Formal Infrastructure and Ethical Decision Making: An Empirical Investigation and Implications for Supply Management

Building on Rest's (1986) conceptual model of ethical decision making, we derive and empirically test a model that links an organization's formal ethical infrastructure to individuals’ moral awareness of ethical situations, moral judgment, and moral intention. We contribute to the literature by shedding light on the importance of a multifaceted formal ethical infrastructure–consisting of formal communication, recurrent communication, formal surveillance, and formal sanctions–as a crucial antecedent of moral awareness. In so doing, we discern how these four elements of a formal ethical infrastructure combine to collectively influence moral awareness based on a second-order factor structure using structural equation modeling. We test our model based on survey data from 805 respondents with significant work experience across three separate ethical scenarios. Our results across the three scenarios provide overall support for our model. We found that a second-order factor structure for the formal ethical infrastructure explains the variance among the four infrastructure elements and that a multifaceted formal ethical infrastructure significantly increases moral awareness. Our results further suggest a strong positive effect of moral awareness on moral judgment, which in turn was found to have a positive impact on moral intention. These results were substantiated when taking several individual and contextual control variables into account, such as gender, age, religiosity, work satisfaction, and a de facto ethical climate. Implications for theory, practice, and supply management are discussed.