Financial services and ethical hazards: antecedents of repeated ethical violation

Abstract

PurposePrior studies have extensively explored individual examples of unethical behavior in sales organizations but focused little on repeated violation (RV) of ethical codes, particularly when managers develop salesforces. Based on social learning theory (SLT), the authors propose a multilevel model of RV antecedents and suggest that organizational influence (social cues and modeling) and individual factors (observer characteristics and behavioral outcomes) affect RV, especially with increasing recruitment of salespeople.Design/methodology/approachUsing data from a leading financial company in Taiwan, the authors analyzed 1,231 records of salespeople’s misbehavior through logistic regression and average marginal effects.FindingsModeling in the organization (i.e. peer misconduct), observer characteristics (i.e. experience concerning job tenure and prior violations) and behavioral outcomes (i.e. information concealment violations) were all found to affect the likelihood of RV, and the interactional effect of organizational size was confirmed.Research limitations/implicationsThis study contributes to ethical decision-making theory by explaining aspects of RV through SLT. Its multilevel model, integrated with organizational strategy theories, adds an SLT-focused paradigm into unethical behavior research by considering vicarious learning and self-learning, alongside the reciprocal determinism of cognition, behavior, and environment.Practical implicationsManagers should consider socially based patterns of violation when initiating a sales business plan. The chances of RV are increased by unethical models in the organization and offenders’ potential for violations, which is reinforced by social environment.Originality/valueThis study clarified the key drivers of RV decision-making using SLT and identified an effective sales development strategy to maintain an ethically responsible salesforce.