Whistleblowing, personal benefits and social values : towards getting a better understanding of what drives potential whistleblowers

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Whistleblowing, personal benefits and social values.

Towards getting a better understanding of what drives potential whistleblowers.

Bachelor Thesis Supervisor:

Bart Eindhoven Frank Belschak 10464271

Date: Word count:

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The past years have shown that unethical behavior in business is still a big issue in today’s society. Scandals, like the Volkswagen emission scandal in 2015, the Enron scandal in 2001 and numerous other scandals of various impact are proof of this. In many of these cases the scandal comes to light because of the work of whistleblowers.

A whistleblower can be defined as a former or current employee who, internally or externally, brings to light illegal, immoral or illegitimate practices of an organization (Near & Miceli, 1985, p.4). According to Robbinson and Bennet (1995), up to 75% of employees have been involved in unethical behavior in the workplace, like theft, fraud, vandalism or absenteeism. These unethical acts are costly for the industry and for society as a whole, it can cost up to billions of dollars each year (Zemke, 1986). Besides the high costs it also affects the legitimacy of social institutions and the well-being of societies (Bass, Barnett & Brown, 1999). On top of that, it damages the image of the corporations itself (Mahar, 1992).

This damages show that it is important for managers, but also for society as a whole, to be able to know what drives a whistleblower and what makes that some employees know about illegitimate practices and fail to come forward.

In the past years a lot of research has been done on the phenomenon of whistleblowing. The decision making of an employee has been researched (Dozier & Miceli, 1985), the individual features of a whistleblower (e.g. Near & Miceli, 1996; Keil, Tirwana, Sainsbury & Sneha, 2010) and the organizational environment (Keil et al., 2010). However there has, to date, not been any concrete research of the effect of the personal gains of either the employee, his team, another team or just the manager, on the whistleblowing intention of the employee. This is the research gap this study will try to fill.

Past research has shown that when there is an extrinsic motivation for unethical behavior, people are more likely to show this behavior then when there is no such incentive (Hegarty & Sims, 1978). Also Tang and Chiu (2003) found a positive relation between love of money and evil/unethical behavior among employees. Following from this research it is logical to state that whether an employee benefits financially from an unethical act by someone else could be influencing the whistleblowing intention of the employee. Extending this statement, it is interesting to test whether gains of other people could lead to unethical behavior, or that the person him/herself has to profit personally in order to have an effect on the possible unethical behavior. The possible effect that personal gains and gains of others could have on whistleblowing behavior is what the main focus of this study will be.

Although individual differences as personality in relation to whistleblowing have been mentioned in several studies (Miceli & Near, 2005; Miceli Near & Dworkin, 2009; Bjørkelo et al., 2010) very few have empirically investigated this issue (Bjørkelo et al., 2010). As Bjørkelo, Einarsen and Matthiesen (2010) remark in their study predicting proactive behavior at work, the personality of an employee might be a moderator variable more than a direct predictor of whistleblowing behavior among employees. This study will try to test this proposition by looking at the social value orientation of employees and the influence this might have on their decision to blow the whistle. Since the social value orientation is often described as reflecting the ‘stable preferences for certain patterns of outcomes for oneself and others’ (Smeesters, Warlop, van Avermaet, Corneille and Yzerbyt, 2003) and because Kelly and Thibaut (1978)

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found that people with different SVO’s are likely to make different decisions, social value orientation has been chosen to measure the personality of respondents in this thesis. Therefore the main question that this study is trying to answer is whether the distribution of the benefits of the unethical behavior influences the whistleblowing intention of employees. And if the social value orientation of this employee works as a moderator in this model. The goal of this research is to get a better understanding of what drives whistleblowers and how the whistleblowing intention can be influenced. This in order to contribute to forestalling scandals like Enron and Volkswagen in the future and thereby saving society and the corporations from being damaged.

2. Theoretical framework

2.1 Whistleblowing

One of the most commonly known definitions of whistleblowing is ‘‘the disclosure by organization members (former or current) of illegal, immoral or illegitimate practices under the control of their employers, to persons or organizations that may be able to effect action’’ (Near & Miceli, 1985, p. 4). Whistleblowing can occur both internally, to management or colleagues, and/or externally, to media or supervisory bodies (Nayir & Herzig, 2011).

Considering that it is nearly impossible to conduct research to whistleblowing by observation of employees and their managers, most studies trying to research whistleblowing use the intention of the employee to report as the dependent variable in their research (Victor, Trevino and Shapiro, 1993). Ajzen (1991) states that the subjective behavioral intention of an individual is a good predictor of the actual behavior that is presented.

Although whistleblowing is a widespread phenomenon (Miceli, Near & Dworkin, 2009), employees, perhaps sensing that managers will not welcome their complaints, often do not speak up. Previously conducted research shows that many employees believe they have encountered some wrongdoing on the job in the previous year or two. However, most employees who perceive that wrongdoing is occurring do not act on it. It is most often the case that they believe nothing can or will be done to correct the problems. These beliefs are often well-founded because in most cases the problems are not (fully) corrected when pointed out by employees (Miceli, Near & Dworkin, 2009). Another main concern for whistleblowers is the potential retaliation (Mesmer-Magnus & Viswesvaran, 2005). This can be either by the organization, through job loss or a decrease in quality of work conditions, or by the public, through character assassinations and accusations of merely being “sour grapes” (Mesmer-Magnus & Viswesvaran, 2005). This makes that whistleblowing can entail a high level of risk, something that can hold potential whistleblowers back in coming forward.

Mesmer-Magnus and Viswesvaran state in their meta-analysis (2005) that the type and severity of the wrongdoing, the evidence the employee has for the wrongdoing and the fact that the illegitimate act is closely related to them, are positively related to whistleblowing. A key issue in whistleblowing research has been to identify factors or individual features that may distinguish those who voice their concern from those who do not (Near & Miceli, 1996). To show the decision-making process of a potential whistleblower, a framework has been constructed.

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6 Internal and external whistleblowing

Whistleblowing can be divided into internal and external whistleblowing, based on the channels by which the report of the wrongdoing takes place (Nayir & Herzig, 2011). The term internal whistleblowing is used when the reporting takes place inside of the company, while with an act of external whistleblowing the report is done to someone outside of the company, for instance the media (Nayir & Herzig, 2011).

Various researchers have found that external whistleblowing mostly occurs after the whistleblower has made reports internally (Jubb, 1999; Miceli & Near, 2002). This shows that most whistleblowers prefer reporting internally, before considering to step outside of the company and blow the whistle externally. Near and Miceli (1996) have found that external whistleblowing often appears in the event of a lacking internal reporting mechanism, which supports this statement.

Framework

Dozier and Miceli (1985) constructed a framework consisting of six steps in the decision making process of an employee on blowing the whistle. This framework is built on the ‘decision steps involved in bystander intervention’ by Latané and Darley (1968,1970). (1) First of all the organization member (OM) needs to be aware of the unethical behavior in the organization. (2) In the second step the degree of seriousness of the situation is evaluated. The main question in this stage is whether or not the situation deserves action. (3) The third step Dozier and Miceli describe is the question of whether the OM considers him/herself responsible for the action. Consideration is given to the issue of whether the OM is ought to act in some way. (4) In the fourth step the OM considers the options of a Political Behavior Alternative (PBA). They have to consider if there is a PBA available, in this case that would be blowing the whistle, but in some instances other choices might be available as well. (5) In the fifth step the most appropriate PBA must be chosen, is whistleblowing the best way to handle the situation or are there alternatives that will result in a better outcome. (6) The final step described by Dozier and Miceli is making the decision if the potential benefits of blowing the whistle outweigh the potential costs. If this is not the case the OM will consider another PBA, when this is not available the individual will not take action.

Whistleblowing intention

There are several factors that influence the whistleblowing intentions of people within an organization. Keil et al. (2010) researched the whistleblowing intentions and how they are influenced. The personal reporting responsibility, defined as the degree to which the potential whistleblower has a formally prescribed responsibility to report, has influence on the whistleblowing intentions of an individual (Keil et al., 2010). This is congruent to the third step in the framework by Dozier and Miceli (1985) and the findings of the meta-analysis by Mesmer-Magnus and Viswesvaran (2005), like the positive relation between whistleblowing intention and whether the act is closely related to them, discussed above. Furthermore they found that the extent to which a potential whistleblower trusts the integrity of his or her immediate superior has an effect on the whistleblowing intentions.

Additionally the possibility to report anonymously, for instance through an anonymized e-mail or through a confidential is positively related with the whistleblowing intention. The degree to

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which an organization’s policies and climate encourage reporting irregularities also contribute positively to the willingness to blow the whistle (Keil et al., 2010).

These last two factors are corresponding to the potential costs for the potential whistleblower. The final factor in the Keil et al. research is the management responsiveness. This relates to the extent to which the management of the company will be responsive toward solving the problems (Keil et al., 2010). This has also a clear similarity with the Dozier and Miceli framework, the potential whistleblower has to decide if blowing the whistle will have the desired effect.

2.2 Endorsement of un-ethical leaders

Ferrell and Gresham (1985), stated that the ethical decision-making of an individual could be influenced by many factors like the individual attributes, social, and cultural environment. The individual factors may include those factors that are inherent to a person, such as nationality, sex, and age, and also those factors resulting from the human development and socialization process like personality, attitudes, values, education, religion, and employment (Ford and Richardson, 1994).

Who profits

Trevor (1986) developed a model that states that a person’s ethics are not the sole determinant of the behavior of a person. He identified two main categories that influence the behavior of an individual, the individual characteristics and the situational forces. One of the forces that influences the behavior of a person, according to Trevor’s model can be an extrinsic motivation. Meaning that people can end up engaging in unethical behavior when there are extrinsic rewards for these acts. In 1978, Hegarty and Sims conducted an experiment on unethical behavior. 120 American students were researched, they found that when unethical decision making is rewarded, the unethical behavior is more likely to occur. This indicates that there can be a connection between the profitability of the unethical act for the individual and the occurrence of the act. Tenbrunsel (1998) confirmed and extended this relationship when he found that the higher the incentive for someone to make unethical decisions, the higher the chance that the unethical behavior will occur.

Hypothesis 1: The distribution of the benefits has an effect on the whistleblowing intention of

the employee.

1a. If the employee profits from the unethical behavior by the leader, he or she will be less likely to blow the whistle than when the employee does not profit.

1b. If the employee’s team profits from unethical behavior by the leader, he or she will be less likely to blow the whistle than when the employee does not profit at all.

1c. If the leader and others profit from the unethical behavior by the leader the employee will be more likely to blow the whistle than when only the employee profits.

Gino, Ayal and Ariely (2013), found that whenever, besides the person itself, other people benefit from an unethical act the dishonesty increases. And that this increase was influenced by the number of people that benefit from these unethical actions. This might indicate that when more people profit, the unethical acts are being accepted more easily. From this, we can take that when more people profit, the whistleblowing intention can decrease.

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1d. If, besides the employee, more people will benefit from the unethical behavior, the

employee will be less likely to blow the whistle.

2.3 Social Value Orientation

Social value orientation is defined as individual’s preferences for certain patterns of outcomes for oneself and others (Messick & McClintock, 1968). Comte (1851) was one of the first writers to address the social value orientation. In economics, the rational choice approach states that individuals will always try to maximize their own outcome (e.g. Foss, 1996; Iversen & Soskice, 2001). However this does not explain people doing things for the greater good, seemingly without self-interest. Comte (1851), therefore identified two motives that could occur within an individual, being egoism and altruism. He described egoism as the impulse to seek self-benefit or self-gratification. Altruism on the other hand he defined as social and unselfish behavior and the desire to live for others. People can be either predominantly egoistic or altruistic. A more recent and updated definition of altruism and egoism was given by Batson and Shaw (1991). They stated that altruism is a motivational state with the ultimate goal of increasing another's welfare. While egoism is a motivational state with the ultimate goal of increasing one's own welfare.

Altruism and egoism, as defined here, have much in common. Each refers to goal-directed motivation; each is concerned with the ultimate goal of this motivation; and, for each, the ultimate goal is increasing someone's welfare. These common features provide the context for highlighting the crucial difference: Whose welfare is the ultimate goal- another person's or one's own? (Batson & Shaw, 1991).

Other scholars came up with similar segmentations to depict the social value orientation of individuals. Meglino and Korsgaard (2004), describe the social value orientation as a scale between rational self-interest on the one side and other-oriented on the other side. The more you are self-oriented, the less other-oriented you can be and vice versa. And Carnevale and Probst (1996) consider individuals on the one side of the spectrum and pro-socials on the other.

Liebrandt and McClintock (1988) used a more elaborate approach and split the spectrum into altruism, cooperation, individualism and competition. They describe altruism as the goal to maximize the others outcome, cooperation implies the urge to maximize the joint outcome, individualism maximizes own outcomes and competition maximizing the relative advantage over the other party (Liebrandt & McClintock, 1988). This presumption builds on the research of Kuhlman and Marshello (1975) and Liebrandt and van Run (1985).

Beside this stance that there is a set of four different social values some literature defines other sets of social values that can be selected. Some studies propose up to ten different categories for describing social value orientations (MacCrimmon & Messick, 1976) while others define only individualism, cooperationalism and competitivism, arguing that altruism is a very rare phenomenon (van Lange, 1999).

However, because of the size and the scope of this study, this study will focus on the four above mentioned categories. Altruism will be included in the study since it has been mentioned in multiple previous studies (e.g. Liebrandt and McClintock, 1988; Kuhlman and Marshello, 1975)

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As determined by Messick and McClintock (1968), social value orientation of an individual determines the individual’s preferences for certain patterns of outcomes for oneself and others. This indicates that there is a relationship between the SVO and the division of profits. Furthermore, Kelly and Thibaut (1978) found that people with different SVO’s tend to make different decisions. Individuals with different social values will make different decisions and these decisions can be related to the outcome preferences for oneself and others. This indicates that there can be a link between who profits and the social value orientation and between the social value orientation and whistleblowing intention.

Hypothesis 2.

The Social Value Orientation of an employee has a moderating effect on the effect of who profits from the unethical behavior by the leader on the whistleblowing intention.

Hypothesis 2a.

Individualists and employees with a competitive social value orientation, are more likely to stay silent when they or their team profit from the unethical behavior by the leader than altruists and cooperationists.

Hypothesis 2b.

Altruists and cooperationists are more likely to blow the whistle than individualists and competitive employees, whether they profit themselves or not.

Hypothesis 2c.

In the scenario where an employee profits and the leader and/or his team profits, a competitive individual will be more likely to blow the whistle than an individualistic person.

Hypothesis 2d.

In the scenario where the leader and others profit, a cooperationist will be more likely to blow the whistle than an altruist.

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3. Research Model

3.1 Conceptual model

The conceptual model below, graphically shows the potential relationship between the division of profits from unethical behavior and the whistleblowing intention of employees. It also shows social value orientation as possible moderator of this effect.

Figure 2: Conceptual model.

4. Research methods

In the following section the methodology employed for this study will be presented. Firstly the data gathering method will be explained. After that, the sample and its characteristics will be discussed. Lastly, the research design and some sample information will be presented.

4.1 Subjects

For this research 122 Dutch employees from various companies have been questioned through a computer-based vignette study. Each response contained two, randomly generated, scenarios of the eight different scenarios shown in part 4.2. The questionnaire was built using Qualtrics software, and distributed online, mostly through e-mail. Instructions were given for all the separate parts of the questionnaire and respondents were assured of data anonymity and confidentiality.

The survey contained questions from four different students conducting research in this field. Therefore not only the variables used in this study were questioned but several other personal traits and dependent variables were part of the questionnaire as well. However this data is disregarded in this thesis.

4.2 Vignette study

The scenarios used to test the hypotheses mentioned before were presented to the respondents in the form of a vignette study. A vignette is a short description of a person or a situation that contains information that is considered relevant and that is presented to respondents to obtain a judgment about that person or situation (Rooks, Raub, Tazelaar &

Who profits from the unethical behavior?

Social Value Orientation

- Individualist - Competitive - Altruistic - Cooperative

Whistleblowing intention:

Blowing the whistle or being silent.

Independent variable Dependent variable

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Selten, 2000). For this research the employee will get a short description of a situation and can indicate their reaction through a seven point Likert-scale.

As stated before, it is nearly impossible to conduct research on whistleblowing by observing employees and their managers (Victor, Trevino and Shapiro, 1993). Therefore, in this study the subjective behavioral intention of an individual is used to predict the actual behavior that would occur. This is in line with the findings of Ajzen (1991), as described in the theoretical framework, who found that hypothetical scenarios can be a predictor of actual behavior. The vignette study had a two by four design, as shown in Figure 3, complemented with some additional survey questions concerning the demographics of the subjects and different personal traits.

Leader profits Leader does not profit

Employee profits Scenario 1 Scenario 2

Your team profits Scenario 3 Scenario 4

Others profit Scenario 5 Scenario 6

No other person profits Scenario 7 Scenario 8

Figure 3: Two by four research design for the vignette study

4.3 Measures

This section describes how the different variables will be measured and how these measures are conducted in the research.

4.3.1 Whistleblowing intention

The respondent randomly received two of the eight possible scenarios. These scenarios are followed by a control question to validate whether the respondent has understood who profits in the scenario correctly (Appendix 1). This control question was posed as a multiple choice question that could be answered ‘yes’ or ‘no’. In case the control question was not answered correctly, the answers by this respondent that were applicable to this scenario were disregarded for testing the hypotheses.

To measure the whistleblowing intention, seven statements concerning whistleblowing were stated and the respondent could indicate on a 7-point Likert scale to what extend he/she agreed with the posed statements in this particular situation. The exact statements are listed in the table below.

Whistle blowing statements

WB Question Internal/External

WB 1 Report it to the appropriate authorities outside of the organization.

External WB 2 Use the reporting channels outside of the organization. External WB 3 Provide information to outside agencies. External

WB 4 Inform the public of it. External

WB 5 Report it to the appropriate persons within the organization. Internal WB 6 Use the reporting channels inside of the organization. Internal WB 7 Let upper level of management know about it. Internal

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4.3.2 Cronbach’s Alpha

A Cronbach’s Alpha test is used to test the consistency in a set of questions. This can be used as a measure to indicate whether the different statements can be merged into one variable. As a rule of thumb the value of the Cronbach’s Alpha has to be at least 0.7 in order to merge the different statements or questions. The value has been calculated for the whistleblowing items all together (WB total), the whistleblowing statements 1, 2, 3 and 4 (WB External) and the whistleblowing statements 5, 6 and 7 (WB Internal).

4.3.3 Social Value Orientation measurement

SVO slider measure

In order to properly determine in which of the social value orientation categories an individual belongs, Murphy, Ackerman & Handgraaff (2011), introduced the ‘SVO slider measure’. This measure consists of six primary items with the same general form (figure below). Each item is a resource allocation choice over a continuum of joint payoffs. The subject taking this measure makes the choice how the payoff will be allocated. Based on the six answers given by the subject it is possible to calculate in which of the sections a person belongs. The slider can divide the respondents into four different groups; altruists, egoists, cooperationists and competitivists.

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To test the Social Value Orientation of the subjects the above mentioned SVO slider measure by Murphy et al. (2011) has been used. This measure gives insight in the social value orientation of the subject, enabling to divide the respondents in the categories; individualism, competitive, altruism and cooperation.

The subject has to fill out the six slides (Appendix 1), the maximum total distributed amount per slide will deviate between 150 and 170 units/euros that can be distributed between the subject and the other party by selecting a distribution option in the question.

The formula for computing the SVO value for each person is shown in the figure on the left. Where Ao is average other income and the As is the average income for the respondent.

SVO slider formula

The table below shows how the SVO value can be interpreted to determine the SVO category in which the respondent will be placed.

Social Value Orientation SVO slider value

Altruistic > 57,15

Cooperative 22,45 - 57,15

Individualist -12,04 - 22,45

Competitive < -12,04

SVO slider value interpretation (Murphy et al., 2011)

4.4 Sample

Firstly a pilot version of the survey was conducted to check whether the survey would create relevant and usable results and to obtain feedback concerning the survey. After this pilot the feedback was implemented and retested on three pilot respondents. This process is conform the process described by Saunders (2011). The sample was gathered online using the Qualtrics program through acquaintances. This fast distribution method was chosen because of the short timeframe of the study. Furthermore, the low costs of this method were taken into consideration while choosing this distribution method.

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5 Results

In this section firstly the raw statistics and the demographics are being described. Furthermore the results gathered by testing the hypotheses will be discussed one by

one.

5.1 Demographics

A total of 122 responses have been recorded. These respondents all fully filled out resulting in a dataset containing 244 filled out scenarios. Because of the equal division of appearances, all scenarios were equally represented in the data. The amount of appearances ranged between 29 and 31 depending on the scenario.

The male percentage of the respondents was exactly 50%, resulting in a 50% female percentage. After filtering the unusable data, by checking the control questions, 104 correctly filled out

scenarios remained, with the distribution shown in the figure on the right. The male/female distribution here was a percentage of males of 55,8% and females 44,2%. The mode was age 20-25 years, as shown in the figure on the left.

The total sample contained one altruist, as calculated by the SVO slider formula (Murphy et al., 2011). Furthermore, 88 cooperationists, 30 individualists and 3 competitive individuals were part of the sample and all filed out 2 scenarios.

After filtering the data according to the faulty filled out control questions, no altruist scenarios were remaining, 75 cooperationists scenarios, 28 individualistic answers to scenarios and one competitively answered scenario remained.

Half of the respondents were currently full-time employed, 39 of them were employed part-time and 9 worked on a temporary basis. The remaining responses choose other (N = 8), or stated that they currently were not employed (N = 10). The respondents who were unemployed were not filtered out of the sample, considering the fact that they were of an age that we can assume they have had some working experience and therefore will be able to picture themselves in the described scenarios.

Scenario N 1 9 2 6 3 15 4 17 5 6 6 11 7 22 8 18 Figure 7: Respondents per scenario (after filtering)

Figure 8: Age (after filtering) Age N < 20 0 20-25 48 26-30 28 31-35 7 36-40 1 41-45 0 46-50 2 > 50 18

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15 Whistle blowing statements

5.2 Results

The testing of the separate whistleblowing statements showed that there is a difference in the results for the different whistleblowing statements. In order to create one variable that represents the term whistleblowing, it needs to be checked whether the different statements designed to measure whistleblowing measure the same thing. To check this, the Cronbach’s alpha is calculated for the seven statements.

The results of testing for all the separate whistleblowing statements also gave the indication that there is a difference between the first statements (WB1, WB2, WB3 and WB4) and the other statements (WB 5, WB 6 and WB 7). The content of these statements show this difference as well, while statements 1, 2, 3 and 4 are all concerning external whistleblowing, the remaining statements all involve internal whistleblowing. In order to measure whether this assumption is true the Cronbach’s alpha for these two groups is calculated as well.

For the questions to have enough consistency the result of the Cronbach’s alpha has to be at least 0,7 (Field, 2009).

Group Cronbach’s alpha

All WB statements 0,784

WB 1, 2, 3 and 4 0,907

WB 5, 6, and 7 0,836

Cronbach’s alpha test results

As shown in the table above, the Cronbach’s alpha for all chosen categories meets the requirement of 0,7. However, the internal consistency for the separate groups is higher than the alpha for the total model. Therefore the hypotheses were tested again using the dependent variables Total whistleblowing (WB 1, 2, 3, 4, 5, 6 and 7), External whistleblowing (WB 1, 2, 3 and 4) and Internal whistleblowing (WB 5, 6 and 7).

5.2.1 Hypothesis 1

1a. If the employee profits from the unethical behavior by the leader, he or she will be less likely to blow the whistle than when the employee does not profit.

In order to test this hypothesis all scenarios were included in the dataset. Two distinct groups were made, combining scenarios 1, 2, 3 and 4 into group 1 (N=47), and combining the other scenarios, 5,6,7 and 8 together in group 2 (N=57). This results in the distinction between the scenarios in which the employee profits and the scenarios in which the employee does not profit himself. For these groups a dummy variable was created Employee profits (1 = Employee profits, 0 = Employee does not profit).

WB Question Internal/External

WB 1 Report it to the appropriate authorities outside of the organization.

External WB 2 Use the reporting channels outside of the organization. External WB 3 Provide information to outside agencies. External

WB 4 Inform the public of it. External

WB 5 Report it to the appropriate persons within the organization. Internal WB 6 Use the reporting channels inside of the organization. Internal WB 7 Let upper level of management know about it. Internal

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The results are presented in the table below, and indicate a significant relationship for the Internal whisleblowing variable at α= 10%.

* = significant at α= 10%

1b If the employee’s team profits from unethical behavior by the leader, he or she will be

less likely to blow the whistle than when the employee does not profit at all.

To test this hypothesis the scenarios 1 and 2 were filtered out of the dataset since the employee does profit but the team does not profit in these scenarios. Scenario 3 and 4 represent the scenarios in which the employee and his team profit from the unethical behavior (N = 32). The other scenarios, 5,6,7 and 8, represent the cases in which the employee does not profit from the unethical behavior (N = 57). A dummy variable was created to enter these groups in the regression Team profits (Team profits = 1, Team does not profit = 0).

The results are presented in the table below and indicate a significant relationship for the Internal whistleblowing variable at α= 10%.

Results table hypothesis 1b. * = significant at α= 10%

1c If, besides the employee, more people will benefit from the unethical behavior, the employee will be less likely to blow the whistle.

In order to test this hypothesis the sample was divided into two groups. Group 1 contains the respondents that answered for scenario 1 or scenario 2 (N = 15). These are the scenarios in which the employee either solely or with the leader profits from the unethical behavior. Group 2 consists of scenarios 3 and 4 (N = 32). These are the scenarios in which the employee is not the only one profiting from the unethical behavior, but there are more people profiting. The other scenarios, 5 to 8, will be disregarded in testing this hypothesis as they are not relevant. A dummy variable was created More people profit (Only employee = 1, Employee and others = 0)

The results are stated in the table below, there are no indications that this hypothesis can be supported for any of the dependent variables.

WB Total External WB Internal WB

Beta -0,245 -0,140 -0,385

St. Error -0,151 0,211 0,212 T value -1,5145 -0,661 -1,819

Sig. 0,125 0,510 0,072*

Beta -0,249 -0,118 -0,424

St. Error 0,182 0,245 0,238 T value -1,370 -0,481 -1,780

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17 Results table hypothesis 1c.

2. SVO as a moderator on the effect of profit distribution on whistleblowing intention. To determine whether SVO has a moderating effect on the whistleblowing intention of employees a linear regression analysis has been performed. Firstly the mean centered values of both the measure SVO value and the Employee profits value have been computed by subtracting the calculated mean for the variable from the values measured for each scenario of the respondents. The third value computed is the ‘Product Mean Centered Values’ this value represents the products of the two mean centered independent variables. The three values described have been used as the independent variables for the linear regression analysis.

Results table hypothesis 2. * = significant at α= 10% ** = significant at α= 5% *** = significant at α= 1%

The results found by testing for this hypothesis are stated in the table above. There are significant values for both internal whistleblowing and the total whistleblowing variable. In the graphs below the moderating effect is plotted for SVO with the variables WB Total and WB Internal.

Plotted moderation WB total Plotted moderation WB internal WB Total External WB Internal WB

Beta -0,131 -0,150 -0,106

St. Error 0,222 0,289 0,312 T value -0,591 -0,520 -0,338

Sig. 0,557 0,605 0,736

Mean Centered SVO T- value 0,905 0,648 0,719

Sig. 0,367 0,518 0,474

Mean Centered Empl. Profits T- value -1,793 -0,771 -2,173

Sig. 0,076* 0,442 0,032**

Product Mean centered value T- value 3,065 0,668 4,638 Sig. 0,003*** 0,506 <0,001***

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2a Individualists and employees with a competitive social value orientation, are more likely to stay silent when they or their team profit from the unethical behavior by the leader than altruists and cooperationists.

In order to test this hypothesis the data-points of scenario 5, scenario 6, scenario 7 and scenario 8 were filtered out of the dataset as they are not applicable to this hypothesis. A dummy variable was created, SVO broad (Altruists and cooperationists = 1, Individualists and competitive = 0).

The results are presented in the table below and indicate a significant relationship for the WB total variable at α= 5% and the Internal whistleblowing variable at α= 1%.

Results table hypothesis 2a. * = significant at α= 10% ** = significant at α= 5% *** = significant at α= 1%

2b Altruists and cooperationists are more likely to blow the whistle than individualists and competitive employees, whether they profit themselves or not.

In order to test this hypothesis no data has been filtered out of the dataset, since all the scenarios are applicable to this hypothesis. A dummy variable was created, SVO broad (Altruists and cooperationists = 1, Individualists and competitive = 0).

The results are stated in the table below, there are no indications that this hypothesis can be supported for any of the dependent variables.

Results table hypothesis 2b.

2c In the scenario where an employee profits and the leader and/or his team profits, a competitive individual will be more likely to blow the whistle than an individualistic person.

Not enough data points were available to test this hypothesis in the dataset that is filtered with the control questions. In order to still be able to test this hypothesis all responses have been used, including the respondents that gave an incorrect answer to any of the control questions. In order to test this hypotheses, the scenarios in which the employee and someone else profits are being used (1,2,3 and 4). The other scenarios are being filtered out of the data as well as

Beta 0,548 0,223 0,981

St. Error 0,245 0,318 0,374

T value 2,235 0,701 2,625

Sig. 0,030** 0,487 0,012**

Beta 0,023 0,073 -0,044

St. Error 0,178 0,235 0,239 T value 0,130 0,312 -0,184

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the altruistic and cooperative respondents. Leaving only scenario 1 to 4 and the individual (N = 28) and competitive (N = 3) respondents. A dummy variable was created, SVO narrow (Individual = 1, Competitive = 0)

The results of the conducted linear regression are stated in the table above, there are no indications that this hypothesis can be supported for any of the dependent variables.

Results table hypothesis 2c.

2d In the scenario where the leader and others profit, a cooperationist will be more likely to blow the whistle than an altruist.

There are not enough data-points available to test this hypothesis. Both after filtering out the data using the results of the control question and without filtering there are not enough altruists available in the dataset to conduct a test on this hypothesis.

For scenario 5, in which both the leader and members of another team profit, there are six legitimate responses available. Among these responses, there are four cases that classify as ‘cooperationist’ and there are no cases that classify in the altruist category.

Beta -0,306 -0,098 -0,583

St. Error 0,550 0,599 0,888 T value -0,556 -0,164 -0,657

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6 Discussion

In this section will the results be discussed first, followed by the theoretical implications of these results. After this the practical implications will be discussed and lastly the limitations of this study and the directions for future researched will be reviewed.

6.1 Implications Results

This study aimed to find whether the distribution of the benefits as a result of unethical behavior by the leader, influences the whistleblowing intention of employees. And whether the social value orientation of this employee works as a moderator in this model.

These effects were conceptualized according to the two main hypotheses that consist of several sub-hypotheses. And measured through several questions and statements concerning whistleblowing and social value orientation (Appendix 1).

As stated in section 5.2, the results of Cronbach’s alpha tests indicated that all the whistleblowing statements could be bundled into the variable ‘Whistleblowing’. However, separate testing of the whistleblowing statements indicated that WB 1, 2, 3 and 4 and WB 5, 6 and 7, showed a lot of mutual consistency as well. Testing the Cronbach’s alpha for these two groups of statements resulted in higher alphas then the one for all the whistleblowing items (results in the table below). Therefore the hypotheses were retested for the different dependent variables; Whistleblowing Total, Whistleblowing External and Whistleblowing Internal.

Group Cronbach’s alpha

All WB statements 0,784

WB 1, 2, 3 and 4 0,907

WB 5, 6, and 7 0,836

Cronbach’s alpha test results 6.1.1 Hypothesis 1

Testing hypothesis 1a gave a significant result (α = 10%), for internal whistleblowing. This result indicates that sufficient evidence is found to accept hypothesis 1a. The negative T-value shows that when the employee profits, the whistleblowing intention will go down. Therefore it can concluded that, for internal whistleblowing, if the employee profits form the unethical behavior, he will be less likely to blow the whistle. For the other dependent variables tested, external whistleblowing and the complete whistleblowing variable, no evidence was found that indicates that the hypothesis can be accepted.

From these results can be concluded that, when an employee profits from unethical behavior, chances that he/she will blow the whistle within the company will decline. However for external whistleblowing the profit distribution will not influence the whistleblowing intention.

For the hypothesis 1b, a significant result was found for the internal whistleblowing variable as well (α = 10%). This hypothesis stated that if the employee and his/her team profits from unethical behavior by the leader, the whistleblowing intention would go down. These results are consistent with the findings in hypothesis 1a. This is important because the hypotheses 1a and 1b are fairly similar to each other. The only difference between these hypotheses is that in 1a solely the employee profits and in 1b the whole team benefits from the unethical

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behavior. Again the negative T-value shows a negative relationship between the employees team profiting from the unethical behavior and the intention to blow the whistle.

The conclusion can be drawn from this is that when an employee profits from unethical behavior, chances that he/she will blow the whistle within the company will decline. For external whistleblowing and for the total whistleblowing value no evidence was found to support the stated hypothesis.

Another conclusion that can be drawn from these results is that whether the employee itself profits, either through an incentive for the entire team or a personal incentive, this will have a negative influence on the internal whistleblowing intention an employee has.

For hypothesis 1c, no evidence was found to accept the hypothesis. For both internal-, external- and the total whistleblowing variable there is no concluding evidence, in this study, that shows that, for this dataset, the amount of people profiting from unethical behavior of the leader does not affect the whistleblowing intention.

Testing hypothesis 2, in order to find whether SVO has a moderating effect on the effect of profit distribution on whistleblowing intention, gave two significant results. Evidence was found that for the dependent variables ‘Whistleblowing total’ and ‘Internal whistleblowing’, consisting of WB 5, 6 and 7, the hypothesis can be supported (α = 1%).

This shows that the social value orientation does influence the measured effect of profit distribution on whistleblowing. Therefore social value orientation is a moderator. The positive T-value shows that the higher the SVO value, the bigger the moderating effect on the effect of profit distribution on the whistleblowing intention.

As the figure in section 4.3.3 shows, a higher SVO value indicates being altruistic or a cooperationist. This indicates that the effect between who profits and the whistleblowing intention is moderated more for people with an altruistic or cooperationists SVO.

For the variable ‘External whistleblowing’ that consists of solely WB 1, 2, 3 and 4, no significant effect has been found.

For hypothesis 2a, stating that individualists and employees with a competitive social value orientation, are more likely to stay silent when they or their team profit from the unethical behavior by the leader than altruists and cooperationists, two significant p-values were found (α = 5%). For the dependent variables Whistleblowing total and Whistleblowing internal enough evidence was found to accept the stated hypothesis. Since the direction of the relation is conform the stated hypothesis as well it can be concluded that individualists and employees with a competitive SVO are more likely to stay silent when they (or their team) profit from unethical behavior than their altruistic or cooperationists counterparts.

For hypothesis 2c, no definitive evidence was found to confirm that, in the scenario where an employee profits and the leader and/or his team profits, a competitive individual will be more likely to blow the whistle than an individualistic person.

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Due to a lack of data-points for altruists it was not possible to check whether In the scenario where the leader and others profit, a cooperationist will be more likely to blow the whistle than an altruist. Therefore hypothesis 2d could not be tested in this study.

6.2 Theoretical implications

The theory Hagerty and Sims posed by their study in 1978 and the outcome of the study by Tenbrunsel (1998), can be projected on to internal whistleblowing. While profiting personally has an effect on the whistleblowing internally, the external whistleblowing intention is not affected by the employee profiting from the unethical behavior of the employee. As evaluated in hypothesis 1b, in both cases, whether the employee himself or herself profits alone or the whole team profits, the internal whistleblowing intention is affected. The height of the profit, which according to Tenbrunsel (1998) has an effect on the occurrence of unethical behavior as well was not measured in this study and might be an interesting case for future research. The theory by Gino, Ayal and Ariely (2013), was not confirmed in this study. They found that whenever, besides the person itself, other people benefit from an unethical act the

dishonesty increases. And that this increase was influenced by the number of people that benefit from these unethical actions. This study could not find evidence for a linkage between the number of persons profiting and the whistleblowing intention of employees. 6.2.2 Hypothesis 2

Ferrell and Gresham (1985) as well as Ford and Richardson (1994), stated that ethical decision-making of an individual could be influenced by both individual attributes and social and cultural environment. The results of this study confirm that personal traits, like social value orientation can affect the ethical decision-making. This effect was seen for the total whistleblowing variable and the internal whistleblowing variable. Furthermore it was confirmed that, as Kelly and Thibaut (1978) indicated, the decision making of an individual can be influenced by their social value orientation.

6.2.3 General theoretical implications

This study has shown that internal and external whistleblowing in some instances can be viewed as the same concept. However, internal and external whistleblowing intention can differ substantially. The theory posed by Jubb (1999) and Miceli and Near (2002) that employees will try to blow the whistle internally before doing so externally probably explains the difference found in internal and external whistleblowing dependent variables. Because of this, respondents could have chosen for internal reporting, because the need of reporting externally was not specifically described in the given scenarios.

6.3 Practical implications

Practical implications of the findings of this study can be found across the whole society. From social institutions to big corporations. As mentioned before, it is of great importance to know what drives potential whistleblowers, as they can extremely valuable to prevent or bring to light unethical practices in corporations or institutions.

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As previous research showed, an employee will first seek to raise the issues internally and only when he or she is not being heard inside of the company, or when there are no sufficient solutions presented after the issue is raised, the whistleblower will go outside of the company or institution. In this study, a distinction between internal and external whistleblowing is observed as well, and it is shown that internal whistleblowing can be affected more easily than external whistleblowing. Therefore it is important for all organizations to make sure that there is the opportunity to blow the whistle inside of the organization and that issues are taken seriously.

Furthermore, results of this study show that employees who have an own interest in the unethical behavior are less likely to come forward than employees who do not have an own interest. Whether there is a team based or a personal gain that can be achieved. Therefore it is important that, especially when someone is in a controlling position, there cannot be an incentive based on the result of the job that is being controlled.

Another practical implication that can be derived from this study is concerning the moderating role of social value orientation on the effect between who profits from unethical behavior and whistleblowing intention. For corporations, but also the public sector, it can be important to know that certain behavior can be related to and influenced by the social value orientation of a person. In hiring interviews and personality tests the social value orientation can be determined and based on the outcome a better estimation can be made of the future behavior of a potential employee.

6.4 Limitations

6.4.1 Data limitations

The main limitation of this study is the low amount of valuable data collected, probably because of the impreciseness of the survey. Part of this loss of data might be explained by the description introducing the scenarios. In Qualtrics it is shown that a lot of respondents stop filling out the survey at the start of the second scenario. This might indicate that they think they have gotten the same scenario twice, or at least they were not prepared to getting a second scenario.

The survey used to collect the data was compiled of survey questions used in previous studies that have proven to work. However the control measures taken to ensure that the respondent had completely read and understood the scenario, showed that more than half of the data was not usable since the control questions were answered incorrectly. 122 Surveys were filled out completely, containing a total of 244 scenarios. Only 104 of these scenarios could be used in verifying the hypotheses. This indicates that the survey was not clear enough for many of the respondents.

Without this incorrect data it was not possible to conduct any analysis on hypothesis 2c, therefore both the controlled and uncontrolled data is used to test this hypothesis.

A second point concerning the survey is the length, a multiple complaints were received stating that the survey was too long. As mentioned before the survey contained questions from four different students conducting research in this field. Therefore not only the variables used in this study were questioned but several other personal traits and dependent variables were part of the questionnaire as well. This can also be confirmed looking at the drop-out rate shown

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in Qualtrics. This problem might have been resolved by giving an indication of the remaining questions. Or by not combining surveys of different students in to one by which the length of the survey was increased significantly. However combining the survey in to one made the task of getting enough respondents a lot easier.

6.4.2 Other limitations

Another limitation of this study is that the respondents did not receive all the scenarios, the respondents received two randomly selected scenarios out of the eight possibilities. This makes it difficult to accurately compare the samples of the different scenarios with one another, since individual characteristics of the respondents receiving different scenarios cannot be matched. However showing all the different scenarios to all respondents is not practically possible and would make the respondent bias since their knowledge of the other scenarios will possibly play a role in their choices.

Also, a limitation of this study is that, by using a scenario design, respondents have to respond to hypothetical problems, with hypothetical reactions to these problems. Therefore it is possible that the respondent will answer differently from how he/she would behave in a real situation.

Furthermore, this research was conducted solely on Dutch employees. This makes it hard to generalize the study cross-culturally. As Chiu (2003) indicated, the ethical judgement and the whistleblowing intention can be influenced by cultural differences. By solely questioning Dutch employees the cross-cultural differences are taken out of the equations, however this means that this study is more difficult to generalize.

The homogeneity of the social value orientation was rather high, not every orientation was represented equally. Most respondents were either individualistic (N = 30) or cooperative (N = 88), only one altruistic person filled out the survey and the remaining (N = 3) were classified as competitive. This made it difficult to test for hypothesis 2c and impossible to conduct any research on hypothesis 2d. This homogeneity could be averted by choosing a more heterogenic sample. In this study, older respondents and respondents of different social backgrounds could have resulted in a more diverse sample.

6.5 Future research

In future research, this study can be replicated with a larger sample size, with more heterogeneity, which can possibly result in more decisive evidence and new insights. Also the hypothesis 2d that could not be tested using this data-set can be tested with a larger more heterogeneous set of data.

Additionally future studies could focus on more and different sorts of wrongdoing. As this was not specified in this study. Past studies have shown that an employee is more likely to blow the whistle when he or she thinks blowing the whistle is the right thing to do (Chiu, 2003). This implicates that whether the employee perceives the actions of the leader as wrong can affect the whistleblowing intention. Testing for different sorts of unethical behavior can result in better insights in how whistleblowing intention is influenced and can be triggered.

Furthermore, while already being researched more and more often, the difference between internal and external whistleblowing is an important variable to take into account in future

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studies. As seen in this study, external and internal whistleblowing can be seen as the same thing, but in some cases it can interesting to split up internal and external whistleblowing to come to new insights.

Additionally, building on the results of this study indicating that personal gains affect the (internal) whistleblowing intention, new research could focus on the height of the profits influencing the effect of personal gains on whistleblowing intention. This phenomenon has been described by Tenbrunsel (1998) as he stated that the higher the extrinsic motivation for an individual to engage in unethical behavior the higher the likelihood of this behavior to occur. Future studies could research if this phenomenon can be transferred on to whistleblowing intention for unethical behavior conducted by managers.

Likewise, a complete model including, among others, social value orientation, personal traits (Ford and Richardson, 1994), the type and severity of the wrongdoing (Mesmer-Magnus & Viswesvaran, 2005), possible consequences (Miceli, Near & Dworkin, 2009), the degree of reported responsibility (Keil et al., 2010), cross cultural differences (Brody, Coulter & Mihalek, 1998) and organizational culture (Keil et al., 2010). In order to find a predicting model that includes the most important factors that influence whistleblowing intention.

Another way to gain new insights on whistleblowing behavior would be to conduct in-depth case studies at corporations were unethical behavior has occurred. While it is difficult to get access to such corporations and to the people involved this could shed a new light on whistleblowing and unethical practices in the workplace. Talking to people face to face and getting their qualitative information could result in new theories that later on can be tested in quantitative research.

7 Conclusion

While research on whistleblowing and what moves whistleblowers is growing, there is still a fair amount to learn about the incentives and the consequences for whistleblowers. This study showed, for the total whistleblowing intention and the internal whistleblowing intention, that if the employee profits, the incentive to blow the whistle will decrease. Furthermore, the social value orientation of an individual has a moderating effect on the effect of the profit distribution on the willingness to blow the whistle. Furthermore, social value orientation can, in some cases affect the whistleblowing intention of an individual.

Besides that a distinction between internal and external whistleblowing has been confirmed in this study. Probably this difference came to light because the option of reporting internally is used first by the employees. Which is consistent with previous studies.

In future research, this study can be replicated with a larger sample size which can possibly result in more decisive evidence and new insights. Furthermore future research could address different sorts of wrongdoings as well as different sorts of whistleblowing.

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Appendix 1: Survey

This appendix shows the questions in the survey used to conduct this research.

Introduction Survey

Dear Participant,

Thank you for taking the time to participate in this research project.

The following survey is part of a study on unethical leadership conducted by researchers of the Amsterdam Business School.

Below, you will first be asked to complete some general questions, You will then be

presented with two short descriptions of independent scenarios after each of which you will be asked to respond to a set of questions.

All responses are completely anonymous and will be treated with strict confidentiality. If you have any concerns, experience problems or would like to direct questions to the research team, please do not hesitate to contact us by using one of the following email addresses:

laura.klotz@student.uva.nl bart.eindhoven@student.uva.nl yoeri.pegel@student.uva.nl alies.louwen@student.uva.nl

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Introduction SVO slider

In the following image, 6 different scales are shown. These scales show different allocation options for an allocation of points/units/euros between you and a random other person. Please fill out for each scale what allocation would be preferable for you. (You-Other)

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SVO Questions

1. What would be your preferred allocation for scale 1? (You-Other)

85-85 85-76 85-68 85-59 85-50 85-41 85-33 85-24 85-15

SVO2

85-15 87-19 89-24 91-28 93-33 94-37 96-41 96-46 100-50

SVO3

50-100 54-98 59-96 63-94 68-93 72-91 76-89 81-87 85-85

SVO4

50-100 54-89 59-79 63-68 68-58 72-47 76-36 81-26 85-15

SVO5

100-50 94-56 88-63 81-69 75-75 69-81 63-88 56-94 50-100

SVO6

Whistleblowing, personal benefits and social values : towards getting a better understanding of what drives potential whistleblowers