Abstract
This study analyzed whether self-esteem directly predicts ethical behaviours and corporate responsibility values and whether power-distance mediates such relationships. A total of 410 students from two business schools in eastern India participated. A questionnaire was administered to collect information on socio-demographics and on self-esteem, power-distance, ethical behaviours and corporate responsibility values. Results revealed that self-esteem was positively associated with ethical behaviours and corporate responsibility values. Power-distance was a partial mediator in the relationships of self-esteem with ethical behaviours and corporate responsibility values suggesting that promoting self-esteem can partially reduce power-distance and can foster ethicality. These quantitative findings were substantiated with qualitative narratives from middle-level corporate executives.
Introduction
Self-esteem is an evaluation or judgement of the self (Wells & Marwell, 1976), often termed as self-respect, self-confidence, self-worth and a sense of competence (Tharenou, 1979). It is mentioned that human beings have evolved as a species to pursue a universal need for self-esteem (Leary & Baumeister, 2000; Taylor & Brown, 1988). In Maslow’s hierarchy of needs, self-esteem is an important higher-order ego need that the individual seeks to satisfy after satisfying basic needs for physiological necessity, safety and love. Self-esteem has been found to associate positively with job satisfaction, organizational commitment, organizational citizenship behaviour and job performance (McAllister & Bigley, 2002; Pepi, Faria & Alesi, 2006). Evidence suggests that individuals with high self-esteem avoid unethical behaviour and adhere to ethical behaviours that are congruent with a positive sense of self-worth (Avey, Palanski & Walumbwa, 2011). Against this backdrop, this study examines the influence of self-esteem on ethical behaviours and corporate responsibility values, and considers whether power-distance mediates such relationships.
Literature Review and Hypotheses
In business, ethical behaviours are the just, right and fair practices. It includes a set of acceptable, desirable activities for employees such as sticking to organizational rules and policies, being secretive about organization’s sensitive information, not padding an expense account, not falsifying time, quality, or quantity reports, etc. Adherence to ethical norms mobilizes employees to engage in desirable work practices, prevents lawsuits, improves business prospects and enhances the goodwill of the organization (Becker & Fritzche, 1987). Corporate responsibility values are the importance assigned to legal and moral conduct towards employees, customers, community, the environment and shareholders. If both ethical behaviours and corporate responsibility values capture ethicality, it can be said that they would be moderately correlated and distinct from one another.
The Theory of Moral Sentiments (Smith, 2010) argues that individuals with high self-esteem believe themselves to be capable, worthy (Pierce et al., 1989), intelligent, attractive, popular (Baumeister et al., 2003) and superior to others (Brown, 1986; Campbell, 1986). Individuals with high self-esteem acquire self-knowledge, maintain lifelong relationships, cope well with stress, show persistence in the face of failure and seek opportunities to be outstanding (Carr, 2004). Individuals’ reactions to life experiences vary with self-esteem (Pierce et al., 1989). Individuals with high self-esteem are afraid to do anything that will invite criticism, erode their positive self-image or hurt their reputation and integrity. To preserve their self-esteem, they show more ethical attitudes and behaviours than individuals with low self- esteem. Although individuals with high self-esteem acknowledge that they have made mistakes in the past, they see their present or recent past in a positive light (Wilson & Ross, 2000). They also perceive their future to be better than that of other individuals (Taylor & Brown, 1988) and, accordingly, resist unethical activities. They rarely show deviant behaviours (Ferris et al., 2009). Based on this discussion, we propose the following hypothesis (H):
H1: Individuals with high self-esteem will report higher standards of ethical behaviour and corporate responsibility values.
Culture is a collective programming of mind that distinguishes one group of people from another. Triandis (1998) classified the culture of people around the globe into four categories based on the presence and absence of power-distance with respect to individualism and collectivism. Power-distance is the extent to which individuals perceive, expect and accept that power is unequally distributed among members of society. It reflects differences in social status, privilege, facilities and perks among employees in organizations (Chatterjee, 2014). Competence, knowledge and skills in different domains of life are foundations of self-esteem. Individuals with high self-esteem are less likely to perceive psychosocial distance from authorities and are more likely to feel close to others, including authorities, than individuals with low self-esteem. Hence,
H2: Individuals with high self-esteem will perceive lower power-distance from authority figures.
High power-distance cultures have a higher degree of corruption (Getz & Volkema, 2001). Individuals in such cultures claim benefits they are not entitled to, accept bribes and stolen merchandize (Inglehart, 2000), and have weaker work ethics (Yoo & Donthu, 2002) than individuals in low power-distance cultures. Individuals (Cohen, Pant & Sharp, 1996) and business managers (Christie et al., 2003) in high power-distance cultures are more likely to view questionable business practices as ethical compared to individuals and business managers in low power-distance cultures. In high power-distance cultures, subordinates are expected to show loyalty and obey their superiors even when questionable actions are carried out (Patel, Harrison & McKinnon, 2002). Top-level managers do not defend their decisions to lower level employees (Khatri, 2009), and lower-level employees do not seek explanations. This insulates top-level managers from being exposed, encouraging further unethical behaviours. Individuals who frequently engage in questionable practices of a minor nature are more likely to engage in misfeasance of a more serious nature over time (Newstrom & Ruch, 1975). On the contrary, individuals in low power-distance cultures are characterized by equality of status and relationships. Such individuals, without much difference in power and privilege, seek guidance from others on appropriate behaviours (Vitell, Nwachukwu & Barnes, 1993), which makes it easier to question and challenge the unethical practices of others in the organization (Sauers, Kennedy & Loo, 2005).
India has a vertical collectivist culture where power-distance coexists with collectivist values of group mindedness, interdependence, cooperation and interpersonal sensitivity (Triandis, 2001). Throughout the globe, there is a relationship between economic affluence and cultural individualism (Hofstede, 2007) and, accordingly, wealthy people are more likely to be individualists and to distance themselves from other individuals, and less wealthy people are more likely to be collectivists and to distance themselves less from others. It is also reported that people can be individualists and collectivists depending on the time, place and person (Sinha & Tripathi, 1994). Individuals from the same culture may perceive different power-distance, and their ethical standards are expected to take shape accordingly. Therefore,
H3: Individuals who perceive lower power-distance will report higher standards of ethical behaviours and corporate responsibility values.
The above discussion suggests that power-distance will be a mediator/intervening variable because self-esteem, through power-distance, may influence ethical behaviours and corporate responsibility values. As individuals’ skill, knowledge and attitudes that nurture self-esteem increase, their power- distance from authority figures decreases. They feel psychosocially closer to the authority of higher status and more privilege, and are likely to cultivate ethical practices.
Power-distance to be an intervening variable, four conditions must be satisfied (Baron & Kenny, 1986). First, the independent variable of self-esteem must influence the dependent variables of ethical behaviours and corporate responsibility values (H1). Second, the independent variable of self-esteem must inversely predict the mediator, power-distance (H2). Third, the mediator must negatively influence the dependent variables (H3). Fourth, controlling the effects of the mediator must decrease (partial mediation) or nullify (full mediation) the previously established relationships between the independent and dependent variables (H1).
To sum up, this study examines the direct relationships of self-esteem with ethical behaviours and corporate responsibility values and the indirect relationships of the above constructs via power-distance. The model for investigation is shown in Figure 1.

Along with testing the hypotheses on potential managers in a quantitative study, a qualitative study was done with corporate executives to substantiate the four constructs and hypotheses (Eisenhardt, 1989). We adopted a method similar to Herzberg’s (1968) critical incidents to uncover themes that are likely to be missed in a quantitative study.
Method
Participants
For the quantitative study, 410 students from first- and second-year management courses from the two technological institutes in eastern India participated. The students were from different states in India and represented varied subcultures. With the prior permission of the class teachers, students in classes of 25–60 were briefed about the study and were asked to sign an informed consent form. Those who signed the form were given a questionnaire to complete and return. Of the 410 participants in the sample, there were more men (n1 = 230, 56.10 per cent) than women (n2 = 180, 43.90 per cent), χ2(1) = 8.10, p < 0.01, and the men (M age = 24.17, SD = 2.07) were a little older than the women (M age = 23.31, SD = 2.21), F (1,408) = 16.37, p < 0.001.
For the qualitative study, 60 executives were contacted through e-mail, postal mail, phone calls and personal contacts, and qualitative narrations in a questionnaire were obtained from 12 male and 3 female corporate middle-level managers. They were aged 27–45 years and had 5–20 years of experience. Thirteen managers had a masters degree in technology or management and two had a B.Tech. degree.
Measures
For the above measures, the summed score of the items of a construct was divided by the number of items in that construct to keep the score within the range of the response scale.
Results
The descriptive statistics and Pearson correlations among the studied variables for the quantitative study are shown in Table 1. The correlation between ethical behaviours and corporate responsibility values was 0.57, suggesting that they were not highly related and the two constructs were separate to assess ethicality. Self-esteem was positively related to ethical behaviour and corporate responsibility values, but negatively related to power-distance. Power-distance was negatively associated with ethical behaviours and corporate responsibility values.
Descriptive Statistics and Correlations among Studied Variables
Findings were consistent with the hypotheses but the correlations revealed bidirectional relations. To predict unidirectional hypothesized relations, a multivariate regression analysis was carried out with two dependent variables using AMOS 20. In the first model, self-esteem was the antecedent of ethical behaviours and corporate responsibility values. As in Figure 1, in the second model, self-esteem was the antecedent of power-distance and of ethical behaviours and corporate responsibility values. Power-distance was also the predictor of ethical behaviours and corporate responsibility values. The disturbance terms were applied to the dependent variables. The first model tested the first hypothesis and the second model tested the other hypotheses, including the mediation effect. The standardized and unstandardized path coefficients with fit indices are shown in Table 2.
Self-esteem and Power-distance Predicting Ethical Behaviours and Corporate Values
In support of the first hypothesis, self-esteem was positively related to ethical behaviours and corporate responsibility values. However, the relative chi-square (χ2/df ) value was above the cut-off limit of 5, the root mean square of approximation (RMSEA) was above the cut-off limit of 0.08, and the model had poor fit. In the second model, supporting the second hypothesis, higher (lower) self-esteem was associated with lower (higher) power-distance. Furthermore, supporting the third hypothesis, lower power-distance was associated with higher standards of ethical behaviour and corporate responsibility values when the effect of self-esteem was controlled. The model had acceptable fit indices.
Supporting the partial mediation of power-distance, when its effect was controlled, the influence of self-esteem on ethical behaviours and corporate responsibility values decreased in comparison to the same influence observed when testing the first hypothesis. Along with supporting the partial mediation of power-distance, the second model also supported the second and third hypotheses.
When the Sobel (1982) test was carried out, the partial mediating role of power-distance in the positive relationships of self-esteem with ethical behaviours and corporate responsibility values was reaffirmed. In the second model, to find out the percentage of partial mediation, the standardized indirect effects via power-distance were multiplied. The multiplied indirect effects were divided by total effects (direct + indirect) and the result was multiplied by 100. The results revealed that the partial mediating effect of power-distance accounted for a 10.59 per cent variance in the relationship between self-esteem and ethical behaviours and an 11.33 per cent variance in the relationship between self-esteem and corporate responsibility values. Power-distance explained about 10 per cent of the effects of self-esteem on ethicality and the mediation effect was low.
The results of the qualitative analyses were congruent with the quantitative findings Out of 15 executives, 13 reported the incidents that confirmed the positive association of self-esteem with ethicality, 9 reported that those with high self-esteem maintained less distance from juniors, and 12 reported that high power-distance among employees reduced employees’ ethicality. Some of the narratives reported by the executives are included in the discussion of the results to substantiate the empirical observations.
Discussion
Earlier studies have suggested that people with high self-esteem engage in ethical practices congruent with their perceived self-worth (Avey et al., 2011). Findings from the present study are consistent with those of the earlier literature. People with high (low) self-esteem have reported high (low) ethical behaviours and corporate responsibility values. Individuals with high self-esteem, who are competent, knowledgeable, authentic, able to resist temptations and expect a better future, display more ethical behaviours and show more sensitivity to corporate responsibility values.
High self-esteem among executives inhibited unethical practices and promoted ethical behaviour. One executive explained,
I believe in one anonymous thought that people tell themselves stories and then pour their lives into stories they tell. Once a new colleague joined my company, we immediately became good friends. She disclosed some confidential information to me about her colleague in her past job. I too was tempted to disclose information about my current colleagues, hoping that this self-disclosure will increase feelings of understanding between us. I could not because my inner conscience was not permitting. Having self-esteem, I thought this was unethical behaviour on my part to disclose personal information about my current colleagues to enhance intimacy in a relationship.
Another executive shared,
Once I had to take a decision on promotion of employees. One of my relative[s] was in that organization, but there was another employee who actually was a high performer, deserved to be promoted, and I had to choose who will be promoted. And finally, I decided to promote the employee who deserved, because it was my self-esteem which prevented me from a biased decision.
These narratives suggest that self-esteem of managers fosters ethical decision-making and promotes ethical practices.
Competence, knowledge and skills lead to high self-regard, therefore, individuals with high self-esteem perceive low distance from authority figures. Lower power-distance accompanies perceived similarity of psychosocial status with superiors, easier access to superiors and fosters collective decision-making that make such individuals behave ethically. In supporting this observation, one executive wrote,
Having high self-regard does not make people maintain distance from their seniors and subordinates. They only keep themselves away from irrelevant decisions and unauthentic people. People who are well qualified and are in well-to-do positions do mingle with all seniors and subordinates easily in my organization. They, however, abstain themselves from easy chat, mingling with leisure-seekers, arrogant, and persons who differentiate employees on the basis of caste and language.
Another executive related,
One of my colleagues who was also my neighbour was a highly self-respected person, and because of that, he never feared to interact with the supervisors. Whenever we need any kind of work with our supervisor, we always take his help. He was also kind and good to his subordinates.
However, another executive said,
…in a BPO firm, a manager with high concern for his self-regard was not mixing freely with his team members or even with his reporting officer, as he felt that they were below him in terms of qualifications. This behaviour was despite the fact that the manager had average abilities to deliver and would need the help of his peers and superiors to deliver.
The first two narratives suggest that executives having self-esteem mingle with genuine people, do not maintain power-distance, and help others whereas the last narrative reveals the opposite.
Earlier evidence suggested that individuals in high power-distance cultures are less ethical than the individuals in low power-distance cultures (Yoo & Donthu, 2002). Empirical findings support that individuals perceiving lower power-distance from superiors report higher standards of ethical behaviours and corporate responsibility values. One executive explained,
I and another person were handling same issues, but after some months, that person got promoted. Along with handling of issues, he had to lead the team. Suddenly it was found, he did not come for snacks/lunch with team members, did not work on issues, unnecessarily forced others to work, and was not helpful as before.
Another manager reported,
When I was in the recruitment committee in my company, my supervisor insisted me to rate one candidate significantly higher so that the candidate can be recruited. As per him that candidate had the support of senior management. Though I did not oblige him, I was surprised by the unethical activities of the senior management for selecting him.
Another executive said,
My team leader was over-dominant. Last few months, I was given tasks. But he was monitoring my work every now and then. He wanted explanation over small things like a schoolteacher and pointed silly mistakes to make an issue out of it and humiliate me. This irritated me a lot. I cannot work like this and will have to look for other job.
These narratives from the executives support the claim that power and privilege lead to ego-boosting, over bossism, distancing from others, engagement in unethical practices and harassment of juniors.
On the other hand, power and privilege were also claimed to promote performance and ethical practices. One executive explained,
In one of our location, Mr. P […] was working as field executive for five years. We promoted him to look after the community institutions, as he had considerable experience in the field. He transformed his learning and guided other professionals to work in a better way by promoting community institutions. On getting the privilege and wider roles, he proved himself and nurtured people to promote five federations across two states.
This incident suggests that higher position and privilege can trigger ethical practices. However, the earlier cited incidents suggested the opposite. Higher positions dampened ethical practices and promoted unethical behaviours. Therefore, whether higher positions and privileges can trigger unethical practices depends on the nature and personality of the person. Accordingly, power-distance was found to be only a partial mediator between self-esteem and ethicality in the quantitative study.
Conclusion
The quantitative study’s participants were business students, who are future business leaders. The qualitative study’s participants were middle-level executives. The findings are complementary. The conceptual understanding of the relationships among self-esteem, power-distance, and ethicality obtained in the quantitative study matches the ground realities of the practising executives in the qualitative study. This study contributes to the growing empirical evidence that self-esteem directly fosters ethical behaviours and high self-esteem partially promotes ethical behaviours via low power-distance.
If high self-esteem reduces the power-distance that fosters ethical behaviours and corporate responsibility values, promoting self-esteem can reduce the power-distance among organizational members, which can foster ethicality. Self-esteem is a sign of well-being and an indicator of the ability to meet organizational challenges. Because self-esteem reflects how well one is thinking, feeling and doing in life, individuals’ self-esteem can be promoted by improving their skills, knowledge and attitudes that can foster ethicality and lower power-distance among organizational members which can also promote ethicality.
Footnotes
Acknowledgements
The authors are grateful to the anonymous referees of the journal for their useful suggestions to improve the quality of the article. Usual disclaimers apply.
