Article

When are Do-Gooders Treated Badly? Legitimate Power, Role Expectations, and Reactions to Moral Objection in Organizations

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Abstract

Organization members who engage in "moral objection" by taking a principled stand against ethically questionable activities help to prevent such activities from persisting. Unfortunately, research suggests that they also may be perceived as less warm (i.e., pleasant, nice) than members who comply with ethically questionable procedures. In this article, we draw on role theory to explore how legitimate power influences observers' responses to moral objection. We argue that individuals expect those high in legitimate power to engage in moral objection, but expect those low in legitimate power to comply with ethically questionable practices. We further propose that these contrasting role expectations influence the extent to which moral objectors are perceived as warm and subjected to social sanctions (i.e., insults, pressure, unfriendly behavior). We test our predictions with 3 experiments. Study 1, which draws on participants' prior workplace experiences, supports the first section of our mediated moderation model in which the negative association between an actor's moral objection (vs. compliance) and observers' warmth perceptions is weaker when the actor is high rather than low in legitimate power and this effect is mediated by observers' met role expectations. Study 2, an online experiment featuring a biased hiring task, reveals that the warmth perceptions fostered by the Behavior × Legitimate Power interaction influence observers' social sanctioning intentions. Finally, Study 3, a laboratory experiment which exposes participants to unethical behavior in a virtual team task, replicates Study 2's findings and extends the results to actual as well as intended social sanctions. (PsycINFO Database Record

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... Research on the individual-level outcomes of voice that has addressed the speaker characteristics and reactions to voice is nascent. Only a few studies ( Howell et al., 2015;Wellman, Mayer, Ong, & DeRue, 2016;Whiting et al., 2012) have explored the effect of speaker characteristics on manager reactions to voice. Here, we extend this emerging work by drawing upon EST to explore how speakers' gender impacts the way their peers respond, and advance current theory by showing that even for a dominant group (i.e., men), not all voice is equally valued. ...
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... Thus, our primary goal is to devise and test a model of the cognitive process of third-party observers of whistleblowers and wrongdoers based on Haidt's (2001) social intuitionist theory (SIT). Secondly, based on calls for research into contextual influences over third-party perceptions (Wellman et al. 2016), we examine the roles of injunctive and descriptive norms in peer reactions to wrongdoing and whistleblowing. Given the importance of whistleblowing in detecting corporate misconduct, and the seemingly ingrained societal distaste for whistleblowing, it is important to consider how social norms in organizations influence peer reactions to wrongdoing and whistleblowing. ...
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... On the other hand, research on behavioral ethics suggest that people are often derogated and even punished for expressing their morality (e.g., Monin, 2007;Monin, Sawyer, & Marquez, 2008;Sumanth, Mayer, & Kay, 2011;Wellman, Mayer, Ong, & DeRue, 2016). For example, scholars have demonstrated that moral people can elicit a sense of moral reproach, leading others to dislike them (Monin et al., 2008), and that being moral might lead to lower perceptions of warmth (Wellman et al., 2016) and humor , leading to lower likeability. ...
... On the other hand, research on behavioral ethics suggest that people are often derogated and even punished for expressing their morality (e.g., Monin, 2007;Monin, Sawyer, & Marquez, 2008;Sumanth, Mayer, & Kay, 2011;Wellman, Mayer, Ong, & DeRue, 2016). For example, scholars have demonstrated that moral people can elicit a sense of moral reproach, leading others to dislike them (Monin et al., 2008), and that being moral might lead to lower perceptions of warmth (Wellman et al., 2016) and humor , leading to lower likeability. In short, people who signal their morality may be seen as self-righteous and holier than thou, and thus less attractive to employers. ...
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... The literature on team effectiveness has devoted considerable attention to formal leaders and their profound influence on the satisfaction of team members' (i.e., followers') needs which supposedly increases team effectiveness (Hackman, 2005). Given the long list of tasks and responsibilities that are nowadays associated with the role of formal leaders (Wellman et al., 2016), organizations have a growing interest to encourage team members to take over leadership tasks themselves (i.e., to claim leadership). Furthermore, organizations tend to dissociate themselves from rigid power structures and followers are increasingly interested to actively participate in leadership. ...
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... Given people's general tendency to comply with the numerical majority (Asch, 1955;Cialdini & Trost, 1998;Martin & Hewstone, 2008;Moscovici, 1980), it may be quite challenging, if not impossible, for an ethical champion to shift the entire team's decision away from the dominant business perspective. Additionally, research reveals both expected and actual peer negative reactions (e.g., disliking, derogation, and retaliation) to coworkers who report or oppose unethical practices (Kish-Gephart et al., 2009;Mesmer-Magnus & Viswesvaran, 2005;Milliken, Morrison, & Hewlin, 2003;Treviño & Victor, 1992;Wellman, Mayer, Ong, & DeRue, 2016). This suggests that ethical champions can expect to incur social costs in their teams. ...
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... If so, such factors could provide alternative explanations for our findings (Sigall & Mills, 1998). In attempting to address this concern, we chose to include a variety of control variables in our analyses related to the incident, the follower, as well as the leader and the leader-member relationship when testing our hypotheses, consistent with research that previously employed this methodology (e.g., Wellman, Mayer, Ong, & DeRue, 2016). ...
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Article
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... The literature on team effectiveness has devoted considerable attention to formal leaders and their profound influence on the satisfaction of team members' (i.e., followers') needs which supposedly increases team effectiveness (Hackman, 2005). Given the long list of tasks and responsibilities that are nowadays associated with the role of formal leaders (Wellman et al., 2016), organizations have a growing interest to encourage team members to take over leadership tasks themselves (i.e., to claim leadership). Furthermore, organizations tend to dissociate themselves from rigid power structures and followers are increasingly interested to actively participate in leadership. ...
Article
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... Participants then respond to survey questions. This technique has been widely used in experimental studies (e.g., Casciaro, Gino, & Kouchaki, 2014;Liang, Lian, Brown, Ferris, Hanig, Keeping, 2016;Mayer, Greenbaum, Kuenzi, & Shteynberg, 2009;Wellman, Mayer, Ong, & DeRue, 2016). ...
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Group members gain social status via giving favors to others, but why and when they do so remain unclear in the literature. Building on social exchange theory and social status literature, we identify three types of favor giving among group members (generous, stingy, and matched) and propose that an affective mechanism (i.e., gratitude) and a cognitive mechanism (i.e., perceived competence) underlie the relationship between favor giving and status attainment. Specifically, generous/stingy favor giving has a linear relationship with status attainment through both gratitude and perceived competence, whereas matched favor giving has a curvilinear relationship with status attainment only through perceived competence. An experimental study and a field study lend support to our propositions. Our study complements the literature by offering a complete picture of how three types of favor giving among group members shape their social status in different ways.
... We used an adapted critical incident technique with random assignment to experimental condition (e.g., Casciaro et al., 2014;Mayer, Greenbaum, Kuenzi, & Shteynberg, 2009;Wellman, Mayer, Ong, & DeRue, 2016). Studies using a traditional critical incident design ask participants to recall real experiences rather than rely on hypothetical events (Flanagan, 1954;Hershcovis, 2011;Morgeson, 2005). ...
... However, individuals may react beyond these categories of behaviors. Wellman, Mayer, Ong, and DeRue (2016) researched on moral objection, which refers to Bthe act of speaking up or taking action to oppose a morally questionable practice or refusing to participate in the practice( 793). Though moral objection comes from an appeal to ethical principles, it is sometimes subjected to social sanctions, such as social isolation, which is one form of ostracism (Mesmer-Magnus & Viswesvaran, 2005). ...
Article
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Ostracism is an important issue in the workplace and studies on this issue are diverse and large. This paper comprehensively reviews the literature related to workplace ostracism in five aspects. First, in discussing why ostracism occurs, it outlines that individuals are ostracized due to their dispositions, ability and skills, behavioral features, and perpetrators’ ostracism motives. Second, in investigating the consequences of ostracism, it outlines that victims would respond with affective and attitudinal, physical, and behavioral tendencies, and these reactions can be either positive or negative. Third, in describing specific mechanisms for ostracism to take effect, it summarizes that threat-to-needs as well as affective and cognitive responses play important roles. Fourth, regarding the mixed findings of ostracism’s impact, it points out that extant inconsistencies lie in individual differences, temporal effects, and situational cues. Last, in recommending future research areas, it suggests several promising directions, particularly the role of culture in shaping victims’ responses to ostracism. We hope this article will be a good foundation for management researchers in Asia Pacific regions to conduct indigenous studies of workplace ostracism relevant to their own contexts.
... Second, LH sends an implicit message that the leader is nonrestrictive, accepting averse normative behavior, signaling that the relationship of the leader is open, complicated, and playful with a specific employee. In fact, a research study in behavior ethics indicates that moral leaders do not allow adverse normative behavior, which is why they are less friendly and more restrictive (Wellman et al., 2016). Third, the LH sends a message that the leader likes to be vulnerable because the leader is violating norms, looking more open and less guarded during social interaction with their employees. ...
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Although we use humor in our daily communication, there still needs to cognize its effects on the attitudes and behavior of the employees. Based on benign violation theory (BVT), the study proposes that leader's humor (LH) conveys social information about counter norms. The BVT has been amalgamated with social information processing theory (SIPT) to develop hypotheses assuming the consequences of LH on the attitude and behavior of the employees. This study hypothesizes that even though LH is linked positively with employee creativity via leader-member exchange and psychological empowerment in sequence (blessing path), it may also send information to the employees about the acceptability of norm violation. This perception ultimately leads to power perception and, causes unethical behavior in the series (curse path). Moreover, this study also postulates that leader's self-deprecating humor (LSDH) moderates these indirect effects by enhancing the blessing and reducing the curse, which emerged from LH. Quantitative data of 630 software engineers from software houses based in Pakistan provided support to test the hypotheses. The results demonstrate that LH is a double-edge sword that enhances blessing (creativity) as well as curse (employee unethical behavior), whereas LSDH augments the blessing and throttles back the curse. Theoretical and managerial implications have also been discussed.
... Integrating the interactive effect of peer mentoring and team LMX on team performance (Hypothesis 2) and team potency (Hypothesis 3), and consistent with the established relationship between team potency and team performance (Gully et al., 2002;Shea & Guzzo, 1987), we hypothesize a mediated moderation effect (Hayes, 2017;Kearney & Gebert, 2009;Wellman et al., 2016). That is, team potency is a central process that helps to explain the interactive effect of team LMX and peer mentoring on team performance. ...
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Decades of research on leader–member exchange (LMX), which refers to relationship quality between a leader and follower, has consistently shown LMX to be positively related to individual outcomes. An emerging body of research exploring whether these positive results extend to the team level has found inconsistent results. Because team LMX relationships with team outcomes are not consistent, we explore the way in which peers can contribute toward team outcomes and also enhance the relationship between team LMX and outcomes. Specifically, we investigate the role that peer mentoring social networks play in providing advice and support to team members to enhance what is provided by the leader. With a sample of 111 teams from 25 diverse organizations, results revealed that peer mentoring positively and indirectly related to supervisor-assessed team performance via team potency. In addition, peer mentoring moderated relationships between team LMX (operationalized as LMX median) and team performance, and team potency such that these relationships were more positive when the density of the peer mentoring was high rather than low. Our study contributes to the LMX, team, and mentoring literatures by highlighting the effects of within-team peer mentoring on team performance.
... Thus, by speaking up when other people do not, they would be supporting their creative identity. Maryam Kouchaki and I (2016) examined this possibility by exploring how the creative identity can lead to moral objection, which is the act of speaking up or taking action to oppose a morally questionable practice or refusing to participate in the practice (Wellman et al., 2016). We found that individuals with creative identities have stronger norm-breaking motives (Ng & Yam, 2019). ...
Chapter
The introductory chapter to Creativity and Morality outlines the relationship between the constructs, summarizing the AMORAL model of dark creativity (Kapoor & Kaufman, in press). Specifically, the Antecedents, Mechanisms (individual), Operants (environmental), Realization, Aftereffects, and Legacy of the creative action are theorized and described within the context of general and dark creativity. We present real-life and simulated examples to illustrate the application of the theory across multiple domains, from law enforcement to interpersonal relationships, from the initial idea to the impact of the eventual action. The AMORAL model will help introduce the main concepts that will be addressed in subsequent chapters.
... Second, when leaders interact in a manner that violates norms, this signals that the leader is permissive-accepting of counter-normative behavior-with their followers, thus signaling that their relationship with particular followers is uncomplicated, playful and open. Indeed, research in behavioral ethics suggests that leaders who are moral, thus less likely to violate ethical norms, are perceived to be less warm and permissive (Wellman, Mayer, Ong, & DeRue, 2016). Third, a leader who displays humor is demonstrating a willingness to be vulnerable because they are openly violating norms, and thus likely seem less guarded and more open during social exchanges with followers. ...
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Workplace humor is ubiquitous, yet scholars know little about how it affects employees' behaviors in organizations. We draw on an emerging psychological theory of humor—benign violation theory—to suggest that a leader's sense of humor often conveys counter-normative social information in organizations. We integrate this theory with social information processing theory to develop hypotheses about the effects of a leader's sense of humor on follower behavior. We suggest that although a leader's sense of humor is positively associated with leader member exchange and ultimately work engagement, it can also signal to followers the acceptability of norm violation at work. These perceptions in turn are positively associated with followers' deviance. Furthermore, we propose that these indirect effects are moderated by leader aggressive humor. Data from two three-wave field studies in China and the United States provide support for our hypotheses. Taken together, our results suggest that a leader's sense of humor can be a mixed blessing and elicit unforeseen negative behaviors from their followers.
... 30). In summary, an organizational communication perspective is in alignment with Weick's (1965) theorizing, but identifies the communication among organizational members at all levels within and across organizational functions and structures as the processes by which organizing occurs. Communication is not limited to one modality but, rather, occurs through verbal, nonverbal, textual, and visual forms (mediated or not). ...
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This article focuses on the study of organizational communication, which is a dominant subarea of communication scholarship as recognized by the National Communication Association (NCA) and the International Communication Association (ICA). Because communication, and organizational communication as a subarea, is multiperspectival, this article first defines communication and then organizational communication. Next, the article describes the philosophical perspectives of organizational communication. The next section points to specific areas of individual-, dyadic-, group-, and organizational-level communication research in which communication and organizational psychology and organizational behavior (OPOB) share similar interests. The article concludes by describing practical implications of this area of scholarship (i.e., what can organizations and individuals do with the findings of organizational communication scholarship) and by identifying promising areas of organizational communication study.
... Additional criticism of Treviño's theory focuses on the role of legitimate power in moral objection behavior (Wellman, Mayer, Ong, & DeRue, 2016). This critique focuses on the effect of legitimate power in defining expectations for either accepting or rejecting unethical behavior. ...
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Management scholars have long depended on convenience samples to conduct research involving human participants. However, the past decade has seen an emergence of a new convenience sample: online panels and online panel participants. The data these participants provide—online panel data (OPD)—has been embraced by many management scholars owing to the numerous benefits it provides over “traditional” convenience samples. Despite those advantages, OPD has not been warmly received by all. Currently, there is a divide in the field over the appropriateness of OPD in management scholarship. Our review takes aim at the divide with the goal of providing a common understanding of OPD and its utility and providing recommendations regarding when and how to use OPD and how and where to publish it. To accomplish these goals, we inventoried and reviewed OPD use across 13 management journals spanning 2006 to 2017. Our search resulted in 804 OPD-based studies across 439 articles. Notably, our search also identified 26 online panel platforms (“brokers”) used to connect researchers with online panel participants. Importantly, we offer specific guidance to authors, reviewers, and editors, having implications for both micro and macro management scholars.
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A number of studies have examined how employees regulate their behaviors in keeping with their leaders’ formal control (e.g., authoritarian leadership) or informal control (e.g., abusive supervision). Yet, these two lines of investigation are largely unintegrated. Drawing on a social control perspective, we integrate these two forms of controlling behaviors into one coherent model and link them to employee proactive behaviors. We propose that authoritarian leadership and abusive supervision substitute effects from each other in thwarting followers’ proactivity by increasing their perceived powerlessness. We then test our hypotheses with three field samples of Chinese supervisor-subordinate dyads, using different exemplary behaviors to operationalize proactivity (i.e., taking charge, personal initiative, and proactive performance). The findings across the three studies show that authoritarian leadership and abusive supervision weaken each other’s effects in terms of inhibiting subordinate proactive behaviors. Moreover, in our third study, perceived powerlessness mediates this interaction effect. These results, however, do not generalize to employee affiliative behaviors, operationalized as altruism, cooperation, and conscientious behaviors. The implications of our findings for theory and practice are discussed.
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There is a gap between morality as experienced and morality as studied. In our personal and professional lives, moral judgments are embedded within a specific context. We know the who, what, where, and when and often can infer the why; we know the broader context of actions; and we may have a specific relationship with the actors. However, scholarly theorizing is often built on inferences from participants’ responses to decontextualized, impoverished stimuli. In our quest for uncovering general psychological truths, moral psychologists have examined evaluations of poorly guarded trolleys, strangers with odd sexual proclivities, and endorsement of abstract principles. The four articles included in this section demonstrate the power of contextualizing morality. In the current article, I place these papers within a broader framework for how scholars can contextualize morality research. I then argue why contextualizing morality matters: not only do contextualized questions better reflect the nuances of reality but also contextualized judgments might be key for improving predictions of moral behavior and understanding moral change.
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Despite the ubiquitous observance of humor at workplace, there is paucity of scholarly attention in terms of the manner in which it affects the behaviour of employees. This study aims to explore the relationship between sense of humor and work efficiency by utilizing the benign violation theory (BVT) to posit that elaborative social information is attributed to in the humor of superiors across organizations. Additionally, the social information processing (SIP) theory was applied for forming the hypotheses. Despite the fact that superiors’ humor is suggested to have a positive correlation with superior-subordinate interchange and as a consequence, work efficiency, it could also point at the norm violation’s tolerability in a workplace environment. These insights, in turn, have a positive correlation with the deviance of subordinates. Furthermore, these indirect impacts are suggested to have been mediated by the violent humor of superiors. Data was sourced from three-wave field that were conducted in United Arab Emirates (UAE). The findings suggest that the humor can evince unexpected negative behavioral patterns.
Article
Recognizing that supervisor‐subordinate dyads exist within a broader organizational hierarchy, we examine how the individual’s role within the organizational hierarchy influences perceptions of abusive supervision. Specifically, we examine how supervisors’ abusive behaviors are perceived by abusive supervisors’ managers as well as abusive supervisors’ subordinates. Drawing on role theory we propose these perceptions will differ. Further, we suggest these differences will be reflected in different relationships between manager‐rated abusive supervision and subordinate‐rated abusive supervision and managers’ evaluations of supervisor performance. Results from manager‐supervisor‐subordinate triads indicate differences between managers’ and subordinates’ view of abusive supervision. Further, managers’ perceptions of abuse were related to supervisors’ in‐role performance, whereas subordinates’ perceptions of abuse were related to workgroup performance. In Study 2, we replicate these findings and expand our investigation to an examination of supervisors’ contextual performance. Additionally, we examine another contextual characteristic—aggressive climate—and demonstrate it influences how abusive supervision relates to managerial evaluations of supervisor performance. Future research and managerial implications are discussed.
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Though organizational scholars have studied punishment for decades, recent examples of punishment in organizations cannot be fully explained by the scholarly literature. This may be because much of our prior understanding of punishment has been based on studies in highly bounded organizations, but with the shift to remote work arrangements and contract or freelance work, modern organizations are becoming increasingly boundaryless. Does punishment in bounded organizations look different than punishment in boundaryless organizations? To answer this question, we review and categorize the literature on punishment in organizations according to the boundedness of the organization it examined. We find that though there are similarities in punishment in bounded and boundaryless organizations, punishment in boundaryless organizations involves different actors, punishing different situations, for different reasons, using different methods. However, many questions about punishment in boundaryless organizations remain, including about the pervasiveness, motivations, and impacts that punishment has in boundaryless organizations.
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We study employee taking charge behavior in a team context and investigate how it influences social consequences in work teams. Drawing on the person perception perspective and the warmth–competence framework, we develop a theoretical model outlining how coworkers view and react to those team members who take charge more at work. We conducted two studies to test our model. Using a three‐wave, multisource study with a round‐robin design (Study 1), we find that members who take charge relatively more in their work teams tend to be perceived as more competent and are more likely to emerge as informal leaders; however, they are also likely to be seen as less warm and receive less coworker support, especially in teams with a low initiative climate. In a follow‐up vignette experimental study (Study 2), we replicate the results in a more controlled setting and expand our understanding of the social consequences for employee taking charge behavior. We discuss the theoretical and practical implications of these results.
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Despite the continuous increase in empirical research on leader humor, the important issue of how and when leader humor affects employees’ interpersonal, proactive behaviors in the form of upward voice has largely been overlooked. Drawing on relational process model of humor and data from one multiwave, multisource field study and one experimental field study, we find that the positive effects of leader humor on upward voice behavior can be accounted for by both supervisor–subordinate nonwork ties (i.e., supervisor–subordinate guanxi) and supervisor–subordinate work ties (i.e., leader–member exchange). The indirect effects of both supervisor–subordinate guanxi and leader–member exchange on the relationship between leader humor and upward voice behavior are stronger when employees score low on traditionality. These results shed light on the role of leader humor in promoting the bottom–up flow of potentially critical information in organizations through high-quality relationships with followers and provide insights into who will benefit more from humor in leadership.
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Although the consequences of leader humor on subordinates have been well documented, the important issues of how and when leader humor affects employees’ attitudes or behaviors beyond the workplace have received limited attention. We integrate the humor literature with spillover-crossover theory to address the gap regarding the implications of leader humor in the nonwork domain. By performing an experiment and two field studies involving employee-spouse dyads, we consistently find 1) a positive association between leader humor and followers’ job satisfaction, 2) a spillover effect of followers’ job satisfaction on subordinates’ work-to-family enrichment (WFE) and a crossover effect of subordinates’ WFE on their spouses’ marital satisfaction, 3) serial mediating effects of followers’ job satisfaction and WFE on the leader humor-spouses’ marital satisfaction link, and 4) a stronger positive indirect effect of leader humor on spouse’ marital satisfaction via followers’ job satisfaction and WFE when followers’ perceived organizational interpersonal harmony is low. We discuss the theoretical implications of these findings and suggest practical implications for developing leader humor to enhance employee well-being.
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Research has indicated limited effects of formal governance measures on securities fraud prevention in emerging markets due to the weak rule of law. We propose that hierarchical inconsistency, misaligned rank ordering in formal organizational and informal social hierarchies of the corporate elite, can provide a novel monitoring mechanism to reduce securities fraud. Leaders at the top of the two inconsistent hierarchies can feel distressed and motivated to engage in contestation and challenge each other’s authority, thus providing checks and balances and preventing groupthink. This monitoring effect is likely to be stronger when either of the two heads has dominant and unequivocal superiority in their respective hierarchy, making them particularly distressed by the hierarchical inconsistency and prone to contest. We test our argument in the context of publicly listed family-controlled firms in China, where business and family hierarchies may confer superiority to different individuals. Our study contributes to the corporate securities fraud literature by understanding how formal organizational structures and informal social relationships interact and jointly influence governance effectiveness in emerging markets.
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We examine how leadership structure schemas (LSS) – mental models of how leadership is most effectively structured in groups – interact with formal authority to influence individuals’ leadership behavior and perceptions of others who lead. Across two experiments and a field study, we find that for individuals without formal authority, holding a more shared LSS (relative to a more hierarchical LSS) is positively associated with leadership behavior. However, this effect reverses for individuals in authority positions. Additionally, individuals who engage in leadership behavior are seen as higher in interpersonal warmth by observers who hold a more shared rather than a more hierarchical LSS.
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Ethics and honesty in organizations deserve unique attention as the workplace context adds additional complexities to be considered. We organize the development in research into three areas: (a) the move from the traditional view of looking at unethical behaviors in organizations as motivated by self-interest to the one looking at some motivated by the desire to benefit others; (b) honesty in organizations and the different motivational tensions at work that add to its complexities; (c) interventions to curb unethical behaviors and encourage honesty at work. In the process, we identify and typologize how different pillars within the organization—hierarchy, goal interdependence, and coordination and teamwork—bring about unique psychological tensions and challenges that make ethics and honesty in organizations particularly complex. We conclude by encouraging more observer- (versus actor-) centric future research.
Chapter
How we see ourselves and how we want others to see us affect our behaviors. We often act in ways that support and protect our valued identities and self-perceptions. Research on the creative identity supports this idea. If we see ourselves as creative people, we act in ways that we associate with creativity. This might mean engaging in idea generation or other creativity-related behaviors. However, depending on what people subjectively associate with creativity, it also can lead to behaviors that we often associate with people who are creative like being unconventional or counter-normative. Engaging in those behaviors can lead to both moral and immoral behaviors in order to support one's creative identity.
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Purpose The purpose of this paper is to examine notable instances of fraud that have occurred in Southeastern Connecticut and surrounding areas since the development of two large casinos in that region. Design/methodology/approach Fraud case histories and prosecutions in which the gambling actions of individuals provided the incentive or pressure for the fraud to occur are examined. Findings A number of employees who work in business and government have stolen significant sums of money to support gambling activities. The cases are linked to the growth of casino gambling and an accompanying increase in pathological and problem gambling; which research indicates doubles within 50 miles of a casino. Consistent with prior research, most of the thefts were not discovered by auditors or management in a timely manner. Research limitations/implications This paper examines the impact of fraud due to casino gambling in one region, further research will examine other regions. One limitation in the research process is the reluctance of businesses to report instances of fraud, thus resulting in an underreporting of the extent of the problem. Practical implications The paper recommends actions to be taken by managers in casino areas that can prevent employees from committing such fraud. These actions include the establishment of internal audit procedures, use of an external auditor for specific internal control tasks, upper management review of certain key business documents, increased accountability for organizational check registers, improved control for incoming cash receipts, and fraud awareness training. Originality/value Managers in casino regions that become aware of the risks and employ the recommended measures may prevent and minimize business fraud.