Business ethics is a much debated issue in contemporary America. As many ethical improprieties gained widespread attention, organizations tried to control the damage by institutionalizing ethics through a variety of structures, policies, and procedures. Although the institutionalization of ethics has become popular in corporate America, there is a lack of research in this area. The relationship between the cultural dimensions of individualism/collectivism, power distance, uncertainty avoidance, and masculinity/femininity and the perceptions of managers regarding the institutionalization of ethics is investigated in this study. This research also examined whether managers' level of cognitive moral development and locus of control influenced their perceptions. Data collection was performed through a mail survey of managers in the U.S. and India. Out of the 174 managers of American multinationals who responded to the survey, 86 were Americans and 88 were Indians. Results revealed that managers' perceptions were influenced by the four cultural dimensions. Managerial perceptions regarding the effectiveness of codes of ethics and the influence of referent groups varied according to their nationality. But, managers from both countries found implicit forms of institutionalizing ethics, such as organizational systems, culture, and leadership to be more effective in raising the ethical climate of organizations than explicit forms such as codes of ethics, ethics officers, and ethics ombudspeople. The results did not support the influence of moral reasoning level and locus of control type on managerial perceptions. The results suggested that in order for ethics institutionalization efforts to be successful, there must be a fit or compatibility between the implicit and explicit forms of institutionalizing ethics. The significance of this study rests on the fact that it enriched our understanding of how national culture affects managerial perceptions regarding the institutionalization of ethics. This is the first comparative study between U.S. managers and Indian managers that examines the variables, both explicit and implicit, which influence how ethical values are cultivated and perpetuated in organizations.
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Place Name coordinates. (May be approximate.)
