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Published in:

14-01-2014

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

Authors: Kristin Smith-Crowe, Ann E. Tenbrunsel, Suzanne Chan-Serafin, Arthur P. Brief, Elizabeth E. Umphress, Joshua Joseph

Published in: Journal of Business Ethics | Issue 4/2015

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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.

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As Scott (1987) notes, formal systems may also be transformed, or changed by informal systems. As this paper focuses on a single point in time, this possibility is not investigated.

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Title: The Ethics “Fix”: When Formal Systems Make a Difference
Authors: Kristin Smith-Crowe
Ann E. Tenbrunsel
Suzanne Chan-Serafin
Arthur P. Brief
Elizabeth E. Umphress
Joshua Joseph
Publication date: 14-01-2014
Publisher: Springer Netherlands
Published in: Journal of Business Ethics / Issue 4/2015
Print ISSN: 0167-4544
Electronic ISSN: 1573-0697
DOI: https://doi.org/10.1007/s10551-013-2022-6

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