The perceived importance of an ethical issue as an influence on the ethical decision-making of ad managers

ELSEVIER

The Perceived Importance of an Ethical Issue as an Influence on the Ethical Decision-making of Ad Managers Donald R Robin UNIVERSITY OF SOUTHERN MISSISSIPPI

R. Eric Reidenbach UNIVERSITY OF SOUTHERN MISSISSIPPI

R J. Forrest GEORGIA COLLEGE

We explored the impact of a proposed new construct "perceived importance of an ethical issue" (PIE) on the ethical decision-making process. This construct parallels similar constructs in involvement literature popular in consumer behavior. The PIE construct was found to exhibit reasonable characteristics for preliminary judgments about validity, and it produced a significant and substantial impact on both ethical judgment and behavioral intention. This investigation also offered two research propositions, each of which focuses on how this perceived importance construct influences the ethical decisionmaking process. In addition the article suggests several potentially useful implications for marketing managers, j BUSN aES 1 9 9 6 . 3 5 . 1 7 - - 2 8

n a conceptual article without empirical test, Jones (1991) offered a detailed explanation of why and how the importance of the ethical issue, which he called "moral intensity," can influence ethical decision-making in business. He posited that six components of moral intensity-magnitude of consequences, social consensus, probability of effect, temporal immediacy, proximity, and concentration of effect-operated together to influence every stage of the ethical decision-making process in business (see Jones, 1991, Figure 2, p. 379). This article suggests an extension of Jones' idea and an empirical test of the effects of a similar construct on ethical judgment and behavioral intention. The construct used to test the relationship is defined as the perceived personal relevance or importance of an ethical issue to an individual (PIE). It is personal and temporal in character in order to accommodate an individual's values, beliefs, needs, perceptions, the special characteristics of the situation, and the

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Addresscorrespondenceto Donald R Robin, Professorof BusinessEthics, College of BusinessAdministration, Universityof Southern Mississippi,RO. Box 5091, Hattiesburg, MS 39406. Journal of Business Research35, 17-28 (1996) © 1996 ElsevierScience Inc. 655 Avenue of the Americas, New York, NY 10010

personal pressures existing in an ongoing basis or at a particular place and time. The similarity of the PIE construct to the concept of"involvement" ought to add intuitive support for the existence of this construct. The PIE construct parallels the concepts of consumer and social involvement (e.g., Celsi and Olson, 1988; Greenwald and keavitt, 1984; Hupfer and Gardner, 1971; Krugman, 1965; Mitchell, 1979; Rothschild, 1984-; Zaichkowsky, 1985). The involvement construct has been found to be important in the ways consumers approach the purchase of a product and the way voters participate in elections. In these examples, involvement is defined as the perceived importance of the act to the individual just as HE is defined as the perceived importance of the ethical issue in this article. The definition of PIE is differentiated from Jones' (1991) concept of moral intensity in that he focuses on exogenous characteristics of the issue rather than individual perceptions. For a number of reasons, actual issue characteristics are likely to be perceived differently by different individuals, or by the same individual over time, or by the same individual in different situations. The reasons for these different evaluations include the ethical sensitivity of the individual, the level of moral development of the individual, the organizational and individual values that are activated, situational pressures, the opportunity for ethical or unethical behavior, relationships with superiors, peers, and subordinates, and even factors in the physical environment. Thus, PIE is an individual state construct that is believed to be closer to the behavioral intention and behavior decisions than the moral intensity construct suggested by Jones (1991), and hence, is likely to be a better predictor of those decisions. Further, the perception of ethical importance is something that management can influence fairly easily. Rewards and punishments, documents like codes of ethics, and values from ISSN 0148-2963/961515.00 SSDI 0148-2963(94)00080-X

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the corporate culture can all be used to influence individual perceptions of the ethical issue's importance on the job. Thus, although the characteristics of the issue can sometimes be difficult to change, a person's perception of that issue can be managed. That is, managers can influence the perceived importance of an issue through the use of positive and/or negative incentives. As suggested earlier, the PIE construct is similar to the concepts of consumer and social involvement (e.g., Celsi and O1son, 1988; Greenwald and Leavitt, 1984; Hupfer and Gardner, 1971; Krugman, 1965; Mitchell, 1979; Rothschild, 1984; Zaichkowsky, 1985). The involvement construct has been found to be important to the consumer purchase of a product as well as voting behavior. In these examples, involvement is defined as the perceived importance of the product or the act to the individual, and is very similar to PIE, which is defined as the perceived importance of an ethical issue to the individual. The PIE construct could be considered to be an exploratory first step into the potentially broader and more complex concept of what might be called moral involvement. Problems in business ethics usually occur within the context of a multiplicity of constraints and directives. They are not typically isolated events that can be analyzed clinically over a long period, but are influenced by business missions, specific short- and long-term objectives, and immediate tactical concerns. Moreover, these ethical decisions occur within an environment that is often shaped by frantic competition, technological change, company deadlines, inaccurate and incomplete information, and immediate demands from customers and fellow employees. The ethics of the issue must compete for attention within this fog of high personal pressure and activity. Further, even when the ethical issue is recognized, it must compete for priority within these same conditions. The justification for investigating the impact of the PIE construct on ethical decision-making is supported from two sources. The sources include published theoretical and empirical analyses and model-based support from the business ethics literature.

Theoretical and Empirical Analyses Jones (1991) describes his moral intensity measure as one that "focuses on the moral issue, not on the moral agent or the organizational context" (p. 373). The PIE construct is different in that it seeks to incorporate perceptions of the moral agent in their organizational environment. Most of Jones' support for his contentions about the impact of moral intensity on ethical decision-making also apply to the application of the PIE construct. Jones concludes his arguments with untested propositions which suggest that moral intensity influences every stage of ethical decision-making in business (Jones, 1991, pp. 380-389). In the study of consumer decision-making, researchers interested in the involvement issue have found a link between

D. R Robin et al.

the perceived personal relevance of an object, situation, or action, and the individual's cognitive and behavioral approaches to that object, situation, or action. In general, the research findings suggest that the level of involvement seems to influence: (1) the individual's search for, and receptivity to, information, (2) the commitment to, and extensiveness of, the individual's decision process, and (3) their behavioral intention (e.g., Bloch and Richins, 1983; Burnkrant and Sawyer, 1983; Celsi and O1son, 1988; Cohen, 1983; Greenwald and Leavitt, 1984; Gensch and Javalgi, 1987; Houston and Rothschild, 1978; Krugman, 1965, 1967; Lastovika and Gardner, 1979; Laurent and Kapferer, 1985; Mitchell, 1981; Petty and Cacioppo, 1979, 1981; Ray, 1982; Richins and Bloch, 1986; Rothschild, 1979; Vaughn, 1980; Wright, 1974; Zaichkowsky, 1985). A justification for these results is that individuals seek some simplicity and efficiency in their lives. They focus attention and evaluate those situations important to them. That same reasoning may be transferable to the evaluation of ethical issues because of the high level of personal pressure and activity in the work place mentioned earlier. The complexity and frantic pace of the job as well as the focus on objectives other than ethics would certainly seem to encourage the desire for simplicity and efficiency among marketers. Thus, the same three impacts could be expected for PIE on the ethical decision process. As important as involvement is to purchase decisions in consumer behavior, the concept is thought to be even more relevant to other social issues (e.g., Hupfer and Gardner, 1971; Slama and Taschlan, 1985). Involvement has been recognized as an important issue in social psychology for several decades, and the early development of involvement research in consumer behavior relied heavily on the work done by Sherif and Cantrell (1947). Ethical issues in business, such as plant shut down, minority and gender hiring practices, advertising to children, misleading sales practices, and product quality problems, to name a few, certainly qualify as social issues capable of activating a sense of personal salience or involvement.

Models of Business Ethics The business ethics literature also contains acknowledgments of the existence or effects of a perceived importance construct. Further, the focus of these models appears to be on behaviors elicited from people who are high in the perceived importance of the ethical issue, or at least, they seem not to concentrate on low PIE behaviors. Jones (1991) offers the proposition "Issues of high moral intensity will elicit more sophisticated moral reasoning.., than will issues of low moral intensity." (p. 385). If true, the validity of the models would be improved if they considered the PIE construct. Trevino (1986) specifically recognizes that certain individual variables can "influence the likelihood of an individual's acting on the choice of what is thought to be right or wrong" (p 609). She does not include a variable like PIE in her list, but it could be incorporated into her model, because the propensity to judge

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the importance of an ethical issue is an "individual moderator." Jones (1991) references Trevino's work in his discussion of moral intensity (see his Figure 1, p. 370). Hunt and Vitell developed another often cited model in which they state: "Like Ryan (1976), we believe both ethical judgments and intentions should be better predictors of behavior in situations where the ethical issues are central, rather than peripheral" (1986, p. 9). Salience or importance to the individual is the core of the proposed PIE construct and these authors seem to support its potential relevance. In another model, Ferrell and Gresham (1985) state: "Beliefs may serve as inputs affecting attitude formation/change and intentions to resolve problems. Also, evaluation or intention to act (or even think about an ethical dilemma) may be influenced by cognitive factors that result from the individual's socialization processes" (p. 90). These authors acknowledge less overtly that an antecedent state of the PIE can influence how the decision-maker deals with the ethical content of a marketing problem. An explicit recognition of a PIE construct is found in the Wotruba model (1990), where an initial component identifies what he calls the "ethical sensitivity" of the individual (pp. 31-32). This component includes the willingness and ability to recognize ethical issues and the alternative outcomes of their behavior. The third component of his model "involves an assessment of the ethical alternative in light of one's priority structure of values" (p. 33), and it influences a manager's propensity to behave ethically. Taken together, these two components of the model seem to suggest that the perceived importance of the ethical issue is significant in establishing the sales manager's ethical judgment and behavioral outcomes (part D in his model). The theoretical and empirical analyses and the modeling efforts of business ethicists seem to urge a greater formalization and testing of the effects of a PIE construct. To date, no such formalization and testing has occurred.

bach, Robin, and Dawson, 1991; Rest, 1986; Wotruba, 1990). Jones (1991, p. 370) provides an integration of several of these models focusing on the work of Rest (1986) in which ethical judgment and behavioral intention are the two center constructs of Rest's four construct models. Prior correlational evidence suggests that this linkage is both significant and substantial (e.g., Flory, Phillips, Reidenbach, and Robin, 1992; Reidenbach, Robin, and Dawson, 1991) in a variety of settings. Because of the centrality of the link, this initial empirical investigation into the impact of PIE on ethical decision-making focuses on ethical judgment and behavioral intention. We test two hypotheses, which parallel two of the four propositions offered by Jones (1991 ). They are similar to Jones' offerings in that each of the two hypotheses focus on the middle two stages of the ethical decision process used by both Jones and Rest (1986). The hypotheses offered in this study are also different from those of Jones in that they employ the PIE construct and are more concerned with the specific reactions of individuals. The first hypothesis suggests the nature of the impact of the PIE construct on ethical judgment.

The Study

Jones states that "This article argues that moral reasoning is issue dependent (p. 384)." The research presented here represents a fundamental agreement but adds the impact of individual perceptions to the PIE test measure. Jones also draws from Fiske and Taylor (1984, p. 146) when he states "... moral reasoning takes time and energy (e.g., gathering facts, applying moral principles, and making moral judgments [Velasquez, 1982], it is likely that moral agents will economize on efforts devoted to moral reasoning when moral stakes are low." (p. 384). He also suggests that the stage in moral development can partly explain individual differences in perception (p. 385); that people may develop individual event and role schemata for dealing with ethical issues (p. 383); and that people may be more likely to use external cues in reacting to ethical issues when the stakes are low but focus on personal determinants when the stakes are high (p. 384). Thus, there seems to be reasonable support for testing hypotheses 1 and 2.

This study begins the process of developing a PIE measure and provides initial tests of its impact on the core of the ethical decision process. The study provides an empirical beginning but does not produce generalizable results about an industry or group, or about the ethical issues selected for use in this study. Instead, it provides a PIE scale that passes preliminary tests of validity, provides initial tests of two hypotheses of PIE's effect on the ethical decision process, and offers inductive support for additional research propositions.

Hypothesis The core relationship postulated in many of the business ethics models is between ethical judgment and behavioral intention (i.e., Ferrell and Gresham, 1985; Ferrell, Gresham, and Fraedrich, 1989; Hunt and ViteU, 1986; Jones, 1991; Reiden-

HI: PIE is positively linked to ethical judgment. High levels

of PIE will correspond with more unethical judgments, and low levels of PIE will correspond with more ethical judgments. In this hypothesis ethical judgment is the degree to which an individual perceives an issue or action to be unethical. The second hypothesis suggests the nature of the impact of the PIE construct on behavioral intention. H2: PIE is positively linked to behavioral intention for an

ethical issue. High levels of PIE will correspond with unwillingness to behave in an unethical manner, and low levels of PIE will correspond with a greater willingness to behave in an unethical manner.

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Selection and Presentation of the Ethical Issues A scenario-based approach was selected for this study because of its ability to present participants in the study with realistic problems that require a minimal amount of effort for a response. Several researchers have used the scenario approach successfully (e.g., Alexander and Becker, 1978; Barnett and Karson, 1987; Flory et. al., 1992; Fritzsche and Becker, 1984; Laczniak, Lusch, and Strang, 1981; Reidenbach and Robin, 1988, 1990, 1991 with Dawson). In the approach used in this study, a potentially unethical scenario is followed by a statement of specific action by an individual from the scenario. This action statement is used to provide a focus for the participant's responses. Following the work of Reidenbach and Robin (1988, 1990, 1991) and Flory, Phillips, Reidenbach, and Robin (1992), the first group of measures asks the participant to evaluate the action that follows the scenario. For reasons of convenience, the scenarios used in this study (Appendix A) attempted to isolate ethical issues on which marketers could focus. These two issues were selected from four that were prominent in the current debates about advertising to children. They fall under the labels of "deceptive message" and "host selling," and were selected because of the differing ethical perception of respondents toward them in a pretest. Two factors governed the choice of these scenarios. First, scenarios that marketers in the survey described as "moderately" ethical or unethical were desired. Because of the desire to avoid the problems connected with end loading, common in some research on values, exceptions to these ideal results would favor a deviation toward a midscale value rather than toward the extremes of the scale. The two scenarios (Appendix A) selected for this study meet the above criterion. The second factor concerns the difference between the perceptions of the respondent group about the ethical issue. These two issues, a deceptive advertising message to children labeled "deceptive message" and the use of cartoon characters to promote products to children labeled "host selling," have been prominent in the debate concerning the ethics of advertising to children. The Federal Trade Commission has recently cited several toy makers for "potentially misleading claims" while New York City's Commissioner of Consumer Affairs has accused several other companies of deceptive advertising and demanded that they "enter settlement talks" (Lipman, 1991, p. 134). The use of host selling is also illegal, thus providing two scenarios that could have legal ramifications for the advertiser and the agency. The ethical perceptions of the advertising issues used in this study provide relevant and topical settings for formalizing and testing a PIE construct. Further, the illegality of both issues illustrates an important difference in focusing on perceptions rather than just the issue itself.

Sample The subjects were selected from members of a regional advertising association that included individuals from six states, all of whom were managers active in some area of the advertising

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industry. To assure some homogeneity of respondents, the membership list of this advertising association was screened to assure that only members who directly participated in the creation, sales, or management of advertising were used. A pretest sample was randomly selected from the list. The pretest mailing included: (1) a cover letter that described the study, promised a gift, and requested their participation, (2) a letter from the president of the advertising association, which encouraged their participation, and (3) a return postcard with their name, address, and agreement to participate. The gift and the questionnaire were sent to all who agreed to participate and produced 41 responses, a 73% return rate. The results from the analysis of the pretest identified the two scenarios selected (Appendix A), and allowed a preliminary test of the measures. The same procedure used in the pretest was continued for the full study. All available names (978) were used in this second mailout, and a final sample of 251 usable responses were available for analysis, or 26% of the original list. The promise of individual anonymity available through a mail survey made this approach attractive for eliciting more candid responses to ethical questions. The ego-involving character of such questions represents a potential source of bias for research in this area, and as this study represents exploratory investigation into the impact of the PIE construct, a mail approach was believed to be the preferred sampling method in spite of other well-known problems inherent to the approach (e.g., self-selection). The variance of responses and the relatively low degree of end loading found in the results suggests that the concern about less candid responses was at least somewhat ameliorated.

The PIE Measure and Other Scales Because measures of a construct are not fully developed in a single study, the initial selection of a scale should have potential to capture the meaning of the construct (i.e., be content valid) and have good likelihood of maintaining its integrity when tested using other approaches for construct validity. The PIE measure was designed to fit a direct and relatively narrow meaning of "the perceived personal relevance or importance of a moral issue or action to an individual." Items that focused solely and directly on the perceived salience of the issue to the individual were sought for the measure. An additional characteristic desired of the items used in the measure was that they allow individuals to express the extreme opinions that sometimes occur when evaluating ethical issues. Finally, it was desired that the items selected have some history of capturing the concept of perceived importance. The last criterion was satisfied by selecting and adapting items from the work of Zaichkowsky (1985), who developed a measure of consumer involvement. From this inventory, items that were primarily product-related were eliminated, as were items that did not seem to relate directly to the perceived importance of an ethical issue. Four items were selected from Zaichkowsky's inventory of 20 (Zaichkowsky, 1985, p. 350) as having the best

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potential for capturing the concept of PIE as defined in this study. They were adapted for use in this construct by adding the term "issue" to each pair of bipolar phrases, and in three cases, one end of the bipolar phrase was expanded by adding "extremely," "highly," or "considerable" to facilitate the expression of extreme opinions. This latter addition follows the satisfaction/dissatisfaction literature and their approaches for preventing end loading and skewed distributions (e.g., Westbrook, 1980; Peterson and Wilson, 1992; Babin et. al., 1994). The four items used in the study appear in Appendix B. The basic statistics for the PIE construct for each of the two scenarios appears in Table 1. The difference in the means of the PIE measure between the two scenarios was significant and was roughly equidistant from the midscale value. This perceptual difference between the scenarios increases their usefulness in the study by providing situations that were to the low and high sides of perceived importance. Ethical judgment is defined as the degree to which an individual perceives an issue or action to be unethical. The measure of ethical judgment used in this analysis was taken from the work of Reidenbach and Robin (1988, 1990, 1991 with Dawson) and Flory et. al. (1992). This measure contains three dimensions, of which only one was selected for use in this article. Their moral equity dimension contains four items (also shown in Appendix B), and in previous applications of the scale, this dimension has captured a high degree of what respondents mean by "ethical." This relationship is evidenced by the linkage (R2s) between the moral equity dimension and a univariate ethics measure (ethical/unethical) that have been both significant and substantial, ranging from 0.29 to 0.87 with an average of 0.56 in the work by Reidenbach, Robin, and Dawson (1991, p. 87). The focus of this study is on the core ethical judgment so only their moral equity dimension is used. Following the approach of Reidenbach and Robin, a similar validity check was conducted on the work in this current study where correlations were run between the moral equity dimension and a univariate ethics measure, anchored with "ethical/un-

Table 1. PIE Statistics for Scenariosa

Perceived Unethical Scenario

Perceived Ethical Scenario

Mean b

4.48

3.59

Median

4.75

3.50

0.101 1.60 Extremes of

0.100 1.58 Extremes of

scale ( 1 - 7 )

scale ( 1 - 7 )

Statistic

Standard error Standard deviation Range Number

of cases

239

249

The total involvement measure consists of the four measures in Appendix B Each item in the measure was assigned a number from 1 to 7 where 1 was the least important extreme and 7 the most important extreme. The average value of the responses for the four items was used for the measure. b Difference between means for the two scenarios - 0.89 (p < 0001)

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ethical." The average correlation between the two measures across both scenarios and the extreme groups within scenarios was 0.92, compares favorably with the work of Reidenbach and Robin and suggests the moral equity dimension does capture a large amount of what these respondents meant by "ethical." The moral equity dimension also proved to be a reliable (coefficient c~s for each scenario were 0.94 and 0.95) and informative measure. Behavioral intention was measured by asking respondents for the perceived probability that they would undertake the same action as depicted in the scenario. The behavioral intention scale contained the statement: "Ifyouwere responsible for taking the same action described in the scenario, what is the probability that you would make the same decision?" It was followed by a seven-point scale anchored by the bipolar phrases "highly probable/highly improbable," following the work of Reidenbach and Robin cited earlier.

Separating Individuals Who Are Low or High in PIE within the Responses for a Single Scenario To better understand the mechanism by which PIE works when extreme views are present, high and low PIE individuals were identified within each of the distributions for responses to the two scenarios. They were defined as those individuals whose responses placed them in the end quartiles of the distribution for each scenario. As discrete points were used to develop the measure, individuals were included in the low or high PIE categories if their score on the measure occurred in the end 25th percentiles. The PIE measure was summated and averaged to provide common one to seven results for facilitating discussion. The end quartile PIE means from this analysis were 2.40 and 6.40 for the perceived unethical scenario and 1.58 and 5.56 for the perceived ethical scenario. In both cases, lower means meant lower PIE scores.

Results This section is composed of three parts. First, construct properties of the PIE measure are analyzed to establish a preliminary judgment about validity. Then, the two hypotheses presented earlier are tested. Finally, research propositions about the characteristics of the linkage between PIE, ethical judgment, and behavioral intention are offered for future investigation.

Properties of the PIE Construct The four bipolar items selected to measure PIE seemed to capture the same construct as judged by the results of principal components and confirmatory factor analyses (using LISREL), which appear in Table 2. Separate analyses were made for responses to both the perceived ethical and unethical scenarios. Factor loadings ranged from the high 0.70s to the low 0.90s for both scenarios and both methods. The amount of explained variance in the prin-

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Table 2. Factor Analysis for the PIE Construct

Statistic

Factor loadings Important Significant Of concern Fundamental Percent of explained variance Coefficient o~ Maximum likelihood loadings Important Significant Of concern Fundamental Confirmatory factor results Goodness-of-fit index Adjusted goodness-of-fit index Root mean square residual X2 (degrees of freedom) Null model X2 (dJ) Bentlers normed fit index (prob.)

Perceived Ethical Scenario

Perceived Unethical Scenario

0.78 0.85 0.84 0.79

0.89 0.92 0.93 0.88

81.3% 0.92

82.2% 0.93

0.83 0.91 0.89 0.84

0.84 0.90 0.93 0.83

0.998

0.999

0.991 0.005 096 (2) 1067.95 (10) 0.999 (p < .0005)

0.998 0.003 0.22 (2) 1107.33 (10) 0.999 (p < .005)

cipal component analysis was 81.3% for the perceived ethical scenario and 82.2% for the perceived unethical scenario. The internal consistency of the measure is further evidenced by coefficient c~s in the low 0.90s. The tests from the confirmatory factor analysis results also produced excellent results. Both goodness-of-fit indexes, the very low X2 results, and the Bentler normed fit test all suggest that the four items produced a measure that represents a single construct. As a test of discriminant validity, the four item PIE scale was combined with the four-item moral equity scale described earlier (Appendix B) in a LISREL-based measurement model. The results of this test appear in Table 3. The fit of the model is excellent, and the maximum likelihood loadings for both constructs were high. Further, the moderately high 4~ coefficient suggests that a linkage between PIE and moral equity does exist.

Tests of Hypotheses Hypothesis 1 stated "PIE is positively linked to ethical judgment." Table 4 is a presentation of analysis of the means on two measures of ethical judgment for both scenarios. Both the betweenscenario results and the within-scenario analyses support the hypothesis that the perceived importance of the ethical issue (PIE) is positively linked to the ethical judgment of that issue. The difference for the within-scenario moral equity means ranged from 2.33 to 2.52 or from about 38 to 42% of the maximum separation possible (6.00). The ANOVA generated ~/2 values were also fairly large ranging from 0.34 to 0.45. A very similar relationship was found between the two PIE groups when

the univariate ethics mean was used. Further, the between scenario analysis using all cases indicated a large difference in means. Thus, as hypothesized, when managers perceive an issue to be relatively low in importance, they also seem to believe that the issue is less unethical (more ethical). Conversely, when the issue is perceived to be relatively important, the issue is perceived to be more unethical. Hypothesis 2 states "PIE is positively linked to behavioral intention for an ethical issue." The results from the analysis of means for behavioral intention appear in Table 5, and as hypothesized, the results closely parallel the findings for ethical judgment. The behavioral intention means for both scenarios were substantially different between individuals who were high or low in PIE, and again, the 7/2 values suggest that the low and high PIE categories "explain" a significant amount of the variance in behavioral intention. The between-scenario analysis using all cases produced similar results when the perceived ethical scenario is compared to the perceived unethical scenario. In all comparisons, individuals who were low in PIE indicated that they were much more likely to undertake the action than were individuals who were high in PIE. The behavioral intention of the individual is influenced by more than the ethical judgment. This is the point in the decision process where a balance is sought between ethical judgment and other competing pressures. It seems reasonable to expect that when an ethical issue is perceived to be relatively unimportant, these competing pressures would tend to dominate the behavioral intention decision. Another speculative justification of these results is that managers low in PIE could be seeking to lower cognitive costs and reduce cognitive dissonance. In this situation, the perceived low importance of the issue could reduce the dissonance derived from judging an issue ethical. Further, if the manager low in PIE is also less ethically critical of the issue, he/she may find it psychologically easier to undertake the activity. Thus, the following research propositions are offered for further investigation.

Research Propositions One important question concerns how PIE impacts the link between ethical judgment and behavioral intention. Jones (199 l) seems to suggest that his moral intensity construct operates as a moderator or mediator variable in his Figure 1 (p. 370). The intent of Jones is unclear because the relationship is implied only from his figure, which has the same appearance as Figure 1 in this article with the exception that PIE is used instead of his "moral intensity," and that this analysis focuses on only the two central elements of the ethical decision making process (i.e., ethical judgment and behavioral intention). In such a case, changes in moral intensity, or in our case PIE, would greatly influence the strength of the link (correlation) between ethical judgment and ethical intent. If, however, the construct were causal in its impact, instead of acting as a moderator/mediator, the link would remain strong even with fairly large changes

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T a b l e 3. M e a s u r e m e n t Model for PIE a n d Moral Equity Perceived Ethical Scenario

Statistic Coefficient of d e t e r m i n a t i o n for the eight m e a s u r e m e n t variables N u m b e r of o b s e r v a t i o n s Goodness-of-fit i n d e x Adjusted goodness-of-fit i n d e x Root m e a n s q u a r e residual Coefficient b e t w e e n the two constructs (~) M a x i m u m likelihood loadings Important Significant Of c o n c e r n Fundamental Fair Just Morally right Acceptable to m y family

Perceived Unethical Scenario

0.995

0.993

251 0.969 0.941 0.031 0.535

247 0.976 0.954 0.027 0.660

0.826 0.898 0.902 0.837 0.916 0.878 0.936 0.929

0.844 0.895 0.926 0.821 0.934 0.890 0.871 0.865

Measurement Model PHI

I s,.,.= IIo, co=m II,

0.,.ll

I ,.i,

II

II Mo,,gh,

Table 4. Ethical J u d g m e n t a n d PIE C o m p a r i s o n s (Means a n d SD) Perceived Unethical Scenario Statistic

Perceived Ethical Scenario

Univariate Measure a

Multivariate Measure b

Univariate Measure a

Multivariate Measure b

6.20 (1.62)

6 1 9 (1.32)

4.09 (2.25)

4.09 (2.04)

3.74 (1.72) 2.46 c .36

3.67 (1.50) 2.52 c .45

1.79 (1.09) 2.30 c .29

1.76 (1.02) 2.33 c .34

5.19 (1.64)

2.88 (1.86)

Within-scenario analysis High PIE (see Table 2) Within-scenario Low PIE (see Table 2) Difference in m e a n s '172

Between-scenarios analysis Ethical j u d g m e n t m e a n s (all cases) PIE m e a s u r e (from Table 1)

5.29 (1.85) 4.48

2.84 (1.68) 3.59

"~The univariate measure of ethical judgment was single seven point bipolar scale with endpoims designated ethical (1) and unethical (7). b The multivariate measure of ethical judgment was the Reidenback and Robin moral equity scale (Appendix B) that was averaged such that ' f ' was morally equitable and "T' was morally inequitable • Sig p < 0005.

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Table 5. Behavioral Intention a and PIE Comparisons (Mean and SD) Statistic

Perceived Perceived Unethical Scenario Ethical Scenario

Within-scenario analysis High PIE (see Table 2) Low PIE (see Table 2) Difference in means r/2 Between-scenario analysis Behavioral intention means (all cases) PIE measure (see Table 1)

5.91 (1.88) 3.53 (1.64) 2.38 b 0.31

367 (2.36) 1.86 (1.45) i.81 b O17

5.04 (1.99)

2.77 (1.97)

4.48

3.59

~' Behavioral intention was measured using the statement "If You were responsible for taking the same action described in the scenario, what is the probability that you would make the same decision?" followed by a seven-point bipolar scale anchored by the phrases "highly probable" and "highly improbable" Thus, a lower mean indicates a higher probability of participating in the action. bSig. p < 0 0 0 5

in PIE. In the case of PIE as a causal construct, only the means of ethical judgment and behavioral intention would be influenced and the link between the two constructs would remain strong (Baron and Kenny, 1986). Causal modeling can be used to inductively develop a research proposition about the nature of this relationship. Another question also occurs about the stability of the link

Figure 1. Perceived Importance of an Ethical Issue as an Influence on Ethical Judgment and Behavior Intention

Statistic

Model coefficient of determination Goodness-of-fit index Adjusted goodness-of-fit index Number of observations 3' (1,1) y (2,1) fl (2,1)

Perceived Unethical Scenario

Perceived Ethical Scenario

0.298 0.439 0.961 0.974 0.930 0.952 251 246 0.563 0.661 0.018 (NS) 0.064 (NS) 0.681 0.675

* All measures were standardized before they were used in this model.

between ethical judgment and behavioral intention for managers who are extremely low or high in PIE. For example, if managers who are low in PIE make substantially less critical ethical judgments about an issue than those high in PIE, is it likely that their behavioral intention will correlate highly with that ethical judgment as most of the models suggest? This exploratory investigation should produce a research proposition about the relationship. The higher level of information processing expected of managers who are high in PIE would seem to suggest a strong tie between an individual's ethical judgment and his/her behavioral intention because of the individual's commitment to the analytical process or cognitive calculus undertaken. If, using the arguments from the involvement literature, this same desire for efficient evaluation of an ethical issue applies for a manager low in PIE, he/she would not be likely to undertake the information processing activity at least to the degree of someone high in PIE. Figure 1 represents a model of the ethical judgment -+ behavioral intention link with the impact of PIE drawn as suggested by Jones (1991) in his "moral intensity" measure. The results incorporate all respondents for each of the two scenarios. The structural equation test of the model is similar for both scenarios, and the statistics indicate that the fit of the model is acceptable. Given the assumed direction of influences indicated in Figure 1, PIE had its most important impact on ethical judgment 7 (1,1), and essentially impacted behavioral intention only through ethical judgment, as the y (2,1) link was almost zero for both scenarios. PROPOSITION 1: These results suggest that PIE should not be considered as a moderator/mediator variable for two reasons. First, the link between PIE and behavioral intention [Y (2,1)] is not significant for either scenario. W h e n that finding is combined with the strong link between PIE and ethical judgment [7 (1,1)], it suggests that the causal path, PIE "~ ethical judgment "~ behavioral intention, does a much better job of explaining the results in this study. Second, the strong link between ethical judgment and behavioral intention did not experience significant changes between the two scenarios (see Table 1). Thus, PIE's impact on behavioral intention seems to occur through ethical judgment for the two scenarios used in the study. However, cross-sectional analysis can never establish causal direction, and these results must be held in abeyance until additional research can be conducted. Nevertheless, the following research proposition seems to be suitable for further investigation.

P I PIE operates as a causal variable that precedes ethical judgment rather than as a moderator or mediator variable. The between-scenario analysis that produced proposition 1 can be extended by comparing those results to the extremes produced by a within-scenario analysis. The results of the within-scenario analysis appear in Table 6. All of the adjusted

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Table 6. Relationship between Ethical Judgment and Behavioral Intention for Different Levels of PIE [Adjusted R2s] Statistic

Within-scenario high PIE (number of cases) Low PIE (number of cases) All cases (number of cases)

Perceived Unethical Scenario

Perceived Ethical Scenario

0.35 a (62)

05@ (70)

0.26 ~ (67)

0.25 a (62)

0.485 a (239)

0.424 ~ (249)

25

be generated from this high PIE relationship. However, it does offer an interesting point for further investigation. Because of its apparent impact on ethical judgment and intention, the perceived importance of an ethical issue seems to have the potential to become an important factor in the intervention of an individual's (un)ethical behavior. If the hypotheses and propositions presented in this article are true, a manager who can increase the level of perceived importance of an issue with his or her employees will also improve the probability of greater ethical judgment and behavior of those employees.

,ISig p < 0005 Note: The results for between scenario comparison are suggested in Figure 1

Conclusions R2s are 0.25 or higher and seem substantial enough to suggest that proposition one is supported even in extreme examples of PIE. That is, if PIE were to act as a moderator or mediator variable, it could be anticipated that the adjusted R2s in Table 6 would be statistically insignificant and approach zero (Baron and Kenny 1986) in extreme conditions. The between-scenario (all cases) results are included in Table 6 for comparison purposes. In this between-scenario analysis the "explained" variation is 42% and 48% and closely matches the/~ (2,1) link in Figure 1. PROPOSITION 2: The relationship between ethical judgment and behavioral intention is weakest for individuals who were very low in PIE in both scenarios but still respectable at around 0.25. There are at least two reasons for this weaker linkage. First, it may be due to the presence of other variables that are perceived to be more important in explaining behavioral intention. For example, personal and organizational objectives may dominate behavioral intent for these groups. Second, the low perceived importance of the issue for these two groups may simply produce lower cognitive activity about it and a more random relationship with behavior. The comparative R2S for the most and least extreme cases of low PIE (0.26 and 0.25) provide some support for the proposition that the lower R2s for the low PIE individuals are not a statistical phenomenon. Even so, the comparability of results in the between scenario analyses (Figure 1 and "all cases" in Table 6) suggests that the reduction of the link occurs only at very low levels of PIE. Thus, proposition 2 is given as follows. P2: At very low levels of PIE, the link between ethical judg-

ment and behavioral intention will be weakened because of the relative increase in the importance of other determinants of behavior. The comparatively lower R2 for the highest PIE individuals in Table 6 produced an unexplained anomaly. Although the 0.35 adjusted R2 is moderately large, indicating a moderately strong link between ethical judgment and behavioral intention, this result does not fit the apparent progression of R2s in Table 6. Without further exploration, no viable proposition can

A construct for the perceived importance of an ethical issue (PIE) was developed and tested to determine its potential influence on an individual's ethical judgment and their intention to behave ethically or unethically. The level of an individual's PIE was found to have a significant and substantial impact on both ethical judgment and behavioral intention in this test group. Individuals who were high in PIE were more critical of the ethical content of the two scenarios than were those who were low in PIE. Further, high PIE individuals were less likely to engage in the same unethical behavior depicted in the scenarios than were those who are low in PIE. This research also generated two research propositions. P I PIE operates as a causal variable that precedes ethical

judgment and moral intention rather than a moderator or mediator variable. P2: At very low levels of PIE, the link between ethical judgment and behavioral intention will be weakened because of the relative increase in the importance to other determinants of behavior. If supported, these findings could have a major impact on both the modeling of the ethical decision-making process and on the success of managing ethics in the organization. At a minimum, future ethical decision-making models should consider PIE as a potential causal variable. Subject to information from additional research, the specific nature of the PIE construct should become an integral part of all models of business ethics. In addition, the PIE construct is suggestive of several approaches for managing ethical issues in an organization. Because the research suggests that PIE is a causal variable that precedes ethical judgment, and as it seems to have an indirect but substantial impact on behavioral intent, any approach by management that increases the perceived importance of ethical issues to employees should improve behavior. Ideas for increasing PIE in employees require little elaboration. For example, managers can attempt to identify potential ethical problem areas throughout the planning process and focus on those most likely to be faced by employees. Then employees could be trained on how the organization wants such ethical problems handled. Management could work to develop effective communication techniques with appropriate feedback

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D. P Robin et al.

mechanisms for handling ethical problems. In addition, managers could work on the organizational culture to develop a sense of ethical values. Also, both positive and negative reinforcements could be used to support ethical values and behaviors. All of these activities should increase the level of perceived importance of an ethical issue for employees. One interesting direction for future research comes from the consumer involvement literature. Could moral involvement influence behavior in a manner similar to the high and low involvement findings in consumer behavior? Many of the existing ethical decision-making models parallel information processing models that are high in individual cognitive involvement. The ethical decision-making models typically have the thinking or cognitive stages of awareness and cognition, a feeling or affective stage of ethical evaluation or judgment, and doing or conative stages of behavioral intentions and behavior stages (e.g., Ferrell, Gresham, and Fraedrich, 1989; Hunt and Vitell, 1986; Rest, 1986; Trevino, 1986). Jones (1991) provides a summary of these models in his Figure 1 (p. 370). Leaning heavily on Rest's model, Jones suggests the following stages.

in cases of low involvement. Perhaps the think-do-feel sequence better represents the nature of low PIE individuals, just as it seems to explain the nature of low involvement in other social behavior (Ray, 1982; Krugman, 1965). Individuals who are high in PIE may exhibit the more traditional think-feel-do sequence that seems to be suggested by the extant ethics models. Only substantial additional research can discover if these speculations have merit.

Appendix A. Scenarios Used in This Study Space City Toys Scenario [perceived unethical scenario] a Space City toys is a group of mechanical and battery-operated toys designed to appeal to 7- to l 1-year-old boys. An entire array of spacesuit clad people, space shuttles, a space station, etc., most of which are capable of limited movement and action, are available.

Action: The commercials for these toys are shown during cartoons and other children's programs. These commercials feature a fullscale animated space city with movement and appearance of objects far beyond that which exists in the toys. Sweetheart Squirrels Scenario [perceived ethical scenario]"

Recognize Moral Issue "+ Make Moral Judgment + Establish Moral Intent + Engage in Moral Behavior

The "Sweetheart Squirrels" is a half-hour cartoon show that is aired during prime Saturday cartoon time. The Sweethearts are a group of animated squirrels, each of which has a distinctive name and personality, as well as a color and symbol that identifies it from the rest. For example, Happy Squirrel is bright yellow and white with a happy face symbol and has a bright, sunny personality. The show is one of the most popular cartoons for children in the 3- to 7-year age group. Sweetheart Squirrel stuffed toys, bearing the name and symbol of the cartoon characters, are available for purchase.

The first stage can be considered cognitive, the second stage affective, and the latter two stages conative. The specific decision about the perceived importance of an ethical issue, if the issue is recognized at all, is likely to take place in the cognitions stage of the process. This is supported by proposition 1, which suggests that PIE occurs before moral judgment. For individuals who are high in PIE, the process probably continues as the existing ethical decision-making models suggest, but for individuals low in PIE the process may be different. As an example from the involvement literature, Krugman (1965) suggested that behavior often precedes an attitude change

Action: During the half-hour cartoon show, a commercial is shown in which the Sweetheart Squirrels appear and promote the purchase of the stuffed toys. a These bracketed phrases did not appear in the questionnaire.

Appendix B. PIE unimportant issue insignificant issue issue is of no concern trivial issue

extremely important issue highly significant issue issue is of considerable concern fundamental issue Moral Equity Scale Items" fair just morally right acceptable to my family

unfair unjust

not morally right not acceptable to my family

a Reidenbach and Robin (1990).

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