Perception of What the Ethical Climate is and What it Should be: The Role of Gender, Academic Status, and Ethical Education

participate in the study. Three hundred and thirty
six of the subjects were freshmen and 355 were
seniors. The instruments were administered and
completed in the classrooms with the permis-
sion of the instructors. The students used opscan
forms to respond to all the items on the ques-
tionnaire. To minimize errors associated with
data entry, the opscan forms were read directly
by the scanner into a data file. SAS software was
used for all the data analysis. 
Construction of the dependent variables
Factor analysis with varimax rotation was used to
determine the items to be used in the measures
of the dependent variables. The analysis per-
formed represents what Comrey (1988) in an
important didactic piece described as “the appli-
cation of tried-and-true exploratory factor-
analytic methods to the task of scale develop-
ment” (p. 760). (See also, Devellis, 1991; and
Pedhazur and Schmelkin, 1991). Indeed,
Comrey’s (1988) and Pedhazur and Schmelkin’s
(1991) suggestions and recommendations con-
cerning the use of exploratory factor analysis
leading to the selection of particular items to
form factor-based scales were adopted virtually
in their entirety.
Having a large sample is important in doing
an adequate factor analysis (Pedhazur and
Schmelkin, 1991). Two hundred observations are
considered minimally satisfactory for most types
of factor-analytic techniques, although factor
structures are likely to considerably improve and
stabilize with even larger samples (see Comrey,
1988, p. 759). Because the current sample con-
sisted of nearly 700 observations, conducting
factor analysis was a highly appropriate strategy.
A principal components analysis was per-
formed with varimax rotation. Several factor
solutions were attempted using the scree plot as
a general guide (See Devellis, 1991 for a good
discussion of the potential criteria to be used in
determining factor solutions). As expected, in
each of the solutions two conceptually distinct
factors remained stable. Items measuring what
the current ethical climate is and what the ethical
climate should be consistently loaded on to two
different factors. A cutoff point of 0.40 was used
for item loadings on the factors. Having this
cutoff point implied that in order for an item to
be included in the factor-based scale, it would
have to share at least 16% of the variance with
the factor. After factor-based scales had been
determined, they were then subjected to a
reliability analysis, and their internal consistency
was determined by calculating the Cronbach’s
alpha. In further analysis, the intercorrelation of
each item to the set of all other items in the scale
was determined. Items having the lowest inter-
correlations were dropped from the scales and
Cronbach’s alphas were than recalculated. If the
new alphas improved then the dropped items
were permanently deleted from the scale.
Reliability of the SHOULDBE factor-based
scale was 0.78 and the reliability of HOWITIS
factor-based scale was 0.72. Typically in social
science research, alphas of over 0.70 are consid-
210
H. K. Luthar et al.

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ered satisfactory (see the discussions in Devellis,
1991; and Pedhazur and Schmelkin, 1991). These
resulting scales (SHOULDBE and HOWITIS)
were used as appropriate dependent variables for
analysis with all items weighted equally. The
decision to give items equal weights in scales has
extensive support in the literature and is consis-
tent with the recommendations of Babbie (1992),
Comrey (1988), Nunnally, (1978), and Pedhazur
and Schmelkin (1991). Specific measures used to
construct the two dependent variables are given
in Table I.
Results
Of the 691 students involved in the study, 379
were male and 294 were female. Eighteen
subjects did not report their sex. The average age
of freshmen in this sample was 18 while the
average age of seniors was 21. Eighty-five percent
of the students reported that they had taken at
least one course in which a portion of the time
had been allocated to discussing ethics. Twenty-
four percent of the students had taken a formal
course in business ethics. Because of missing
values, responses from 33 of the subjects were
eliminated from the sample. Therefore, with the
exceptions of the correlational data, the following
results are based on the responses of 658 subjects.
In doing the analysis the General Linear Models
(GLM) procedure of SAS was used. The GLM
procedure is highly versatile, allows for many
different types of analysis, and can handle both
classification and continuous variables.
Correlation coefficients describing the rela-
tionship between variables are given in Table II.
Significance of each correlation is given in
parentheses underneath. Because of missing
values the N for different correlations varies
slightly. The means and standard deviations of
the dependent variables are given also. Note that
the lower numbers indicate that respondents
tend to strongly agree that there should be
(SHOULDBE) or there is (HOWITIS) a strong
relationship between good business ethics and
positive business outcomes.
Because the two dependent variables are sig-
nificantly correlated, a multivariate analysis was
conducted to determine the overall effect of SEX
(male or female), CLASS (freshman or senior),
and ETHICPRT (exposed to ethics in some
portion of a course or never exposed to ethics
in a course) simultaneously on SHOULDBE and
HOWITIS. This allows a simultaneous test of
differences among multiple dependent variables.
Many researchers recommend that MANOVA be
conducted first to determine whether there are
overall significant differences among groups
before proceeding with more specific univariate
analysis (Pedhazur, 1982). Although there are
many tests available for this purpose the most
widely used is Bartlett’s (1947) test of Wilks’
Lambda.
The hypothesis of no overall effect of SEX was
rejected (Wilks’ Lambda = 0.9843389, F
2, 649
=
5.1629, p < 0.006). The hypothesis of no overall
ACADEMIC-CLASS effect was also rejected
(Wilks’ Lambda = 0.964741, F
2, 649
= 11.8594,