Compliance with Codes of Ethical Conduct: The Effects of Authority and Proximity on Ethical Reasoning Sandra M. Richardson University of Central Florida srichardson@bus.ucf.edu Kelly McNamara Hilmer University of Central Florida kmac@bus.ucf.edu James F. Courtney University of Central Florida jcourtney@bus.ucf.edu Abstract Ethical failures at large, once-respected firms have dramatically illustrated that ethical behavior is of vital importance to organizations. Information technology may be one type of tool to help get widespread participation in ethical processes in distributed organizations to raise the level of awareness of ethical issues and ethics programs. This paper integrates Jones [11] model of ethical decision making with Weaver and Trevino’s [22] findings on compliance with ethics programs to study ethical decision making. The study uses web-based discussion forums to examine the effects of authority and proximity (closeness to the subject) on moral reasoning concerning the punishment for a student guilty of cheating and intent of moral actors to comply with codes of ethics. It was found that authority and proximity affect ethical decisions, but the process did not increase intent to comply with the ethics code. Overall, participants seemed satisfied with the process and their decisions. 1. Introduction Colossal ethical failures at such firms such as Enron, WorldCom, Tyco and Arthur Anderson have affected the lives of thousands, if not millions, of employees, retirees, investors and other stakeholders. One result of these failures has been increased attention paid to ethical behavior within organizations, including increased rates of implementation of formal codes of ethics and legal compliance programs. It is no longer enough to expect individuals to make ethical decisions, nor is it enough to study those decisions in isolation. Most large companies today have a formal policy, or code of ethics, and have established departments or assigned responsibility for managing their corporate ethics to high ranking employees; and many companies today offer formal ethics training and have set up telephone lines for reporting problems or resolving questions they face in their work environment [22]. The complexity of ethical decision-making and compliance in today’s organizational climate has increased. Large companies are often geographically dispersed making face-to-face meetings difficult if not impossible. Thus, organizations of all types are relying more and more on information and communications technology as a tool to bring geographically dispersed employees together to discuss important issues and reach decisions, resulting in more complex arenas for questions involving codes of conduct and ethical decision making. Nonetheless, information technology is playing a prominent role in these organizations, enabling a broad range of participation in dispersed organizational decision making processes. Decisions involving compliance with an organization’s ethical code of conduct may be made through the use of information technology. The impact that this technology has on ethical decision-making and compliance with ethical codes of conduct is an area that has yet to be thoroughly examined in the literature. The current literature has illustrated that there are several factors that influence an individual’s compliance with ethical codes of conduct. Success, or compliance, is dependent on two factors in general, the program itself, combined with the unique organizational context in which the program is embedded. Compliance is also influenced by each individual’s perception of the two factors [22]. Ajzen and Fishbein [1] illustrate that compliance can be influenced by a decision makers attitude, the perception that an individual has regarding the perception of others’ attitudes, and the degree to which the individual perceives that he or she has control over carrying out the intended behavior. Each of these perceptions on the part of decision makers has a prominent role in their compliance with ethical codes of conduct. Therefore the perceptions of factors regarding ethical decision-making should be examined in regard to compliance. In this paper we will specifically examine the role of those perceptions with regard to ethical decision making using current information technology in the form of web- based discussion forums. Jones’ [11] model is prominent 0-7695-2268-8/05/$20.00 (C) 2005 IEEE Proceedings of the 38th Hawaii International Conference on System Sciences - 2005 1