Finding Partners in Crime? How Internal Transparency Affects Employee Collusion
50 Pages Posted: 27 Jul 2017 Last revised: 16 May 2022
Date Written: January 15, 2018
Using a lab experiment, we investigate how internal transparency affects the tendency of employees to initiate collusive efforts with colleagues from other departments in an organization. Building on behavioral economics theory, we argue that employees who are treated unkindly by their managers are more willing to collude. We hypothesize that internal transparency affects collusion in two ways. First, by revealing how employees are treated by their managers, transparency affects the probability that specific individuals are approached by colleagues as potential “partners in crime.” Second, increasing transparency incentivizes managers to treat employees better, which in turn reduces employees’ motivation to initiate collusive agreements. The results of the experiment generally support the theory and have several implications for research and practice.
Keywords: Anticipation of reciprocity; Collusion; Internal transparency; Reciprocity
JEL Classification: C91, D83, M40, M50
Suggested Citation: Suggested Citation