Shaping Organizational Culture and Ethics: A Literature Review

Introduction and Current Situation

Organizational culture and ethics are two critical components that define an organization's character, values, beliefs, and norms. The culture of an organization determines how things are done, how decisions are made, how people interact with each other, and how work is accomplished. Ethical behavior is essential for establishing and maintaining trust among stakeholders and is the foundation for an organization's reputation. In recent years, the importance of shaping a positive culture and ethical behavior in organizations has gained significant attention due to several high-profile ethical breaches and scandals. These incidents have led to a loss of public trust and confidence in organizations and, in some cases, have resulted in legal and financial consequences. As a result, many organizations have focused on developing a strong ethical culture to avoid such negative outcomes and improve their reputation.

Several factors contribute to shaping the culture and ethics of an organization, including leadership, communication, training, policies, and procedures. To create and maintain a positive organizational culture, leaders must provide clear guidance, set the tone, and model ethical behavior themselves. Effective communication is also critical to ensuring that employees understand the values and goals of the organization, as well as their own roles and responsibilities. Training programs can help employees understand and apply the organization's code of conduct and ethical principles. Policies and procedures provide a framework for employees to follow and hold them accountable for their behavior.

Historical Development of the Literature

A chronological perspective can be used to trace the evolution of ideas and research in the area of shaping organizational culture and ethics. Early work in this field focused on establishing the link between a positive organizational culture and ethical behavior, while more recent studies have investigated the role of specific leadership styles or the impact of technology on organizational culture.

The literature in this review does not follow a strict chronological order. However, it can be observed that the earlier sources focus more on the effects of work ethic and organizational commitment on unethical pro-organizational behavior, as well as the relationship between entrepreneurship and ethics — themes explored in the articles by Grabowski et al. and Vallaster et al. The later sources, meanwhile, focus more on the role of leadership, culture, and mindset in promoting ethical behavior in organizations. In particular, the articles by Metwally et al., Lewellyn and Muller-Kahle, Astrachan et al., Canning et al., Goswami et al., and Ouakouak et al. all address aspects of leadership, culture, or both. These later sources also tend to use more recent data and research methods, reflecting the evolving nature of the field.

Methods and Standards

This literature review includes peer-reviewed articles from reputable journals published between 2019 and 2021. The sources were selected based on their relevance to the theme of shaping organizational culture and ethics. The review is arranged thematically based on the key concepts that emerged from the selected sources, with each theme representing a common thread found throughout the literature. This approach allows for a more comprehensive understanding of the research in the field, as well as the relationships between different topics and sub-topics. Each source is cited using APA citation style, which allows readers to easily locate and access the original material. The purpose of this literature review is to provide a concise and informative summary of current research in the field of organizational culture and ethics.

Themes Found in the Literature

The literature on shaping culture and ethics in organizations covers a range of themes, including the role of values, spirituality, and religion in promoting sustainable ethical behavior; the influence of organizational mindsets on cultural norms, trust, and commitment; the importance of ethical leadership; and the impact of organizational culture on pro-organizational behavior and readiness to change. One study highlights the importance of family businesses incorporating their values, spirituality, and religion in promoting sustainable ethical behavior (Astrachan et al., 2020). Another finds that organizational mindsets predict cultural norms, trust, and commitment (Canning et al., 2020). Ethical leadership is also shown to be a critical factor in promoting ethical behavior in organizations (Goswami et al., 2021), while an organizational culture of effectiveness is shown to mediate the impact of ethical leadership on employee readiness to change (Metwally et al., 2019).

Other studies in the review focus on the relationship between organizational culture and ethical behavior. One study examines the influence of work ethic and organizational commitment on pro-organizational behavior, finding that engaged workers are more likely to break ethical rules (Grabowski et al., 2019). Another looks at the role of empowerment and culture in shaping board gender diversity, highlighting the importance of a positive culture in achieving gender diversity on corporate boards (Lewellyn & Muller-Kahle, 2020). A further study investigates the impact of ethical leadership and emotional leadership on employee quitting intentions in public organizations, finding that employee motivation plays a significant role in shaping the relationship between these factors (Ouakouak et al., 2020). Finally, a bibliometric study and literature review on ethics and entrepreneurship highlights the importance of incorporating ethical values and practices into the entrepreneurship process (Vallaster et al., 2019).

The role of values, spirituality, and religion in promoting sustainable ethical behavior is a theme explored in several of the sources. The study by Astrachan et al. (2020) emphasizes the importance of family businesses incorporating their values, spirituality, and religion in promoting sustainable ethical behavior. The authors argue that a focus on shared values and religious traditions can help family businesses build trust and social capital, and ultimately promote ethical behavior. Similarly, Vallaster et al. (2019) point out that entrepreneurs' ethical standards are shaped by their personal values and beliefs, and that these values are often reinforced by their social and cultural environment. In addition, Metwally et al. (2019) suggest that ethical leaders — who are often guided by strong personal values and a sense of purpose — can create a culture of transparency, fairness, and accountability that is conducive to ethical behavior and positive organizational outcomes. Together, these articles suggest that personal values and purpose are foundational to building cultures that sustain ethical behavior over time.

Canning et al. (2020) investigate the impact of organizational mindsets on cultural norms, trust, and commitment. They find that organizations with a "culture of genius" mindset — characterized by a belief in innate talent and intelligence — are less likely to promote diversity and may foster a culture of mistrust. In contrast, a "culture of development" mindset, which emphasizes learning and growth, is associated with more positive cultural norms and higher levels of trust and commitment. While Canning et al. (2020) focus specifically on the negative effects of "cultures of genius," the theme of organizational mindsets and their impact on culture and ethics is explored elsewhere as well. Lewellyn and Muller-Kahle (2020) investigate the glass ceiling in corporate boards and suggest that empowering leadership and a culture that values diversity can promote gender diversity and lead to positive outcomes for the organization.

This theme is directly related to shaping organizational culture and ethics, as it highlights the importance of promoting an inclusive and diverse culture that values a wide range of perspectives and contributions. By promoting a culture of openness, transparency, and respect, organizations can create a work environment that encourages the sharing of ideas and fosters trust and commitment among employees. This, in turn, can lead to more ethical behavior and positive outcomes for the organization.

Several sources discuss the importance of ethical leadership in shaping the culture and ethics of an organization. The study by Goswami et al. (2021) highlights the importance of ethical leadership in promoting ethical behavior in organizations. The authors find that ethical leadership is positively related to employee job satisfaction, organizational commitment, and trust. They argue that ethical leaders serve as role models for employees, inspire trust and confidence, and create a positive ethical culture within the organization. The study by Metwally et al. (2019) also emphasizes the role of ethical leadership in shaping employees' readiness to change, and shows that an organizational culture of effectiveness mediates this relationship. Similarly, Ouakouak et al. (2020) find that ethical leadership significantly reduces employees' intentions to quit their jobs, while emotional leadership has no significant effect; they suggest that this may be because ethical leaders prioritize the well-being of their employees and create a sense of purpose and meaning in their work. Collectively, these sources provide evidence that ethical leadership is a crucial factor in shaping organizational culture and ethics, and that it can have a significant impact on employee behavior and attitudes.

Grabowski et al. (2019) examine the impact of work ethic and organizational commitment on pro-organizational behavior, finding that engaged workers are more likely to break ethical rules. Lewellyn and Muller-Kahle (2020) investigate the influence of empowerment and culture in shaping board gender diversity, highlighting the importance of a positive culture in achieving gender diversity on corporate boards.

Although there are some differences in the approaches and conclusions of the sources, they generally suggest that an ethical organizational culture is critical for promoting pro-organizational behavior and readiness to change, and that leadership plays a key role in shaping this culture. For example, Grabowski et al. (2019) and Metwally et al. (2019) both highlight the importance of ethical leadership in creating an organizational culture that promotes engagement and effectiveness, while Ouakouak et al. (2020) suggest that emotional leadership may be particularly effective in promoting employee retention. These sources collectively indicate that organizations need to focus on creating a culture that promotes ethical behavior and values, with leadership as a key driver in shaping that culture.

Ouakouak et al. (2020) study the impact of ethical leadership and emotional leadership on employee quitting intentions in public organizations, finding that employee motivation plays a significant role in shaping the relationship between these factors. The results suggest that ethical leadership is negatively related to quitting intentions, while emotional leadership is positively related to quitting intentions. Additionally, employee motivation is found to mediate the relationship between emotional leadership and quitting intentions. This theme ties in with the broader topic of shaping organizational culture and ethics, as it highlights the importance of ethical and emotional leadership in promoting employee motivation and reducing quitting intentions — outcomes that can in turn contribute to a positive organizational culture. No other sources in this review specifically address the relationship between emotional leadership, employee motivation, and quitting intentions, so there is no direct comparison to make within the present literature. However, the topic of ethical leadership is addressed in several other sources, as discussed above.

Vallaster et al. (2019) conduct a bibliometric study and literature review on ethics and entrepreneurship, highlighting the importance of incorporating ethical values and practices into the entrepreneurship process. The study finds that the relationship between entrepreneurship and ethics has gained increasing attention in recent years, with scholars arguing that ethical considerations are critical to the long-term success of entrepreneurial ventures. Vallaster et al. (2019) identify four main areas in which ethics and entrepreneurship intersect: (1) the ethical dimension of entrepreneurial opportunity recognition, (2) the ethical responsibilities of entrepreneurs, (3) the influence of entrepreneurial ecosystems on ethical behavior, and (4) the ethical implications of entrepreneurial failure. The article also finds that ethical considerations have become increasingly embedded in entrepreneurship education and that there is a need for further research on how to effectively integrate ethics into entrepreneurial practice.

As it pertains to the topic of shaping culture and ethics in the organization, the study suggests that entrepreneurs and organizational leaders need to pay close attention to ethical considerations and foster a culture of ethics within their ventures. This includes creating an ethical vision for the organization, establishing ethical norms and values, and promoting ethical decision-making processes. The approach of Vallaster et al. (2019) differs from the other sources in that it focuses specifically on entrepreneurship, whereas the other sources address ethics and culture in organizations more broadly. However, there is overlap in the emphasis on the importance of ethics and culture in promoting sustainable and ethical behavior within organizations.