How peers influence ethical decision-making in work organizations: Revisiting the social dimension

Amid increasing revelations of improprieties in financial accounting, disclosure of health and safety information, and general public accountability among leading organizations, the need for research on ethical decision-making (EDM) has probably never been greater. Senior executives in organizations may "set the tone" for ethics, but their influence cannot fully explain how employees make ethical decisions. The social context for ethical practice in the workplace also depends upon regular social interactions among employee peers (coworkers). Although past research in business ethics and related fields of study offers strong evidence that employees learn from their coworkers' behavior, the details of how coworkers may influence moral choice are not well understood. Most existing models of ethical decision-making tend to summarize research on "referent others"---including employee peers and managers---without specifying either the scope of peer influence or how it may operate at different stages in the EDM process. In addition, some models do not distinguish clearly between coworker influences on ethical decision-making and those of managers. To address these gaps and limitations, this study builds on current EDM models and on theory and empirical findings from a number of related literatures. The central argument is that peer interactions uniquely affect how employees identify and respond to ethics-related information, even after accounting for other major influences. Using a national ethics data set, several hypotheses are tested. These hypotheses address peer effects on employees' moral awareness and behavior as well as on how employees experience select outcomes related to ethical culture in their organizations (e.g., satisfaction with the response to reported misconduct). The results are informative and help clarify the scope and limitations of peer influence. The primary hypotheses receive modest support, indicating that peers exert social influence at key stages in the EDM process. Importantly, these findings hold even after the effects of other study variables---including those related to management influence---are taken into account. In contrast, hypotheses that peers influence select outcomes associated with ethical culture are not supported. The results and their implications for ethics research and organizational practice are discussed.