Academic journal article Journal of the Australian and New Zealand Academy of Management

The Influence of Company Rules, Ethical Climate, and Individual Characteristics on Sales Representative's Honesty

Academic journal article Journal of the Australian and New Zealand Academy of Management

The Influence of Company Rules, Ethical Climate, and Individual Characteristics on Sales Representative's Honesty

Article excerpt

ABSTRACT

This study examined the impact of situational and individual characteristics on sales representatives' propensity to lie or to tell the truth. The situational elements were the honesty of the organisation climate and its formal rules about lying to customers. The individual elements were the participants' degree of Machiavellianism and tolerance for ambiguity. The results indicated that more Machiavellian people were more likely to lie and that they were less guided by the rules than people who were low in this trait. In addition, rules and climate work together for people with a high tolerance for ambiguity in a complex manner.

INTRODUCTION

Ethical behaviour in business continues to receive empirical and theoretical attention that is undoubtedly fuelled by headline news stories such as the Enron accounting practices scandal or Martha Stewart lying about insider trading. However, while major economic fraud may generate drama, people behave ethically and unethically every day on the job. A recurring theme in the business ethics literature questions the extent to which corporate codes of ethics influence everyday behaviour (Cressey & Moore, 1983; Trevino, Butterfield, & McCabe, 2001). A parallel theme questions the comparative impact on behaviour of personal differences versus structural elements of a situation (Giacalone & Knouse, 1990; Hegarty & Sims, 1978; Trevino & Youngblood, 1990). The present study examines everyday business behaviour by exploring how corporate culture, or expectations, and individual differences influence deception, specifically the situational and individual explanations for why people lie or tell the truth at work.

It is well established in the social science literature that people behave more and less honestly depending on the situation. In fact, Hartshorne and May (1928), in their quest for the dishonest personality, found that most people behaved dishonestly when provided with the opportunity. People in the workplace find themselves facing various circumstances under which they lie. Some contexts, such as a competitive negotiation, place people in a frame of mind that allows them to lie (Boles, Croson, & Murnighan, 2000). Similarly, conflicting demands, or role conflicts, might be resolved to some degree by lying (Grover, 1993b). For example, Grover (1993a) found that nurses were more prone to lying in medical charts when they were faced with conflicting expectations between the physician's orders and nursing obligations, and Schweitzer, Ordonez, & Douma (2004) found that people lied about their performance when they failed to achieve a difficult goal.

Situational norms influence ethical behaviour, and the organisational studies literature has a history of investigating how norms, or the commonly held group beliefs, shape individual behaviour. Going by different labels, such as climate, culture, shared beliefs, and social information processing (Enz, 1988; Salancik & Pfeffer, 1978; Schneider, 1975), they share the overarching idea that the attitudes and opinions of people around us influence our ethical actions and beliefs. For example, some automobile dealerships have a collective belief that reinforces the idea that nearly any behaviour is acceptable to closing a deal with a customer, whereas others share a belief that closing the deal should be balanced with humane treatment of the customer.

Research on how shared beliefs affect ethical behaviour is largely based on Victor and Cullen's (1988) ethical climate taxonomy, which classifies the manner in which organisational participants collectively interpret and make sense of ethical issues (Cullen, Parboteeah, & Victor, 2003; Forte, 2004; Fritsche, 2000; Peterson, 2002; Stone & Henry, 2003; Weber & Seger, 2002). However, the impact of various ethical climates is not clear. Trevino, Butterfield, and McCabe (2001) conducted one of the few studies that deeply analysed the impact of ethical context, dividing it into ethical climate and ethical culture. …

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