International Journal of Hospitality Management 39 (2014) 97106

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International Journal of Hospitality Management

journal homepage: www.elsevier.com/locate/ijhosman

Codes of ethics, corporate philanthropy, and employee responses

Yong-Ki Lee a,1 , Joowon Choi b,2 , Bo-young Moon c, , Barry J. Babin d,3
a
College of Business Administration, Sejong University, 209, Neungdong-ro, Gwangjin-gu, Seoul 143-747, South Korea
b
Department of Hospitality Management and Dietetics, Kansas State University, Manhattan, KS 66502, USA
c
Department of Sports and Outdoors Eulji University, 553 Sanseongdaero, Sujeong-gu, Seongnam-si, Kyeonggi-do 461-713, South Korea
d
Department of Marketing and Analysis, Louisiana Tech University, Ruston, LA 71272, USA

a r t i c l e i n f o a b s t r a c t

Keywords: Although ethical management would seem to be a must in todays business climate, research and practi-
Codes of ethics cal applications in the services industry and in developing economies remain scarce. Hence, the purpose
Corporate philanthropy of this study is to investigate the effects of codes of ethics and corporate philanthropy on the Korean
Engagement
services industry. The results demonstrate that, overall, a code of ethics directly affects corporate philan-
Turnover intention
thropy and organizational engagement. Corporate philanthropy, in turn, positively relates to employee
Services
engagement and turnover intention. Turnover intention is explained by job and organizational engage-
ment. The strategic importance of ethics management and the following philanthropic activities in the
hospitality services are illustrated from the ndings of this research.
2014 Elsevier Ltd. All rights reserved.

1. Introduction
Good ethics is simply good business (Koonmee et al., 2009;
Lantos, 2001). Socially responsible marketing rms act with the
realization that their actions affect many stakeholders, including
customers, employees and society at large (Madden-Hallett, 2009).
All organizations sometimes face ethical scrutiny, even at times due
to circumstances not entirely under their control. The Bhopal gas
tragedy (1984) in India, the Exxon Valdez oil spill disaster (1989)
and the Enron scandal (2001) give us lessons about the diversity of
and potential ethical consequences associated with business envi-
ronments.
Even a cursory examination of worldwide corruption indices
(http://cpi.transparency.org/cpi2012/results/) suggests that
weaker economies and lower standards of living tend to go along
with high corruption. South Korea provides a case study of sorts
given the remarkable transition from among the worlds poorest
countries in 1950 to one of the worlds leading economic forces
today. South Korea has been a G20 member since 1999. The
Korean government promoted the growth of large corporations by
subsidizing bank loans to provide capital at below market rates and
providing discounted government land use, among other things
Corresponding author. Tel.: +82 31 740 7256.
E-mail addresses: yongki2@sejong.ac.kr (Y.-K. Lee), jwchoi@ksu.edu (J. Choi),
bymoon@eulji.ac.kr (B.-y. Moon), bbabin@latech.edu (B.J. Babin).
1
Tel.: +82 2 3408 3158.
2
Tel.: +1 785 532 2213.
3
Tel.: +1 318 257 4012.
(Lee et al., 2009). South Koreas corruption index remains steady
(ranked 45 out of 174 nations, those with low numbers enjoy
less corruption) and various public scandals put some Korean
businesses in an unfavorable light. Subsequently, Korean rms
linked publicly with unethical behavior openly provide charity and
support as public retribution for potentially ill-gotten material
gains. These acts also ght against a prevailing anti-corporation
public sentiment (Lee et al., 2009).
Given the potentially deleterious consequences (Jose and
Thibodeaux, 1999), many rms are attempting to institutionalize
good ethics by establishing a formal code of ethics, credos, ethical
values statement, and/or codes of conduct (Ki et al., 2012). Codes of
ethics can play key roles in demonstrating the organizations moral
concern, transmitting ethical values to organizational members,
and impacting the ethical behavior of organizational members. If
effective, an organizations ethical work climate improves and the
rm can respond better to external demands and pressures from
stakeholders (Raiborn and Payne, 1990; Wotruba et al., 2001). In
addition, companies openly associate with social causes as a way
of enhancing their reputation, which in turn, may produce pos-
itive effects on sales and market share (Papasolomou-Doukakis
et al., 2005). Accordingly, corporate responsibility activities can be
a source that helps a rm to create resources and capabilities from
resource-based view (Branco and Rodrigues, 2006; McWilliams
et al., 2006). Although the effectiveness of ethics codes have been
mixed and controversial (Ki et al., 2012), it has become a fact in
todays business world (Chonko et al., 2003). We believe that the
adoption of a corporate code of ethics is particularly meaningful in
South Korea where public displays strongly shape image.

http://dx.doi.org/10.1016/j.ijhm.2014.02.005
0278-4319/ 2014 Elsevier Ltd. All rights reserved.
98 Y.-K. Lee et al. / International Journal of Hospitality Management 39 (2014) 97106
Ethics codes often encourage corporate philanthropy (CP) activ-
ities (Sharma et al., 2011; Wood, 1991). CP activities demonstrate
corporate social responsibility (CSR). CP activities may even build
competitive advantages and increase employee morale (Porter
and Kramer, 2002) and commitment (Collier and Esteban, 2007).
From this perspective, cause-related marketing strategies can be
implemented through willingful employee participation (Liu et al.,
2010). Such action enhances job and organizational engagement
(Brammer et al., 2007; Lim, 2010) and decreases turnover (Lee
et al., 2012a,b). Employees as internal customers then become lead-
ers and encourage customers, suppliers, and community groups to
communicate a rms socially responsible message (De Bussy et al.,
2003).
Service rms are particularly keen on creating an ethical image
as they inevitably interact closely with customers. For a hospitality
rm, the institutionalization of ethics manifests itself in the actions
of its front-line service providers. Frontline personnel, including
salespeople, are particular susceptible to ethical dilemmas due
to conicting demands that they routinely face in their bound-
ary spanning roles (Babin and Boles, 1998; Dubinsky et al., 1986).
Frontline employees who toil in a less than ethical work climate
experience greater on the job conicts, which in turn contributes
to increased turnover (Levy and Dubinsky, 1983). An ethical work
climate can be promoted through numerous means not the least of
which is the adoption of codes of ethics and policies that promote
a sense of responsibility among workers (Babin et al., 2000; Porter
and Kramer, 2002).
Overall, very little is known about ethical governance in Korea or
emerging economies. Lacking a more formalized approach includ-
ing a code of ethics, some South Korean rms rely exclusively
on a formalized whistle-blower system. Moreover, research about
ethics and corporate responsibility in hospitality is still in its
infancy. Very little hospitality research reviews issues related to
codes of ethics (c.f. Coughlan, 2001; Payne and Dimanche, 1996).
The purpose of this study is to examine the role played by explicit
forms of codes of ethics and corporate philanthropy in changing the
work environment among Korean service rms. In particular, the
work sheds light on the link between formalized ethical procedures
and employee responses including job engagement, organizational
engagement and turnover intentions among service employees.
This paper takes steps in bridging the research gap by grounding
itself in the code of ethics and CP literature and providing empirical
evidence of their outcomes. As such, the work offers an opportu-
nity to develop theory in this important area and make practical
recommendations for implementation.
2. Literature review
2.1. Codes of ethics
A code of ethics is a written expression of an organizations
ethical norms and values (Valentine and Barnett, 2003, p. 359)
providing useful guidelines for managerial policy and employee
decision-making (Sims, 1991). The Code should inuence decisions
about all manner of issues including supervisor-employee behav-
ior, customer treatment, consideration of societal concerns and
public stakeholders, not the least of which deals with customer
and public safety and welfare.
The need to institutionalize ethics is alluded to in Brenners
(1992) study saying that most ethics programs are implicitly
inherent within the organizational culture, but are not explic-
itly developed. A code of ethics manifests itself in the form of
policy manuals, formal ethics training and instructional materi-
als, employee orientation programs, ethics audits and committees
(Callan, 1992; Dean, 1992; Trevino and Nelson, 1995; Vitell and
Singhapakdi, 2008). Questionnaire and telephone survey target-
ing the top 200 Korean companies in 2009 showed that the key
contents of formalized charters of ethics are compliance with
internal standards of operation and regulations, followed by fair
trade and legal compliance, social contribution, and then other
things (KCCI, 2010). However, employees often are unaware of the
existence or unfamiliar with the content of organizational codes
of ethics (Wotruba et al., 2001). Hence, awareness of the codes
contents can help in establishing explicit rules and guidelines for
ethical behavior (c.f. Singhapakdi and Vitell, 2007).
Ethics-oriented corporations can be protable. A corporate
endorsement of high levels of ethical standards can be encour-
aged by developing a code of ethics. Sims (1991) pointed out
that such codes of ethics not only help develop a CEOs commit-
ment, but they also help retain public trust, stress managerial
professionalism, encourage employees to abide by established
laws and protect stakeholders against employee misconduct. A
code of ethics should do more than espouse a minimally accept-
able type of behavior to keep abreast of ethical global trends
(Weeks and Nantel, 1992). Establishing a code of ethics, or at least
the perception of ethical behavior, seems mandatory for public
corporations.
2.2. Corporate philanthropy
According to social institutional theory, a rm is viewed as a
public institution sanctioned by the state for some social good
(Boatright, 2000, p. 248). As such, corporations, not just nonprot
institutions, exist to serve society in some way and to promote soci-
etal advancement (Carroll, 2009; Davis, 1983). Firms that do well
from a marketing standpoint should also work to promote a fair
and just marketplace.
CSR should generally meet four societal expectations: eco-
nomic, legal, ethical, and philanthropic (Carroll, 1999). Among
those, philanthropy derives from the Greek roots meaning the
love of humans. A companys economic, legal, and ethical duties
are mandatory, whereas philanthropic responsibility is volun-
tary and desirable (Carroll, 2009). As illustrated by Lantos (2001,
p. 20), If possible, do good. A philanthropy-based company
may work to minimize public problems (e.g., poverty, illiteracy,
crime, underfunded educational institutions, chronic unemploy-
ment, environmental pollution) to improve societal welfare and
enhance the quality of life (Brenkert, 1992; Jamali et al., 2008;
Velasco, 1996).
In Korean culture, the notion of philanthropy resonates. Korean
culture is seen as a giving culture captured in Korean by the
word, jeong, which translated into English means affection and
sharing for one another (Yang, 2006). In addition, collectivistic Con-
fucianism prevails in Korea and values obligations to others over
self-interest, and gives priority to harmony between group mem-
bers (Markus and Kitayama, 1991; Miller, 1994; Yang, 2006). Miller
(1994) refers to it as intrinsic benevolence, charity, and virtue.
Although CP is relatively new in Korea, dating back only
about two decades (Lee et al., 2009), companies are embracing
the concept by increasing charitable giving (Korea Herald, 2011).
According to the Community Chest of Korea, total charitable giv-
ing from 2005 to 2010 was approximately 1.3 trillion won with
844 billion won (65%) given by Korean corporations (Korea Herald,
2011). As indicated above, some rms are trying to rebrand them-
selves by publically participating in CSR (Kahn et al., 2012). Others
ignore the inuence of social activities and solely focus on sales and
prots (Flores, 2001). Despite rising public awareness, CPs impact
on service rms specically remains unexplored (Holcomb et al.,
2007).
 Y.-K. Lee et al. / International Journal of Hospitality Management 39 (2014) 97106 99

2.3. Job engagement and organizational engagement

Employee engagement represents a new and emerging area

proving vital to success in the services sector (Saks, 2006, p. 612).
Surprisingly, researchers comment on the paucity of employee
engagement research (e.g., Kim et al., 2009; Saks, 2006; Sltten
and Mehmetoglu, 2011). By Kahns (1990) denition, work engage- Fig. 1. Theoretical framework.
ment is the harnessing of organization members selves to their
work roles [by which they] employ and express themselves phys-
about the welfare of its stakeholders wants the code of ethics to
ically, cognitively, and emotionally during role performances (p.
be more than a publicity stunt (Ndubmisis et al., 2014). The promi-
694). Roberts and Davenport (2002) set forth a denition of job
nence of norms and policies regarding ethical standards become a
engagement as a core aspect of the self representing a persons
primary dimension embodying an ethical work climate in service
enthusiasm and involvement in his or her job (p. 21). Hence,
organizations (Babin et al., 2000). An ethical work climate sets
engaged workers have a state of mind that is positive and fullling
the tone for ethics throughout the organization. In this way, the
in work characterized by vigor, dedication, and absorption (Bakker
code of ethics sets a standard and expectations for actions not
and Demerouti, 2008; Schaufeli et al., 2002).
only among managers, but also among those critical employees
Higher levels of job engagement result in outcomes that orga-
charged with delivering value to customers. As employees become
nizations value. An individual who is highly engaged in their job
aware of the ethical actions of managers they develop a healthier
perceives that the work personally ts them and nds the work
outlook about the organization and their work (Deconinck, 2011).
intrinsically motivating (Roberts and Davenport, 2002). Engaged
This healthier outlook provides the general mechanism by which
employees feel a strong connection to the company and work hard
employees awareness of codes of ethics and philanthropic acts by
to innovate and improve (Mirvis, 2012). Further, they usually put in
management eventually reduce turnover among service employ-
extra effort (Mirvis, 2012). Engaged employees take actions more
ees. Fig. 1 illustrates this general theoretical framework. Below,
likely to meet customer and company desires and in doing so, they
specic generalizations are offered with respect to outcomes on job
contribute to rm performance (Roberts and Davenport, 2002).
and organizational engagement and then with turnover intentions.
Schaufeli et al. (2009) nd that when individuals are engaged in
their work, they express less psychosomatic complaints than their
2.6. Outcomes of codes of ethics
non-engaged counterparts.
Previous research explores correlates of employee engagement.
Valentine and Fleischman (2007) argue that moral develop-
In Salanova et al.s (2005) study, work engagement positively
ment (i.e., ethics programs) facilitates broader corporate ethical
associates with a supportive service climate promoting both
obligations to society. They view CP and codes of ethics as ways
restaurant employee performance and customer loyalty. In the
of stimulating social responsibility and thereby provide signals of
context of fast-food restaurants, greater levels of employee engage-
moral development (also see Koonmee et al., 2009). Other authors
ment can increase their objective nancial returns (Xanthopoulou
also point to the performance benets such as integrity and pub-
et al., 2009). Moreover, role benets, job autonomy, and strategic
lic philanthropy as potential sources of competitive advantage
attention relate positively to employee engagement (Sltten and
(Turban and Greening, 1997). Business research also suggests that
Mehmetoglu, 2011).
companies that have ethically sound codes of ethics participate
more in CP (Sharma et al., 2011; Wood, 1991).
2.4. Turnover intention
As indicated in the theoretical framework, the pervasive knowl-
edge of formal codes of ethics among employees can be a key
Turnover plagues many service industries including the hospi-
to a healthy ethical work climate (Deshpande, 1996; Jose and
tality industry. Sixty percent of front-line employees and 25 percent
Thibodeaux, 1999; Koh and Boo, 2001; Trevino et al., 1998;
of managerial positions leave their job each year (Woods et al.,
Valentine and Barnett, 2003). Over time, the ethical work climate of
1998). Turnover intention reects the extent to which individuals
a marketing organization solidies and employees who are uncom-
in an organization want to leave their job and are actively engaged
fortable in such an environment fail to t in and show a greater
in any effort to do so. Conversely, intention to remain expresses the
inclination to look for work elsewhere (Babin et al., 2000; Sims and
opposite attitude and behavior (Kraut, 1975; Mobley et al., 1978).
Kroeck, 1994). As a rm receives public acclimation for good ethics
In general, job performance among new and veteran service
over time, these long-term employees come to take greater pride in
providers diminishes with turnover intention. Adding to the
their work and develop a stronger commitment and are willing to
turnover problems, new employees are unproductive and require
sacrice to make the rm successful. Therefore, this study suggests
substantial resources to be trained. Work-related conicts and
a set of hypotheses including outcomes of adopting, maintaining
burnout among new employees limits productivity as employees
and living a strong code of ethics.
are unable to concentrate on the job (Tracey and Hinkin, 2008). For
these reasons, retaining employees is more effective than hiring Hypothesis 1. Codes of ethics are positively associated with CP.
new ones (Budhwar et al., 2009).
Hypothesis 2. Codes of ethics are positively associated with job
Reichheld (2001) urged that effective employee retention leads
engagement.
to increased customer retention. Mainly, front-line employees run
hospitality services. Firms that try to demonstrate the fact that the Hypothesis 3. Codes of ethics are positively associated with orga-
company is a concerned and caring organization may well pro- nizational engagement.
mote attitudes leading to comfort among employees and thus a
decreased desire to leave the job. 2.7. CP, job and organizational engagement and turnover
intention
2.5. Theoretical development
Along the same lines, CP positively inuences employee engage-
While a rm may adopt a formal code of ethics as a way of get- ment in their work (Roberts and Davenport, 2002). For example,
ting some short-term positive PR, a rm that is truly concerned Sirota Survey Intelligence (2007) reports that 75% of employees
100 Y.-K. Lee et al. / International Journal of Hospitality Management 39 (2014) 97106

in rms perceived as committed to social responsibility also con-

Job
sider themselves highly engaged in their jobs. Indeed, more than Engagement
H2
three out of four workers in a survey involving respondents from H8

more than 20 countries express a preference to work for a company H4

noted for socially responsible performance (Reputation Institute, H1
H7
Codes of H3
Corporate Turnover
2008). A corporate prosocial behavior enriches employees sense Ethics Philanthrop y Intention
H6
of belonging and identication in the workplace (Googins et al., H5
2007).
Thus, public philanthropy represents another opportunity to H3 H9
Organizational
improve work engagement (Brammer et al., 2007; Collier and Engagement
Esteban, 2007). CP in this way serves as a positive motiva-
tional resource (Kenexa Research Institute, 2010). CP boosts
Fig. 2. Proposed model.
employee goodwill and morale, and enables a rm to attract
capable employees (Porter and Kramer, 2002). A six-country sur-
vey suggests that employees intend to stay with organizations 2.9. Relationship among job engagement, organizational
longer as employees perceive them as more socially responsi- engagement and turnover intention
ble (Kenexa Research Institute, 2010). Similarly, CP reinforces
employees trust toward their organization, which in turn, low- Employees deep in work engagement nd difculty detach-
ers turnover intention (Lee et al., 2012a,b). Hence, the following ing from their job because of the strong personal identication
hypotheses: they have with their work and organization (Hobfoll, 2001). Work
becomes a primary source of self-identity. Since their work and
Hypothesis 4. CP is positively associated with job engagement. organization are seen as providing so many resources, both tan-
gible and intangible, engaged employees may be reluctant about
Hypothesis 5. CP is positively associated with organizational
changing or quitting their job (de Lange et al., 2008). Engagement
engagement.
in this way mediates the relationship between job resources and
Hypothesis 6. CP is negatively associated with turnover intention. turnover intention (Bakker and Demerouti, 2008; Schaufeli and
Bakker, 2004). Hence, the following hypotheses:
2.8. Job engagement and organizational engagement Hypothesis 8. Job engagement is negatively associated with
turnover intention.
Kahn (1990) proposed that engagement gives rise to positive
outcomes at both the personal level (i.e., quality of work and Hypothesis 9. Organizational engagement is negatively associ-
experiences of doing that work) and the organizational level (i.e., ated with turnover intention.
the growth and productivity of organizations). Engaged employ- The hypotheses come together to form a detailed process model
ees express positive emotions such as happiness, joy, contentment as illustrated in Fig. 2.
and enthusiasm (Bakker and Demerouti, 2008). Such positive
experiences and emotions tend to drive positive work outcomes.
3. Methods
Schaufeli and Bakker (2004) argue that engaged employees express
greater attachment to their organization and a lesser tendency
3.1. Sample and procedure
to quit. Engaged employees have high levels of energy and pos-
itive work affect (Sltten and Mehmetoglu, 2011; Sonnentag,
Data were collected from service employees working for ve-
2003). These positive energies manifest themselves in greater
star hotels located in Seoul, South Korea. Researchers contacted
engagement.
Social exchange theory (SET) provides a theoretical basis to
explain why employees choose to become more or less engaged Table 1
Prole of the sample.
in their work and organization (Saks, 2006). Engagement devel-
ops as a result of an abundance of individual employee resources Frequency (n) Percentage (%)
(Halbesleben and Wheeler, 2008). When an organization provides Gender
employees with these resources and benets, they feel obliged Female 156 53.8
to return by bringing themselves more deeply into their var- Male 132 45.5
Missing 2 0.7
ious role performances (Kahn, 1990; Saks, 2006). When both
Age
the rm and the employees comply with the exchange rules, a Below 20 years old 10 3.4
trusting and loyal relationship along with a mutual commitment 2029 115 39.7
between employees and their company develops (Cropanzano and 3039 114 39.3
Mitchell, 2005). Thus, individuals who continue to engage them- 4049 46 15.9
Above 49 years old 5 1.7
selves do so because of the continuation of favorable reciprocal
Education
exchanges. High school 4 1.4
Transformation theory offers a similar perspective. Weitz and Two-year college 125 43.1
Jap (1995) claim that ones attitudes and behaviors shift to oth- Four-year university 143 49.3
ers in an organization through day-to-day interaction. Bakker and Graduate school 17 5.9
Missing 1 0.3
Demerouti (2008) mention also that engaged employees transfer Hotel status
their engagement to coworkers. Thus, in these types of rms, com- Chained 219 75.5
mitment to their work brings about a proportional commitment to Independently owned 71 24.5
the organization. Hence, the following hypothesis: Department
Food & Beverage 251 86.6
Hypothesis 7. Job engagement is positively related to organiza- Rooms 38 13.1
Missing 1 0.3
tional engagement.
 Y.-K. Lee et al. / International Journal of Hospitality Management 39 (2014) 97106 101

Table 2
EFA and CFA results.

EFA CFA

Standardized factor Eigen value Variance Standardized CCR AVE

loadings explained (%) loadings

Codes of ethics 4.294 20.447 0.902 0.647

My organization conducts ethics audits on a
regular basis.a
Top management evaluates the ethics training
programs on a regular basis.a
My organization does not have a top-level
person(s) responsible for ethics compliance
programs.a
Top management is involved in ethical training
programs.a
My organization does not have training 0.806 0.873
programs that effectively communicate
ethical standards and policies.
My organization does not have an ethics 0.826 0.869
committee or team that deals with ethical
issues in the organization.
In order to prevent misconduct within my 0.813 0.918
organization, there are training programs to
create effective ethical culture.
My organization has a formal ethics training 0.873 0.913
program focusing on ethics.
Top management in my organization has a 0.778 0.854
mechanism for detecting ethical issues
relating to the local community.

Corporate philanthropy 4.002 19.059 0.912 0.623

Our hotel tries to help the poor. 0.800 0.827
Our hotel contributes toward bettering the 0.844 0.903
local community.
Our hotel tries to fulll its social responsibility. 0.808 0.920
Our hotel tries to accommodate governmental 0.794 0.888
request.
Our hotel tries to accommodate request from 0.721 0.856
NGOs.

Job engagement 3.871 18.433 0.858 0.602

I really throw myself into my job.a
Sometimes, I am so into my job that I lose track 0.796 0.811
of time.
My mind never wanders and I do not think of 0.673
other things when doing my job.b
I am highly engaged in this job. 0.822 0.855
The job I have makes me enthusiastic. 0.733 0.849
I view my job as being meaningful.a
I am enthusiastic about the job I do. 0.771 0.831
When I wake up in the morning, I really want
to go to work.a

Organizational engagement 3.175 15.118 0.884 0.656

Being a member of this organization is very 0.758 0.840
captivating.
I am really into the goings-on in this 0.742 0.844
organization.
Being a member of this organization makes me 0.797 0.913
come alive.
Being a member of this organization is 0.754 0.906
exhilarating for me.
I am highly engaged in this organization.a
I am committed to this organization.a

Turnover intention 1.835 8.738 0.708 0.549

I am going to quit this job in the next three 0.947 0.84
months.
I am going to quit this job sometime in the 0.936 0.90
next year.
Total variance explained (%) 81.795

EFA: KMO = 0.934, Bartletts test of sphericity (2 = 5724.475, df = 210, p < 0.001), Cronbachs : Codes of ethics (0.966); Philanthropic CSR (0.944); Job engagement (0.922);
Organizational engagement (0.946); Turnover intention (0.820).
CFA: 2 = 332.510, df = 160 (2 /df = 2.078), p = 0.000, NFI = 0.940, CFI = 0.968, GFI = 0.898, AGFI = 0.866, PNFI = 0.792, RMSEA = 0.061.
a
Items were deleted during EFA procedure.
b
Item was deleted during CFA procedure.
102 Y.-K. Lee et al. / International Journal of Hospitality Management 39 (2014) 97106
the room and food & beverage restaurant managers of 20 ve-star
hotels listed in the Korea Hotel Association directory and explained
the purpose of this study. Twelve of the 20 ve-star hotels agreed
to participate in the research.
The survey was conducted in June of 2011. A letter introduc-
ing the purpose of this research and a top executives cooperation,
encouraging participants to complete and return the questionnaire
was enclosed. A total of 330 questionnaires was distributed and
316 completed questionnaires were returned. Participants who
completed the survey were given a small gift. Of those collected
questionnaires, 26 were excluded since they had not been fully
completed. After elimination, 290 questionnaires with an effective
response rate of 87.9% were coded and analyzed for further analysis.
Table 1 is a summary of respondents proles.
3.2. Measures
All constructs were measured with multiple item scales devel-
oped and tested in previous studies. Each item was measured on
a 5-point Likert-type scale anchored by strongly disagree and
strongly agree (see Table 2). Back-translation (with the material
translated from English into Korean and then back into English,
the versions compared, and any discrepancies resolved) was used
to ensure consistency between the survey items and the original
scales (Mullen, 1995; Singh, 1995).
Code of ethics was assessed the awareness of organizations
explicit institutionalization of ethics using 9 items adopted from
Singhapakdi and Vitell (2007). CP which the organization engages
in explicitly CP activities in terms of public-serving and reactive
motives was measured by 5 items adopted from Lee et al.s (2009)
work. Employee engagement was measured by 14 items adapted
from the work of Saks (2006) to assess employees perceptions
of their job (8 items) and organizational engagement (6 items).
Lastly, turnover intention was measured by 2 items indicating
plans to leave the company in the near future (Babin and Boles,
1998). Pretesting of the questionnaire was performed on several
hotel employees to test and improve the questionnaire design. The
pretesting led to minor changes in wording, the ow of the ques-
tionnaire and interpretation of the questions.
4. Results
4.1. Measurement model
Exploratory factor analysis (EFA) using SPSS 18.0 and conrm-
atory factor analysis (CFA) using AMOS 18.0 were performed to
further verify the identied dimensions and to check unidimen-
sionality and validity.
Principal components analysis with varimax rotation was used
to initially identify the dimensions of a code of ethics, CP, job
engagement, organizational engagement, and turnover intention.
Eight items were eliminated because of low factor loadings of less
than 0.4 and a couple of cross loadings on two factors. EFA identied
ve factors with 21 items (Table 2). All ve factors had eigenvalues
greater than 1, accounting for 83.52% of the total variance.
CFA results assess the validity of the measures and overall mea-
surement quality. Several items that had factor loadings lower than
0.5 were dropped to maintain the proper level of discriminant
and convergent validity. As shown in Table 2, the CFA results sug-
gest good t; GFI = 0.898, CFI = 0.968, PNFI = 0.792, RMSEA = 0.061,
and a 2 = 332.5 (df = 160, p < 0.01, 2 /df = 2.078). All AVEs and con-
struct reliability estimates are adequate. Discriminant validity was
checked by comparing the proportion of variance extracted in each
construct to the square of the coefcients representing its corre-
lation with other factors (Fornell and Larcker, 1981). The variance
Table 3
Construct intercorrelation, mean, and standard deviation.
1 2 3 4 5 Mean SD
1. Codes of ethics 1.00 5.06 1.28
2. Corporate 0.679 1.00 5.35 1.17
philanthropy
3. Job engagement 0.459 0.566 1.00 5.23 1.09
4. Organizational 0.579 0.541 0.710 1.00 5.07 1.20
engagement
5. Turnover 0.432 0.419 0.496 0.542 1.00 2.64 1.32
intention
Note: All coefcients were signicant at p < 0.01.
extracted in each measure exceeded the respective squared corre-
lation estimate, showing evidence of discriminant validity.
To check common method bias, we additionally employed Har-
mans one-factor test (Bauer et al., 2006; Lee et al., 2011; McFarlin
and Sweeney, 1992). This test was done by comparing the t of
the proposed model (i.e., multidimensional model) against the t
of a one-factor model. If the t of the single-factor model is bet-
ter than the proposed model, common method bias may indeed be
present (Podsakoff and Organ, 1986). The one-factor model yields a
2 residual of 2127.4 with 170 df (compared with the 2 = 332.510
and df = 160 for the ve dimensional measurement model). The t
is considerably worse than the unidimensional model, suggesting
that common method bias is not a serious threat to the study. Cor-
relations between the constructs, means, and standard deviations
are presented in Table 3.
4.2. Structural model and hypotheses testing
Table 4 displays t statistics and maximum likelihood estimates
for the model parameters. The multiple model t indices suggest
that the model ts the data well: 2 = 357.4 (df = 161, p < 0.01),
GFI = 0.908, CFI = 0.974 and RMSEA = 0.058.
Hypotheses 13 state that awareness of ethics codes inuences
CP, job engagement, and organizational engagement. As shown
in Table 4, awareness of the rm code of ethics signicantly and
positively inuences CP ( 11 = 0.787, t-value = 17.4, p < 0.01) and
organizational engagement ( 31 = 0.306, t-value = 5.18, p < 0.01) but
does not affect job engagement ( 21 = 0.107, t-value = 1.45, n.s.).
Thus, the results support H1 and H3 but not H2.
Hypotheses 46 posit that awareness of CP inuences both
job and organizational engagement as well as turnover intention.
The results suggest that CP affects job engagement (21 = 0.604,
t-value = 7.70, p < 0.01) and organizational engagement posi-
tively (31 = 0.306, t-value = 5.18, p < 0.01), but CP affects nega-
tive turnover intention negatively (41 = 0.159, t-value = 2.41,
p < 0.05). Therefore, Hypotheses 46 are all supported.
Hypothesis 7 states that job engagement relates positively
to organizational engagement. As hypothesized, job engagement
has a signicant positive effect on organizational engagement
(32 = 0.631, t-value = 10.88, p < 0.01), thus supporting Hypothesis
7.
Hypotheses 8 and 9 propose that job engagement and organi-
zational engagement relate negatively to turnover intention. As
hypothesized, job engagement (42 = 0.232, t-value = 2.52,
p < 0.05) and organizational engagement (43 = 0.377, t-
value = 4.20, p < 0.01) have a signicant negative effect on
turnover intention. Hence, H8 and H9 are supported.
Fig. 3 summarizes the results of testing hypotheses and the esti-
mates.
4.3. Mediating testing
The mediating effects of CP, job engagement, and organiza-
tional engagement on the relationship between codes of ethics
 Y.-K. Lee et al. / International Journal of Hospitality Management 39 (2014) 97106 103

Table 4
Standardized structural estimates.

Estimate C.R. p-Value

H1 Codes of ethics Corporate philanthropy 0.787 17.407 0.000**

H2 Codes of ethics Job engagement 0.107 1.448 0.148
H3 Codes of ethics Organizational engagement 0.306 5.179 0.000**
H4 Corporate philanthropy Job engagement 0.604 7.700 0.000**
H5 Corporate philanthropy Organizational engagement 0.306 5.179 0.000**
H6 Corporate philanthropy Turnover intention 0.159 2.409 0.016*
H7 Job engagement Organizational engagement 0.631 10.881 0.000**
H8 Job engagement Turnover intention 0.232 2.516 0.012*
H9 Organizational engagement Turnover intention 0.377 4.196 0.000**

SMC (R2 )
Corporate philanthropy 0.619 (61.9%)
Job engagement 0.478 (47.8%)
Organizational engagement 0.715 (71.5%)
Turnover intention 0.495 (49.5%)

2 = 357.361, df = 161, p = 0.000, NFI = 0.955, CFI = 0.974, GFI = 0.908, AGFI = 0.880, PNFI = 0.809, RMSEA = 0.058.
*
p < 0.05,
**
p < 0.01,

Table 5
Results of mediating role estimation of corporate philanthropy, and job and organizational engagement between codes of ethics and turnover intention.

Paths of mediating role Indirect effects 95% bootstrap CIs Z-values Mediating roles

LL CIs UL CIs

Codes of ethics Corporate philanthropy Job engagement 0.475* 0.346 0.582 6.992** Full mediator
Codes of ethics Organizational engagement Turnover intention a 0.514* 0.602 0.399 3.282** Full mediator
Corporate philanthropy Job engagement Organizational engagement 0.381* 0.253 0.506 6.267** Partial mediator
Job engagement Organizational engagement Turnover intention 0.238 0.446 0.036 3.835** Partial mediator
*
p < 0.05,
**
p < 0.01,
Note: The direct effect of code of ethics on turnover intention is not presented in Table 4, but when the direct path from codes of ethics to turnover intention is conducted, it
was not signicant.

and turnover intention are examined with the Aroian version of Table 5 shows the results that CP signi-
the Sobel test (see Table 5; see also Appendix) and the BC boot- cantly mediates the effect of codes of ethics
strapping method (Preacher and Hayes, 2004). MacKinnon et al. ( codes of ethics corporate philanthropy job engagement ; 0.475, p < 0.01;
(2002) suggest that this combined approach to mediation anal- 95% bootstrap CI = 0.34L CI , 0.582UL CI ; Z = 6.99, p < 0.01) on job
ysis is more powerful than traditional single mediation analysis engagement. The direct effect of codes of ethics on job engage-
approaches (e.g., Lee et al., 2012a,b). The Aroian version of the ment is not signicant ( codes of ethics job engagement ; 0.107, n.s.).
Sobel test presents the level of signicance of the indirect effect This result indicates that CP plays a full mediating role in the
of the independent variable on the dependent variable through a relationship between codes of ethics and job engagement.
mediator (see Preacher and Leonardelli, 2003). Job engagement signicantly mediates the effect of CP
Other studies view CSR as a mediator of the codes of ethics ( corporate philanthropy job engagement organizational engagement ; 0.381,
(i.e., ethics programs) job satisfaction relationship (e.g., Valentine p < 0.01; 95% bootstrap CI = 0.25L CI , 0.506UL CI ; Z = 6.27, p < 0.01)
and Fleischman, 2007). Others treat engagement as a modera- on organizational engagement. The direct effect of CP on organi-
tor of relationships between antecedents (i.e., job characteristics, zational engagement ( codes of ethics organizational engagement ; 0.306,
rewards and recognition, perceived organizational and supervisor p < 0.01) also is signicant. This result indicates that job engage-
support, perceived justice, withdrawal) and consequences (i.e., job ment plays a partial mediating role in the relationship between CP
satisfaction, organizational commitment, intentions to leave, and and organizational engagement.
organizational citizenship behavior) (e.g., Saks, 2006; Schaufeli and Organizational engagement signicantly
Bakker, 2004; Sonnentag, 2003). mediates the effect of codes of ethics
( codes of ethics organizational engagement turnover intention ; 0.514,
p < 0.01; 95% bootstrap CI = 0.60L CI , 0.399UL CI ; Z = 3.282,
p < 0.01) on turnover intention. Additionally, the direct effect
of codes of ethics on turnover intention is not signicant
( codes of ethics turnover intention ; 0.107, n.s.). This result indicates
that organizational engagement fully mediates the relationship
between codes of ethics and turnover intention.
Finally, organizational engagement signi-
cantly mediates the effect of job engagement
( job engagement organizational engagement turnover intention ; 0.238,
p < 0.01; 95% bootstrap CI = 0.44L CI , 0.036UL CI ; Z = 3.835,
p < 0.01) on turnover intention. The direct effect of job
engagement on turnover intention is also signicant
( job engagement turnover intention ; 0.232, p < 0.05). Thus, orga-
nizational engagement plays a partial mediating role in the
Fig. 3. Estimates of model tests. relationship between job engagement and turnover intention.
104 Y.-K. Lee et al. / International Journal of Hospitality Management 39 (2014) 97106
5. Discussion
Corporations should establish and enforce explicit ethics rules
and guidelines to make clear what proper actions employees should
follow. Employees perceive organizational values through codes
of ethics and thus create greater awareness of CP. Additionally,
engagement must be regarded as a long-term and ongoing strat-
egy that eventually retains employees and guarantees a companys
sustainable success.
5.1. Theoretical implications
First and foremost, this study highlighted philanthropic traits
of CSR on the basis of jeong and collectivistic Confucianism per-
tinent to Koreas unique business situations. Second, Saks (2006)
argues that engagement has little basis, pointing to it as the a-
vor of the month (p. 615). This study attempted to integrate the
concept of engagement as an important link between ethics and
turnover.
In addition, the meaningful difference between job engage-
ment and organizational engagement was suggested based on three
different theories: social exchange (Saks, 2006), conservation of
resources (Hobfoll, 2001), and transfer (Bakker and Demerouti,
2008). Employees who feel that the company provides plenty of
sources are likely to reciprocate with high engagement in both their
job and company. These employees hesitate to leave the company.
Employees with high engagement in their job also transfer their
positive attitudes or behaviors throughout their work environment.
Lastly, as is true for other studies (e.g., Schaufeli and Bakker,
2004; Sonnentag, 2003), job and organizational engagement
together with CP play mediating roles between codes of ethics
and turnover intention. This result compares similarly with previ-
ous research showing that CSR intervenes between organizational
ethics and job satisfaction (Valentine and Fleischman, 2007).
5.2. Managerial implications
Our results add to the body of evidence suggesting that ethi-
cal rms enjoy greater productivity and higher employee retention
(Sharma et al., 2011). Social involvement like community services
and volunteer programs could make employees feel connected
with their job and organization. Armed with a strong commitment
toward CP, services rms should leverage moral values, legal com-
pliance and social responsibility as a way of creating a philanthropic
organizational culture.
Hospitality employees organizational engagement is driven
in part by codes of ethics and CP activities. Thus, rms should
understand the importance of good ethics and develop supportive
actions. The InterContinental Hotels Group (2012) focuses on the
two themes of community and environment (e.g., disaster relief,
recycling). The Westin Chosun Hotel (2011) in Korea received an
award in 2009 for maintaining strong ethical norms and promoting
moral guidelines for employees. The Chosun also increased chari-
table giving through food bank donations, blood donation drives,
tree planting projects, matching gifts, etc. Likewise, ethical rm
behaviors give credibility to employees and promote employee
engagement through numerous avenues some of which convey
ethical skills to team members (Halbesleben and Wheeler, 2008).
Top management should design ethics training programs that
convey the parameters of good employee conduct. Regular train-
ing can highlight ethical issues surrounding the work environment
through class presentations and role-playing exercises. In-house
campaigns, for example, an ethics day, anti-corruption campaigns
and ethical management slogans (KCCI, 2010) may help build
ethical climates, particularly in work cultures lacking a strong eth-
ical tradition. Employees should be informed of corporate ethics
through all manner of communication including social networking
sites, newsletters, and face-to-face training. The display of orga-
nizational support and caring for such social concerns encourages
employee engagement and, in doing so, reduces turnover.
Ethics guidelines drive philanthropy and indirectly, job engage-
ment. In other words, when employees acknowledge ethics rules
and norms, and in turn philanthropic initiatives, they will put more
effort into their work. Hence, to have employees more engaged
in their job, hospitality rms should create an ethical work cli-
mate. Employees that t with the ethical values of the organization
stay on the job longer and in doing so, promote the welfare of
the organization and its stakeholders (LRN, 2006; Sims and Kroeck,
1994). In sum, philanthropy should be embedded in corporate cul-
ture to improve employee awareness and engagement and reduce
turnover. To institutionalize ethics could help accomplish these
goals.
Since many of hospitality rms distribute their units across
regions or nations via franchising or chain systems, it is dif-
cult for the headquarters to control the effectiveness of ethics
management and CP actions. Therefore, local or district managers
and their employees should be empowered when it comes to
ethics-related decision-making and voluntary practices. With their
authority ethics appreciation and/or assessment programs, includ-
ing reward systems, can be more effectively implemented than by
more centralized authorities. Internal control systems such as whis-
tle blowing mechanisms or online reporting systems and internal
control checklists (KCCI, 2010) also can be utilized to solve ethical
problems occurring within the organization effectively while not
serving to demotivate employees.
6. Limitations and future research
These study ndings should be viewed in light of a few lim-
itations. There are several fruitful avenues for future research to
consider. First, the survey was conducted in a single service sector
of hotels. We also received responses only from twelve hotels to
allude to the generalization of study ndings. Also, this study was
limited to front- and bottom-line employees, not middle or upper
level managers. Ethical attitudes and behaviors of managers and
their CP activities are perceived to be successful in their organi-
zation (Viswesvaran and Deshpande, 1996). From this perspective,
linking institutionalization of ethics and CP with leadership style
could be more effective to explain hospitality management (Carlson
and Perrewe, 1995; Weeks and Nantel, 1992). Accordingly, our
study could be replicated in other hotel tiers or different hospital-
ity sectors such as restaurants, airlines, casinos, etc. and in different
employee levels.
Second, the research here considered perceptions of explicit
ethical norms as expressed in codes of ethics rather than on
implicit ethical values. Implicit ethical values may play a key role
in whether or not hospitality employees pay attention to CP (Vitell
and Singhapakdi, 2008). Third, even if CP was selected as the most
important Korean ethics business trait, it may be done based on the
subjective judgment by authors. In other words, other types of CSR
were not included to this study despite possible impacts. Future
study should conduct comparative research including all three- or
four dimensions of CSR to ensure what are the truly inuential CSR
in Korean business situations.
Fourth, the results of this study suggest that employee engage-
ment is worthy of future research. This study only includes two
variables related to ethics and CP as antecedents, and turnover
intention as a consequence of job and organizational engagement.
However, there are several others that may also be crucial for
both job and organizational engagement. For example, Saks (2006)
employed four different outcome variables (i.e., job satisfaction,
 Y.-K. Lee et al. / International Journal of Hospitality Management 39 (2014) 97106
organizational commitment, intention to quit, and organizational
citizenship behavior directed to the individual and organization).
In Saks (2006)s study, both job and organizational engagements
predicted intention to quit while only organizational engage-
ment predicted organizational citizenship behavior. For possible
predictors, personality variables (e.g., self-efcacy, hardiness, self-
esteem, and locus of control) might also be considered (Maslach
et al., 2001). Future studies should embrace other variables that
can make this present research more meaningful.
Appendix.
The Aroian version of the Sobel test (Baron and Kenny, 1986)
is represented as follows (see Preacher and Leonardelli, 2003;
http://quantpsy.org/sobel/sobel.htm):
ab
Z-value =  An International Review 50, 337370.
b2 sa2 + a2 sb2 + sa2 sb2
where a and b are unstandardized path coefcients of paths and sa
and sb are associated standard errors.
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