My Company Cares About My Success: The Impact of a Firm’s Ethical Reputation on Employee Success

Abstract

As corporate scandals continue to dominant the news cycle, 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 (e.g., customers, investors, potential job applicants) to its impact on internal stakeholders (e.g., employees). To this end, we rely on signaling theory to explain why a firm’s ethical reputation matters to its employees in effort to bridge the macro-micro research gap. Specifically, we integrate one macro-level proprietary dataset (i.e., Ethisphere) and one micro-level proprietary dataset (i.e., Glassdoor) to propose and demonstrate that a firm’s ethical reputation (i.e., macro-level construct) positively impacts multiple aspects of employee career success, such as career opportunities and work-life balance (i.e., micro-level constructs). 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. Subsequently, we also demonstrate that high levels of industry competition and industry regulation mitigate the impact of a firm’s ethical reputation on career opportunities and work-life balance. Theoretical and practical implications are discussed.