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When does Ethical Code Enforcement Matter in the Inter-Organizational Context? The Moderating Role of Switching Costs

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Abstract

Drawing on signaling theory, we suggest that a supplier’s enforcement of ethical codes sends signals about the supplier that affect a buyer’s decision to continue their commitment to the supplier. We then draw on side-bet theory to hypothesize how switching costs influence the importance of a supplier’s enforcement of ethical codes in predicting a buyer’s continuance commitment to a supplier. We empirically test our model with data from 158 purchasing managers across three manufacturing industries. Results confirm the connection between ethical code enforcement and continuance commitment, but suggest that a supplier’s enforcement of ethical codes matter less when switching suppliers is perceived as too costly.

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Acknowledgments

The authors would like to thank the Social Sciences and Humanities Research Council of Canada (SSHRC) for its financial support of this research.

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Authors and Affiliations

  1. College of Management and Economics, University of Guelph, Guelph, ON, N1G 2W1, Canada

    Scott R. Colwell

  2. NUS Business School, National University of Singapore, Singapore, 119077, Singapore

    Michael J. Zyphur

  3. College of Business Administration, University of Central Florida, Orlando, FL, 32816-1400, USA

    Marshall Schminke

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  1. Scott R. Colwell
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Correspondence to Scott R. Colwell.

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Colwell, S.R., Zyphur, M.J. & Schminke, M. When does Ethical Code Enforcement Matter in the Inter-Organizational Context? The Moderating Role of Switching Costs. J Bus Ethics 104, 47–58 (2011). https://doi.org/10.1007/s10551-011-0888-8

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