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Business leaders are more likely to overlook unethical behaviour if their company operates in a competitive market, according to new research from Rotterdam School of Management, Erasmus University (RSM) and Erasmus School of Law (ESL).

The business school’s Assistant Professor Dr Niek Hoogervorst and his co-author Pieter Desmet (Associate Professor at ESL), found that in highly competitive markets, such as finance, media, or car manufacturing, unethical behaviour is often only punished if it does not result in profit.

The researchers, whose study examined 673 managers, concluded that a competitive market environment encourages a propensity towards practical business solutions, rather than one which focuses on moral value. A manager can grow to assess malpractice, such as purposefully over-insuring clients, for its functional or institutional merits and whilst doing so lose sight of ethical procedure.

Hoogervorst comments: “Strong market competition can undermine leaders’ ethical decision-making. Specifically, it diminishes their responses to ethical transgressions to mere instrumental actions, solely focused on the organisation's profit and loss. We hope that our findings inspire scholars to further explore how these contextual processes can reshape our understanding of leadership and unethical behaviour within organisations.”

More information on the research is available on the RSM Discovery platform.

Note to editor

The RSM Discovery Platform aims to disseminate top tier research from Rotterdam School of Management to business and society. By accessing the website, http://discovery.rsm.nl/home/ you will gain access to research in areas such as finance, small business, management, strategy, leadership and sustainability. All research here is stripped of the jargon and explained in a practical way so anyone interested has something to gain from reading it.

Rotterdam School of Management, Erasmus University (RSM) is one of Europe’s leading business schools, and ranked among the top three for research. RSM provides ground-breaking research and education furthering excellence in all aspects of management and is based in the international port city of Rotterdam – a vital nexus of business, logistics and trade. RSM’s primary focus is on developing business leaders with international careers who carry their innovative mind-set into a sustainable future thanks to a first-class range of bachelor, master, MBA, PhD and executive programmes. RSM also has offices in Chengdu, China, and Taipei, Taiwan. www.rsm.nl

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