Ethical Climate in Business Environment


The concept of ethical climate has been a significant research topic for over thirty years. This concept is defined as the shared perceptions within a business environment of what is regarded to be an ethically right behavior and how an organization should deal with ethical issues (Kreitner&Kinicki, 2014). In large extent, it emerges from processes within an organization, which transmit expectations of the management as far as moral processes and behaviors are concerned. These moral processes and behaviors are significantly important as they are used to solve ethical challenges. In addition, they carry a decisive influence over behaviors and attitudes of all stakeholders in any given organization(Kreitner&Kinicki, 2014).

Importance of Ethical Climate in an Organization

Ethical climate serves as a perceptual lens that sustains business managers in the process of identifying ethical issues and solving themCoady& Corry, 2013). The theory of ethical climate is characterized in the field of recent works regarding the concept of ethics as a significant element of the median theory, which belong to a series of integrated perspectives on ethics. In this particular phenomenon, two most predominant distinctive theories that have developed a catalysts for research studies are work climate theory and moral philosophy theories (Coady& Corry, 2013).

Moral philosophy theories are utilized during the process of evaluating or assessing grids regarding moral aspects of management actions as well as their practices(Stanwick&Stanwick, 2014). These constitute deontological and utilitarian theories, where the latter assesses ethical characters regarding an action on the basis of generated consequences. On the other hand, the former tends to offer judgments on various ethical dimensions regarding a single act in relation to predefined to specific standards, which are universally recognized(Stanwick&Stanwick, 2014).

In addition, organizational climate approach is important as it serves as an essential theoretical basis for research studies focusing on ethical work climate. In this context, such an approach makes an effort to explain organizational stakeholders’ ethical behavior(Stanwick&Stanwick, 2014). This is not only individualized kinds of motivations but also by way of identifying the impacts of organizational context and ethical behaviors in the process of understanding conducts of an individual ethics. It is imperative to note that ethical work climate essentially reflects practices, policies as well as procedures of a specific organization, usually with moral consequences(Stanwick&Stanwick, 2014). In this respect, several models focusing on ethical climate have emerged through literature. Each of these models provides several methods of understanding the particular facets of this construct.

One dimension regarding ethical criterion refers to the dominating moral philosophy that is vital during decision making processes with any business environment(Stanwick&Stanwick, 2014). This specific dimension constitutes three main criteria, which are aligned closely with other three major classifications of ethical theories. These ethical theories are mainly deontology, egoism as well as utilitarianism(Stanwick&Stanwick, 2014).  Locus of analysis is yet another dimension, which is obtained from the theory of sociology on the reference group. This theory tends to reflect three main levels regarding ethical concerns for business as far as organizational, individual and cosmopolitan levels are concerned.

Ethical climate is regarded as a mechanism of true social capital, good governance or a coordination mechanism(Stanwick&Stanwick, 2014). In this respect, the concept of trust within any organizational environment is increasingly becoming a topic of focus in several empirical and theoretical research studies. This plethora of work is mainly accompanied by several typologies and conceptualizations. Most typologies focusing on the concept of trust in any business environment tend to lay emphasize on institutional and interpersonal dimensions regarding this particular phenomenon(Stanwick&Stanwick, 2014).

For instance, at interpersonal level, trust is assumed to be a psychological condition, which constitutes acceptance of any individual who trusts. In this regard, such an individual is assumed to be vulnerable to any acts performed by the other party, who is the trustee. Such kind of vulnerability is founded on several expectations associated to behaviors or intentions of the trustee(Stanwick&Stanwick, 2014). Several researchers have attempted to make progress in the consolidation of such expectations. Through these, they have suggested for an integrated model of trust, which involve three main categories namely; benevolence, ability as well as integrity(Stanwick&Stanwick, 2014). In this context, ability refers to a series of an individual’s skills that makes him or her efficient and reliable in a specific area. On the other hand, benevolence is one and the same with a commitment seeking to protect and support the interests and rights of others as a consequence of emotional attachment. Integrity refers to a situation where individuals are held by the belief that other individuals would retain and maintain a set of principles, which are perceived to be acceptable(Stanwick&Stanwick, 2014).

Ethical Dilemma in an Organization

The core objective of any business organization is to have high performance with the objective of not only surviving in a highly competitive business environment but also to increase revenues and profit. In the recent past, my company faced significant challenges brought about by low sales, harsh business environment and high inflation rate. As a result, the management was faced with an ethical dilemma of downsizing many employees as it was not sustainable in regards to disbursing salaries and wages. This was a critical decision, which had to be made regardless of prevailing business climate. However, such a decision was not received well by many employees who felt that the company was not showing a caring climate considering the fact they did not have alternative sources of income after getting discharged from their jobs.

Ethical business climate involves several element that characterize a socially responsive business environment. Such a business environment is expected to offer organizational listening capabilities, support, interest demonstration, perceived fairness. All these are significant elements, which reveals the significance of relational ethics as a form of shared value that is deeply rooted in the organizational culture(Stanwick&Stanwick, 2014). For instance, employees working in my company realized that they were working in an organizational climate that sets them outside the administration’s concerns. Moreover, they realized that the company was not listening to them neither did it attempt to intervene by providing support or in their private or professional lives.

As a business manager I would have adopted the principle of benevolence, which seeks to protect the rights of others. This is because most employees regard their companies as their families or homes, a sense of feeling that was particularly present in my human sized company. This is normally characterized by hierarchical distances, which are narrow and that operates in a protective and paternalistic style (Stanwick&Stanwick, 2014).


It is worth to note that the notion of shared perceptions that are linked with the definition of ethical climate provides this particular concept an aspect that is subjective. To a large extent, the presence of this kind of ethical climate may only be confirmed when a unit or stakeholders within the business environment assume that specific forms of behaviors as well as ethical reasoning dominates the entire functioning of a shared system.


















Coady, D., & Corry, R. (2013). The climate change debate: An epistemic and ethical enquiry.

Stanwick, P. A., &Stanwick, S. D. (2014). Understanding business ethics.


Kreitner, R., &Kinicki, A. (2014). Organizational behavior and ethical leadership. NY: McGraw-Hill.