| In recent years, increasing attention has been given to unethical behavior, especially in the business community. Practices such as embezzlement, fraudulent billing, and overstatement of financial performance have spurred researchers to investigate and identify determinants of unwarranted behavior. Although a variety of works have been undertaken to understand the impact these practices might have on organizational performance effectiveness, the results continue to vary; researchers have found positive and negative relationships as well as no relationships. Consequently, there is no concrete evidence that conclusively indicates that ethical firms are more profitable than the less ethical firms. Nonetheless, scholarship suggests that unethical behavior possible might negatively impact a firm's ability to achieve sustained profitability. This research study investigated quantitatively the relationship between individual ethical behavior and organizational behavior and organizational performance effectiveness. The study sought to discover and explain the relationship between the two independent variables (individual ethical behavior and organization ethical behavior) and organizational performance effectiveness (dependent variable). To accomplish the task, two highly acclaimed theories, moral reasoning, and ethical climate types were relied upon. James Rest's Defining Issues Test Questionnaire (DIT) assessed individual moral reasoning (individual ethical behavior) and Victor and Cullen's Ethical Climate Questionnaire determined the organizational ethical climate (organizational ethical behavior). The resultant data from both questionnaires along with financial measures (return on sales, return on equity, and return on assets) were subjected to Pearson Correlation Coefficient and one tail t test at the industry and total sample levels. The results of the analyses revealed that even wide noticeable correlations at specific industry levels, no one industry segment or sample at the total level exhibited statistical significant correlations. Therefore, this research study found that there were no relationships between perceived organizational ethical behavior, defined by ethical climate style and organizational performance effectiveness. The study also discovered that there was no relationship between perceived individual ethical behavior, explained by ethical reasoning, and organizational performance effectiveness (return on sales, return on equity, and return on assets). |
