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Oh, S. Effect of Ethical Climate in Hotel Companies. Encyclopedia. Available online: https://encyclopedia.pub/entry/25315 (accessed on 21 December 2024).
Oh S. Effect of Ethical Climate in Hotel Companies. Encyclopedia. Available at: https://encyclopedia.pub/entry/25315. Accessed December 21, 2024.
Oh, Seok-Youn. "Effect of Ethical Climate in Hotel Companies" Encyclopedia, https://encyclopedia.pub/entry/25315 (accessed December 21, 2024).
Oh, S. (2022, July 20). Effect of Ethical Climate in Hotel Companies. In Encyclopedia. https://encyclopedia.pub/entry/25315
Oh, Seok-Youn. "Effect of Ethical Climate in Hotel Companies." Encyclopedia. Web. 20 July, 2022.
Effect of Ethical Climate in Hotel Companies
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This entry is adapted from the peer-reviewed paper 10.3390/su14137886

Researchers identifies the factors of ethical climate in hotel companies in light of the growing importance of ethics in corporate management. It determines the effects those factors have on organizational trust and, in turn, the effect organizational trust has on organizational citizenship behavior (OCB).

ethical management ethical climate organizational trust organizational citizenship behavior hotel employees

1. Introduction

The impact companies have on society is constantly growing due to private sector-led economic development. With the increasing demand for corporate social responsibility, ethical management is perceived as an essential strategy for enhancing enterprise value and ensuring sustainable development [1][2][3].
Hotel companies are highly dependent on human services; thus, the employee–customer relationship significantly determines the success or failure of a company. Morality and ethical behavior of employees are important in these customer relationships [4]. Organization members tend to violate ethical strictures due to excessive work demanded by the organization or incorrect rules or procedures rather than personal reasons [5]. Organization members tend to accept and internalize the organizational climate in their work environment—they are affected significantly by it [6]. Victor and Cullen [7] defined ethical climate as a pervasive organizational characteristic that affects how an organization’s decisions are made—the shared perception of what ethically correct behavior is and how ethical issues can be handled [7]. Dickson et al. [8] referred to ethical climate as a special case of organizational climate, and Fritzsche [9] stressed that ethical climate is a subset of organizational climate, rather than the ethical values of individuals. Nevertheless, Lu and Lin [10] assert that the ethical climate within the organization has a significant impact on the ethical behavior of members. Ethical climate performs many roles in an organization. It helps resolve ethical issues by guiding employees on what they must do when facing a moral dilemma [11][12][13]. In other words, ethical climate serves as the perceptual lens through which employees diagnose and assess situations in the organizational context [11].
Members that more strongly perceive the ethical climate in the organization show a stronger will to conduct ethical behaviors and practices [14]. No system can actually list all details related to the application of ethics and define them in advance. This is why the ethical climate is more important in securing organizational ethicality than institutional regulations. Unethical behavior by/in an egoistic organization can be reduced by creating an ethical climate [15], and this can also change the organizational climate positively [16].
Organizational trust is important due to the nature of hotel jobs, which involve many interactions among employees. No variable affects individual or group attitudes or behavior as much as trust [17]. Trust is, accordingly, the most important factor that affects the interactions of organization members, and job performance can also be improved by trust [18][19]. A high level of trust in leaders encourages organization members to find ways to have more impact during working hours and actively participate in activities aside from their prescribed roles [20], thereby benefiting both the organization and its members [21].
In hotel companies, which must sensitively handle environmental changes in a customer-focused way, employees must deal with all kinds of different customers with diverse backgrounds and cultures. There are limitations in how fully these employees can be managed based on set rules due to their considerable variety of jobs. Therefore, the hotel staff must make efforts and act voluntarily in addition to performing their given roles; the concept that sums this up is organizational citizenship behavior (OCB). To adapt to rapid environmental changes and survive, such behavior, aside from the prescribed roles of members, is also important. It is difficult for organizations that depend only on the prescribed roles and behaviors of members to survive in competition [22]. In general, organizations want employees to take ownership of their roles and behave in a way that considers the organization’s interests, as opposed to simply performing their explicit duties [23]. OCB is an activity that promotes organizational functions not specifically prescribed by the organization, based on voluntary motivation and the will of members [24]. OCB can increase organizational efficiency and improve performance without additional cost to or support from the organization [25][26].
Accordingly, studies on ethical climate are being conducted in the hotel and hospitality industry. For example, there are studies on ethical work climate in lodging operations as perceived by general managers [27], ethical climate and organizational trust [28], and the relevance of variables such as the following: job satisfaction [29][30], job embeddedness [31], employee compassion [32], organizational commitment [29][33], organizational identification [34], OCB [35], employee incivility [36], workplace deviant behavior [37], and service quality [30]. Moreover, there are studies on unethical managerial behavior [38].
However, there is little research on the effect that ethical climate in hotel companies has on organizational trust, and organizational trust’s effect on OCB. Lee et al. [28] examined the effect of ethical climate on organizational trust among employees of a food service franchise, and most studies have viewed ethical climate as a single factor [31][33][37].
In hotel companies, where ethical issues surface frequently, the ethical climate that encourages the sharing of ethical awareness and promotes ethical decision making and behavior is necessary to bring about ethical behavior among employees [7][10][14][27]. Organizational trust among employees at hotel companies raises organizational performance not only through explicitly defined roles that instill a sense of unity and commitment to the organization, but also through undefined roles by inducing OCB where employees voluntarily perform tasks [22][25][35]. Hence, continuous progress based on performance improvements of an organization is possible by raising organizational trust among employees and encouraging their voluntary participation or OCB through the establishment of an ethical climate in hotel companies.

2. Ethical Climate

One of the key strategic mechanisms for encouraging employees’ ethical behavior is to promote an ethical climate. Ethical climate here refers to a normative climate that reflects organizational procedures, policies, and practices related to moral outcomes [11].
Organizational ethical climate generally has two meanings. First, it is a general perception of the organization’s typical practices and procedures containing ethical content [13]. The ethical climate is the specific part containing ethical content among the practices and procedures of the organization in various sectors. Another meaning of ethical climate is the shared perception of organization members about what ethically correct behavior is and how ethical issues must be handled [9]. Victor and Cullen [7][13] provide a two-level theoretical typology with reference to Kohlberg’s stages of moral development and Schneider’s attraction–selection–attrition framework to categorize ethical climate. They first classified the ethical criterion dimensions into egoistic, benevolence, and principle and then into individual, local, and cosmopolitan based on the locus of analysis. On this basis, they categorize ethical climate into nine types using the 3 × 3 matrix—self-interest, company profit, efficiency, friendship, team interest, social responsibility, personal morality, company rules and procedures, and laws and professional codes.
Based on these nine theoretical factors, Victor and Cullen [7][13] developed 26 survey items on ethical climate. The empirical analysis in their 1987 study led Victor and Cullen to present six types of ethical climate: professionalism, caring, company rules and procedures, instrumental, efficiency, and independence [7]. Subsequently, based on the empirical analysis in their 1988 study, they categorized ethical climate into five types: caring, law and code, company rules, instrumental, and independence [13]. In 1993, Cullen et al. [39] increased the number of survey items from 26 to 36 items, assigning four items to each of the nine ethical climate factors. Based on their empirical analysis, they proposed a classification of seven types: self-interest, efficiency, caring, social responsibility, independence, rules and standard operating procedures, and laws and professional codes [39].
Martin and Cullen [40] pointed out that the nine theoretical factors of ethical climate presented by Victor and Cullen [13] had not been substantiated by empirical analysis. They reviewed studies on ethical climate conducted from 1987 to 2005, based on which they discovered five factors—instrumental, caring, independence, law and code, and rules—and identified how these five factors affect organizational commitment and job satisfaction.
Victor and Cullen [7][13] theoretically devised nine types of ethical climate. However, there are many cases of empirical research in which the typology provided by Victor and Cullen is not found. The lack of consistency in the results of empirical research is due to theoretical limitations as well as the fact that researchers use a wide variety of scales [41]. However, considering that five to seven types are mostly found in empirical studies, the theory and ethical climate typology by Victor and Cullen can be viewed as generally valid.
Tseng and Fan [34] defined organizational ethical climate as members’ perception of ethical procedures, policies, and behaviors in the organization, making reference to the definitions by Victor and Cullen [7][13] and Cullen et al. [39]. They referred to the study by Cullen et al. [39] and classified the ethical climate factors into self-interest, social responsibility, and laws and professional codes, and identified each of their effects on knowledge management. In general, organizations inform their members of what is right or wrong and acceptable or unacceptable through ethical norms. When organization members know and comply with accepted rules and standards, trustworthiness and long-term relationships with others can be promoted [34].
Goebel and Weißenberger [42] examined the relationship of informal controls and ethical climates with trust and organizational performance. While they identified an effect of ethical climate on trust, they failed to identify an effect of ethical climate on organizational performance. Lee et al. [28] examined food service franchise employees and identified how ethical values affect ethical climate and how ethical climate affects organizational trust. Their study identified ethical climate as comprising responsibility, peers’ unethical behavior, and sales orientation in examining its effect on organizational trust. Responsibility turned out to have a positive effect on organizational trust, while peers’ unethical behavior and sales orientation had negative effects on organizational trust.
DeConinck [43] examined how ethical climate affects trust in supervisors among salespeople, considering the influences of responsibility and trust, ethical norms, peer behavior, and selling practices. The results of the empirical analysis showed that only ethical norms and peer behavior affected trust in supervisors. Simha and Stachowicz-Stanusch [44] identified the ethical climate factors as egoistic local climate, benevolent local climate, and principled local climate, and examined their effect on trust in supervisors and the organization. Egoistic climate had a negative effect on trust in supervisors and the organization, while benevolent climate had a positive effect on trust in supervisors and the organization. Principled climate did not show an effect on trust in supervisors but did have a positive effect on trust in the organization.
Lilly et al. [45] classified ethical climate into five factors—caring, law, rules, instrumental, and independence—to determine their effect on organizational trust. The results of the empirical analysis showed that caring, law, and rules had a positive effect on organizational trust, while instrumental climate had a negative effect. Furthermore, Nedkovski et al. [46] examined the effect of ethical climate on trust, classifying ethical climate into three factors, i.e., egoistic, principled, and benevolent climate, and trust into three factors, i.e., trust in colleagues, trust in supervisors, and trust in the organization, to determine how ethical climate affects trust. The results demonstrated that principles and benevolence affect trust. Moreover, Agrawal [47] classified ethical climate into six factors—laws and codes, rules and procedures, independence, caring, company interest, and self-interest—and examined the effect of each on trust in management. The results showed that laws and codes, rules and procedures, and caring all affected trust in management.

3. Organizational Trust

Trust is a key variable that explains organizational effectiveness, because employees with high trust in members are committed to the organization [19][48]. Trust among members of a company is important in multiple ways, producing goods such as boosting morale, producing outcomes, and achieving organizational goals. Trust can be defined as the expectation, assumption, or belief that another person will be beneficial, favorable, or not detrimental to one’s interests [49]. Trust is the individual’s will to believe another person’s actions when there is a mutual risk of opportunistic behavior [50]. There are various concepts of trust, which are mainly classified into two key concepts. First, trust is the will to believe and accept the other person’s behavior when it is impossible to manage or monitor them [51]. Second, trust is about confidence in and positive expectations of the other person [52].
Trust within the organization can be classified into various types depending on the research perspective. However, it can be mainly divided into members’ “institutional trust” (vertical trust in the organization, lateral trust between departments) and “interpersonal trust” among members (vertical trust between subordinate and supervisor; lateral trust among coworkers) [53][54].
Özlük and Baykal [55] classified nurses’ organizational trust into the three categories—their trust in their coworkers, managers, and institutions—and examined their impacts on OCB. Wong et al. [56] explored the effect of justice on organizational trust and the effect of organizational trust on OCB, where organizational trust was divided into the two factors—trust in supervisors and the organization. However, Huang et al. [57], while studying its impact on OCB, identified trust as a single factor—trust in management. Yoon et al. [58] also examined the impact of organizational trust on OCB as a single factor. Choong and Ng [59] looked into the influence of trust on OCB among public secondary school teachers in Malaysia. Similarly, Amini and Kemal [60] examined the impact of trust on OCB among high school teachers in Indonesia. Lastly, Engelbrecht and Hendrikz [61] studied the effect of trust in leaders on OCB among employees of various organizations in South Africa.
Nyhan and Marlowe [62] divided organizational trust into two dimensions: trust in supervisors and trust in the organization. Trust in supervisors is the subordinate’s will to believe in the supervisor’s behavior, promises, or intentions, constituting a positive mental state the subordinate has toward the supervisor [63]. Trust in the organization is the belief that the organization will be beneficial for its members [17].

4. Organizational Citizenship Behavior

OCB is an index that measures extra-role performance, as opposed to the in-role performance of duties [64]. OCB is a critical concept for the reduction in employee turnover rates and production costs of firms and improvement of organizational productivity and customer satisfaction [25][65]. OCB refers to voluntary and discretionary behavior conducted to promote organizational development and efficiency, separate from official tasks given by the organization to individuals [66].
OCB can be explained in terms of altruism and compliance [67]. Altruism refers to the willingness to help and behavior of helping colleagues and people, while compliance refers to observing job procedures and rules. Organ [66] classified OCB into altruism, conscientiousness, civic virtue, courtesy, and sportsmanship. Williams and Anderson [50] divided OCB into OCB-I and OCB-O. OCB-I refers to behavior that helps individual members of the organization, such as supervisors, colleagues, and subordinates, and it includes altruism and courtesy, as presented by Organ [66]. OCB-O refers to behavior that contributes to organizational goals or benefits and includes sportsmanship, conscientiousness, and civic virtue.
Ma et al. [68] developed the three-dimensional model of OCB by emphasizing the importance of customers in the hotel industry. They added OCB directed toward the customer (OCB-C) to the two-dimensional model by Williams and Anderson [50]. Many studies examining the effect of organizational trust on OCB have classified OCB into OCB-I and OCB-O [58][69]. Therefore, the research was conducted by dividing OCB into two dimensions: OCB-I and OCB-O.

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