Doing Well by Doing Good 1 Doing Well by Doing Good: Does Economic Development Make a Difference? Thomas Li-Ping Tang and Toto Sutarso, U.S.A.; Peter Vlerick, Belgium; Vivien Kim Geok Lim, Singapore; Ilya Garber, Russia, Fernando Arias-Galicia, Mexico; Adebowale Akande, South Africa; Michael W. Allen, Australia; Abdulgawi Salim Alzubaidi, Oman; Mahfooz A. Ansari, Canada; Mark G. Borg, Malta; Brigitte Charles-Pauvers, France; Bor-Shiuan Cheng, Taiwan; Randy K. Chiu, Hong Kong; Linzhi Du, China; Consuelo Garcia De La Torre, Mexico; Rosario Correia Higgs, Portugal; Abdul Hamid Safwat Ibrahim, Saudi Arabia; Chin-Kang Jen, Taiwan; Ali Mahdi Kazem, Oman; Kilsun Kim, South Korea; Roberto Luna-Arocas, Spain; Eva Malovics, Hungary; Alice S. Moreira, Brazil; Richard T. Mpoyi, U.S.A.; Anthony Ugochukwu Obiajulu Nnedum, Nigeria; Johnsto E. Osagie, U.S.A., AAhad M. Osman-Gani, Singapore; Francisco Costa Pereira, Portugal, Ruja Pholsward, Thailand; Horia D. Pitariu, Romania; Marko Polic, Slovenia; Elisaveta Sardzoska, Macedonia; Petar Skobic, Allen F. Stembridge, and Theresa Li-Na Tang, U.S.A.; Thompson Sian Hin Teo, Singapore, Martina Trontelj, Slovenia; Caroline Urbain, France. The final version of this paper was published in: Tang, T. L. P., Sutarso, T., Vlerick, P., Lim, V. K. G., Garber, I., Arias-Galicia, F., Akande, A., et al. (2007). Doing Well by Doing Good: Does Economic Development Make a Difference? Academy of Management Index on Corporate and Personal Values, 66, 392. ABSTRACT Using survey data from managers of 29 geopolitical entities (7 geopolitical entities in the high GDP group, 12 in the median GDP group, and 10 in the low GDP group) across six continents around the world (N = 6,081), we propose and test a model of “doing well by doing good”. Results supported the precept: High corporate ethical values and low love of money were related to high ethical behavior that was related to low job stress that, in turn, was related to high life satisfaction. Corporate ethical values had a positive “double-whammy” effect: increasing ethical behavior and reducing job stress. Moreover, our results varied across the three GDP groups: The relationship between corporate ethical values and ethical behavior and between low love of money and ethical behavior existed for the high and median GDP groups but not for the low GDP group. The high GDP group had the lowest unethical behavior, as expected, whereas the median GDP group had the lowest corporate ethical values, the highest unethical behavior, the highest percentage of bad apples, the highest job stress, and the strongest relationship between love of money and unethical behavior. Our theory provides new insights regarding doing business at different levels of economic development around the world. ------------ Key words: Doing Well by Doing Good, the Love of Money, Corporate Ethical Values, Propensity to Engage in Unethical Behavior, Job Stress, Life Satisfaction, Levels of Economic Development, Measurement Invariance ------------
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Doing Well by Doing Good 1
Doing Well by Doing Good: Does Economic Development Make a Difference?
Thomas Li-Ping Tang and Toto Sutarso, U.S.A.; Peter Vlerick, Belgium; Vivien Kim Geok
Lim, Singapore; Ilya Garber, Russia, Fernando Arias-Galicia, Mexico; Adebowale Akande,
South Africa; Michael W. Allen, Australia; Abdulgawi Salim Alzubaidi, Oman; Mahfooz A.
Ansari, Canada; Mark G. Borg, Malta; Brigitte Charles-Pauvers, France; Bor-Shiuan Cheng,
Taiwan; Randy K. Chiu, Hong Kong; Linzhi Du, China; Consuelo Garcia De La Torre,
Mexico; Rosario Correia Higgs, Portugal; Abdul Hamid Safwat Ibrahim, Saudi Arabia;
Chin-Kang Jen, Taiwan; Ali Mahdi Kazem, Oman; Kilsun Kim, South Korea; Roberto
Luna-Arocas, Spain; Eva Malovics, Hungary; Alice S. Moreira, Brazil; Richard T. Mpoyi,
U.S.A.; Anthony Ugochukwu Obiajulu Nnedum, Nigeria; Johnsto E. Osagie, U.S.A., AAhad
M. Osman-Gani, Singapore; Francisco Costa Pereira, Portugal, Ruja Pholsward, Thailand;
Horia D. Pitariu, Romania; Marko Polic, Slovenia; Elisaveta Sardzoska, Macedonia; Petar Skobic,
Allen F. Stembridge, and Theresa Li-Na Tang, U.S.A.; Thompson Sian Hin Teo, Singapore,
Martina Trontelj, Slovenia; Caroline Urbain, France.
The final version of this paper was published in:
Tang, T. L. P., Sutarso, T., Vlerick, P., Lim, V. K. G., Garber, I., Arias-Galicia, F., Akande, A.,
et al. (2007). Doing Well by Doing Good: Does Economic Development Make a Difference?
Academy of Management Index on Corporate and Personal Values, 66, 392.
ABSTRACT
Using survey data from managers of 29 geopolitical entities (7 geopolitical entities in the high
GDP group, 12 in the median GDP group, and 10 in the low GDP group) across six continents
around the world (N = 6,081), we propose and test a model of “doing well by doing good”.
Results supported the precept: High corporate ethical values and low love of money were related
to high ethical behavior that was related to low job stress that, in turn, was related to high life
satisfaction. Corporate ethical values had a positive “double-whammy” effect: increasing ethical
behavior and reducing job stress. Moreover, our results varied across the three GDP groups: The
relationship between corporate ethical values and ethical behavior and between low love of
money and ethical behavior existed for the high and median GDP groups but not for the low
GDP group. The high GDP group had the lowest unethical behavior, as expected, whereas the
median GDP group had the lowest corporate ethical values, the highest unethical behavior, the
highest percentage of bad apples, the highest job stress, and the strongest relationship between
love of money and unethical behavior. Our theory provides new insights regarding doing
business at different levels of economic development around the world.
------------
Key words: Doing Well by Doing Good, the Love of Money, Corporate Ethical Values,
Propensity to Engage in Unethical Behavior, Job Stress, Life Satisfaction, Levels of Economic
Development, Measurement Invariance
------------
Doing Well by Doing Good 2
Doing Well by Doing Good: Does Economic Development Make a Difference?
I know what I want, I have a goal, and opinion. If God lets me live, I shall not remain
insignificant. I shall work in the world and for mankind! And now I know that first and
foremost I shall require courage and cheerfulness!
-Anne Frank, April 11, 1944 (Vermeulen, 2007, p. 754)
Introduction
In this paper, we develop a model of doing well by doing good and limit ourselves to
only one social success component of this issue. Our model, grounded in substantive theory of
reasoned action (Ajzen & Fishbein, 1980) and framed in stewardship theory (Davis, Schoorman,
& Donaldson, 1997), investigates two antecedents (individual attitude and social norms) and two
consequences (job stress and life satisfaction) of ethical behavioral intention. We assert that
organizations that do good by promoting ethical values as well as reducing the love of money are
able to do well by enhancing managers’ ethical behavior, reducing job stress, and improving life
satisfaction. Our model stems from a small set of research ideas and addresses puzzling
omissions.
Due to an ever-expanding list of scandals and corruptions in the USA, ethics has become
an interesting topic for research and spirited debate (Evans, Treviño, & Weaver, 2006). Since
many executives received their training at the best business schools (Merritt, 2002), it is not lack
of “intelligence” (brains) but lack of “wisdom” (Feiner, 2004, p. 85) or virtue (Giacalone, 2004;
Tang & Chen, in press) that caused these scandals. Researchers continue to identify means for
improving ethical behavior. Some scholars argue that one of the real root causes of this ethics
crisis is “maximizing shareholder value” (Kochan, 2002, p. 139) or “the bottom-line-mentality”
(Sims, 1992, p. 508). The social responsibility of business is to increase its profits (Freidman,
1970). Agency theory suggests that owners (principals) of many corporations have profit-sharing
programs for top-level executives (agents) to align management interests with the owners’ value
maximization goals (Eisenhardt, 1989; Tosi & Gomez-Mejia, 1989). The tremendous amount of
pressure to maximize profits and opportunities to earn exorbitant bonuses may “push” and
“pull”, respectively, executives to engage in unethical behavior. Those who want to be rich fall
into temptation and a trap and into many foolish and harmful desires that plunge men into ruin
and destruction. De Tocqueville traced love of wealth to the root of all that Americans do.
However, greed is not good (Sloan, 2002). The adage that power corrupts and absolute power
corrupts absolutely once again has proven true (Kochan, 2002). We assert that managers’ high
aspiration for money (love of money) may lure them to engage in these scandals (Tang & Chiu,
2003). One puzzling omission is that very little research has investigated people’s attitude toward
money, love of money and money as power, in particular, as related to corruption or unethical
behavior.
According to the theory of reasoned action (TRA, Ajzen & Fishbein, 1980), or the
expanded theory of planned behavior (TPB, Ajzen, 1991; Armitage & Conner, 2001), behavior is
determined by intention, which is a function of attitude toward the behavior and subjective
norms: Attitude toward the behavior deals with the individual’s global positive or negative
evaluations of performing a particular behavior; subjective norms refer to the individual’s
perceptions of general social pressure to perform (or not to perform) the behavior. The person-
situation interactionist model of ethical decision making (Treviño, 1986) suggests that managers’
ethical behavior is influenced by the situational variables in organizations. Following these
Doing Well by Doing Good 3
suggestions (Ajzen, 1991; Treviño, 1986), we investigate two antecedents of unethical behavior
and examine the extent to which (1) high love of money, a personal attitude at the individual
level, may “pull” people to engage in unethical behavior and (2) corporate ethical values,
managers’ perceptions of ethical values at the organizational level, may “push” people to engage
in ethical behavior. In other words, for the former, low love of money may “pull” people to
engage in ethical behavior in organizations.
Expanding the stewardship notion, unethical behavior in an organization may cause a
high level of job stress because most people would like to conceal their unethical behavior and
those who with a “concealable stigma” face considerable stressors and psychological challenges
(Pachankis, 2007). American businesses lose an estimated $200-$300 billion per year due to
stress. When managers behave ethically, they may experience a low level of job stress that, in
turn, may lead to a high level of life satisfaction (Diener & Lucas, 2000). We argue that job
stress may serve as a mediator of the relationship between ethical behavior and life satisfaction.
Very little research has examined these issues. With a low level of job stress and a high level of
life satisfaction, managers may focus on creativity, innovation, improving effectiveness and
efficiency in producing products and services, and the satisfaction of many stakeholders.
Due to globalization, multinational corporations employ more than 1.3 million expatriates
from the USA alone. About 80 percent of mid-size and large corporations send expatriates
abroad (Black & Gregersen, 1997). Doing business in different parts of the world has become
very important to researchers and executives because bribery is illegal (Foreign Corruption
Practices Act) in the USA but is commonly practiced in other geopolitical entities. According to
Transparency International’s Corruption Perceptions Index (CPI), corruption is the abuse of
public office for private gain (http://www.infoplease.com/ipa/A0781359.html). CPI measures the
degree to which corruption is perceived to exist among a country’s public officials and
politicians. The CPI Index (http://www.transparency.org/documents/cpi/2001/cpi2001.html)
illustrates once more the vicious circle of poverty and corruption. The richest countries (Finland,
Iceland, New Zealand, Denmark, and Singapore) have very low levels of perceived corruption;
the poorest countries (e.g., the Philippines, Nigeria) are the greatest victims of corruption
(Campbell, 2007; Organization for Economic Co-operation and Development, the OECD).
However, we know very little about managers’ unethical behavior in different geopolitical
entities and at different levels of economic development. This is another puzzling omission.
We examine unethical behavior, of which corruption is an important component, across
cultures. Recent advances in analytic tools and measurement theories enable researchers to
examine measurement invariance and test management theories across cultures (Tsui, Nifadkar,
& Ou, 2007; Vandenberg & Lance, 2000). The bulk (64%) of cross-cultural research has covered
only two countries and little (23%) involved more than two countries (Sin, Cheung, & Lee,
1999). Studies involving an insufficient number of cultures may have limited usefulness.
We attempt to identify not only stable, distinctive, and generalizable models based on
data from three levels of economic development but also a culture-free theory for all geopolitical
entities involved in this study. We argue that within the same level of economic development,
geopolitical entities may have different yet similar level of ethical values at organizational and
national levels, attitudes toward money, and propensity to engage in unethical behavior. At this
convergence, we trust that the time is ripe to address this omission, investigate these issues
across developed, developing, and underdeveloped economies, and treat economic development
as a moderator (Baron & Kenny, 1986). We believe that this research is useful for theory and
practice and may make relevant and responsible contributions to the literature.
Konopaske, and Matteson (2005) examined 23 misbehaviors at work, some of those may have
nothing to do with the love of money (e.g., sexual harassment). Researchers examined a variety
of unethical behaviors and then combine them as one construct (Grover, 1993), a potential
deficiency in studying these constructs in the literature. Among these measures, we select the
Propensity to Engage in Unethical Behavior Scale (PUB) (Chen & Tang, 2006) with four sub-
constructs that are related to publicized scandals and white-collar crime. The cumulative effect of
these unethical behaviors may hurt organizations’ bottom line. For example, shoplifting costs
$196 per incident and $10.23 billion annually, and theft costs $1,446 per incident and $15.2
billion annually (Greenberg, 1993; Ivancevich et al., 2005). Corruption is costly to managers
(loss of jobs and pension), corporations (in 2001, Arthur Andersen collapsed and Enron stock
dropped from $2.1 billion to $10 million), and society. In 2000, among 8,766 defendants charged
with white-collar crime by the US government, 78 percent were convicted, and 46 percent of
Doing Well by Doing Good 7
whom were sentenced to prison for an average of 16 months (Ivancevich et al., 2005). We
introduce these sub-constructs of PUB below.
Because the cumulative effects of resource abuse, such as pilfering office supplies or
wasting company time, including cyberloafing (Lim, 2002), on the bottom line can be huge,
many organizations electronically monitor managers. Not whistle blowing means not taking any
action against misbehavior/wrongdoing. Some managers implicitly condone theft by “looking
the other way” or may consider it “an invisible wage structure” (Tang & Chiu, 2003). In the
USA, theft is a $200 billion-a-year problem. Many people steal money or merchandise and
falsify expense accounts (Greenberg, 1993). Corruption is the misuse of organizational position
or authority for personal or organizational gain (e.g., bribery, kickbacks) and may include acts
committed against or on behalf of the organization (Anand et al., 2004). Executives need to
prevent such problems because all may lead to financial losses and hurt the organization’s
bottom line. We turn to the relationships among the three major constructs below.
The Relationship between the Love of Money (LOM) and Unethical Behavior (PUB) In a nationwide survey, American adult consumers who desire to be rich (Factor Rich of
the Love of Money Scale) are likely to condone questionable consumer activities (Vitell et al.,
2006). The instrumental climate (looking out for one’s own self-interest) of the Ethical Climate
Questionnaire (ECQ) is the most related to unethical behavior (Peterson, 2002; Wimbush et al.,
1997). The love of money (17 items with Factors Rich, Motivator, Success, and Importance) is
related to unethical behavior (15-item, 4-factor scale) among Hong Kong managers (Tang &
Chiu, 2003). Among business and psychology students, the love of money is indirectly related to
unethical behavior through Machiavellianism (the Love of Money Machiavellianism
Unethical Behavior) (Tang & Chen, in press). Further, this mediating effect existed for business
students but not for psychology students, for male students but not for female students, and for
male business students but not for female business students. Moreover, when examined alone,
the direct effect (the Love of Money Unethical Behavior) existed for business students but not
for psychology students.
We argue that when opportunities present themselves, high love-of-money people may
have a higher propensity to adopt devious strategies, take advantage of the situation, do whatever
it takes to make money (Milkovich & Newman, 2008), and engage in activities related to their
self-interest, financial benefits, and personal gains than their low love-of-money counterparts. To
the best of our knowledge, the Factor Power of the Love of Money (examined in the present
study) has not been studied in the context of unethical behavior and may contribute to our
understanding of unethical behavior. We test our Hypothesis 1 (Path 1, Figure 1) below.
Hypothesis 1: Managers’ love of money is positively related to their unethical behavior.
The Relationship between Corporate Ethical Values (CEV) and Unethical Behavior (PUB)
People obtain and process information that is available from the social context (Bandura,
1977), authority figures, role models (Litzky et al., 2006), and the reward system (Treviño &
Brown, 2004). Organizational ethical values are negatively related to organizational misbehavior
(Vardi & Weitz, 2004) and counterproductive behavior (Wimbush et al., 1997). Organizations
with strong ethical values have strong policies to reward ethical behavior and punish or deter
unethical behavior (O’Reilly & Chatman, 1996). Managers’ ethical behavior is influenced by the
situational variables in organizations (Treviño, 1986) and ethical values at the “organizational”
level (social norms, Ajzen, 1991). Borrowing the general ideas above, we argue that managers
Doing Well by Doing Good 8
with a strong perception of corporate ethical values are more likely to behave ethically, in
general (Path 2).
Hypothesis 2: Corporate ethical values are negatively related to managers’ unethical
behavior.
Three Paths to Job Stress
Following the stewardship theory, we focus on the extent to which low love of money
and high corporate ethical values may reduce job stress and enhance life satisfaction. Stress is
one’s physiological or psychological response to an external event or stressor mediated by one’s
correlation (Part 4), and factor loading (Part 5). The indirect effect of the love of money on job
stress for the high GDP group (the Love of Money Unethical Behavior Job Stress) was .03.
The total effect (Part 3) was exactly the same as the direct (Part 1) or indirect (Part 2) effect
when the same number of variables was involved in the path. Two total effects were underlined
(Part 3): For the high GDP group, the total effect of the love of money on job stress (.12)
consisted of (1) a direct path (the Love of Money Job Stress = .09) and (2) an indirect path
(the Love of Money Unethical Behavior Job Stress = .03). The total effect of corporate
ethical values on job stress (-.23) also had two components: the direct effect (-.20) and the
indirect effect (-.03). The total effects of the love of money on life satisfaction (the Love of
Money Unethical Behavior Job Stress Life Satisfaction) for the high, median, and low
GDP groups were -.03, -.04, and .02, respectively. The total effect of corporate ethical values on
life satisfaction (Corporate Ethical Values Unethical Behavior Job Stress Life
Satisfaction) was .06, .05, and -.03 for the high, median, and low GDP groups, respectively. The
squared multiple correlation of unethical behavior for the high, median, and low GDP groups
Doing Well by Doing Good 17
was .05, .08, and .00 respectively (Table 4, Part 4). The predictors of job stress explained 11
percent, 14 percent, and 11 percent of its variance for the high, median, and low GDP groups,
respectively. For the predictors of life satisfaction, the results were 7 percent, 10 percent, and 11
percent, respectively.
------------Insert Table 4 and Figure 2 about here------------
The second-order factor loadings of the love of money and unethical behavior across the
three GDP groups are listed in Table 4 (Step3, Model 6, Part 5). For the love of money, Factor
Rich had the highest factor loading, relatively speaking, among the four factors for the high
(.88), median (.84), and low (.82) GDP groups, supporting the literature (Tang & Chiu, 2003;
Tang et al., 2006). For unethical behavior, Factor Theft had the highest factor loading among the
four factors for the high GDP group (.86), whereas Factor Corruption had the highest factor
loading for the median (.95) and low GDP (.96) groups.
In summary, we ask the question: Does the level of economic development make a
difference using our model? Our answer is a resounding yes. We have identified four culture-
specific (emic) and two culture-free (etic) paths using our model. Thus, the level of economic
development is a moderator. We turn to our next question: Can researchers summarize all these
findings in an overall culture-free (etic) model that is, in a sense, universal across all three GDP
groups? We examine this issue in our Step 4 below.
Step 4: The Final Model (Constrain All Paths to be Equal, Model 7) Using Model 6 as the baseline model, we constrained all paths to be equal across the
three GDP groups in Model 7. The non-significant difference between Models 7 and 6 (.0019)
revealed functional equivalence across the three GDP groups. We focused on the unstandardized
estimates that were exactly the same across all three GDP groups (see the last column of Table 4
and Figure 2). High corporate ethical values and low love of money were related to high ethical
behavior, which, in turn, was related to low job stress, which, in turn, was related to high life
satisfaction. Corporate ethical values were negatively related to job stress. Hypotheses 1, 2, 4, 5,
and 6 were supported, but Hypothesis 3 was not. Figure 2 is our final culture-free (etic) model.
Our model is generalizable to entities in all three levels of economic development.
Additional Results
We examined five variables across the three GDP groups in a multivariate analysis of
variance (F (10, 12146) = 32.72, p < .001, Wilks’ Lambda = .948, partial eta squared = .026).
Tests of between-subjects effects showed significant differences in unethical behavior (F (2,
6078) = 102.68, p < .001), corporate ethical values (F (2, 6078) = 21.54, p < .001), and job stress
(F (2, 6078) = 50.72, p < .001) but no differences in the love of money and life satisfaction. The
median GDP group reported (1) the lowest corporate ethical values (3.40) (lower than the low
(3.51) and high GDP (3.55) groups, ps < .05, Tukey HSD); (2) the highest unethical behavior
(1.78) (higher than the low (1.60) and high GDP group (1.53)); and (3) the highest amount of job
stress (2.44) (similar to the high (2.41), but higher than the low GDP group (2.16)).
Based on individuals’ scores on Resource Abuse, Not Whistle Blowing, Theft, and
Corruption, we applied a cluster analysis and found two clusters for the whole sample. People in
Cluster 2 had higher scores of unethical behavior (bad apples, 29.39% of the sample) than those
in Cluster 1 (good apples, 70.61%). Second, we conducted the same cluster analysis for each of
Doing Well by Doing Good 18
the three GDP groups and found that 28.30 percent of the high GDP group, 66.55 percent of the
median GDP group, and 29.74 percent of the low GDP group were bad apples.
We took a closer look at four geopolitical entities in the low GDP group. The love of
money was strongly related to unethical behavior for China (.21, p = .018) and Peru (.43, p <
.001) but not for Bulgaria (.04) or Thailand (.04). Corporate ethical values were associated with
ethical behavior for China (-.19, p = .020) and Peru (-.34, p = .001) but not for Bulgaria (.00) or
Thailand (.05). It appears that China and Peru may belong to the median GDP group, whereas
Bulgaria and Thailand may belong to the low GDP group in terms of behavior patterns.
Discussion
This study proposes and tests a model of doing well by doing good and provides
important theoretical, empirical, and practical contributions to the literature. First, we discuss our
final etic model. Low love of money, the personal attitude at the “individual” level, and
corporate ethical values, perceptions of ethical social norms at the “organizational” level, are
significantly related to ethical behavioral intention. Corporate ethical values have a positive
“double-whammy” effect: increasing ethical behavior and reducing job stress. The strongest
paths of our model show that people with high propensity to engage in ethical behavior have
high life satisfaction because they experience low job stress: Job stress is a mediator of the
relationship between ethical behavior and life satisfaction. High corporate ethical values and low
love of money are also indirectly related to high life satisfaction (Srivastava et al., 2001). Our
findings support our theory of doing well by doing good (Davis et al., 1997; Freeman, 1984).
Low love of money and high corporate ethical values are related to propensity to engage in
ethical behavior that is related to low job stress that, in turn, is related to high life satisfaction.
Second, across the three GDP groups, our overall model fits the high and median GDP
groups but not the low GDP group. Therefore, the level of “economic development” is a
moderator (Baron & Kenny, 1986). Our results offer indirect support of Campbell’s (2007)
propositions. Since we collected data from different geopolitical entities around the world, this
significant moderating effect may not be affected by the common method variance (CMV)
biases.
Third, we turn to similarities and differences across three levels of economic
development. There are no significant differences in the love of money and life satisfaction
across the three GDP groups. Although income levels vary significantly across the high, median,
and low GDP groups, the love of money may be equally important to people in all GDP groups.
Due to the lack of mean differences in life satisfaction, our findings do not support the notion
that wealthy nations are happier than less wealthy ones (Khamsi, 2006). Happiness is similar
across entities (Easterlin, 2001). We discuss the differences below.
The high GDP group. With the highest level of economic development, the high GDP
group has the lowest unethical behavior, as expected. On one hand, since individual
characteristic (love of money) is positively related to unethical behavior, our results support the
notion that the love of money is a root of all kinds of evil (Tang & Chen, in press; Tang & Chiu,
2003; Vitell et al., 2006). “Bad apples” exist in good barrels (the high GDP group). On the other
hand, corporate ethical values are significantly related to ethical behavior. “Good apples” and
ethical behavior exist in good barrels. Individuals do look to the social context to determine what
is ethically right and wrong, obey authority figures, and do what is rewarded in organizations
(e.g., Treviño & Youngblood, 1990). Although “bad apples” exist in the high GDP group, the
percentage of bad apples (28.30% of the managers) is the smallest and overall unethical behavior
Doing Well by Doing Good 19
is also the lowest in “good barrels” among the three GDP groups. Most managers (71.7%) in the
high GDP group are “good apples”; therefore, it is easier and safer, relatively speaking, to do
business in these high GDP entities. Our results seem to support the literature regarding
managers in the high GDP group (Campbell, 2007).
According to the 17th
-century French playwright Jean-Baptiste Molière, “it is not only for
what we do that we are held responsible but for what we do not do”. Executives need to be aware
of what managers have done (Resource Abuse, Theft, and Corruption) and what they have failed
to do (Not Whistle Blowing) in organizations. Among four sub-constructs of unethical behavior,
Factor Theft (not Corruption) is the most important concern for managers in the high GDP
group. Corruption, in fact, is a more serious problem than theft around the world. It is possible
that managers in the high GDP groups may have less power, authority, and opportunity to
engage in corruption than those in other GDP groups. Doing well by doing good may be easier to
achieve in this group than other GDP groups due to the higher perception of corporate ethical
values and solid social infrastructures.
The median GP group. This group has the lowest corporate ethical values, the highest
unethical behavior, the highest percentage of bad apples (66.55%), the highest job stress, and the
strongest relationship between the love of money and unethical behavior (Path 1). Due to the
highest level of volatility and competition in the global environment (Campbell, 2007; O’Reilly
& Chatman, 1996; Sorensen, 2002), 66.55 percent of managers may experience the most
“pressure” (maximizing profits) and abundant “opportunities” (earning exorbitant bonuses) and
become “bad apples”. Managers in the median GDP groups may have power, authority, and
opportunity to engage in corruption; corruption is the most important element of unethical
behavior. These “bad apples” display the highest level of unethical behavior in “bad barrels”.
Thus, ethical values at organizational and cultural level may cause unethical behavior (Treviño &
Youngblood, 1990). On the positive side, people still respect laws and organizational ethical
values. On the negative side, when corporate ethical values (Baker et al., 2006; Victor & Cullen,
1987) are weak and the need to survive and competition are both high, high love-of-money
managers take risks, succumb to temptation, and engage in the most unethical behavior
(Badaracco, 2006; Campbell, 2007).
President Bush signed the Sarbanes-Oxley Act into law on July 30, 2002. Entities in the
developing economy may or may not have such laws. The implications are clear: Ethical values
at the organizational level may not exist in a vacuum. Strong and coherent economic, legal,
political, and social infrastructures must exist at the geopolitical entity level. Corporate ethical
values may be too weak to curb managers’ unethical behavior. Due to low ethical values at the
corporate and geopolitical entity levels, unethical behavior is the highest and the relationship
between love of money and unethical behavior is also the strongest. Bad apples’ vicious streak
will come out when they are given a chance, in bad barrels (Christie & Geis, 1970). It is difficult
to do business in the developing economy. Executives and expatriates need to be aware of the
possible gaps between espoused values and actual practices, i.e., behavioral integrity (Simons,
Friedman, Liu, & Parks, 2007). Doing well by doing good is difficult to achieve. Due to
institutional voids, managers experience the highest level of job stress and human “costs” in the
developing economy.
The low GDP group. For these “good” and “bad” apples (29.74% of the managers)
mixed in the “poorest barrels”, no rules and/or behavior patterns exist. That is, ethical decision
making has nothing to do with the love of money at the individual level and perceptions of
ethical values at the organizational level. We suspect that these managers may have adequate pay
Doing Well by Doing Good 20
(Tang et al., 2006), much more power, authority, and opportunity to engage in corruption, and
are much better off than the majority of people in society (mostly illiterate, unemployed, living
in remote or rural areas, and perhaps living on less than one dollar a day) than those in the other
GDP groups. Perhaps due to a poor economy and pervasive corruption in society, managers do
not have a sense of self-sufficiency (Vohs et al., 2006) but rather a strong sense of injustice
(Baker et al., 2006) or a victim mentality. In a state of chaos, some victims do not care about
anything and just act out their frustration, ignore all the laws, orders, and values in the poorest
barrels, become corrupt in the name of justice, and do whatever it takes to get even. Promoting
corporate ethical values may have very little or no impact on ethical behavior in these entities.
People have very little or no money. Disparity is acute. Without wealth, perhaps reputation and
liberty have very little value (Campbell, 2007; Gomez-Mejia et al., 2005). When needs are not
satisfied, money is a motivator (Lim & Teo, 1997). To some, the most important mentality is:
How I can get the most benefit out of the situation for myself now?
Here is a case in point. A business professor in the USA sent enough money to his
younger brother, who was caring for their ill father in one of the poorest countries in Africa. He
instructed his brother to buy the best medicine and supplements and bring them to their father
every day so that their father’s health might improve. The professor was surprised to learn later
that his brother brought medicine and food to their father only twice a week. The young brother’s
rationale was that he needed the money more and could make much better use of it than his
father. When he received the money, he considered it his. He brought medicine and supplements
to his father twice a week, which was much better than doing nothing at all. Later, the father
passed away. In a dire situation, people ignored social norms, love for their parents, and the
stewardship of wealth, reputation, and liberty. The corruption that occurred in this family may be
applicable to managers in organizations.
Those with a high love of money may engage in unethical behavior in an effort to reduce
their perceptions of injustice, vent frustration, voice concerns, get even, and reduce job stress.
Path 3 is negative. When we constrain all the paths to be equal across the three GDP groups, the
two positive paths (high and median GDP groups) and one negative path (low GDP group)
cancel each other out, creating a non-significant path.
Corporate ethical values increase job stress for the low GDP group. We speculate that (1)
people engage in unethical behavior regardless of their love of money or corporate ethical
values, and (2) corporate ethical values exist. With a high level of corruption and unethical
behavior, the above two conditions create conflict, confusion, and chaos that cause job stress
(Path 5). When we impose equality constraints, the two negative paths for the high and median
GDP groups are much stronger than the positive path, creating a negative path.
Bulgaria, China, Peru, and Thailand belong to the same low GDP group. The behavior
patterns of people in China and Peru are similar to those people in the median GDP group (i.e.,
Paths 1 and 2 are both significant) but with a large difference in self-reported income (China =
$2,553 vs. Peru = $13,060). People in Bulgaria and Thailand have a significant difference in
income (Bulgaria = $2,148 vs. Thailand = $10,985), yet their behavior patterns are similar to
those of people in the low GDP group (i.e., both Paths 1 and 2 are not significant). We speculate
that managers in China and Peru may respect and obey the laws but that managers in Bulgaria
and Thailand do not because corporate ethical values do reduce unethical behavior for the former
but do not for the latter. The love of money, ethical values at the organizational and entity level,
and the level of the economic development all play a role here. Future researchers need to
identify qualitative data and test this proposition empirically.
Doing Well by Doing Good 21
Due to globalization, outsourcing, and foreign direct investment (FDI), China (hourly
compensation = US$0.57, Milkovich & Newman, 2008, p. 3) may become one of the most
volatile markets in the world: It has experienced an eight percent increase of GDP per capita for
the past several years (10.1% in 2004, 9.9% in 2005, 8.6% in 2006, and expected 8.2% in 2007)
and will move from the low GDP group, based on 2005 GDP data, to the median or high GDP
groups quickly. According to the United Nation’s 2006 GDP per capita, China ($5,896) is
already in the median GDP group. Chinese managers respect and obey laws but may face tough
challenges. Due to extremely low ethical values at organizational and geopolitical entity level,
they may engage in unethical behavior. In the low GDP group, doing well by doing good may be
difficult to achieve at the present time. Researchers need to investigate the impact of change in
GDP per capita and self-reported income on ethical/unethical behavior over time. We present our
practical implications below.
Practical Implications
Doing well by doing good may be applicable to people at individual, organizational, and
national levels. First, at individual level, people enter the business field to make money (Bok,