From Inaction to External Whistleblowing: The Influence of the Ethical Culture of Organizations on Employee Responses to Observed Wrongdoing

Abstract

Putting measures in place to prevent wrongdoing in organizations is important, but detecting and correcting wrongdoing is just as vital. Employees who observe wrongdoing should therefore be encouraged to respond in a manner that supports corrective action. This paper examines the influence of the ethical culture of organizations on employee responses to observed wrongdoing.The findings show that, contrary to transparency and congruency of management, many other dimensions of ethical culture were negatively related to inaction and external whistleblowing and positively related to direct interven-tion, reporting to management and calling an ethics hotline. The model used for ethical culture explained 27.5% of intended responses by employees.

Keywords: ethical culture, ethics hotline, reporting, whistleblowing, wrongdoing

JEL Classification: M, G3, F23, M14