Exploring relationships among ethical climate types and organizational commitment: A case of Indian banking sector

Abstract

Purpose

Indian banking sector is facing a number of challenges, and increasing number of corporate frauds and employee turnover are among the top list. Literature reveals that gaining insights about ethical climate may provide a possible solution and relief from the challenges being faced. This paper aims to contribute to the understanding of the prevalent various ethical climate types in the Indian banking industry. Furthermore, it presents interesting results by investigating the effect of five theorized ethical climate types on organizational commitment along with its three components in the banking sector.

Design/methodology/approach

This empirical research encompasses a descriptive research design. Sample uses 266 respondents from four prime banks of the Indian banking industry.

Findings

Statistical analyses unveiled that all five conceptualized ethical climate types are prevalent in the Indian banking industry. However, the perception of employees for caring climate was the highest among all others. In contrast to the results reported by Western studies, this research reveals a strong negative impact of instrumental climate on affective commitment. Furthermore, it has been seen that instrumental climate is a significant predictor for the three components of commitment (affective, continuance and normative). However, it fails to predict the overall organizational commitment construct. Likewise, opposed to findings of Western countries, law and code, rules and independent climate types have shown significant relationship and impact on organizational commitment for Indian banking sector employees. It has been found that different commitment components are predicted by a diverse mix of climate types in India.

Practical implications

Findings highlight varying strength of relationship and predictive ability of different ethical climate types with commitment. This helps in elucidating that managers and top executives should focus on building an ethical work environment to warrant high-level commitment among employees. Congruence between employee, manager and organizations’ perception of ethics is a pre-requisite for maintaining a long-term relationship among the parties. This study will enable understanding the role of ethical climate in reducing corporate frauds and employee turnover.

Originality/value

This research addresses a significant gap in literature by exploring the relationship between ethical climate and organizational commitment. The study uses data from the Indian banking industry which contributes to expanding knowledge of the relationship in the Indian context.

Citation

Kaur, J. (2017), "Exploring relationships among ethical climate types and organizational commitment: A case of Indian banking sector", Journal of Indian Business Research, Vol. 9 No. 1, pp. 20-40. https://doi.org/10.1108/JIBR-02-2015-0022