This study expands the application of deonance theory into organizations’ upper echelons by examining how CEOs imprinted with a sense of duty can influence managerial decision-making. We hypothesize an imprint of bounded autonomy, an ought-force that constrains their decision-making and understanding of behavioral freedom, influences duty-bound CEOs to self-report errors in past financial reporting. We test deonance theory propositions of instrumentality for behavioral expansion, namely loss avoidance and gain attainment, related to institutional ownership concentration and CEO equity ownership. We use (...) CEOs that are graduates of U.S. service academies as a proxy for duty-bound executives and find firms they lead are more likely to issue a financial restatement to correct a previous reporting error. This finding is robust to alternate explanations such as being error-prone, earnings management, auditor oversight, and risk behaviors. We also find evidence that deonance may be subject to behavioral expansion. The likelihood of issuing a restatement decreases as institutional ownership concentration and CEO equity ownership increases. This study shows imprinted deonance within the C-suite influences important organizational outcomes. (shrink)

Substantial research demonstrates that ethical leaders improve a broad range of outcomes for their employees, but considerably less attention has been devoted to the performance and success of the leaders themselves. The present study explores the extent to which being ethical relates to leaders’ performance and promotability. We address this question by examining ethical leadership from the two ethical perspectives most common in Western traditions—i.e., the “right” and the “good”—and whether one might be more closely associated than the other with (...) performance and promotability evaluations. Results from 117 employee-supervisor-manager triads show that supervisors with a deontological outlook are more likely to be seen as ethical leaders and that utilitarian leaders are more likely to earn higher performance evaluations. We discuss the implications of these findings for research on ethical leadership. (shrink)

Research on justice climate demonstrates a consistent effect on workgroup outcomes such as job satisfaction, commitment, and performance. However, little research considers how justice climate affects these outcomes and when the relationship is stronger or weaker. In an effort to extend the literature on justice climate, we draw on research on other types of organizational climate to suggest justice climate influences the fair behavior of coworkers. Specifically, we propose fair coworker behavior mediates the relationship between justice climate and outcomes. Further, (...) we examine the influence of workgroup structure on this mediated relationship. We examine these relationships in two studies and find support for the mediating effect of fair coworker behavior and the proposed moderated mediation model. Implications of these results for justice and climate research are considered. (shrink)

The value of a company’s ethical reputation has become a focal point for management researchers. We seek to join this conversation and extend the research centered on a firm’s ethical reputation. We accomplish this by shifting our focus away from its impact on external stakeholders to its impact on internal stakeholders. To this end, we rely on signaling theory to explain why a firm’s ethical reputation matters to its employees in an effort to bridge the macro–micro research gap. Across two (...) studies, we propose and demonstrate that a firm’s ethical reputation impacts employee subjective career success in form of career opportunities and work–life balance. Given our signaling theory framework, we also identify and explain when two industry-level characteristics operate as boundary conditions that distort a firm’s ethical reputation signaling properties. Specifically, the results demonstrate that a firm’s ethical reputation is positively related to employees’ perceptions of career opportunities and work–life balance. The results of our studies also demonstrate that the relatively high levels of industry competition and industry regulation weaken the positive impact of a firm’s ethical reputation on career opportunities and work–life balance. Theoretical and practical implications are discussed. (shrink)

Business Ethics: A European Review, EarlyView.