Multidimensional Ethics Scale

Notwithstanding ethics is important in explaining tax compliance

behaviour (Jackson & Milliron, 1986; Richardson & Sawyer, 2001; Alm &

Torgler, 2011), the issue of how to measure ethics in tax compliance is still

debatable (Richardson & Sawyer, 2001). In the ethics literature, a review by Kujala

et al. (2011), found that a tool to measure ethics which has been commonly used by

researchers is the Multidimensional Ethics Scale (MES) developed by Reidenbach

and Robin (1988; 1990). Arguably, humans rely on more than one ethical

dimension in making ethical decisions, and because a single measurement scale of

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single measurement scale has reliability problems (Reidenbach & Robin, 1988;

1990). As an improvement to the single scale measurement of ethics, using a factor

analysis, Reidenbach and Robin (1988) developed a multidimensional ethics scale

in marketing ethics consisting of 33 items which reflect five normative moral

philosophies.

According to Reidenbach and Robin (1990), the five normative moral

philosophies which formed the foundation of MES are not merely moral

philosophies but encompass religious values which cover most of the distinguished

concepts for social survival. They suggest “ideas of fairness, justice, contract, duty,

consequence, greatest good and many others that come from the five philosophies

can also be found in the Bible, the Koran, the writings of Buddha and in other

religions” (Reidenbach & Robin, 1990, p. 640). They argued that, as a result, the

MES offers a pivotal point for ethical decision making.

The first ethical dimension is justice which comes from the Theory of

Justice (Reidenbach and Robin, 1990). The Theory of Justice perceives fairness in

two dimensions: fair procedures and fair outcomes (Crane and Matten, 2007).

Consequently, the concepts of distributive and procedural justice, such as fairness

and equity, are highlighted in this theory.

The second ethical dimension is relativism, which refers to the belief that

there is no universal ethical rule for everyone since ethical rules are relative to a

specific culture. Therefore, according to relativism, what is considered as right or

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Western culture on other cultures, such as Asian culture, is considered to violate

the concept of relativism in ethics (Beauchamp et al., 2009).

The third ethical dimension is egoism, an aspect of Teleological Ethics

Theory (TET),6 which measures morality based on the consequences of an action in the long term. Egoism Theory promotes the well-being of one individual over

everyone else which reflects that individuals should act on the basis of one’s self interest. Thus an individual should only act for others if it brings benefit to one’s

own interest and does not care of the welfare of others unless it affects the welfare

of oneself (Beauchamp et al., 2009).

The fourth ethical dimension in MES is utilitarian, another concept in TET.

It emphasizes the concept of efficiency in ethical decision making by considering

the greatest possible ratio of good to evil for all in the society. According to

Utilitarian Theory, the consequences of an action determine whether or not an act

is ethical. It also focuses on the maximisation of benefits and minimisation of

harm. Thus, from the utilitarian perspective, it is acceptable to break a law if

breaking the rule brings the greatest benefits over bad consequences to greatest of

people (Beauchamp et al., 2009). The concept of cost and benefit analysis in

accounting, for instance, implies the utilitarian dimension in ethical decision

making (Cohen et al., 1993).

6 _{The traditional ethical theories could be divided into consequentialist and non-consequentialist.} The consequentialist ethics is also referred as teleologicalethics. The term teleological is originated from the Greek word for ‘goal’. On the other hand, non-consequentialist ethics is based on their individual’s right and duty. It is based on the deontological concept. The word deontological is a Greek word for ‘duty’ (Crane & Matten, 2007).

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The fifth and final moral philosophy in MES is deontology, represented by

the contractualism dimension. The deontology philosophy emphasizes the belief

that individuals have a duty to fulfil the claims of others by applying logic to an

ethical rule through a social contract. It is based on the decision maker underlying

principles of being ethical. An action is deemed as ethical if the decision maker’s

underlying principle perceives the action as morally right (Crane & Matten, 2007).

The individual’s duty is translated in an unwritten contract or unwritten obligations

(Cruz et al., 2000).

Reidenbach and Robin (1990) later reduced the original MES from 33 items

to 8 items, representing three groups of ethical dimensions which are: moral equity,

relativism and contractualism. Similar to the original MES, the moral equity

dimension reflects an individual perception of fairness and justice, expectation of

family and what is morally right or not in ethical decision making. Relativism

concerns the importance of culture and tradition in determining what is right or

wrong in the decision making which results in the importance of culture or social

system overtakes individual considerations. Finally, contractualism represents the

social construct in the form of duties, rules, obligations between businesses and

society in ethical decision making.

The main advantage of MES is its ability to capture the beliefs of a person

in ethical decision making while at the same time it reveals the reasons for

believing that a particular action is ethical or unethical by using different ethical

philosophies. This is important since not all people fit into one category

(Reidenbach & Robin, 1988; 1990). In addition, MES also allows people to use

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Sennetti, 2009; Casali, 2011). As a result, MES is argued to better capture the

complexity in ethical decision making (Cohen, et al., 1993). Moreover, compared

to other ethics measurement scales which focus on the psychological aspects of

individuals, such as the Defining Issues Test (DIT) or Managerial Judgment Test

(MJT), MES is considered more appropriate to measure ethics since it is based on

moral theories (Casali, 2011).

Furthermore, the five ethical theories in MES provide more explanation of

the ethical choices rather than just measuring the cognitive development of an

individual. The different ethics effects could be measured by using MES, since

different but correlated dilemmas could be used in an MES questionnaire, unlike

the DIT which only allows for fixed original dilemmas in its questionnaire

(Shawver & Sennetti, 2009). The use of multiple items in the MES could also

enhance the reliability of the scale instrument (Cohen et al., 1993).

The use of MES in measuring ethics, however, is criticized for a number of

reasons. The validity of MES in ethics studies can be challenged due to the

ambiguous scale items, faulty scale development procedure, lack of ethical

rationales, and mixed findings from replicated studies which indicate the instability

of the scales (Hyman, 1996). Other studies, such as Kujala and Pietilaihen (2007)

and Casali (2011), argue that the MES should not be considered as a

multidimensional since it was developed from a single group of ethical theories,

namely the traditional ethical theories. The MES, for example, does not consider

contemporary ethical theories such as virtue ethics, which is capable of influencing

ethical decision making (Casali, 2011) or female ethics (Kujala & Pietilaihen,

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caring. Indeed, the MES is claimed to be biased since it embraces the masculine

culture by only accentuating masculine attributes, such as justice, fairness,

independence and rationality (Kujala & Pietilaihen, 2007; Kujala et al., 2011).

Consequently, the MES should not be considered to be multidimensional; rather it

only provides a general pattern of ethical decision making (McMahon & Harvey,

2007).

Furthermore, Shawver and Sennetti (2009) question the ability of the MES

to reveal the fundamental justifications of being ethical and unethical since the

scales in the MES do not correspond to any objective, unlike the DIT scores, which

are correlated with the stages in Kohlberg’s (1969) moral development. Therefore,

higher scores in the MES do not imply better moral cognition; instead the scores only offer an explanation to the respondents’ choices. Notwithstanding that the

MES is designed to measure ethical judgment across a range of scenarios, as

argued by Reidenbach and Robin (1988; 1990), findings from prior studies that

used the MES, (for instance, Cohen et al., 1993; McMahon and Harvey, 2007;

Kujala and Pietilaihen, 2007; and Nguyen and Biderman, 2008), found that the

MES is situation specific. Indeed, to validate the MES, Reidenbach and Robin

(1988; 1990) used a within-scenario approach. Therefore, the MES should not be

considered as multidimensional since it is scenario dependent. This perhaps

explains the mixed support of MES in ethics studies (Nguyen & Biderman, 2008).

As an improvement to the original MES, different forms of the MES scales

have been used in ethics research, such as by Cohen et al. (1993), who refined the

MES to a 15-item scale representing all the five moral philosophies in an

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six scenarios, of which two were related to retail scenarios and the remaining four

were accounting-based scenarios, were used to test the refined version of the MES.

The study involved a sample of accounting academics and members of the

international section of the American Accounting Association who came from

various cultural backgrounds across the United States. Principal component factor

analysis was then applied to generate the factors and the Cronbach’s Alpha for each

factor ranging from 0.86 to 0.96 indicating high reliability. The finalised 15-item

scales consist of four items representing moral equity, two items to measure

relativism, and three items each for contractualism dimension, egoism and

utilitarianism.

A recent example of using MES in measuring ethical sensitivity in an

accounting context is provided by Buchan (2005) who extended TPB with ethical

sensitivity and instrumental ethical climate among public accountants in the US.

Two scenarios, which are developing a bid for a new client and charging personal

expenses to the firm, were used to test the relationship between ethical sensitivity

and intention of public accountants from five public accounting firms in the

Northeast US. No support, however, was recorded for the relationship between

ethical sensitivity and intention which is most likely because the scenarios being

used to examine ethical sensitivity were different from the scenarios used to

measure intention in the TPB. Based on the findings, Buchan (2005) also concludes

that MES is situation specific.

With regard to applying MES in tax context, Cruz et al. (2000) have tested

the refined version of MES by Cohen et al. (1993) and incorporated gender as

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ethical judgment of tax agents when they are pressured for providing aggressive

reporting. The findings suggest that all of the five moral philosophies in the MES

influence the ethical decision making of tax agents. The influence primarily comes

from moral equity and contractualism. Indeed, moral equity has the highest

influence on self-reported intentions in all three cases presented in the study. The

study also found that relativism and utilitarianism had the largest effect on peer

behaviour.

As tax compliance and non-compliance behaviour is associated with ethical

or unethical decision making, therefore, after considering the advantages and the

disadvantages of using the MES, this study will use the MES as proposed by Cruz

et al. (2000) to capture the moral sensitivity in ethical decision making of tax

agents in Malaysia and New Zealand, except for the exclusion of a gender scale.

The gender scale is excluded from the MES since this study uses the TPB which

assumes that the influence of demographic variables is already captured in the

attitudes toward behaviour. Cruz et al.’s, (2000) version of MES, overall, indicates

high reliability ranging from 0.73 to 0.94 for the moral equity, contractualism,

relativism and utilitarianism dimensions in all three cases presented in the study.

The only dimension rejected is egoism which indicates an average of 0.49 level of

reliability in all three cases. Furthermore, as Cruz et al.’s (2000) MES version has

been tested in a tax context, it is deemed appropriate for this study.

In document Tax compliance behaviour of tax agents: a comparative study of Malaysia and New Zealand. (Page 78-85)