The effect of negative work outcomes and values on the perceived likelihood of employee dishonest behaviour

Krista Jaakson (Faculty of Business Administration, Ton Duc Thang University, Ho Chi Minh City, Vietnam)
Maaja Vadi (School of Economics and Business Administration, University of Tartu, Tartu, Estonia)
Ilona Baumane-Vītoliņa (Faculty of Economics and Management, University of Latvia, Riga, Latvia)

Baltic Journal of Management

ISSN: 1746-5265

Publication date: 1 October 2018

Abstract

Purpose

Employee dishonesty is problematic for businesses in general, particularly for retailers. The purpose of this paper is to empirically analyse selected factors associated with the perceived likelihood of dishonest behaviour among retail employees. Specifically, the role of three negative work outcomes – insufficient pay, boredom, and perceived injustice – is investigated, as well as the effect of individual values and espoused organisational values.

Design/methodology/approach

The sample consisted of 784 retail employees from six retail organisations located in Estonia and Latvia. A survey questionnaire that used manipulated scenarios of work outcomes and organisational values was administered.

Findings

The study concludes that perceived injustice produces more dishonesty than other negative work outcomes (insufficient pay and boredom), whereas boredom was a surprisingly strong trigger for the perceived likelihood of dishonest behaviour. Individual ethical values determined the perceived likelihood of dishonest behaviour as hypothesised while sensation-seeking values did not. Espoused organisational values had no significant effect on the perceived likelihood of dishonest behaviour.

Practical implications

The results imply that the breach of distributional and procedural justice simultaneously associates most with employee dishonesty, and retail employee selection is the key to curbing dishonest behaviour in the workplace.

Originality/value

The paper makes a contribution to behavioural ethics literature by studying dishonest employee behaviour in the post-communist context while addressing various forms of dishonest behaviour, in addition to stealing. Also, the effect of espoused organisational values has been scarcely studied before.

Keywords

Citation

Jaakson, K., Vadi, M. and Baumane-Vītoliņa, I. (2018), "The effect of negative work outcomes and values on the perceived likelihood of employee dishonest behaviour", Baltic Journal of Management, Vol. 13 No. 4, pp. 605-622. https://doi.org/10.1108/BJM-03-2018-0091

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Publisher

:

Emerald Publishing Limited

Copyright © 2018, Emerald Publishing Limited


1. Introduction

It is important to know why employees act dishonestly, especially in the retail sector, as the consequences of dishonest behaviour are disheartening to employers. Retailers face inventory losses worth billions of dollars, amounting to $123bn in 2015, and internal theft was identified as the leading cause of that loss (Global Retail Theft Barometer, 2015). The high incidence of employee dishonest behaviour in retail has been attributed to stressful low-paying jobs and their abundance of temptations and opportunities for misdeed (Beck and Willis, 1993; Hollinger and Davis, 2006; Whysall, 2008). Yet, the unethical behaviour of retail employees has immediate effects on customer satisfaction (Thomas et al., 2002; Detert et al., 2007) and may even affect organisational survival.

In this study, we rely on organisational justice theories (Greenberg, 1990a) as an explanation for employee dishonest behaviour. There are different forms of justices: distributive, procedural, retributive, and restorative justice (Vermunt and Steensma, 2016). Our study focusses on distributive and procedural justice; the former deals with the allocation of rewards (or punishments) relative to inputs, and the latter concerns organisational decision processes. Since employee perceptions of unfairness in either domain may channel into dishonest behaviour as a retributive action against the employer (Hollinger and Davis, 2006; Houser et al., 2012; Gill et al., 2013), it is important to understand how people perceive injustices and how they react to them (Wenzel et al., 2017). Some authors warn that rank-and-file employees working in low-paid sectors and who experience unfair treatment are especially likely to exhibit dishonest behaviour (Jelinek and Ahearne, 2006; Detert et al., 2007; Gill et al., 2013). This is because they lack the formal authority to express their discontent and restore justice in other ways. We refer to the forms of injustice perceived by the employees as negative work outcomes.

Our aim in this study was to further understand how different injustices relate to the perceived likelihood of dishonest behaviour among employees and to what extent individual values and espoused organisational values affect these relationships. There are many studies investigating the effect of particular injustice on employee misbehaviour, such as Greenberg (1990b) (focusing on underpayment), Detert et al. (2007) (analysing abusive supervision), and Gill et al. (2013), who look at the effects of an experiment involving random bonuses, but comparative quantitative research on this topic is scant, with Ambrose et al. (2002) being a rare exception.

In addition to this aim, our study makes an important contribution in some other respects. First, we present the manifestations of dishonest behaviour and elaborate on three work-related outcomes in the specific societal and sectorial contexts. Recent research confirms that organisational life varies significantly between Western, Central, and Eastern European countries (Sakowski et al., 2015; Meyer and Peng, 2016; Zupan et al., 2017), but few studies on dishonesty have been conducted outside developed Western societies (e.g. Baumane-Vitolina et al., 2017, which analyses generational differences with regard to ethicality). Post-communist legacy may add an additional layer: documents illustrate that petty illegalities, e.g. goods snatched from the workplace, work hours used to render private services, and the private utilisation of state assets, were regularly practiced by almost all citizens under the former Communist rule (Hignett, 2016). When Lenches (1993) analysed communist mindset, she expressed the idea that the communist governments could not have pursued their Marxist–Leninist agenda without a constant stream of lies; according to her, these lies and broken promises were the part and parcel of communist “ethics” (p. 26). Recent studies confirm the long-lasting impact: Libman and Obydenkova (2013) show that Russian regions with high communist party membership rates during the Soviet era have higher corruption nowadays. These examples reflect a complex combination of dominating ideology and everyday practices and we can expect that in post-communist countries, where a disposition towards dishonesty used to be high, a negative work outcome serves as a handy self-justification for dishonest acts (Shalvi et al., 2011).

Retailing has received attention in literature about dishonesty before, but in these studies dishonest behaviour was limited to stealing (see, e.g. Terris and Jones, 1982; Hollinger and Clark, 1982; Cherrington and Cherrington, 1983; Jones et al., 1990; Beck and Willis, 1993; Chen and Sandino, 2012; Conrads et al., 2015; Moorthy et al., 2015). Our second contribution is that we widened the spectrum of dishonest behaviour.

Third, while organisational values are recognised as an important contributing factor to employee dishonesty (Peterson, 2002), empirical research showing how organisational values influence manifestations of dishonest behaviour is scarce.

The paper begins with a theoretical overview of dishonesty, upon which we develop our hypotheses, followed by a description of the sampling and methodological approaches we used in this study. After presenting the results, we conclude with theoretical and practical implications as well as suggestions for further research stemming from our limitations.

2. Theoretical background and hypotheses

2.1 Conceptualising dishonesty

Various scholars have noted that dishonesty is a complicated and multifaceted phenomenon, causing difficulties in providing a coherent and relevant definition (Scott and Jehn, 1999; Vadi and Vissak, 2013). We consider employee dishonesty to be a specific form of counterproductive workplace behaviour. The latter includes all behaviour by employees that result in harm to the organisation or its members (Martinko et al., 2002). The negative consequences of a behaviour can be deliberate (i.e. consciously designed) or accidental, and dishonesty specifically addresses conscious behaviour. It should be noted that people may consciously harm an organisation for a variety of reasons, including altruistic ones (Scott, 2003; Wiltermuth et al., 2015). In this paper, dishonest behaviour is only deemed as such if the motive of the act was self-gain. To clarify the definition, we compiled a list of dishonesty characteristics from Hollinger and Davis (2006, p. 204) and Vadi and Vissak (2013, p. 6):

  • conventions of transferring information, property, or trust are violated by the act or intention to act;

  • the actor does it voluntarily and thus can be deemed responsible;

  • the act (potentially) harms the employer directly or indirectly via customers;

  • the act takes place during the course of a legitimate occupation; and

  • the act is committed primarily for the benefit of the individual, either financially or in terms of social status.

Based on these characteristics, we agree with Scott and Jehn’s (1999, p. 311) definition: “Dishonesty occurs when a responsible actor voluntarily and intentionally violates some convention of the transfer of property or information and, in so doing, potentially harms a valued being”. Following Scott and Jehn’s (1999) categories of dishonesty, the following types of behaviour comprise dishonesty in this paper:

  • property deviance: theft, misuse of employer facilities, and damaging property;

  • production deviance, i.e. shirking; and

  • deception, including lies, concealment, and cheating.

2.2 Selected negative work outcomes and employee dishonest behaviour

There are a number of motives that may lead employees to act dishonestly; in fact, any value chosen over honesty may become the reason for a dishonest act (Wiltermuth et al., 2015). Hollinger and Davis (2006) contend that no single explanation or theory is applicable to all cases of dishonesty. Taking into account the retail context, we selected three negative work outcomes that have been shown to be associated with employee unethicality: insufficient pay (Beck and Willis, 1993; Jones and Kavanagh, 1996), boredom at work (Hollinger and Clark, 1982; Terris and Jones, 1982; Kass et al., 2001), and the perception of injustice (Bennett and Robinson, 2003; Wang and Kleiner, 2005). The effect of these three negative work outcomes on dishonest behaviour is expected to depend on their magnitude and form of justice violation. In the following paragraphs, we develop two hypotheses related to these work outcomes.

Insufficient pay represents a distributional injustice, the perception of which may result in dishonest behaviour. In general, service employees are sensitive to monetary rewards (Elmadağ and Ellinger, 2018). Ambrose et al. (2002) studied perceptions of income distribution fairness and found that perceived unfairness resulted in sabotaging behaviour. Greenberg’s (1990b) famous study examining employee reactions to wage cuts found that when a wage cut was perceived as unfair, a significantly higher theft rate followed. Chen and Sandino (2012) conclude that higher relative wages effectively curbed theft by retail employees and Moorthy et al. (2015) report that no monitoring of retail employees nor pre-employment integrity tests can forestall stealing if the retail employees’ compensation package is unfair. Thus, insufficient pay is a negative work outcome bearing significant risk for dishonest behaviour in retail.

Unlike insufficient pay, boring work relates to procedural rather than distributional justice (Spector et al., 2006) as it implies there is a lack of process control on the part of employees. While the breach of procedural justice is associated with employee aggression, e.g. bullying and other dysfunctional behaviour such as absenteeism, turnover, or cyberloafing (Vermunt and Steensma, 2016), the moral consequences of boredom, specifically, have not received much scholarly attention (Morgeson and Campion, 2003; Elpidorou, 2017).

However, mental understimulation characterised by low arousal and dissatisfaction may be a serious issue in salespeople’s work. For example, Hollinger and Clark (1982) concluded that retail employees are especially unhappy about inadequate work challenges. Employees experiencing this negative emotional state have different strategies to cope with it, and dishonest and counterproductive work behaviour may be among them (Cherrington and Cherrington, 1983; Kass et al., 2001; Bruursema et al., 2011; van Hooff and van Hooft, 2014; Morf et al., 2017). Nevertheless, boredom is typically associated with less serious forms of misbehaviour, such as withdrawal or negative behaviour (Spector et al., 2006; Harris and Ogbonna, 2012). An experimental study by van Tilburg and Igou (2011) showed that respondents in a high-boredom state evaluated their in-group members more favourably than out-group members while respondents in a low-boredom state did not differentiate as much between in- and out-group. This result has direct implications on our study since the respondents evaluate their colleagues’ dishonest behaviour.

Finally, managerial decisions made without consultation, i.e., where the concerns and viewpoints of employees affected by the decision, are not sought, is an indication of procedural injustice. If such decisions also end up in the self-interested allocation of rewards favouring managers themselves, distributional justice is in jeopardy as well. Our third negative work outcome – perceived injustice – refers to exactly this kind of situation where both types of justice, procedural and distributional, are violated. Prior research indicates that different forms of injustice have a cumulative effect on the severity of employee deviance (Ambrose et al., 2002). Perceived unfairness increases counterproductive reactions even when the victim is distant (Treviňo et al., 2014). Thus, one might assume that the violation of one form of justice causes less strong reactions than when both forms of justice are breached.

Given the above, we put forward the following hypotheses:

H1.

Perceived injustice has a stronger positive effect on employees’ perceived likelihood of dishonest behaviour than insufficient pay and boredom.

H2.

Boredom has a weaker positive effect on employees’ perceived likelihood of dishonest behaviour than insufficient pay and perceived injustice.

2.3 Individual values and employee dishonest behaviour

“Some individuals […] are better equipped to resist unethical behavior,” according to Gino et al. (2011, p. 200). It has been shown in many studies that the moral values of individuals are powerful determinants of ethical behaviour (Xu and Ma, 2015; Hilbig and Zettler, 2015; Gächter and Schulz, 2016; Borg et al., 2017).

The mechanism for how moral values translate into ethical action is explained by the model of moral philosophies (Hunt and Vitell, 1986) and the theory of moral identity by Aquino and Reed (2002). According to Hunt and Vitell (1986), there are two main cognitive processes of unethical decision-making: rule-based and cost-benefit cognitive reasoning. The former stems from deontology, i.e. moral obligation and exhibiting virtue in every situation, and the latter from utilitarianism, which is aimed at maximising the greatest good for the greatest number of people. The ethical values of individuals like fairness or honesty are related to rule-based moral philosophy, which, in turn, inhibits moral disengagement (Roberts et al., 2018). As moral disengagement enables individuals to act unethically, the higher importance an individual places on ethical values predicts less dishonest behaviour.

Moral identity “reflects the extent to which values, goals, and virtues are central elements of a person’s identity” (Roberts et al., 2018, p. 106). Moral identity comprises two dimensions: internalisation, which refers to a person’s moral self-concept, and symbolisation, which refers to the extent to which moral traits making up that self-concept manifest in an individual’s actions. Just like rule-based moral philosophy, moral identity is negatively related to moral disengagement (Roberts et al., 2018). We may thus conjecture that individuals for whom ethical values are important are characterised by stronger moral identity, deem dishonest behaviour more condemnable, and are less inclined to engage in dishonest behaviour. Moreover, these people consider dishonest behaviour less widespread among their colleagues because experimental studies have demonstrated how belief about and knowledge of others’ norm violations lead one to act dishonestly and even lower their moral standards (Houser et al., 2012; Gächter and Schulz, 2016). But the relationship is also reciprocal: if a person wishes to act dishonestly, they convince themselves that others are corrupt, too (Di Tella et al., 2015). Hence, it is hypothesized that:

H3.

Employees characterised by low prioritisation of ethical values perceive a significantly higher likelihood of dishonest behaviour compared to employees for whom ethical values are more important.

In contrast to the ethical values described above, there are certain values associated with a delinquent predisposition, namely creativity, hedonism, and the need for stimulation (Gino and Ariely, 2012; Harris and Ogbonna, 2012; Vincent and Kouchaki, 2016; Borg et al., 2017). One possible reason for this stems from the fact that creativity is generally regarded as a rare and valuable characteristic, and people viewing themselves as such feel a sense of entitlement (Vincent and Kouchaki, 2016). Entitlement, in general, makes people feel they deserve rewards, even if it involves dishonest behaviour (Poon et al., 2013). In addition, creativity is characteristic of utilitarian rather than rule-based moral philosophy and, according to Roberts et al. (2018), people preferring this reasoning do not suppress their moral disengagement. Moreover, Gino and Ariely (2012) find that creative people possess greater ability to justify their dishonest behaviour.

A craving for stimulation and sensation is another trait prone to dishonesty. Sensation seekers look for exciting experiences and pay little attention to their potentially adverse consequences. For example, openness to experience, which is analogous to sensation seeking in the Big Five scale, is associated with production deviance, i.e. time theft (Bolton et al., 2010). Therefore, we hypothesise:

H4.

Employees characterised by high prioritisation of sensation-seeking values perceive a significantly higher likelihood of dishonest behaviour compared to employees for whom sensation-seeking values are less important.

2.4 Organisational values and dishonest behaviour

There is a widespread consensus that the organisational environment affects the way employees perceive ethical situations and choose to behave when encountering them (Martin and Cullen, 2006; Treviño et al., 2006; Vadera et al., 2013). This area of research is based on employees’ psychological processes of identification and internalisation (see Weaver, 2014 for a review of the relevant literature). The most commonly studied item as part of the ethical infrastructure is the business code of ethics, but it has been demonstrated that the mere presence or the clarity of such a code does not have a significant effect on employee behaviour (Treviño et al., 1999; Helin and Sandström, 2007; Kaptein, 2011).

Organisational values have received considerably less attention than codes. Even though it is possible to conclude that individual behaviour is influenced by the perceived ethical values of an organisation (Biron, 2010), any relationship between organisational values and employee dishonest behaviour is far from being definitely shown. Empirical research – albeit sparse – has shown that the clarity of an organisation’s values is related to perceptions of the importance of ethics in that organisation (Vitell and Hidalgo, 2006; Posner, 2010), the ethical intentions of employees (Marta et al., 2012), and ethical behaviour (Baker et al., 2006). In general, organisational values explain only a small proportion of the overall variance in ethical employee behaviour compared to personal variables (Akaah and Lund, 1994).

This leads us to propose that espoused organisational values are irrelevant until employees face emotionally charged situations when dishonest behaviour can be a way of coping with the situation. Victor and Cullen (1988) suggested that an ethical environment improves employees’ reactions to morally questionable work situations. If an organisation’s values make justifying the misconduct more difficult, self-image maintenance theory predicts that dishonest behaviour will occur less frequently (Mazar et al., 2008).

However, the situation might be different, if not the opposite, in cases where the organisation itself has been found to be unethical. Unethicality coupled with organisational values that were supposed to preclude it may result in the perception of organisational hypocrisy – a situation when espoused values diverge from managers’ actual behaviour, i.e. leaders do not “walk the talk”. Hypocrisy attribution, in turn, causes employee disenchantment (Cha and Edmondson, 2006). Biron (2010) studied the effect of perceived ethical organisational values on workplace deviance under low and high levels of abusive supervision. He concluded that perceived ethical values had a negative effect on deviant behaviour under a low level of abusive supervision, but values became insignificant when a high level of abusive supervision was reported. We, therefore, assume that if employees perceive organisational injustice the ethical organisational values lose their ability to buffer dishonest behaviour. Hence, it is hypothesized that:

H5.

An organisation’s values stressing honesty and responsibility have a deterring effect on the perceived likelihood of dishonest behaviour under the insufficient pay and boredom outcome, but not under the perceived injustice outcome.

Our study’s framework is given in Figure 1.

3. Sample and method

3.1 Sample

Estonian and Latvian retail organisations composed our study sites. We collected data from four retailers in Estonia and three in Latvia, including one retailer operating in both countries. Three retailers belonged to international chains. The data collection period was from February 2012 to January 2015. Altogether, 1,774 questionnaires were distributed. The final sample consisted of 784 retail employees: 542 from Estonia and 242 from Latvia, meaning that the average response rate was 44 per cent. The characteristics of the sample are presented in Table I.

3.2 Method

A questionnaire with a concocted study design was developed by the authors based on extant literature and consultations with the human resources manager in one of the participating retail organisation. The original questionnaire was developed and pilot-tested in Estonian, then back-translated by two different bilingual translators to obtain Russian version. The Russian version of the questionnaire was adapted into Latvian. Again, back-translation from Russian into Latvian was performed by a professional bilingual translator. Differences from the initial version of the questionnaire were discussed by two academic experts (one of them bi-lingual) and one practitioner, working in the managerial positions (also bilingual). To ensure the respondents’ confidentiality, the questionnaires were placed in a sealed envelope in the stores. The store managers were not allowed to take part in the survey as their responses were expected to be systematically different from frontline employees (Liao et al., 2009), but we could not control for respondents’ position together with store characteristics without the loss of their anonymity.

3.2.1 Measurements

Dishonest behaviour

This questionnaire included hypothetical scenario in which respondents were asked to evaluate the likelihood of several types of dishonest behaviour. In the scenario, retail employees were asked to play the role of floor manager overseeing ten employees in a fictitious retail organisation in their country. They were instructed to read the description of the organisation (base case) and later one randomly assigned negative work outcome. In both instances, the base case and the outcome, respondents had to evaluate the likelihood of certain dishonest behaviour among their hypothetical subordinates on a seven-point Likert-type scale (1=completely unlikely; 7=very likely). It was pointed out in the instruction that with all dishonest behaviour, it is assumed that these are beneficial to the actor and deliberately performed by them. We studied seven types of behaviour (Table II).

Organisational values

The hypothetical company was described as a subsidiary of an international retailer that is relatively well known in the countries surveyed and has been in the market for almost 20 years. The subsidiary’s stores are located in major cities and open seven days a week. To be as realistic as possible, we drew on information from real retail organisations’ core values and objectives. There were two sets of espoused organisational values: “honesty, responsibility, and professionalism” for half of the sample and “cheerfulness, creativity, and product quality” for the other half. In each participating retail store, an equal number of each type of questionnaires was distributed, but respondents picked their questionnaire randomly. Overall, 46.7 per cent of respondents had honesty-related organisational values.

Negative work outcomes

After the assessment of the likelihood of dishonest behaviour in the base case was made, one negative work outcome was added. It comprised a short description of a situation of either insufficient pay, boredom, or the organisation’s ethically questionable decision to increase the management’s salary while laying off staff (perceived injustice). Exact descriptions of the outcomes are given in the Appendix. After reading the situation, respondents again rated the likelihood of dishonest behaviour occurring among their hypothetical subordinates given the work outcome type. As such, the study employed a 2 (organisational values: ethical values present vs ethical values absent)×3 (negative work outcome: insufficient pay, boredom, or perceived injustice) between-subjects design.

Individual values

Respondents ranked their individual values using 18 instrumental values, a subset of overall human values (Rokeach and Regan, 1980). Instrumental values, i.e. preferable modes of behaviour, were selected because these reflect the honesty–humility trait dimension, which has been found to be the strongest predictor of unethical behaviour in the literature (Hilbig and Zettler, 2015). Out of 18 values, we only focus on the position of two types of values: ethical values and sensation-seeking values. Ethical values were operationalised as the average rank of honesty and responsibility values. There is no direct counterpart for sensation seeking among instrumental values; as it relates to stimulation and self-direction we operationalised it via the average rank of imagination and obedience values, whereas the latter was reverse-coded.

Controls

The last section of the questionnaire inquired about socio-demographic data: gender, education, job tenure, and age. In addition, as questionnaires were administered to respondents on paper in different languages (Estonian/Latvian and if needed Russian), depending on the national composition at the store, we distinguished between the nationality of respondents. We also controlled for organisational characteristics such as retailer location and ownership, as Jaakson et al. (2017) showed that these may have an effect on the perceived likelihood of dishonesty.

3.2.2 Data analysis

Perceived likelihood of dishonest behaviour was measured on a continuous scale and after checking the factor structure of seven types of behaviour, composite indicators for the base case, and negative work outcomes as well as the difference between the two indicators for each respondent were calculated. To test the hypotheses two-sample t-test, logistic and linear regression analyses in STATA 14.0 were performed. All results were considered statistically significant with 0.95 confidence with p<0.05.

4. Results

4.1 Missing data analysis

With regard to dishonest behaviour, among 10,976 potential data points, i.e. 784 respondents×(7 base case behaviour types+7 test behaviour types), there were 99 missing entries, which is less than 1 per cent. The percentage of missing values for each item ranged from 0 to 1.8 per cent. Using the missing data procedure in STATA, we obtained a nonsignificant value for Little’s test (χ2=286.56, degrees of freedom (df)=264, p=0.16), indicating that the assumption of missing completely at random was met. Out of 784 respondents, 712 ranked their personal values; non-respondents were excluded from respective analysis. Missing values for control variables were not replaced.

4.2 Descriptive statistics

In Table III, means, standard errors, and correlations between base case dishonest behaviour are reported.

It can be seen that all forms of dishonest behaviour are moderately correlated with each other in the base case, mean r=0.51, all p<0.01. All items loaded onto one factor in an exploratory principle components analysis (all factor loadings>0.65). The coefficient α for the seven items was 0.87 in the base case and 0.91 and 0.92 under our outcome conditions. Given these results, we averaged the seven dishonest behaviour items to create a composite measure of perceived likelihood of dishonest behaviour for the base case and negative work outcomes.

4.3 The effect of negative work outcomes

Overall, the perceived likelihood of dishonest behaviour was significantly higher in the case of negative work outcomes compared to the base case (p=0.000). We hypothesised in H1 that perceived injustice has a stronger positive effect on the perceived likelihood of dishonest behaviour compared to other work outcomes and in H2 that boredom generates weaker positive effect out of all the outcomes. To test these hypotheses, we generated a dependent dummy variable such that the increase in the perceived likelihood of dishonest behaviour after the inducement of the work outcome was assigned 1 (454 observations) and unchanged, or a decrease in the perception change was assigned 0 (330 observations). We then ran logistic regressions with work outcomes as independent dummy variables. The results are shown in Table IV.

Regarding H1, Models 2 and 3 indicate that perceived injustice indeed significantly increases the perceived likelihood of dishonest behaviour. Thus, H1 is confirmed. However, when it comes to H2, Models 1 and 2 show that while boredom’s effect is significantly weaker than perceived injustice, it is not significantly different from insufficient pay. Therefore, H2 is rejected.

4.4 The effect of individual values

In H3 and H4, we expected that different perceptions of dishonest behaviour would depend on employees’ individual values. To test this, an average rank of ethical values (honesty and responsibility) and sensation-seeking values (imagination and reverse-coded obedience) was calculated[1]. Respondents were split into two groups, high (=0) and low prioritisation of ethical values (=1), using country-specific median value as cut-off. The same procedure was applied to sensation seeking: high prioritisation (=1) and low prioritisation of sensation seeking values (=0). Coding this way, we expect positive associations with the perceived likelihood of dishonest behaviour.

In the base case, respondents who did not regard ethical values highly reported a significantly higher likelihood of dishonest behaviour among their colleagues (see Table V). Thus, H3 was confirmed. However, the same pattern did not hold for respondents who value sensation seeking in their life. The assessments of the two groups were practically identical (see Table V). Therefore, H4 was not confirmed.

4.5 The effect of organisational values

Next, we tested the influence of the espoused organisational values written out in the description of the organisation. We constructed linear regressions with individual control variables (gender, tenure, education, nationality, and personal ranking of the value honesty), organisational control variables (store location in the capital city or outside it, domestic or international ownership), and the main dummy variable indicating the presence of the values honesty, responsibility, and professionalism in the organisational values statement. To capture the potential effect of the specific organisational culture where the employees were surveyed, standard errors were clustered by retailer. It is reasonable to assume that respondents from the same organisation share somewhat similar views about dishonest behaviour stemming from recent critical events or company’s (compensation) policies (Jelinek and Ahearne, 2006). Disregarding such a possibility may falsely narrow confidence intervals and overestimate the significance of the explanatory variable.

We suggested that organisational values gain relevance when people have an excuse to behave dishonestly, especially under conditions of insufficient pay and boredom. We used stepwise regressions, where first only control variables were inserted (Step 1) and thereafter organisational values’ dummy was included (Step 2) (see Table VI).

As anticipated, Table VI indicates that organisational values played practically no role in the perceived likelihood of dishonest behaviour in the base case. Regarding negative work outcomes, the presence of ethical values had an expected negative, albeit insignificant, coefficient under insufficient pay and, contrary to our expectations, under the perceived injustice outcome. Surprisingly, the coefficient was positive under boredom, although still not significant (p=0.29). Consequently, H5 was not supported.

5. Discussion

In the following paragraphs, we discuss our main findings, which are organised into three larger sections. First, we discuss the negative work outcomes followed by individual values. Next, we move on to elaborate on the role of organisational values in determining dishonest behaviour. We conclude our study with a discussion of some of its limitations.

5.1 Ethical consequences of negative work outcomes

Our study showed that employees tend in general to expect more dishonest behaviour when negative work outcomes are experienced. That said, the effects were not entirely in line with our hypotheses.

It appeared that the perceived injustice, conceptualised as the breach of both distributional and procedural justice, had the strongest effect on the perceived likelihood of dishonest behaviour. The fact that retail employees care about justice and the breach thereof, even if they are not direct victims, results in a perception of increased dishonest acts to restore justice. This finding echoes many previous studies (Greenberg, 1990b; Ambrose et al., 2002; Hollinger and Davis, 2006; Detert et al., 2007; Houser et al., 2012; Gill et al., 2013), which point to the relevance of fairness and preference of egalitarian treatment of employees, although none of this research was conducted in the post-communist context. Our result validates the thesis on injustices’ cumulative effect on employee deviance (Ambrose et al., 2002).

While insufficient pay had a significant effect on the perceived likelihood of dishonest behaviour, the pivotal role of extrinsic rewards in forming service employees’ attitudes (Elmadağ and Ellinger, 2018) can be questioned. Namely, procedural (in)justice in terms of boredom was no less important, which was not to be expected given the relatively mild consequences of boredom reported in earlier studies. For example, Spector et al. (2006) associated boredom with employee withdrawal rather than theft, sabotage, or production deviance.

Work design and especially its job enrichment perspective focus on the characteristics of work, such as skill variety, task identity, task significance, autonomy, and feedback (Hackman and Oldham, 1980). Jobs designed to reduce error and mental overload may result in monotonous and unchallenging work, leaving employees understimulated and bored. Interestingly, dishonest behaviour as a potential consequence of boredom has not been studied much in this framework. An exception is a recent study by Morf et al. (2017) who investigated counterproductive work behaviour in relation to task variety. They posit that counterproductive work behaviour is a coping mechanism that employees exhibit in order to deal with dissatisfaction stemming from a low level of task variety. Our study underlines the severity of this phenomenon: the reaction to boredom with dishonest behaviour was, on average, as intense as the reaction to insufficient pay.

Such a surprising intensity is in line with the job demands–resources model (Bakker and Demerouti, 2007), which stresses the importance of the balance between job demands and organisational and personal resources. If challenges are below the available resources, employees actively seek ways of removing mental underload with boredom behaviour, some of which may be dishonest and which over time become more and more insidious (van Hooff and Van Hooft, 2014). This is all the more likely given our sample: more than 40 per cent of respondents had a higher (professional) education and may be overqualified for service work. Luksyte et al. (2011) have shown that perceived overqualification was associated with counterproductive work behaviour, because employees were cynical about their organisation. For managers, a careful selection of employees in terms of routine–tolerance may be suggested. Moreover, knowing that boredom facilitates dishonest behaviour suggests that an enriched job design may alleviate it (Hackman and Oldham, 1980). Enrichment may include rotation of employees, giving them more autonomy, or offering them responsibility for the whole selling process.

5.2 The role of individual values

The perceived likelihood of dishonest behaviour being associated with colleagues was influenced by the respondents’ own values regarding honesty and responsibility. If these values are relatively important to an individual, they expect more honest behaviour from their colleagues (and, presumably, from themselves). The same was concluded by Cherrington and Cherrington (1983), Terris and Jones (1982), Xu and Ma (2015), Gächter and Schulz (2016), and more recently by Borg et al. (2017). Our contribution was in showing that individual values do not merely affect individuals’ own behaviour, but also the perception of the level of ethicality in their work environment. The result that ethical values affect the perception of others’ behaviour emphasises the socially constructed nature of ethicality: the (dis)belief in others’ ethicality affects our value system to be more aligned with others (Houser et al., 2012; Gächter and Schulz, 2016) and at the same time, we see others similar to our own moral standards (Di Tella et al., 2015). The practical implication of this result would be that hiring honest people seems to be the best safeguard against dishonest behaviour, as admitted by salespeople in Beck and Willis’ (1993) study and concluded by Baumane-Vitolina et al. (2017). Therefore, honesty tests that measure a job applicant’s tolerance of deviant behaviour are also of practical relevance (Hollinger and Davis, 2006).

Contrary to expectations, the so-called sensation seekers did not report a more likely occurrence of dishonest behaviour. One reason for this may be that Rokeach instrumental values do not contain ideal expressions for creativity and sensation seeking. Low regard for obedience and high regard of imagination are at best only indirect indications for those traits; unlike ethical values, sensation seeking is better uncovered by terminal values like pleasure or exciting life. From the viewpoint of forestalling dishonest behaviour, however, high ethicality and low obedience seems to be more efficient combination than high obedience with low ethicality.

5.3 The role of espoused organisational values

Turning the discussion to organisational values, prior literature led us to hypothesise that espoused organisational values stressing honesty should have a deterring effect when respondents encounter a motive to be dishonest, i.e. a negative work outcome. We found practically no support for this. Furthermore, ethical values statement had a positive association with the perceived likelihood of dishonest behaviour under the boredom outcome. That result may be subject to value expansion as put forward by Cha and Edmondson (2006) according to whom values form the lenses that may lead to unfavourable interpretation of certain situations.

The results indicate that espoused organisational values promoting honesty do not have the desired effect on employee dishonest behaviour, which is in line with the previous studies by Akaah and Lund (1994), Treviño et al. (1999), Helin and Sandström (2007), and Kaptein (2011). We nevertheless agree with authors who stress that skilful enforcement of values, i.e., the values-practice, has a much stronger potential to hinder dishonest behaviour (Treviňo et al., 2014; Weaver, 2014) than formulation alone.

6. Conclusion and limitations

While it is impossible to fully prevent employee dishonesty even in the most reputable companies and using stringent deterrents, it is realistic to lessen the risk of it. First, service employees care about organisational justice and the breach of it is associated with an increased perception of dishonesty among colleagues. Second, individual ethical values determine the extent of perceived ethicality in the workplace pointing to the relevance of employee selection rather than compliance training. Third, retailers cannot rely on espoused ethical values in the hope that these will be enough to regulate employee behaviour.

Our study is subject to several limitations. Most notably, we derived our conclusions about dishonest behaviour without objective observation; we only asked employees’ opinions about their likely occurrence in a given situation. Hypothetical scenarios are widely used in this field (see, e.g. Paternoster and Simpson, 1996; De Bock et al., 2013), but these reflect the reality only proximately. Our scenarios were limited to gains, but more dishonesty can be expected when it helps to avoid losses (Schindler and Pfattheicher, 2017). Therefore, future research should include loss-aversion paradigm as well.

Assessing the potential behaviour of others instead of oneself carries some implicit assumptions. Honesty is a social construct (Somanathan and Rubin, 2004; Vadi and Jaakson, 2011), which is why we presume that speculative assessments about peers bears reflection on the respondents’ own everyday work experience. Nevertheless, it is the next best option after objective data.

It is also a limitation that we could only test the presence of hypothetical organisational values. Most likely, our respondents had different levels of awareness and restraint about dishonest behaviour depending on their current (and perhaps past) employer’s policies. We accounted for this somewhat by examining the changes in reported dishonest behaviour instead of absolute levels and by clustering the standard errors by retailer. Nevertheless, our inferences were sensitive to the extent to which our respondents actually identified with the prescribed hypothetical organisation.

Finally, it should be mentioned that the explained variance of perceived likelihood of dishonest behaviour was rather low, meaning that even though we could say something about the (lacking) effect of the variables under examination, in this particular study they all failed to explain why dishonest behaviour occurs among retail employees in the first place.

Figures

Study framework

Figure 1

Study framework

Sample characteristics

% of female % of native speakers Average age (SE) Average tenure in years (SE) % of (enrolment in) higher (professional) education
80.8 90.5 35.5 (0.42) 4.1 (0.15) 43.6

Forms of employee dishonest behaviour in the current study

Broad forms of dishonest behaviour Specific manifestations of dishonest behaviour
Property deviance Stealing company property
Damaging company property
Misuse of company facilities for personal use
Production deviance Time theft i.e. shirking
Deception Hiding information from (lying to) customer
Hiding information from (lying to) employer
Cheating customer financially

Means, standard errors, and pair-wise correlations of perceived likelihood of dishonest behaviour, base case

Study variables Mean (SE) 1 2 3 4 5 6
(1) Time theft 3.65 (0.06)
(2) Misuse of company facilities 3.64 (0.06) 0.58**
(3) Hiding information from (or lying to) customer 2.92 (0.06) 0.48** 0.50**
(4) Hiding information from (or lying to) employer 2.73 (0.06) 0.48** 0.51** 0.59**
(5) Stealing company property 2.20 (0.05) 0.52** 0.50** 0.51** 0.63**
(6) Cheating customer financially 2.04 (0.05) 0.39** 0.36** 0.46** 0.53** 0.67**
(7) Damaging company property 1.73 (0.04) 0.38** 0.39** 0.46** 0.52** 0.64** 0.61**

Note: **Significant at p<0.01 level

Results of logistic regressions with the change of perceived likelihood of dishonest behaviour and negative work outcomes

Dependent variable: change of perceived likelihood of dishonest behaviour after negative work outcome (1 – increase; 0 – no change or decrease)
Model 1 Model 2 Model 3
Negative work outcomes β (SE) β (SE) β (SE)
Insufficient pay −0.48** (0.18) 0.10 (0.17)
Boredom −0.58** (0.18) −0.10 (0.17)
Perceived injustice 0.48** (0.18) 0.58** (0.18)

Notes: n=784. LR χ2=11.77, Prob>χ2=0.003, pseudo R2=0.01. **Significant at p<0.01 level

Perceived likelihood of dishonest behaviour in the base case depending on individual values, two-sample t-test

Factor variable: individual values t Prob>t
Ethical values important (n=388) Ethical values unimportant (n=324)
Mean (SE) 2.52 (0.06) 2.85 (0.07) −3.58 0.000
Sensation-seeking values important (n=307) Sensation-seeking values unimportant (n=405)
Mean (SE) 2.72 (0.07) 2.64 (0.06) −0.92 0.357

Regression results for (the increase of) perceived likelihood of dishonest behaviour, standard errors clustered by retailers

Base case Insufficient pay Boredom Perceived injustice
Independent variables Step 1 Step 2 Step 1 Step 2 Step 1 Step 2 Step 1 Step 2
Gender (1–female) −0.34** −0.34** 0.17 0.16 0.02 −0.00 0.03 0.04
Tenure −0.01 −0.01 −0.02 −0.02 0.03 0.03 0.02 0.02
Educationa 0.01 0.01 −0.21 −0.21 −0.01 −0.01 −0.16* −0.15*
Nationality: Russian −0.46* −0.45* −0.05 −0.04 0.19 0.19* −0.44** −0.42**
Nationality: Latvian −0.21 −0.21 −0.67* −0.67* −0.12 −0.12 0.11 0.11
Individual value honesty rank 0.03 0.03 0.03 0.03 −0.01 −0.01 −0.00 −0.00
Store location (1–capital) 0.31* 0.31* 0.00 −0.00 −0.21 −0.20 −0.40** −0.41**
Store ownership (1–international) 0.35* 0.35* −0.14 −0.14 0.18 0.17 0.19 0.18
Organisational values (1–honesty, responsibility, professionalism) −0.08 −0.09 0.27 −0.08
_cons 3.12** 3.14** 1.12* 1.15* 0.26 0.17 1.56** 1.57**
R2 0.07 0.07 0.11 0.11 0.04 0.05 0.07 0.07
n 629 629 212 212 223 223 194 194

Notes: a1 – higher; 2 – higher vocational; 3 – high-school; 4 – unfinished high-school. *Significant at p<0.05 level; **Significant at p<0.01 level

Note

1.

Equality of populations rank test showed that individual value rankings were not influenced by the organisational values provided in the base case: p=0.23 for the average rank of honesty and responsibility; p=0.77 per the average rank of imagination and reverse-coded obedience.

Appendix

Insufficient pay:

You as a floor manager of service employees constantly struggle with one and the same problem: employees complain that their salary is not enough to make ends meet. In the case of a job opening, many candidates apply, but many lose interest when they hear about the potential salary. At the same time, you know that your organisation pays employees as much as their competitors, and the financial situation of the company would not enable raising their pay level.

Boredom:

You as a floor manager of service employees constantly struggle with one and the same problem: employee turnover in your store is high and your primary task is to hire new employees. Talking to another service employee who is about to leave reveals that their main reason for quitting is the nature of the job. Service employees say that the job is dull or outright tedious, especially on weekdays when there are only a few customers visiting the store.

Perceived injustice:

You are concerned because in your opinion commitment to the organisation by service employees has drastically decreased. Owing to the economic crisis, the management of the organisation analysed the existing network of stores and as a result, two stores in neighbouring towns were closed down. Employees in these stores got compensation as stipulated by the law, but nothing beyond it. However, soon after this decision the management raised its salaries and this has caused disapproval among service employees.

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Acknowledgements

The authors are grateful to Ruta Kazlauskaite, Mark F. Peterson, Ingo Zettler, and two anonymous reviewers for their comments and suggestions that greatly helped to improve the paper. This study was partly supported by Project IUT20-49 Structural Change as the Factor of Productivity Growth in the Case of Catching up Economies.

Corresponding author

Krista Jaakson can be contacted at: jaakson.krista@tdt.edu.vn