(Dis)honesty in Management: How Beneficial Is It?

Tiia Vissak is a senior researcher of international business at the UT Faculty of Economics and Business Administration. Her research interests include internationalisation processes, networks, emerging economies, case studies and management issues.


People protesting on Austurvöllur in reaction to the economic crisis in Iceland in November 2008. Image credit: Wikimedia Commons / Haukurth.

Did Iceland’s government deceive people during the economic crisis? Why have many Baltic companies decided to avoid paying taxes? Why is corruption relatively high in the Czech Republic? How do African managers feel about giving gifts and employing relatives? Are corporate community initiatives in Sri Lanka ‘honest’? How was trust established between US and Chinese negotiators and what caused Chinese partners’ dishonesty in selling products copied from their partners in China or abroad without informing them?

Which acts are justified and which are not? To answer these questions, we also need to understand what dishonesty is.

Honesty can be defined as the refusal to pretend that facts of reality are other than what they are, while dishonesty – including lying, stealing, cheating, distortion, concealing important information, failing to fulfill promises, and abruptly abandoning a business relationship – presents its opposite.  Still, the phenomenon is even more complex than it would seem from this definition.

Dishonesty can be blatant, massive, strong and active, or subtle, minimal, weak and passive. It is not always possible to draw a line between honest and dishonest acts: many acts have some characteristics of both. For instance, corporate community initiatives – like supporting local female entrepreneurs in Asia – are not always driven only by altruistic motives but also by reputational or financial gains. Yet the entrepreneurs benefit.

Also, avoiding taxes is illegal and deceiving partners can be punishable in several cases, but in some situations such acts can be the only way to postpone bankruptcy and thus retain jobs and keep some other partners in business. Thus, sometimes, even from the society’s perspective, dishonesty can be beneficial or ‘a little cheating will not hurt anyone’.

Moreover, the understanding of what is honest and what is not depends on the cultural context – for example, in some African countries it is considered correct to employ relatives even if other candidates are better – but also on personal characteristics: both from the actor and the evaluator’s (manager’s, coworker’s) perspective.

In addition, situational characteristics – such as whether the act is motivated by revenge, altruism or self-enrichment, or if a person is forced to commit the act – and the consequences of the act may affect the perception of how honest or dishonest this act is. Thus, the term (dis)honesty may sometimes be more appropriate.

Although managers cannot change the perceptions of honesty and dishonesty in society as a whole, they can shape organisational culture and through that their employees’ actions; thus, they need to understand these issues. They have to take into account that dishonesty can be contagious, especially if the firm’s managers or other employees also seem to act dishonestly or if the company provides ample opportunities for dishonest behaviour.

Even one bad apple can ruin the barrel. Employees tend to act dishonestly if the risk of getting caught and punished for dishonest acts is low, the potential punishment is not significant from the employee’s viewpoint, or potential (financial) gain is very high. Also, employees tend to take revenge on the company if they sense dishonest or unjust management behaviour towards staff (for instance, earning a large profit and paying very high wages to managers but very low wages to workers).

Moreover, managers have to understand that dishonesty may lead to unfavourable consequences for the dishonest and, quite often, for the honest party as well, but sometimes dishonesty may pay off for the dishonest party in the short term. For example, some Chinese firms deceived their partners because costs from dissolving the partnership were lower than gains from the deception. These firms managed to grow even faster and enter even more foreign countries after their partnerships were broken. Furthermore, to some extent they continued copying but became more creative.

(Dis)honesty in Management (cover)Learn more from the newly published book: (Dis)Honesty in Management: Manifestations and Consequences (edited by Tiia Vissak and Maaja Vadi). This volume focusses on different forms of honesty and dishonesty in management and their consequences for managers, firms and society in Europe, Africa, Asia and America. Several other authors from the University of Tartu contributed to the volume: Eneli Kindsiko, Anneli Kaasa, Eve Parts, Jaanika Meriküll, Oliver Lukason, Mark Kantšukov, Krista Jaakson, Jaan Masso and Xiaotian Zhang. In addition, the book includes chapters by authors from other research institutions.

Tiia Vissak, Maaja Vadi (2013). Introduction to Dishonesty in Management: Manifestations and Consequences, Advanced Series in Management , v. 10 DOI: 10.1108/S1877-6361(2013)0000010004

This entry was posted in Research, Social sciences and tagged , , , , , . Bookmark the permalink.