View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Research Papers in Economics Investigating the Effects of Moral Disengagement and Participation on Unethical Work Behavior Adam J. Barsky Gazi Islam Michael J. Zyphur Emily Johnson Insper Working Paper WPE: 069/2006 Copyright Insper. Todos os direitos reservados. É proibida a reprodução parcial ou integral do conteúdo deste documento por qualquer meio de distribuição, digital ou im- presso, sem a expressa autorização do Insper ou de seu autor. A reprodução para fins didáticos é permitida observando-sea citação completa do documento 13447 Investigating the Effects of Moral Disengagement and Participation on Unethical Work Behavior Adam J. Barsky University of Melbourne Gazi Islam Ibmec São Paulo Michael J. Zyphur National University of Singapore Emily Johnson University of North Carolina ABSTRACT With massive corruption uncovered in numerous recent corporate scandals, investigating the reasons for unethical behavior in organizations has become a critical area of research for organizational scientists. This paper seeks to explain why people engage in unethical behavior by forcing on the use of rationalizations to justify egregious actions at work, termed moral disengagement. Further, we predicted that allowing employees to participate in setting performance goals would both decrease the incidence of unethical behavior as well as attenuate the relationship between moral disengagement and unethical behavior. Across two studies, a lab simulation and field survey, we developed a measure of moral disengagement for use with working adults, and tested our propositions. Hypothesized relationships between disengagement, participation, and unethical behavior were largely confirmed. Implications and future directions are discussed. 1 13447 Investigating the Direct and Interactive Effects of Moral Disengagement and Participative Goal-Setting on Unethical Work Behavior The literature linking individual differences and organizational factors to ethical decision making processes and behavior at work has developed substantially in the past two decades. Research has implicated individual differences such as personality factors (e.g., cognitive moral development; authoritarianism, locus of control), demographics (gender, age, nationality), values and beliefs; as well as contextual factors such as codes of conduct, ethical climate/culture, and rewards and sanctions as explanatory factors in individual wrongdoing (see O’Fallon & Butterfield , 2005 for a recent review). However, a number of important gaps in the literature remain. First, the individual difference research has not provided a compelling window into the cognitive processes employed when individuals decide to act in an unethical manner. As such, this paper takes an alternate approach to understanding unethical behavior by focusing on breakdowns in self-regulation as a common factor underlying the perpetration of high risk, harmful, deceitful or otherwise unethical acts at work. While this latter area is far less developed, we are beginning to see clues about the nature of moral thinking as it relates to moral behavior across a variety of disciplines. For instance, Bandura (1999) proposed the concept of moral disengagement, which refers to individuals’ selective disengagement of their moral self-sanctions which generally operate to keep behavior in line with moral norms, as a means by which people allow themselves to act in deviant ways. While this construct has shown promise as a factor underlying misbehavior among juveniles (e.g., Bandura, Barbaranaelli, Caprara & Pastorelli, 1996), and is growing in popularity in the social psychological literature on wrongdoing, it has yet to be integrated into mainstream business ethics research. Second, research has not tended to emphasize the interaction between the person and the situation as a cause of corruption (Loe et al., 2000). Organizational practices designed to promote productivity have come under scrutiny in recent years as cases of corruption in the popular literature have been tied to goal setting practices (e.g., overcharging in Sears’ automotive centers, Stevenson, 1992), and experimental research has begun to suggest that goal-setting may cause individual’s to engage in deception and other unethical behaviors (e.g., Schweitzer, Ordonez & Douma, 2004; Umphress, See, Barsky, Gogus, Ren & Coleman, 2005). In this paper, we will extend that literature as well, by suggesting that the manner in which goal-setting is conducted (extent to which individuals participate in the process) has implications for the extent to which failures in self-regulation though moral disengagement will lead to unethical behavior. Therefore, this manuscript is intended to contribute to the understanding of unethical behavior at work by (1) integrating the individual difference concept of moral disengagement into current business ethics theory, and (2) demonstrating how individuals’ moral disengagement may interact with the performance management prerogatives (i.e., allowing for participation in goal setting) at work to impact the perpetration of unethical behavior. To this end, the paper will unfold as follows. First, the nature of moral disengagement, and how it relates to unethical behavior at work is discussed, with a particular focus on how two mechanisms of moral disengagement are independently related to ethical behavior during the pursuit of performance goals. I then describe the first study in which is designed to develop a measure of moral disengagement and unethical behavior scales for use with working adults, and establish a relationship between moral disengagement and actual unethical behavior. Performance goal setting practices (i.e., participation) are linked to individuals’ willingness to engage in unethical behavior, and an argument is presented that participation may attenuate the effects of moral disengagement on the perpetration of unethical behavior. Finally, a second study 2 13447 designed to both extend the findings from study 1 to a field setting, and demonstrate the interactive relationship between moral disengagement and participative goal setting is descbed. Ethical Decision Making Models While numerous definitions of unethical behavior exist in the literature, for the purpose of the current manuscript, we rely on Jones’ (1991) broad conceptualization of unethical behavior as reflecting any action that is “either illegal or morally unacceptable to the larger community” (Jones, 1991, p. 367). Over the previous two decades, a number of frameworks have been proposed as models for understanding the reasoning or decision-making processes underlying moral (or immoral) behavior (e.g., Rest, 1986; Trevino, 1986). Jones’s (1991) issue-contingent model is often cited as a comprehensive synthesis model of ethical decision-making (e.g., Street, Douglas, Geiger, & Martinko, 2001), and has been used to guide a number of theoretical and empirical studies (see Loe, Ferrell, & Mansfield, 2000). Jones’s (1991) model provides a useful heuristic framework for understanding the processes individuals go through when deciding to engage in ethical behavior. However, the model is incomplete in the discussion of reasoning processes that occur when individuals decide to act unethically. To fill this void, we will draw on Bandura’s (1999) social cognitive theory of moral disengagement and Sykes and Matza’s (1957) neutralization theory. The foundation of Jones’s (1991) model lies in Rest’s (1986) multi-stage model, whereby individuals are argued to move through a series of sequentially ordered steps during the course of making a decision to act ethically or unethically (e.g., Jones, 1991). In the first step, the terms “ethical recognition” and “moral awareness” are often used interchangeably in reference to individuals’ recognition that their decision or action will harm or help others, and that they have some volition in acting or making a decisio n. Once a problem is recognized as moral, decision- makers enter the second step wherein they reason that acting morally is warranted and, therefore, resolve to place moral concerns above other concerns. This process is referred to as establishing moral or ethical intent. The steps (i.e., ethical recognition, ethical judgment, and ethical intent) in ethical decision-making scenarios act as a script, which, when activated, ultimately increase the probability of ethical behavior. In addition, this decision-making script functions such that the activation of a prior step usually precedes the activation of future steps. Given that most research to date has focused on the ethical recognition component (e.g., Loe et al., 2000), we feel that focusing on additional cognitive processes that come into play, such as disengaging internal moral controls, is an important agenda for business ethics research. This is where we turn now. Moral Disengagement and the Use of Rationalizations This manuscript presupposes that most wrongdoers in organizations are psychologically “normal,” in the sense that they see themselves as fair, moral, and honest (Allison, Messick, & Goethals, 1989). Given that individuals typically imagine themselves as moral people, one would expect that, if a moral issue were recognized, then individuals would always attempt to act ethically to maintain a consonant self-image. However, this reaction is often not the case, as ethical recognition is often a necessary but insufficient condition for ethical behavior. A further