Ethical Fading as Systemic Vulnerability: From Theoretical Review to a Multi-Level Diagnostic Framework for Moral Erosion in Complex Organizations

Ethical fading, viewed as the gradual and often imperceptible erosion of moral salience in organizational decision-making, has emerged as a critical vulnerability in complex, high-stakes environments. While originally theorized in behavioral ethics as a cognitive phenomenon affecting individual judgment, accumulating evidence indicates that ethical fading operates at multiple organizational levels simultaneously, constituting a systemic risk rather than an isolated individual failure. This article presents a structured theoretical review of the ethical fading construct, traces its theoretical lineage from bounded ethicality and moral disengagement to contemporary multilevel organizational ethics research, and synthesizes converging findings across organizational behavior, leadership studies, and AI-augmented decision-making. Building on this review, the article proposes a Multi-Level Diagnostic Framework (MLDF) for detecting and assessing moral erosion across individual, group, organizational, and technological layers. The framework identifies specific indicators, enabling conditions, and interaction effects at each level. Practical implications are discussed for governance design, leadership development, ethics auditing, and organizational resilience. The proposed MLDF offers a transversal analytical instrument applicable to both public and private complex organizations, with particular relevance for institutions operating under high operational pressure, hierarchical authority structures, and expanding algorithmic decision support.