Organizations Appear More Unethical than Individuals

Organizations Appear More Unethical than Individuals

By
Arthur S. Jago, Jeffrey Pfeffer
Journal of Business Ethics. February
3, 2018, Pages 1-17

Both individuals and organizations can (and do) engage in unethical behaviors. Across six experiments, we examine how people’s ethical judgments are affected by whether the agent engaging in unethical action is a person or an organization. People believe organizations are more unethical than individuals, even when both agents engage in identical behaviors (Experiments 1–2). Using both mediation (Experiments 3a–3b) and moderation (Experiment 4) analytical approaches, we find that this effect is explained by people’s beliefs that organizations produce more harm when behaving unethically, even when they do not, as well as people’s perceptions that organizations are relatively more blameworthy agents. We then explore how these judgments manifest across different kinds of organizations (Experiment 5) as well as how they produce discrepant punishments following ethically questionable business activities (Experiment 6). Although society and the law often treat individuals and organizations as equivalent, people believe for-profit organizations’ behaviors are less ethical than identical individual behaviors. We discuss the ethical implications of this discrepancy, as well as additional implications concerning reputation management, punishment, and signaling in organizational contexts.