Study offers first large-sample evidence of the effect of ethics training on financial sector behavior

Shannon Roddel
phys.org
Originally posted 21 Nov 19


Here is an excerpt:

"Behavioral ethics research shows that business people often do not recognize when they are making ethical decisions," he says. "They approach these decisions by weighing costs and benefits, and by using emotion or intuition."

These results are consistent with the exam playing a "priming" role, where early exposure to rules and ethics material prepares the individual to behave appropriately later. Those passing the exam without prior misconduct appear to respond most to the amount of rules and ethics material covered on their exam. Those already engaging in misconduct, or having spent several years working in the securities industry, respond least or not at all.

The study also examines what happens when people with more ethics training find themselves surrounded by bad behavior, revealing these individuals are more likely to leave their jobs.

"We study this effect both across organizations and within Wells Fargo, during their account fraud scandal," Kowaleski explains. "That those with more ethics training are more likely to leave misbehaving organizations suggests the self-reinforcing nature of corporate culture."

The info is here.

Corruption Is Contagious: Dishonesty begets dishonesty, rapidly spreading unethical behavior through a society

Dan Ariely & Ximena Garcia-Rada
Scientific American
September 2019

Here is an excerpt:

This is because social norms—the patterns of behavior that are accepted as normal—impact how people will behave in many situations, including those involving ethical dilemmas. In 1991 psychologists Robert B. Cialdini, Carl A. Kallgren and Raymond R. Reno drew the important distinction between descriptive norms—the perception of what most people do—and injunctive norms—the perception of what most people approve or disapprove of. We argue that both types of norms influence bribery.

Simply put, knowing that others are paying bribes to obtain preferential treatment (a descriptive norm) makes people feel that it is more acceptable to pay a bribe themselves.

Similarly, thinking that others believe that paying a bribe is acceptable (an injunctive norm) will make people feel more comfortable when accepting a bribe request. Bribery becomes normative, affecting people's moral character.

In 2009 Ariely, with behavioral researchers Francesca Gino and Shahar Ayal, published a study showing how powerful social norms can be in shaping dishonest behavior. In two lab studies, they assessed the circumstances in which exposure to others' unethical behavior would change someone's ethical decision-making. Group membership turned out to have a significant effect: When individuals observed an in-group member behaving dishonestly (a student with a T-shirt suggesting he or she was from the same school cheating in a test), they, too, behaved dishonestly. In contrast, when the person behaving dishonestly was an out-group member (a student with a T-shirt from the rival school), observers acted more honestly.

But social norms also vary from culture to culture: What is acceptable in one culture might not be acceptable in another. For example, in some societies giving gifts to clients or public officials demonstrates respect for a business relationship, whereas in other cultures it is considered bribery. Similarly, gifts for individuals in business relationships can be regarded either as lubricants of business negotiations, in the words of behavioral economists Michel André Maréchal and Christian Thöni, or as questionable business practices. And these expectations and rules about what is accepted are learned and reinforced by observation of others in the same group. Thus, in countries where individuals regularly learn that others are paying bribes to obtain preferential treatment, they determine that paying bribes is socially acceptable. Over time the line between ethical and unethical behavior becomes blurry, and dishonesty becomes the “way of doing business.”

The info is here.

The Normalization of Corruption in Organizations

Blake E. Ashforth and Vikas Anand
Research in Organizational Behavior
Volume 25, 2003, Pages 1-52

Abstract

Organizational corruption imposes a steep cost on society, easily dwarfing that of street crime. We examine how corruption becomes normalized, that is, embedded in the organization such that it is more or less taken for granted and perpetuated. We argue that three mutually reinforcing processes underlie normalization: (1) institutionalization, where an initial corrupt decision or act becomes embedded in structures and processes and thereby routinized; (2) rationalization, where self-serving ideologies develop to justify and perhaps even valorize corruption; and (3) socialization, where naı̈ve newcomers are induced to view corruption as permissible if not desirable. The model helps explain how otherwise morally upright individuals can routinely engage in corruption without experiencing conflict, how corruption can persist despite the turnover of its initial practitioners, how seemingly rational organizations can engage in suicidal corruption and how an emphasis on the individual as evildoer misses the point that systems and individuals are mutually reinforcing.

The article is here.