Trust and Justice in Times of Competition: How Market Competition affects Leaders' trust and treatment of unethical employees

Anecdotal and empirical evidence suggests that unethical employees are sometimes tolerated by organizations. In this research we examine a potential explanation for this phenomenon as a function of the broader organizational... [ view full abstract ]

Anecdotal and empirical evidence suggests that unethical employees are sometimes tolerated by organizations. In this research we examine a potential explanation for this phenomenon as a function of the broader organizational context (i.e., competitiveness of the market). We draw on insights from the theory of bounded ethicality and social exchange theory and propose a model in which market competition increases the likelihood that managers take an instrumental perspective in their appraisal of employees at the cost of moral considerations. Using experimental and survey methodologies, we show across two studies that market competition influences perceptions of competence and benevolence of unethical employees, which managers reciprocate with positive leader behaviors (i.e., fairness enactment, offering developmental experiences, and less disciplining) towards these employees.