Using Alienation at Work to Explain Why Managers' Dishonesty Does Not Lead to Firm Performance

• Date: 01 June 2019
• Published date: 01 June 2019
• DOI: http://doi.org/10.1111/emre.12181

Using Alienation at Work to Explain Why

Managers’Dishonesty Does Not Lead to

Firm Performance

PABLO ZOGHBI-MANRIQUE-DE-LARA

1

and MERCEDES VIERA-ARMAS

2

1

Department of Economics and Management, Universityof Las Palmas de Gran Canaria, Spain

2

Morgan Stanley, Lond on, UK

Although prior studies provide growing evidence that managers’dishonesty is negatively related to firm

performance, the reasons for this relationship remain unclear. The purpose of this study is to model the steps in the

effect of the manager dishonesty on firm performance. Our model hypothesizes that followers’feelings of work

alienation are mediators that explain why managers’dishonesty is negatively related to aspects of a company’s

financial performance (i.e., profit and growth). We used multi-source survey data collected from 100 banks in

London and analyzed 100 team leaders and 100 triads of followers (n = 300). Results confirmed that managers’

dishonesty is related to financial performance,and they supported powerlessness (i.e., employee lack of controlover

their work)as the only studied elementof work alienation that mediatedin this link. Findings suggestthat, when faced

with managers’dishonesty, employeeslose control over the product of their labor or the work process, which causes

firm failure.

Keywords: firm performance; managers’dishonesty; ethical leadership, work alienation; financial performance

Introduction

To determine whether a firm’s initiativ es can work to

support itsoverall strategy and businesssuccess is an issue

for organizations. The concept of firm performance, its

financial definition, and its temporal relationship with

possible antecedents are all useful and difficult

requirements to demonstrate. Because objective and

subjective measurements are positively related, in order

to determine financial performance prior research usually

chose subjective performance measures. These measures

include sales, profit, satisfaction-based scales, and change

(Madsen, 1987; Shoham, 1998). Central to this challenge

is being able to understand the ‘black box’of return on

investment (ROI) in a firm’s initiatives. In this study,

indicators developed by Venkatraman (1989) are used to

measure firm performance, which includes a growth

dimension and a profitability dimension.

One initiative that can influence firms’performance

involves successfully combating managers’dishonesty.

As Weaver et al. (1999: 55) stated, ‘executive

commitment to ethics has important consequences for

ethics governance in companies, and managers should

take their role seriously’. Using an ethical leadership

approach,dishonest managers are definedas those lacking

in ethical leadership performance, that is, ‘normatively

appropriate conduct through personal actions and

interpersonal relationships, and the promotion of such

conduct to followers through two-way communication,

reinforcement and decision-making’(Brown et al., 2005,

p. 120). Servant and authentic leadership are other forms

of leadership that should help to specify details of the

manager dishonesty concept, as defined above. Previous

research, however, reveals that of the two, only servant

leadership exhibits a significant degree of distinctiveness

from ethical leadership (Hoch et al., 2016). In addition,

servant leadership focuses on followers, thus relegating

attention to organizational-level objectives to a

subordinate role (Gregory Stone et al., 2004). Because

the ethical leadership definition by Brown et al.(2005:

120) emphasizes firm-level performance achievement by

including the ‘promotion of such conduct to followers

through two-way communication, reinforcement, and

Correspondence Pablo Zoghbi-Manrique-de-Lara, HR Management and

Organizational Behavior of Department of Economics and Management,

University of Las Palmas de Gran Canaria, Campus de Tafira Edicicio,

Desk C.2.18, 35014 Las Palmas de Gran Canaria, Gran Canaria, Spain,

Tel: +34 (928) 458 131, Fax: + 34 (928) 458 685. E-mail pablo.

zoghbi@ulpgc.es

European Management Review, Vol. 16, 273–284, (2019)

DOI: 10.1111/emre.12181

©2018 European Academy of Management