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Infectious Ethics: How Upright Employees Can Ease Concerns of Tacit Collusion

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  • Brian Mittendorf

Abstract

The recent spate of corporate scandals in the United States has led to a newfound emphasis on developing a culture of ethics within organizations. Many hope the leadership of a few can help persuade ethical behavior by others. This article suggests that direct interpersonal influences need not necessarily be present for individuals to spur such a culture. In this article, incentive contracts make use of relative performance evaluation, which gives rise to concerns of tacit collusion among employees. Ethical employees stand to alter the behavior of others, since their mere presence limits the number and size of potential collusive coalitions. As a result, the firm finds it much easier to motivate not only those who themselves are ethical but also those who act entirely in self-interest. ( JEL J33, M14, M52) The Author 2007. Published by Oxford University Press on behalf of Yale University. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org, Oxford University Press.

Suggested Citation

  • Brian Mittendorf, 2008. "Infectious Ethics: How Upright Employees Can Ease Concerns of Tacit Collusion," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 24(2), pages 356-370, October.
    • Handle: RePEc:oup:jleorg:v:24:y:2008:i:2:p:356-370
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    File URL: http://hdl.handle.net/10.1093/jleo/ewm056
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    Cited by:

    1. Luft, Joan, 2016. "Management accounting in the laboratory and in social context: Four contrasts, 1975–2014," Accounting, Organizations and Society, Elsevier, vol. 49(C), pages 9-20.
    2. Kathleen A. Tomlin & Matthew L. Metzger & Jill Bradley-Geist, 2021. "Removing the Blinders: Increasing Students’ Awareness of Self-Perception Biases and Real-World Ethical Challenges Through an Educational Intervention," Journal of Business Ethics, Springer, vol. 169(4), pages 731-746, April.

    More about this item

    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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