Regulating Ethical Failures: Insights
from Psychology
David De Cremer
Ann E. Tenbrunsel
Marius van Dijke
ABSTRACT. Ethical failures are all around. Despite their
pervasiveness, we know little how to manage and even
survive the aftermath of such failures. In this paper, we
develop the argument that as business ethics researchers we
need to zoom in more closely on why ethical failures
emerge, and how these insights can help us to be effective
ethical leaders that can increase moral awareness and
manage distrust. To succeed in this scientific enterprise, we
advocate the use of a behavioral business ethics approach
that relies on insights from psychology.
KEY WORDS: behavior business ethics, leadership,
moral awareness, trust
Introduction
The numerous international scandals in business
such as those at AIG, Tyco, WorldCom, Enron, and
Ahold have made all of us concerned about the
emergence of unethical and irresponsible behavior in
organizations. It seems that no matter where we look
today, the erosion of ethics and basic moral princi-
ples of right and wrong have taken us to the point
where trust in our institutions and the very systems
that make our society work are in imminent danger
of oblivion. These observations make clear that
ethical failures have become an important reality for
corporations, organizations, and societies at large and
as a result there is a growing concern on how to
manage and regulate such failures (De Cremer,
2009, 2010; Tenbrunsel and Smith-Crowne, 2008).
Responding to these observations, in 2009
(October 21–22), the authors of this article orga-
nized a 2-day conference on the topic of ‘‘On
understanding the psychology of regulating ethical
failures’’. The conference took place at Rotterdam
School of Management, the Netherlands and the
formal organization was in the hands of the Erasmus
Centre of Behavioural Ethics, which in the same
week of the conference was officially opened by the
Erasmus University Rotterdam. The conference was
a great success and received also much media
attention in the Netherlands. Because of the neces-
sity of understanding better how to deal with ethical
failures, a special issue in Journal of Business Ethics
was agreed upon.
In this special issue, we aim to zoom in on the
art of regulating ethical failures by providing a psy-
chological account of how leadership, rules and
the management of distrust may operate in the case
of ethical failures. Although many organizations
attempt to prevent the emergence of unethical deci-
sions and actions, it is clear that these events will
nevertheless occur (De Cremer et al., 2010b). For
this reason, policy makers and organizations should
be aware and possess the necessary knowledge on
how to remedy emerging ethical failures, that is,
how to deal with things when they have gone
wrong. One of the more popular responses is to
develop formal programs in which leaders are edu-
cated, rules are implemented and the emerging dis-
trust is tackled (Schwartz, 2001; Weaver, 2001). The
idea underlying such formal programs is to increase
awareness of moral principles and create improved
ethical climates, often through interventions imple-
mented at the leadership level. Codes of conducts,
rules and integrity officers are popular tools that
these formal programs employ, which not only serve
to increase moral awareness and improve ethical
cultures but also can be mechanisms which attempt
to restore trust (Adams et al., 2001). A problem with
this approach is, however, that leaders, rules and
trust management are not a perfect route to success
when it comes down to promoting integrity and
Journal of Business Ethics (2010) 95:1–6 Ó Springer 2011
DOI 10.1007/s10551-011-0789-x