In this study, we employed both organization and economic
theory to propose an ethical climate theory. As a result, we
believe our work makes two key theoretical contributions.
First, ethical climate theory brings ethical content into the
mainstream of organization theory. It is our belief that organization
theory needs to attend more explicitly to the ethical
content in organizational processes. Ethical issues in organizations
increasingly preoccupy theoreticians and practitioners.
Firms are attempting to control the ethical decision making of
individuals, and society is attempting to influence directly the
ethical decision making of firms (e.g., through legislation like
the foreign corrupt practices act, false claims act, and the
racketeering-influenced and corrupt organizations statutes).
Organization theory is well positioned to study and inform this
process, as we demonstrate in this paper. Second, ethical climate
theory provides further data on the relative contribution
of environment, transaction efficiency, and firm idiosyncrasies
to the nature of organizational normative systems. The procedures
developed in this study provide a step toward the systematic
understanding of the types and complexities of such
normative systems.