Abstract
This study investigates how tone at the top, implemented by top management, and tone at the bottom, in an employee’s immediate work environment, determine noncompliance. We focus on the disallowed actions of employees that improve their own and, in turn, the company’s performance, referred to as performance-improving noncompliant behavior (PINC behavior). We conduct a survey of German sales employees to investigate specifically how, on the one hand, (1) corporate rules and (2) performance pressure, both implemented by top management, and, on the other hand, (3) others’ PINC expectations and (4) others’ PINC behavior, both arising from the employee’s immediate work environment, influence PINC behavior. When considered in isolation, we find that corporate rules, as top management’s main instrument to guide employee behavior, decrease employee PINC behavior. However, this effect is negatively influenced by the employees’ immediate work environment when employees are expected to engage in PINC or when others engage in PINC. In contrast, even though top management places great performance pressure on employees, that by itself does not increase PINC behavior. Overall, our study informs practitioners and researchers about whether and how the four determinants increase or decrease employees’ PINC behavior, which is important to comprehend triggers and to counteract such misconduct.
Highlights
A large number of corporate scandals, such as those of Enron, Xerox, and Volkswagen, have attracted public attention, resulting in enormous negative legal and reputational consequences (Bergstresser and Philippon 2006; Sims and Electronic supplementary material The online version of this article contains supplementary material, which is available to authorized users.Brinkmann 2003)
We thereby choose corporate rules as a benchmark, since they are an organizations’ superior injunctive norm and the central means to communicate compliance values by top management (Tyler and Blader 2005; Weaver and Treviño 1999; Weaver et al 1999). Beyond these clearly defined rules, we investigate whether performance pressure, others’ expectations, and others’ performance-improving noncompliance (PINC) behaviors moderate the expected PINC-decreasing effect of corporate rules
Our study highlights how social norms related to the tone at the top and tone at the bottom impact PINC behavior
Summary
These scandals all involve noncompliant behavior of corporate employees. Noncompliance occurs when employees deviate from the rules, whether the law, regulations, or firm-specific rules (Ewelt-Knauer et al 2020; Weber and Wasieleski 2013). Umphress and Bingham (2011) distinguish three boundary conditions: (1) noncompliant behavior without specific intention, (2) noncompliant behavior to benefit the organization, and (3) noncompliant behavior to benefit oneself. Whereas traditional research primarily focuses on self-interested noncompliance, studies have started to investigate noncompliant behavior aimed to support one’s organization, for example, by withholding or misrepresenting information that would harm the company (Dahling et al 2012; Mahlendorf et al 2018; Umphress and Bingham 2011; Umphress et al 2010)
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