HOW DOES POWER CORRUPT? THE WAY INDIVIDUAL AND INSTITUTIONAL SUPPORT OF SOCIAL HIERARCHIES INFLUENCES UNETHICAL BEHAVIOR A DISSERTATION SUBMITTED TO THE GRADUATE DIVISION OF THE UNIVERSITY OF HAWAI’I AT MĀNOA IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPY IN INTERNATIONAL MANAGEMENT AUGUST 2012 By Valerie A. Rosenblatt Dissertation Committee: Richard W. Brislin, Chairperson David H. Bess Sonia Ghumman Kiyohiko Ito Reginald W. Worthley Ashley E. Maynard Keywords: Corruption, moral disengagement, self-regulation, social beliefs, social dominance orientation, unethical decision making © Copyright 2012 by Valerie A. Rosenblatt All Rights Reserved ii DEDICATION For Galina, Alexander, and Michael. iii ACKNOWLEDGEMENTS My work on this dissertation has been supported by more people than I can possibly thank for their contribution to my academic life and personal life. I am sincerely grateful to my family, my advisors and members of my dissertation committee, professors, colleagues, and friends for providing generous guidance and support which has been instrumental in the completion of this dissertation. I am humbled by their unconditional love, assistance, inspiration, and encouragement. I hope to pass this goodwill on to others. I also would like to acknowledge the financial support from the University of Hawai’i Center for International Business and Education Research (CIBER) and Graduate Student Organization (GSO). iv ABSTRACT A universal aspect of human behavior is the tendency to establish and negotiate social hierarchies supporting power and status inequalities. Previous research linked the support of social hierarchies to unethical behavior at the individual and societal levels of analysis. However, factors and processes supporting these associations have not been well understood. In a series of three studies, this dissertation investigates factors and processes supporting the relationship between the individual and institutional support of social hierarchies and unethical behavior. The first study presents a conceptual multilevel process framework grounded in social dominance theory. The framework suggests that the individual support of social hierarchies (i.e., social dominance orientation) is associated with unethical behavior directly, supported by restricted perception and cognition, and mediationally by means of legitimizing rationalizations, ideologies, and logics. The institutional support of social hierarchies is linked to unethical behavior directly, since hierarchies sustain the decoupling of processes and fragmentation of responsibilities, and interactively through person-environment fit processes (e.g., socialization). The second study empirically demonstrates that the individual support of social hierarchies is indirectly related to unethical decision making by means of legitimizing rationalizations that help reduce accountability, responsibility, and self- sanctions. However, the positive relationships between the individual support of social hierarchies, propensity to use legitimizing rationalizations, and unethical decision making are attenuated among individuals with a greater ability to self-regulate. The third study presents and empirically investigates a culture-based model of the relationship between v the support of social hierarchies and unethical decision making. The results of a cross- cultural study involving participants from Australia and the U.S. reveal that individual cultural orientations in the form of social beliefs (e.g., social cynicism) are related to the individual support of social hierarchies and the propensity to use morally disengaging rationalizations. The individual support of social hierarchies and propensity to use morally disengaging rationalizations, in turn, link the individual endorsement of social beliefs to the propensity to make unethical decisions. Societal differences in the support of social hierarchies only partially influence these relationships. vi TABLE OF CONTENTS ACKNOWLEDGEMENTS………………………...……………………………… iv ABSTRACT ……………………………………...……………………………….. v LIST OF TABLES ………………………………………………………………… x LIST OF FIGURES………………………………………………………………... xi CHAPTER 1. INTRODUCTION AND BACKGROUND…...………………….. 1 General Problem…………………………………………………………… 1 Research Focus……………………………………………………..……… 2 Awareness and Decision Making Aspects of Unethical Behavior… 2 Individual and Institutional Support of Social Hierarchies………… 3 Self-regulation and Disengagement Processes.…………….……… 4 Research Purpose and Contribution………………………………………... 5 Dissertation Format ……...………………………………………..…….…. 6 CHAPTER 2. SOCIAL HIERARCHIES, INEQUALITIES, AND ORGANIZATIONAL CORRUPTION…………………………………………… 8 Abstract…………………………………………………………………….. 8 Introduction……………………………………………………….…..……. 9 Social Dominance Theory…………………………………………………..13 Awareness and Proliferation of Organizational Corruption……………….. 17 Individual Support of Hierarchies and Awareness of Organizational Corruption………………………………………………………………….. 18 Institutional Support of Hierarchies and Awareness of Organizational Corruption…………………………………………………………………. 22 Legitimizing Myths and Awareness of Organizational Corruption……….. 25 Interaction across Levels and Awareness of Organizational Corruption….. 28 Conclusion and Implications for Research and Practice.…………………...31 CHAPTER 3. HOW POWER CORRUPTS: THE ROLES OF SELF-REGULATION AND MORAL DISENGAGEMENT…..………………… 37 Abstract…………………………………………………………………….. 37 Introduction….……………………………………………..………..……... 38 vii Social Dominance Orientation and Unethical Decision Making ....……….. 42 Social Dominance Orientation and Self-regulation ………………..……… 43 Self-regulation and Unethical Decision Making…………………..………. 47 Social Dominance Orientation and Moral Disengagement…………........... 48 Moral Disengagement and Self-regulation……...……………………..…... 51 Moral Disengagement and Unethical Decision Making…………………… 51 Self-regulation and Moral Disengagement as Mediators………………....... 52 Method……………….………………..……….…………………………... 55 Sample and Procedures………..…………………………………… 55 Measures…………………………………………………………… 56 Data Analysis……………………………………………………… 61 Results……………………………………………………………………… 63 Preliminary Analysis……………………………………………….. 63 Measurement Model……………………………………………….. 64 SEM Analysis and Hypotheses Testing……………………………. 68 Common Method Variance………………………………………… 69 Supplementary Analysis…………………………………………………… 73 Discussion………………………………………………………………….. 80 Theoretical Implications…………………………………………… 83 Implications for Practice………………………………………….... 85 Limitations and Future Research…………………………………... 86 Conclusion…………………………………………………………………. 90 CHAPTER 4. HOW POWER CORRUPTS: A CULTURE-BASED MODEL..….. 91 Abstract…………………………………………………………………….. 91 Introduction……………………………………………………………..….. 92 Theory and Hypotheses……………………………………………………. 96 Social Dominance Orientation, Moral Disengagement and Unethical Decision Making………………………………………... 96 The Role of Social Beliefs………………...……………………….. 98 The Role of the Societal Support of Social Hierarchies…………… 107 viii Method……………….………………..……….…………………………... 110 Sample and Procedures………..…………………………………… 110 Measures…………………………………………………………… 112 Data Analysis………………………………………………………. 117 Results……………………………………………………………………… 120 Preliminary Analysis……………………………………………….. 120 Measurement Model……………………………………………….. 122 Measurement Invariance…………………………………………….126 SEM Analysis and Hypotheses Testing……………………………. 131 Common Method Variance………………………………………… 139 Discussion…………………………………………………………………. 140 Theoretical Implications…………………………………………… 141 Implications for Practice…………………………………………… 147 Limitations and Future Research…………………………………... 149 Conclusion…………………………………………………………………. 152 CHAPTER 5. CONCLUSION…………………………………………………… 153 APPENDIX. MEASURES……………………………………………………….. 157 REFERENCES…………………………………………………………………….. 166 ix LIST OF TABLES Table 1. Means, Standard Deviations, and Zero-Order Correlations…………...…. 65 Table 2. Results of the Confirmatory Factor Analysis (Measurement Model)……. 67 Table 3. Standardized Direct and Indirect Effects, Standard Errors, and p-values.. 71 Table 4. Standardized Direct and Indirect Effects, Standard Errors, and p-values for the Modified Model………………………….……………………...... 79 Table 5. Means and Standard Deviations for the Australian and the U.S. samples.. 123 Table 6. Zero-Order Correlations for the Australian sample………...…………….. 124 Table 7. Zero-Order Correlations for the U.S. sample…………………………….. 125 Table 8. Results of the Confirmatory Factor Analysis (Measurement Model)…… 127 Table 9. Summary of Models and Goodness-of-fit Tests Assessing Measurement Invariance……………………………………………………….……….. 130 Table 10. Summary of Models and Goodness-of-fit Tests Assessing Structural Invariance ………………………………………………………………... 133 Table 11. Results of the Structural Equation Model Analysis (Structural Path Invariance Model)………………………………………………………… 135 x LIST OF FIGURES Figure 1. The Model of the Role of Individual and Institutional Support of Social Group-based Hierarchies in Individuals’ Awareness of Organizational Corruption ……………………..………………………..……………….. 13 Figure 2. The Model of the Role of Self-regulation and Moral Disengagement in the Relationship between the Individual Support of Social Group-based Hierarchies and Unethical Decision Making …………….. 41 Figure 3. Results of the Structural Equation Modeling Analysis with Standardized Parameter Estimates …………………………………………………….. 70 Figure 4. A Modified Model of the Relationship between Social Dominance Orientation, Moral Disengagement, Unethical Decision Making, and Self-Regulation