The Role of Employee Honesty and Loyalty in the Institutionalization of Unethical Pro-Organizational Behavior – A Process Model

We propose a conceptual process model of institutionalization exclusively addressing unethical pro-organizational behavior (UPB) in organizations. Our model highlights that the ambiguous nature of UPB shapes the responses of employees who observe UPB in a way that makes organizations more susceptible to UPB institutionalization, irrespective of individuals’ moral preferences. Drawing from moral foundation theory, we explain how observers’ relative preference for loyalty or honesty affects their personal UPB acceptance. Further, integrating the literature from social projection, we argue that the valence ambiguity of UPB biases the observers’ estimation of the peers’ UPB acceptance. It may generate false consensus (uniqueness bias) among individuals supporting (opposing) UPB. Consequently, the organizational discourse would predominantly exhibit silence against UPB, suggesting a normative collective acceptance of UPB. This first episode of apparent collective UPB acceptance would become shared knowledge in the organizational memory. Organizational members would then perceive UPB as acceptable behavior, leading to UPB institutionalization. Our model underlines how employees’ responses at the individual level may play a crucial role in shaping the collective level phenomenon in the organization. We have suggested preventive recommendations against the UPB institutionalization in the form of boundary conditions for our model.