Photo: jetheriot via flickr
Understanding the reasons people behave unethically is incredibly important for businesses. Scandals follow companies for years — legally or otherwise. While such behaviour is usually assumed to be self interested and greedy, the real story is more complex.
New research in a working paper from Francesca Gino, Shahar Ayal, and Dan Ariely of the Harvard Business School finds that when others benefit from someone’s unethical behaviour, they’re able to justify larger lapses and feel less guilt.
It’s an insight that makes sense. Once caught, frauds often attempt to explain their actions by highlighting shareholders or family members that they were trying to help.
In their first experiment, the authors gave participants an opportunity to cheat in situations in which only they were rewarded, and others in which a partner or group shared the spoils. They found that:
- When it helped others, the amount of cheating increased
- That effect increased as the number of beneficiaries grew
A second experiment tested for guilt after students were given the opportunity to cheat. Participants were more dishonest and felt less moral responsibility when others benefitted.
What’s important is that these group based incentives to cheat are separate from individual financial calculation. Dishonesty pays less on an individual basis, but still increases overall.
That’s not to say it’s any more ethical. A third experiment offered participants the opportunity to cheat when only others gained. Both the level of cheating and the levels of moral justification were lower than when the individual got some of the spoils, suggesting that this is very much a self-interested form of altruism.
This research has important implications for businesses. As bad as individual lapses can be, when groups of employees are complicit things can get far worse. It highlights the need for transparent and ethical cultures that highlight the long term costs of the short term thinking that prompts dishonesty.
See the full paper here.
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