Organizational Ethics, Individual Ethics, and Ethical Intentions in International Decision-Making B. Elango Karen Paul Sumit K. Kundu Shishir K. Paudel ABSTRACT. This study explores the impact of both individual ethics (IE) and organizational ethics (OE) on ethical intention (EI). Ethical intention, or the individ- ual’s intention to engage in ethical behavior, is useful as a dependent variable because it relates to behavior which can be an expression of values, but also is influenced by organizational and societal variables. The focus is on EI in international business decision-making, since the inter- national context provides great latitude in making ethical decisions. Results demonstrate that both IE and OE influence EI. Ethical congruence is also discussed as a positive influence. Younger managers are more influ- enced by OE than older managers. The findings call for creating governance mechanisms to enhance ethical congruence, thereby increasing the likelihood of man- agers making ethical choices in organizational decision- making. KEY WORDS: organizational ethics, individual ethics, business ethics, ethical intentions, ethical congruence, corporate governance, international decision-making Introduction Corporate governance refers to the ‘‘system by which companies are directed and controlled’’ (Cadbury, 1992). One of the goals of corporate governance is to create a set of internal mechanisms to ensure sound managerial decisions are made, considering the rights and responsibilities of various stakeholders, together with the ethical norms and standards of the firm. Creating and maintaining a positive ethical climate has been recognized as an important aspect of corporate governance, reducing the costs associated with more intrusive, possibly less effective, means of formal social control, the costs of damaged reputation, and reduced asset value when ethical transgressions come to light (Monks, 2002). Failure to maintain an appropriate ethical culture and to provide employees with appropriate models of ethical behavior can have a high cost for the cor- poration (Monks and Minow, 1989). The ethical climate is most effective when organizational members are internally motivated to behave ethi- cally. Since effective corporate governance is enhanced by concordance between organizational and individual ethics (IE), it is important to under- stand the elements that produce this congruence. Since both organizational-level variables and indi- vidual-level variables influence ethical decision- making, research findings based on studies that focus on one level to the exclusion of the other need to be supplemented by studies that consider both types of variables. This study contributes to the business ethics liter- ature in several ways. The emphasis is on ethical decision-making in international business, an area of considerable contemporary interest (Bird et al., 2009; DeGeorge, 1993; Donaldson, 1989; Donaldson and Dunfee, 1999). Whereas much business ethics research focuses on values and ethical judgments, this study follows the example of Valentine and Ritten- burg (2004), focusing on ethical intentions (EI). By adapting existing vignettes to explicitly represent international scenarios, this study provides an instru- ment that can be used to investigate international business ethics. While observations of actual behaviors would be ideal, verbal assessments of EI are a close measure, falling between the level of values, attitudes, and moral judgments and the level of actual behavior. In addition, the study furthers the understanding of Journal of Business Ethics (2010) 97:543–561 Ó Springer 2010 DOI 10.1007/s10551-010-0524-z