The Role of Risk Climate and Ethical Self-interest Climate in Predicting Unethical Pro-Organisational Behaviour

Abstract

Risk climate (sometimes referred to as risk culture) has become an increasingly important focus since the 2007-2009 financial crisis. Despite efforts to inculcate risk climate, unethical pro-organisational behaviour (UPB) such as misconduct toward customers continues to occur. This study investigates whether four risk climate factors (avoidance, valued, proactive and manager) can, on their own, reduce UPB misconduct. Surveying employees in three financial institutions we found that only one of the risk climate factors (avoidance) was consistently associated with UPB. On the other hand, ethical self-interest climate (ESI) significantly increased UPB in all samples. In multi-climate analysis we found that risk climate factors interacted with ESI climate to predict UPB. That is, when ESI was low, three factors of risk climate – avoidance, proactive and manager – significantly predicted UPB. UPB was least likely when ESI was low, avoidance risk climate was low, proactive risk climate was high and manager risk climate was high. These findings suggest leaders should consider addressing both ESI and risk climate to reduce UPB.

Keywords: ethical climate, financial services, risk climate, risk culture, misconduct, multiple climates, unethical pro-organisational, behaviour