Ethical climate in nonprofit organizations: a comparative study

The purpose of this paper is to show how, by looking within one group of nonprofits, perceptions of ethical climate may differ in the nonprofit sector, both within and between separate country contexts.

Executive directors in two groups of social services nonprofits in the UK and Japan were surveyed, and several subsequently interviewed, in accordance with the Ethical Climate Scale developed by Agarwal and Molloy.

The paper finds that perceptions of the ethical climate types relating to “independence” and “law and codes” were polarized, with executive directors in the UK being more likely to base moral decisions on the evaluation of rights, values or principles than on public opinion. In Japan, however, such decisions were predominantly focused on how they would impact on others, both within and outside the organization, in the context of personal responsibility to society and the maintenance of social order.

Social service nonprofits nowadays occupy a major role in the delivery of services which the state used to provide alone. It has therefore become essential for governments to be able to assess the internal culture of nonprofits in order to determine their trustworthiness and reliability, and the best yardstick for this is ethical climate. This research will help state and local government policy makers toward a better understanding of their contractors.

The originality of this study lies primarily in the fact that it was the first time that this type of research had compared similar nonprofit organizations in different countries.