Trevino, L. K.: 1986, 'Ethical Decision Making in Organiza-
tions: A Person-Situation Interactionist Model' , Academy
ofManagementReview II,
No. 3, pp. 601-617 .
Victor, B. and j. B. Cullen: 1988, 'The Organizational Bases
of Ethical W ork Climates', Administrative Science Quarterly
(March), pp. 101-125.
Williams, O. F. and P. E. Murp hy: 1988 , 'The Ethics o f
Virtue: An Answer to a Misplaced Debate', presented at
the Tenth Annual Macromarketing Seminar in San
Diego, California.
Weiner, Yoash: 1988, 'Forms of Value Systems: A Focus on
Organizational Effectiveness and Cultural Change and
Maintenance', Academy of Management Review 13, No. 4,
pp. 534-545.
- - , 1988, 'Mixed Feelings Abou t Drexel's Decision', Wall
Street ournal
(Dec emb er 23), p. B1.
Codes ofEthics, Bank ofBoston, 1985.
Center or Business Development and Research,
University of Southern Missippi,
Hattiesberg, MS 39406-5094,
U.S.A.
Department ofMarketing,
University of Southern Mississippi,
Hattiesberg, MS 39406-5094,
U.S.A.