To Punish or to Forgive: Managerial Responses to Unethical Employee Behavior from an Organizational Ethical Culture Perspective

Abstract This article examines whether management should respond to unethical employee behavior with punishment or forgiveness from the perspective of how these responses influence the ethical culture of an organization. Using expressive punishment theory, this article argues that both punishment and forgiveness can positively influence various dimensions of an organization’s ethical culture. However, as these managerial responses are mutually exclusive, this article introduces self-punishment by offenders as an alternative path to reconciliation. Reconciliation becomes viable when self-punishment, understood as morally reparative action, generates effects that are comparable to those of managerial punishment in improving the ethical culture of the organization. Based on the organizational ethical culture model, this article proposes specific criteria for self-punishment. When these criteria are met, self-punishment enables management to forgive offenders, thus creating space for further improving the organization’s ethical culture.