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The Ethics “Fix”: When Formal Systems Make a Difference

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Listed:
  • Kristin Smith-Crowe
  • Ann Tenbrunsel
  • Suzanne Chan-Serafin
  • Arthur Brief
  • Elizabeth Umphress
  • Joshua Joseph

Abstract

This paper investigates the effect of the countervailing forces within organizations of formal systems that direct employees toward ethical acts and informal systems that direct employees toward fraudulent behavior. We study the effect of these forces on deception, a key component of fraud. The results provide support for an interactive effect of these formal and informal systems. The effectiveness of formal systems is greater when there is a strong informal “push” to do wrong; conversely, in the absence of a strong push to do wrong, the strength of formal systems has little impact on fraudulent behavior. These results help to explain why the implementation of formal systems within organizations has been met with mixed results and identifies when formal systems designed to promote ethical behavior will be most efficacious. Copyright Springer Science+Business Media Dordrecht 2015

Suggested Citation

  • Kristin Smith-Crowe & Ann Tenbrunsel & Suzanne Chan-Serafin & Arthur Brief & Elizabeth Umphress & Joshua Joseph, 2015. "The Ethics “Fix”: When Formal Systems Make a Difference," Journal of Business Ethics, Springer, vol. 131(4), pages 791-801, November.
    • Handle: RePEc:kap:jbuset:v:131:y:2015:i:4:p:791-801
    DOI: 10.1007/s10551-013-2022-6
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    References listed on IDEAS

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    Cited by:

    1. Claudia Groß & Dirk Vriens, 2019. "The Role of the Distributor Network in the Persistence of Legal and Ethical Problems of Multi-level Marketing Companies," Journal of Business Ethics, Springer, vol. 156(2), pages 333-355, May.
    2. Raymond O. S. Zaal & Ronald J. M. Jeurissen & Edward A. G. Groenland, 2019. "Organizational Architecture, Ethical Culture, and Perceived Unethical Behavior Towards Customers: Evidence from Wholesale Banking," Journal of Business Ethics, Springer, vol. 158(3), pages 825-848, September.

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