With this dissertation I developed a new theory and measure of ethical work climate (EWC). Currently, there exists one dominant theory and measure of EWC developed by Victor and Cullen (1988, 1987). Even though researchers have identified problems with this theory, such as inconsistencies with regard to its limited theoretical scope and troubling psychometric properties, it is the most widely utilized framework for conceptualizing and testing EWC. Therefore, I propose to develop an improved theory and measure of EWC, one capable of addressing some of the principle shortcomings of earlier efforts. Building on Rest’s (1986, 1979) “Four-Component” model of individual-level ethical decision-making and behavior, I specify four dimensions of EWC necessary for the emergence of ethical behavior: collective moral sensitivity, collective moral judgment, collective moral motivation, and collective moral character. I developed a multidimensional instrument capable of capturing each of these dimensions at the climate level. I anticipate that this theory and instrument will allow researchers to understand EWCs and their impact on attitudes and behaviors more effectively than previous approaches. Chapter 1 reviews the organizational climate and culture literatures, so as to gain a comprehensive understanding of the organizational climate construct in general and how it differs from organizational culture in particular. Chapter 2 includes a review and evaluation the EWC literature. This helped to identify opportunities and suggestions for a new theory and measure of EWC. Chapter 3 describes the development of the new theory of EWCs, the Psychological Process Model, with propositions for future research. Chapter 4 informs about the development of the Ethical Climate Index, the measure used to assess the new theory of EWCs. It describes 3 studies that were used to construct the Ethical Climate Index to measure the ethical work climate dimensions of collective moral sensitivity (12-items), collective moral judgment (10-items), collective moral motivation (8-items), and collective moral character (6-items). Study 1 and 2 resulted in parsimonious and reliable scales for each one of the four dimensions. Results of the 3rd study support convergent and discriminant validity for each one of the scales and suggest that the ECI is a valid and reliable predictor of ethical and unethical behavior. Implications and suggestions for the use of this measure in future research is discussed.