The Mediating Role of Employee Perception Toward the Relationship Between Organizational Climate and Ethical Decision-Making

Organizational climate significantly influences ethical decision-making by embedding shared norms, value systems, and behavioral expectations within the workplace. This study investigates the mediating role of employees’ perception between organizational climate and ethical decision-making. Using a quantitative design and stratified random sampling of restaurant employees, data were collected from 266 restaurant employees in Davao City. The study employed hierarchical regression and mediation analysis to examine the direct effects of organizational climate on ethical decision-making and the indirect effects through employee perception in explaining the strength and direction of the relationship. The results showed that employees expressed satisfaction with both the physical and psychosocial dimensions of the organizational climate. This is a novel finding which presents climate to include both physical climate like comfort, cleanliness, safety; alongside non-physical climate such as communication, trust, teamwork, as opposed to mainly ethical tone, leadership, or fairness. It necessitates a supportive work environment. The results of the mediation analysis confirmed the Ethical Climate Theory that organizational climate has a direct effect on employee perception, contributing to ethical decision-making processes. However, in terms of the Social Cognitive Theory, the result of the non-significant mediating role of employee perception suggests that the cognitive pathway proposed by the theory does not fully operate in a highly structured environment. Instead, ethical decision-making appears to be directly shaped by the organizational environment in the form of formal rules, standardized procedures, and supervisory enforcement. It advances understanding of organizational ethics by reinforcing the strategic importance of cultivating transparent, supportive, and integrity-driven workplaces.