When ethics are compromised: Understanding how employees react to corporate moral violations

Abstract

This study investigated how employees react to corporate moral violations against external stakeholders, such as customers, the community, and the environment. Drawing from the deonance theory, we examined the relationships between employees' perceptions of corporate moral violations, their moral emotions (anger and sympathy), and their moral actions (external whistleblowing and compensating behavior) when they witness their company's ethical transgressions targeting external stakeholders. In addition, the study examined the moderating effects of employee-oriented corporate social responsibility and perceived moral violation intentionality on the impact of moral violation on employees’ emotional and behavioral reactions. The proposed model was tested using an online survey panel of 417 full-time U.S. workers. The results mostly supported the hypotheses, indicating that perceived corporate moral violation interacted with employee-oriented CSR and moral violation intentionality to affect employees' anger and sympathy, which, in turn, influenced their moral actions.