Skip to main content
SpringerLink
Log in

Does it Pay to Be Ethical? Examining the Relationship Between Organisations’ Ethical Culture and Innovativeness

  • Published:
Journal of Business Ethics Aims and scope Submit manuscript

Abstract

In this article, we examine the relationship between ethical organisational culture and organisational innovativeness. A quantitative empirical analysis is based on a survey of a total of 719 respondents from all levels of three Finnish organisations, both general staff and managers. The organisations belong to both the private and public sectors. The results of this study show that organisations’ ethical culture is associated with their organisational innovativeness, and that different dimensions of ethical culture are associated with different dimensions of organisational innovativeness. The ethical culture of the organisation had a specific role in process and behavioural innovativeness. It was found that congruency of management was the single dimension with the highest effect on organisational innovativeness overall and specifically on process and behavioural innovativeness. These findings suggest that when organisations are aiming for specific outcomes, such as organisational innovativeness, they need to be aware of what dimensions of ethical culture are particularly relevant.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2

Similar content being viewed by others

References

  • Ahmed, P. K. (1998). Culture and climate of innovation. European Journal of Innovation Management, 1(1), 30–43.

    Article  Google Scholar 

  • Alencar, E. M. L. S., & Bruno-Faria, M. F. (1997). Characteristics of an organizational environment which stimulate and inhibit creativity. Journal of Creative Behavior, 31(4), 271–281.

    Article  Google Scholar 

  • Amabile, T. M. (2008). How to kill creativity. Harward Business Review, 76(5), 77–87.

    Google Scholar 

  • Amabile, T. M., Conti, R., Coon, H., Lazenby, J., & Herron, M. (1996). Assessing the work environment for creativity. Academy of Management Journal, 39(5), 1154–1184.

    Article  Google Scholar 

  • Baregheh, A., Rowley, J., & Sambrook, S. (2009). Towards a multidisciplinary definition of innovation. Management Decision, 47(8), 1323–1339.

    Article  Google Scholar 

  • Baruch, Y., & Holtom, B. C. (2008). Survey response rate levels and trends in organizational research. Human Relations, 61(8), 1139–1160.

    Article  Google Scholar 

  • Bassett-Jones, N. (2005). The paradox of diversity management, creativity and innovation. Diversity Management, Creativity and Innovation, 14(2), 169–175.

    Article  Google Scholar 

  • Baucus, M. S., Norton, W. I., Baucus, D. A., & Human, S. H. (2008). Fostering creativity and innovation without encouraging unethical behavior. Journal of Business Ethics, 81(1), 97–115.

    Article  Google Scholar 

  • Belbin, M. R. (1981). Management teams. New York: Wiley.

    Google Scholar 

  • Brown, A. D. (1992). Organizational culture: The key to effective leadership and organizational development. Leadership and Organization Development Journal, 13(2), 3–6.

    Article  Google Scholar 

  • Calantone, R. J., Cavusgil, S. T., & Zhao, Y. (2002). Learning orientation, firm innovation capability, and firm performance. Industrial Marketing Management, 31(8), 515–524.

    Article  Google Scholar 

  • Carroll, A. B. (1991). The pyramid of corporate social responsibility: Toward the moral management of organizational stakeholders. Business Horizons, 34(4), 39–48.

    Article  Google Scholar 

  • Chang, L., & Birkett, B. (2004). Managing intellectual capital in a professional service firm: Exploring the creativity-productivity paradox. Management Accounting Research, 15(1), 7–31.

    Article  Google Scholar 

  • Collier, J. (1998). Theorising the ethical organization. Business Ethics Quarterly, 8(4), 621–654.

    Article  Google Scholar 

  • Crane, A., & Matten, D. (2007). Business ethics. Oxford: Oxford University Press.

    Google Scholar 

  • Dyer, L., & Reeves, T. (1995). Human resource strategies and firm performance: What do we know and where do we need to go? The International Journal of Human Resource Management, 6(3), 656–670.

    Article  Google Scholar 

  • Ellonen, R., Blomqvist, K., & Puumalainen, K. (2008). The role of trust in organisational innovativeness. European Journal of Innovation Management, 11(2), 160–181.

    Article  Google Scholar 

  • Erdogan, B., Liden, B. C., & Kraimer, M. L. (2006). Justice and leader-member exchange: The moderating role of organizational culture. Academy of Management Journal, 49(2), 395–406.

    Article  Google Scholar 

  • Hosmer, L. T. (1994). Why be moral? A different rationale for managers. Business Ethics Quarterly, 4(2), 191–204.

    Article  Google Scholar 

  • Hosmer, L. T. (1997). Why be moral? A reply to Shaw and Corvino. Business Ethics Quarterly, 4(2), 191–204.

    Article  Google Scholar 

  • Huhtala, M., Feldt, T., Hyvönen, K., & Mauno, S. (2012). Ethical organisational culture as a context for managers’ personal work goals. Journal of Business Ethics, 114(2), 265–282.

    Google Scholar 

  • Huhtala, M., Feldt, T., Lämsä, A.-M., Mauno, S., & Kinnunen, U. (2011). Does the ethical culture of organisations promote managers’ occupational well-being? investigating indirect links via ethical strain. Journal of Business Ethics, 101(2), 231–247.

    Article  Google Scholar 

  • Judge, W. Q., Fryxell, G. E., & Dooley, R. S. (1997). The new task of R&D management: Creating goal-directed communities for innovation. California Management Review, 39(3), 72–85.

    Article  Google Scholar 

  • Kaptein, M. (1998). Ethics management: Auditing and developing the ethical content of organizations. Dordrecht: Springer.

  • Kaptein, M. (2008). Developing and testing a measure for the ethical culture of organizations: The corporate ethics virtue model. Journal of Organisational Behaviour, 29(7), 923–947.

    Article  Google Scholar 

  • Kaptein, M. (2009). Ethics programs and ethical culture: A next step in unravelling their multi-faceted relationship. Journal of Business Ethics, 89(2), 261–281.

    Article  Google Scholar 

  • Kaptein, M. (2010). The ethics of organizations: A longitudinal study of the U.S. working population. Journal of Business Ethics, 92(4), 601–618.

    Article  Google Scholar 

  • Kaptein, M. (2011). From inaction to external whistleblowing: The influence of the ethical culture of organizations on employee responses to observed wrongdoing. Journal of Business Ethics, 98(3), 513–530.

    Article  Google Scholar 

  • Lumpkin, G. T., & Dess, G. G. (1996). Clarifying the entrepreneurial orientation construct and linking it to performance. Academy of Management Review, 21(1), 135–172.

    Google Scholar 

  • Martins, E. C., & Terblanche, F. (2003). Building organizational culture that stimulates creativity and innovation. European Journal of Innovation Management, 6(1), 64–74.

    Article  Google Scholar 

  • Miller, T., & Triana, M. (2009). Demographic diversity in the boardroom: Mediators of the board diversity-firm performance relationship. Journal of Management Studies, 46(5), 755–786.

    Article  Google Scholar 

  • Mumford, M. D. (2000). Managing creative people: Strategies and tactics for innovation. Human Resource Management Review, 10(3), 313–351.

    Article  Google Scholar 

  • Nonaka, I., & Takeuchi, H. (1995). The knowledge-creating company: How Japanese companies create the dynamics of innovation. New York: Oxford University Press.

    Google Scholar 

  • Paine, L. S. (1997). Cases in leadership, ethics, and organizational integrity. Chigago: Irwin.

    Google Scholar 

  • Pučėtaitė, R., Lämsä, A.-M., & Novelskaite, A. (2010). Building organizational trust in a low-trust societal context. Baltic Journal of Management, 5(2), 197–217.

    Article  Google Scholar 

  • Quinn, J. B. (2000). Outsourcing innovation: The new engine of growth. Sloan Management Review, 41(4), 13–28.

    Google Scholar 

  • Rebernik, M., & Širec, K. (2007). Fostering innovation by unlearning tacit knowledge. Kybernetes, 36(3/4), 406–419.

    Article  Google Scholar 

  • Rentsch, J. R. (1990). Climate and culture: Interaction and qualitative differences in organizational meanings. Journal of Applied Psychology, 75(6), 668–681.

    Article  Google Scholar 

  • Riivari, E., Lämsä, A.-M., Kujala, J., & Heiskanen, E. (2012). The ethical culture of organisations and organisational innovativeness. European Journal of Innovation Management, 15(3), 310–331.

    Google Scholar 

  • Roberts, E. B., & Fusfeld, A. R. (1981). Staffing the innovative technology-based organization. Sloan Management Review, 22(3), 19–34.

    Google Scholar 

  • Roffe, I. (1999). Innovation and creativity in organisations: A review of the implications for training and development. Journal of European Industrial Training, 23(4/5), 224–237.

    Article  Google Scholar 

  • Rose-Anderssen, C., & Allen, P. M. (2008). Diversity and learning for innovation: Dialogue for collaboration. Journal of Management Development, 27(3), 307–327.

    Article  Google Scholar 

  • Ruppel, C. P., & Harrington, S. J. (2000). The relationship of communication, ethical work climate, and trust to commitment and innovation. Journal of Business Ethics, 25, 313–328.

    Article  Google Scholar 

  • Salavou, H. (2004). The concept of innovativeness: Should we need to focus? European Journal of Innovation Management, 7(1), 33–44.

    Article  Google Scholar 

  • Scott, S. G., & Bruce, R. A. (1994). Determinants of innovative behavior: A path model of individual innovation in the workplace. Academy of Management Journal, 37(3), 580–607.

    Article  Google Scholar 

  • Shaw, B., & Corvino, J. (1996). Hosmer and the “why be moral?” question. Business Ethics Quarterly, 6(3), 373–383.

    Google Scholar 

  • Sims, R. R., & Brinkmann, J. (2003). Enron ethics (or: Culture matters more than codes). Journal of Business Ethics, 45(3), 243–256.

    Article  Google Scholar 

  • Sims, R. R., & Brinkmann, J. (2009). Thoughts and second thoughts about Enron ethics. In Christina Garsten & Tor Hernes (Eds.), Ethical dilemmas in management (pp. 105–114). New York: Routledge.

    Google Scholar 

  • Sinclair, A. (1993). Approaches to organisational culture and ethics. Journal of Business Ethics, 12(1), 63–73.

    Article  Google Scholar 

  • Solomon, R. C. (2000). Business with virtue: Maybe next year. Business Ethics Quarterly, 10(1), 319–331.

    Article  Google Scholar 

  • Solomon, R. C. (2004). Aristotle, ethics & business organisations. Organisation Studies, 25(6), 1021–1043.

    Article  Google Scholar 

  • Treviño, L. K. (1990). A cultural perspective on changing and developing organisational ethics. Research in Organisational Change and Development, 4, 195–230.

    Google Scholar 

  • Treviño, L. K., Butterfield, K. D., & McCabe, D. L. (1998). The ethical context in organisations: Influences on employee attitudes and behaviours. Business Ethics Quarterly, 8(3), 447–476.

    Article  Google Scholar 

  • Treviño, L. K., & Weaver, G. R. (2003). Managing ethics in business organizations: Social scientific perspectives. Stanford, CA: Stanford University press.

    Google Scholar 

  • Välimäki, S., & Lämsä, A-M. (2010). Critical factors for organizational innovation in the field of diverse human resources. In G. Schiuma, J. C. Spender, & M. Weir (Eds.), Conference Proceedings 2010 ‘International Forum on Knowledge Asset Dynamics’ (pp. 1–23).

  • Van de Ven, A. (1986). Central problems in the management of innovation. Management Science, 32(5), 590–607.

    Article  Google Scholar 

  • Victor, B., & Cullen, J. B. (1988). The organizational bases of ethical work climates. Administrative Science Quarterly, 33(1), 101–125.

    Article  Google Scholar 

  • Wang, C. L., & Ahmed, P. K. (2004). The development and validation of the organizational innovativeness construct using confirmatory factor analysis. European Journal of Innovation Management, 7(4), 303–313.

    Article  Google Scholar 

  • Westwood, R., & Low, D. R. (2003). The multicultural muse: Culture, creativity and innovation. International Journal of Cross Cultural Management, 3(2), 235–259.

    Article  Google Scholar 

  • Woodman, R. W., Sawyer, J. E., & Griffin, R. W. (1993). Toward a theory of organizational creativity. Academy of Management Review, 18(2), 293–321.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Jyväskylä University School of Business and Economics, PO Box 35, 40014, Jyväskylä, Finland

    Elina Riivari & Anna-Maija Lämsä

Authors
  1. Elina Riivari
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Anna-Maija Lämsä
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Elina Riivari.

Appendix

Appendix

See Figs. 1 and 2.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Riivari, E., Lämsä, AM. Does it Pay to Be Ethical? Examining the Relationship Between Organisations’ Ethical Culture and Innovativeness. J Bus Ethics 124, 1–17 (2014). https://doi.org/10.1007/s10551-013-1859-z

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10551-013-1859-z

Keywords

Search

Navigation