THE IMPACT OF MANAGERS’ MORAL

DEVELOPMENT LEVEL ON ORGANIZATION’S PERFORMANCE AND ITS

RESPONSIVENESS TO SOCIETY

Jeeda Rabah

Business Thesis

Under the guidance of DR. RABIH ZARIF

JINAN UNIVERSITYTRIPOLI - LEBANON

November, 2012

Master's Thesis Presentation

Outline

• Research Questions

• Research Objectives

• Methodology

– Literature Review and theoretical framework

– Research Design (field Study)

• Results and Interpretations

• Conclusions

• The research strived to find answers to the following inquiries:– Whether the stage of moral development of managers

has a direct impact on the overall organizational performance and on the responsiveness of this organization to society and its welfare.

– whether the individuals’ moral development is somehow correlated to the management culture of a given organization.

– The weight that should be given to the stage of moral development of individuals in employment.

Research Questions

• The research main objectives were:– to find out a correlation between Individuals’ stage of

moral development and their behavior at work place and to test that against organization’s structural variables, work environment and organization’s culture

– to test moral development stages characteristics against responsiveness and responsibility toward society,

– to induce weighing ethical subjects as critical in organizations, and

– to help evaluate the importance of the need of assessing individuals’ stage of development as a criteria in employment.

Research Objectives

Methodology

• Theoretical Framework

– The research employed moral development* stages theory of Kohlberg which argued that moral reasoning, which is the basis of ethical behavior, belongs to one of six distinct stages of morality development; each stage is more adequate in responding to moral dilemmas than its predecessors.

– Universality of Values were stressed, and the Philosophy of Emanuel Kant regarding ethics as well as his deontological approach* was assumed.

Definitions: Moral Development: the level of independency of individual’s moral

judgment from outside influences and the degree of this moral judgment’s internalization.

Moral Reasoning: It is the process in which people try to do the right thing when faced with dilemmas based on weighing the morality of their action and weighing that against its consequences.

Kant’s deontological approach states that: a morality of an action is judged based on the action’s adherence to principles where judgments of right and wrong are determined by the motives of the person who acts, not based on the consequences of the person’s actions.

American PsychologistLawrence Kohlberg

October, 1927 – January, 1987

The literature Review encompassed the following related topics as well:

– Organizational structural variables and human aspect at work place as determinants of a sought organizational ethical culture; so as to explain the commitment that is required by managers today to face challenges in being socially responsible and ethical in an organization that is focused both on means as well as outcomes.

– Organization’s accountability toward society and environment, as well as social responsibility concept and international social and quality standards.

– The effect of community values on local management and leadership styles.

– Contrasting ethical systems and moral philosophies with certain individual characteristics and implications with regard to certain community cultures, as well as identifying the research’s community population in that same regard.

•Research Design

– The research design was devised so as to find out from a cross-section of executives of business registered establishments, their moral development stages in comparison to their organizational performance and their responsiveness to society both on the short and long run frame.

– It has also compared the sample’s consideration to ethical subjects with regard to the effect of situational factors on individuals compared to their stage of moral development.

Master's Thesis Presentation

Research Hypothesis’ Variables and Conceptual Model

Independent Variables:– Executives' Moral Development

stages

Dependent Variables:– organizational performance and

responsibility toward society

Intervening Variables:– time frame of short run and long run

effect of moral stage on performance and responsibility toward society

Extraneous variables:– positive and/or negative situational

factors which are those that may increase or decrease the magnitude of the relationship between independent and dependent variables.

According to the research hypothesis, the model conceptualized that:• majority of adults are at stage four, where they are limited to

obeying rules and behave ethically accordingly. Stages of moral development cells were highlighted with regard to the probable size of population individuals in each stage.

• Moral Development stages affect the organization’s responsiveness and thus responsibility toward society in regard that the greater the moral development stage, the greater is the altitude of responsibility toward environmental issues and society’s well fair.

• Moral Development stages affect the organizational performance slightly on the short run and vastly on the long run.

• magnitude of the situational factors effect on individuals’ decreases as the stage of moral development increases. (Research’s theory)

Study Design• Research’s study design was cross-sectional in nature, • designed to find out from a cross-section of executives of business

registered establishments, their moral development stages in comparison to their organizational performance and its responsiveness to society

Research Population and Sample• Random sample (SRS)was chosen by referring to information published

by Central Administration of Statistics (CAS) – Lebanon, • Cluster Sampling was utilized after that, where each cluster

represented establishments divided according to their common activity.

• 860 clustered establishments was the preliminary sample size.• Referring to the Ministry of Commerce and the Directory of Exports

and Industrial Firms in Lebanon, also referring to a directory of registered companies in Lebanon, the list of participants’ names, districts, and e-mails were identified and 5000 establishments were contacted.

Research Tools and Measurement Procedures

• A constructed e-mailed questionnaire* instrument with closed ended questions was employed, aiming to collect primary data so as to put to test:

– the stage of moral development for each manager or subordinate,

– to display effect of structural variables on the individual behaviors of these managers,

– to observe whether their attitudes and/or entrenched organizational culture have a subsequent effect on the individual and organization's performance and its responsibility toward society,

– to validate weather their moral development stage is immune enough to minimize effect of situational factors.

*The questionnaire was partly derived from and based on the Defining Issue Test DIT-2 (James Rest).

Research Tools and Measurement Procedures Validity• Instrument questions have utilized an attitudinal scale and succeeded in

obtaining an overall indicator that was able to measure and test:– managers’ stage of moral development;– the relationship between managers’ stage of moral development and their

organization’s performance;– testing organizational variables in contrast to the extent of organization’s

responsiveness and responsibility toward society.

Instrument tool details and scaling• Part I: Includes demographic conditions’ information as part of the external or the

general environment. (age, gender, language, and level of education)* Answers were quantitatively categorized for this part and are integrated to SPSS for statistical

analysis.

• Part II: Includes Information obtained regarding professional career and organization.* Answers were assigned numerical values (higher positive statement will bear the highest number

of the possibilities of a question and so on.

• Part III (DIT2 cases): Responses obtained here were analyzed so as to reveal respondents’ schemas of moral reasoning according to Kohlberg’s theory of moral development.

* Responses and ratings of cases’ issues were scaled following the DIT2 test where items were considered as distillations of themes found in Kohlberg interview data.

83 (n) responses could be obtained reflecting low level of participation from sample population, however, answers could obtain an average correlation that was found acceptable and tolerable.

Schemas and Correlation of Variables

Master's Thesis Presentation

Results and Interpretations

OP

Index

RtS

Index

SF

Index

ES

Index M Index

Mean 71.88755 75.98967 71.28514 79.669 65.38791

N 83 83 83 83 83

Std.

Deviation

13.13050 14.82343 12.29527 16.5314 6.76007

Correlation of Research’s main Variables

M Index OP Index RtS Index SF Index ES Index

M Index Pearson

Correlation

1 .273* .378** .397**

Sig. (2-tailed) .013 .000 .000

OP

Index

Pearson

Correlation

.273* 1 .333** .268*

Sig. (2-tailed) .013 .002 .014

RtS

Index

Pearson

Correlation

.378** .333** 1 .419**

Sig. (2-tailed) .000 .002 .000

SF Index Pearson

Correlation

.397** .268* .419** 1

Sig. (2-tailed) .000 .014 .000

ES Index Pearson

Correlation

.203 .252* .516** .309**

Sig. (2-tailed) .065 .022 .000 .004

Numbers show:

• general positive correlation between Morality (M) index and organizational performance (OP), responsiveness to society (RtS), positive situational factors (SF) and considering ethical subjects (ES).

•Organizational performance significance level is 0.013 0.05, therefore (OP) correlation with (M) index is 0.273 and it is significant at 0.05 level but not on 0.01 level.

•A positive correlation (.378) between morality and responsiveness to society is approved with a significance of 0.000 on 0.01 level.

•A positive correlation of (.397) is computed between morality index and positive situational factors with significance on the 0.01 level.

•A positive correlation with no significance can be found between weight given to considering ethical subjects in business and morality index.

•A positive correlation between considering ethical subjects (ES) and (OP), (RtS), and (SF) with a significance on the 0.05, 0.01, and 0.01 levels consecutively.

Correlation of Research’s main Variables with regard to the extraneous variable (Situational Factors)

Situational

factors Correl./M index (N) M/OP Corr. M/RtS Corr.

Bad

Situational

Factors

General Correl. for

lower M index18 0.1925399 -0.041063

General Correl. for

higher M index8 0.37116194 0.21192274

Average

Situational

Factors

General Correl. for

lower M index23 -0.0978804 0.31078565

General Correl. for

higher M index13 0.40111328 0.33405113

Good

Situational

Factors

General Correl. for

lower M index10 -0.1162528 0.344534

General Correl. for

higher M index11 0.23196424 0.40029682

Given two extents of morality indexes at three levels of situational factors, numbers show:

•a positive correlation between morality and organizational performance indexes at higher morality index,

•no significant correlation at lower morality indexes.

Given different situational factors at different morality indexes, numbers show, and according to the following figure:

• a slight ascending to constant correlation coefficient numbers between (M) and (OP) ( 0.371, 0.401, 0.232) at an improved situational factors, given higher morality indexes.

• a slight ascending to constant correlation coefficient numbers between(M) and (RtS) (.212, .334, .400) at an improved situational factors, given higher morality indexes.

• insignificance (no clear linear relation) between mentioned variables at lower morality indexes.

• in spite of the insignificance at lower morality indexes, responsiveness to society showed improving rates at better situational factors in comparison to organizational performance indicators.

-0.2

-0.1

0

0.1

0.2

0.3

0.4

0.5

Situational Factors

Correl M/OP "High Morality Indexes"

Correl M/Rts "High Morality indexes"

Correl M/OP "Low Morality Indexes"

Correl M/RtS "Low Morality Indexes"

Correlation of Research’s main Variables with regard to the intervening variable of time frame effect

Organization is business-

registered since:

OP

Index

RtS

Index

SF

Index

ES

Index

M

Index

Less than 5 yrs

N=13

OP Index Pearson Cor. 1 .278 .095 .463 -.095

Sig. (2-tailed) .358 .758 .111 .757

RtS Index Pearson Cor. .278 1 .263 .462 -.136

Sig. (2-tailed) .358 .385 .112 .657

SF Index Pearson Cor. .095 .263 1 .081 .672*

Sig. (2-tailed) .758 .385 .794 .012

M Index Pearson Cor. -.095 -.136 .672* -.091 1

Sig. (2-tailed) .757 .657 .012 .768

5 - < 10 yrs

N=20

OP Index Pearson Cor. 1 .511* .366 .283 .402

Sig. (2-tailed) .021 .113 .226 .079

RtS Index Pearson Cor. .511* 1 .615** .764** .318

Sig. (2-tailed) .021 .004 .000 .172

SF Index Pearson Cor. .366 .615** 1 .375 .455*

Sig. (2-tailed) .113 .004 .103 .044

M Index Pearson Cor. .402 .318 .455* .005 1

Sig. (2-tailed) .079 .172 .044 .984

10 - < 20 yrs

N=15

OP Index Pearson Cor. 1 .599* .575* .402 .551*

Sig. (2-tailed) .014 .020 .123 .027

RtS Index Pearson Cor. .599* 1 .477 .575* .273

Sig. (2-tailed) .014 .062 .020 .306

SF Index Pearson Cor. .575* .477 1 .014 -.109

Sig. (2-tailed) .020 .062 .958 .687

M Index Pearson Cor. .551* .273 -.109 .447 1

Sig. (2-tailed) .027 .306 .687 .083

More than 20

Yrs N=34

OP Index Pearson Cor. 1 .100 .114 .066 .180

Sig. (2-tailed) .575 .522 .709 .309

RtS Index Pearson Cor. .100 1 .254 .277 .474**

Sig. (2-tailed) .575 .147 .113 .005

SF Index Pearson Cor. .114 .254 1 .466** .496**

Sig. (2-tailed) .522 .147 .005 .003

M Index Pearson Cor. .180 .474** .496** .252 1

Sig. (2-tailed) .309 .005 .003 .150

Numbers show:

•Significance at level 0.01 between morality and resp. to society variable only for organizations registered for more than 20 years, where no significance obtained on shorter time frames.

•Significance at 0.05 level between morality and org. performance was obtained for organizations registered for more than 10 years and less than 20 years and no significance could be obtained for other time frames.

•Situational factors impact showed decreasing significance in contrast to Morality at the following time frames (less than 5 yrs, 5 - < 10 yrs) and a negative correlation at a time frame of 10 - < 20 yrs with no significance

Summary of conclusions:• Stage of managers’ moral development has a direct impact and a positive correlation on

the overall organizational performance and on the responsiveness of this organization to society and its welfare.

• Individuals’ moral development is correlated to the management culture of a given organization, where it interacts for both parties by shaping the general ethical behavior. Yet the more the ethicality of an executive, the less is the effect situational factors take part in affecting the relationship between his behavioral sensitivity toward these factors and the positive relationship that exists between his morality and organizational performance as well as this organization’s responsiveness toward society.

• Results have provided an evidence on how morality affects organizational performance and consequently societies’ welfare especially on long run frame. Accordingly, it has called for an important correction action and stressed the need to assess individuals’ stage of development as a criterion in employment.

• the research has presented an issue of concern and offered a win-win situation that matters beyond individual’s own interests and instead, served to attain greatest good for greatest number of community

Conclusion

“if capitalism is to be respected, and so sustain itself for

global prosperity, it must be both responsible and moral”

Caux Round Table

THE IMPACT OF MANAGERS’ MORAL DEVELOPMENT LEVEL ON ORGANIZATION’S PERFORMANCE AND ITS RESPONSIVENESS TO SOCIETY

Submitted by:

Jeeda Rabah

Thank you