the ethics of peer reporting in chinese societies: evidence from hong kong and shanghai

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The ethics of peer reporting in Chinese societies:evidence from Hong Kong and ShanghaiRandy Chiu a & Carolyn Erdener ba School of Business, Hong Kong Baptist University, Kowloon, Hong Kong. (e-mail:[email protected]).b Stuttgart Institute of Management, American University of Cairo, Cairo, Egypt (e-mail:[email protected]).Published online: 24 Jun 2010.

To cite this article: Randy Chiu & Carolyn Erdener (2003) The ethics of peer reporting in Chinese societies: evidencefrom Hong Kong and Shanghai, The International Journal of Human Resource Management, 14:2, 335-353, DOI:10.1080/0958519021000029153

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The ethics of peer reporting inChinese societies: evidence fromHong Kong and Shanghai

Randy K. Chiu and Carolyn B. Erdener

Abstract The purpose of this study was to investigate the ethics of peer reporting inChinese societies. Based on a review of the literature, we develop a framework thatexplains peer reporting behaviour in terms of the individual’s ethical ideology, locus ofcontrol and subjective judgement regarding the ethicality of peer reporting. Hypothesesderived from these speculations are tested with data from Chinese managers (n = 362).Statistical analysis largely supports the hypotheses. The implications of this finding arediscussed.

Keywords Ethical judgement; relativism; idealism; peer reporting; locus of control.

Introduction

Peer reporting is a form of whistle blowing. Trevino and Victor (1992) identified peerreporting as a specific type of whistle blowing in which the whistle blower is of equalstatus or position to the wrongdoer. The major different between peer reporting and othertypes of whistle blowing is that peer reporting describes only lateral control attempts atobservation and reporting the wrongdoing of other organization members. Althoughpopular interest in whistle blowing continues to increase, little is known about why someemployees who observe the wrongdoing of a peer or colleague would report it, whileothers would not. As peer reporting is becoming an important mechanism to controlunethical behaviours within an organization, investigation on peer reporting is anessential need.

Whistle blowing, in all its forms, is considered to be a taboo in both Eastern and Westernsocieties because it violates high values in employee and employer relationships – trust andloyalty (Carroll and Gannon, 1997; Lennane, 1996; Taka and Foglia, 1994; Weiss, 1994).Trust and loyalty, in particular, are considered to be important elements in anemployment relationship in the Chinese culture (Fukuyama, 1995), and Chinese virtuethat urges social conformity and harmony (Bond, 1996) makes whistle blowingundesirable and unacceptable. Whistle blowing also brings to the whistle blowerunwanted consequences such as termination, burdensome work assignments, threats ofdisciplinary action and social isolation at work (Lennane, 1996; Jenson, 1987; Weiss,1994). Without either legal or moral support from society, a person is unlikely to blowthe whistle. Fortunately, there are laws in some countries, such as the US False Claim Actand the UK Public Interest Disclosure Act, which provide genuine protection for whistle

Int. J. of Human Resource Management 14:2 March 2003 335–353

Randy K. Chiu, School of Business, Hong Kong Baptist University, Kowloon, Hong Kong. (e-mail:[email protected]); Carolyn B. Erdener, Stuttgart Institute of Management, AmericanUniversity of Cairo, Cairo, Egypt (e-mail: [email protected]).

The International Journal of Human Resource ManagementISSN 0958-5192 print/ISSN 1466-4399 online © 2003 Taylor & Francis Ltd

http://www.tandf.co.uk/journalsDOI: 10.1080/0958519021000029153

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blowers. However, this is not the case in China. Despite its obvious and increasingimportance for all organizations, including those that operate internationally, a literaturesearch did not uncover any prior empirical studies of whistle blowing in non-Westerncultural environments. Specifically, a search of the literature on Chinese managementand managerial ethios did not yield any studies of peer reporting. Thus, whether Chinesepeople would expose a peer’s wrongdoings at the risk of destroying harmoniousrelationships is still unknown.

The purpose of this study was to investigate the ethics of peer reporting in Chinesesocieties and to ascertain the decision-making process of potential whistle blowers. Aspeer reporting becomes an increasingly important control mechanism (Vinten, 1993,1995), a good understanding of this phenomenon is clearly needed. However, researchon peer reporting has focused rather narrowly on the influence of the externalenvironment: for example, the social context (Trevino and Victor, 1992). Very few studieshave examined individual-level factors, such as motivation (Barnett et al., 1996). Second,the research design of this study facilitates the development of both culture-free andculture-specific theories (Cheng, 1996) of peer reporting. The extension of theories thathave been developed in the West by replicating empirical studies in non-Westerncontexts, e.g. China, is an important step in the development of culture-free theory. Onthe other hand, carrying out a study in more than one location within a Chinese culturalenvironment is important in the development of culture-specific theory. To single out theeffects of cultural heritage on individual factors, as opposed to the effects of the social,political and legal environments, data were collected in two Chinese societies, namelyHong Kong and Shanghai. Thus, the present study extends the growing body of researchon this important topic by investigating the ethics of peer reporting at the individual levelof analysis in a culture-specific context.

To integrate related findings from the literature on whistle blowing, peer reporting,business ethics and Chinese management, a conceptual framework was developed. Thisframework explains individual peer reporting behaviour in terms of the individual’sethical ideology, locus of control and subjective judgement regarding peer reporting.

Background

To further understand the peer reporting phenomenon, we could first start with theconcept of whistle blowing. Increasing awareness of the importance of whistle blowingin the workplace is evident in the trend towards adopting whistle-blowing policies(Barnett et al., 1993). Organizations that do not deal effectively with the issue can expectto incur considerable costs as a result of the negative publicity that accompanies publicdisclosure of corporate illegalities or unethical actions (Laczniak and Murphy, 1991) andthe likely disruption of work relationships and routines. Whistle blowing is acquiringnew significance as a mechanism of social control (Vinten, 1993, 1995). Given the lowpublic visibility and high technical complexity of much illegal activity in the workplace,successful monitoring and prevention of unethical conduct rests in large part with thesocial control actions of employees. Often the persons who uncover unethical practicesare those who are positioned where the activity is occurring. Without their aid in bringingabuses of law or public trust to light, there is little hope of learning about or controllingwhat goes on inside most work organizations.

Whistle blowing has been defined both broadly and restrictively (Ferrell andFraedrich, 1997; Jubb, 1999). In general, it is defined as ‘an employee’s act of disclosureof what he or she thinks to be wrongdoing(s) conducted in or by the organisation’ (seeJames, 1990; Miceli and Near, 1992). However, early writing on whistle blowing had

336 The International Journal of Human Resource Management

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a predominantly legal and political focus (Malin, 1983; Weinstein, 1979). Not untila decade ago was the definition of whistle blowing refined as ‘the disclosure by a currentor former organisation member of illegal, inefficient, or unethical practices in anorganisation to persons or parties who have the power or resources to take action’ (Nearand Micelli, 1985: 4). Most empirical research on whistle blowing now follows thisdefinition or some variation of it (Ferrell and Fraedrich, 1997; Miceli and Near, 1992;Miethe and Rothschild, 1994).

Peer reporting

Although popular interest in whistle blowing is on the rise, little is known about whysome employees report a colleague’s wrongdoings, while others do not. Previously,whistle blowing research focused almost exclusively on the narrower issue of reportingthe unethical behaviour of superiors.

Relatively little direct empirical research has dealt with the ethical issues involved inreporting the behaviour of peer group members. By logical extension, however, it can beassumed that peer reporting is influenced by those contextual and individual variablesthat have been shown to influence whistle blowing in general (Trevino and Victor, 1992;Victor et al., 1993). Previous empirical research on peer reporting has focused largely onthe influence of contextual factors. Trevino and Victor (1992) investigated the socialcontext of peer reporting by examining the influence of group interests and roleresponsibility. Victor et al. (1993) added a justice perspective with the suggestion thatpeer reporting behaviour is a positive response to a judgement about justice, in additionto social context factors. Barnett et al. (1993) investigated two individual factors thataffect the peer reporting process: religiosity and ethical ideology.

Theoretical framework

As the overall quantity of empirical research on business ethics in Chinese culture isquite limited, very few survey instruments have been used successfully. However, anapproach that was deemed appropriate for studying Chinese ethical perspectives withinthe broader conceptual framework of ethical philosophy was found in the work ofForsyth (1980).

Building on this work, a framework was developed to allow an empirical examinationof individual peer-reporting behaviour. In the basic version, ethical ideology affects peerreporting judgement, which affects peer reporting intention. A more complex versionwas also developed, in which the relationship between ethical ideology and peerreporting intention is moderated by locus of control. The logical basis for this isexplained below. To avoid confusion, we use the term ‘ethical ideology’ as it has beendefined and used in the work of Forsyth (1980, 1981, 1985, 1992), as discussed in thenext section.

Ethical ideology

Schlenker and Forsyth (1977) developed psychometric measures, in the Ethical PositionsQuestionnaire (EPQ), to investigate ethical ideology in terms of two dimensions: (1)relativism, or the individual’s unwillingness to accept the existence of universal moralrules; and (2) idealism, or the degree to which the individual is influenced by his or herassessment of the consequences of an action.

These dimensions were derived from the empirical investigation of three differentperspectives of moral philosophy – namely deontology, teleology and scepticism – by

Chiu and Erdener: Ethics of peer reporting in Chinese societies 337

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Schlenker and Forsyth (1977). Idealism in the EPQ relates to the individual’s concernwith the consequences of an action and with how these consequences affect the welfareof others (Forsyth, 1992). Highly idealistic individuals have an overriding concern for thewelfare of others, and believe that harming others is always avoidable. In contrast, lessidealistic individuals accept that harmful consequences may sometimes be mixed withdesirable consequences, and are less concerned for the welfare of others, believing thatharmful consequences for some may at times be unavoidable (Forsyth and Nye, 1990).Relativism is used in the EPQ to refer to the individual’s willingness to accept or rejectthe notion of universal moral rules (Forsyth, 1980). Highly relativistic individuals do notbelieve in moral absolutes; therefore the ethicality of an action depends upon theparticular circumstances involved. Conversely, low or non-relativistic individuals believethat the ethicality of an action is determined by universal moral principles or laws(Forsyth, 1992).

Peer reporting judgement

Ethical judgement is an integral component of an individual’s reasoning about ethicalissues. This has been stated in many models of ethical decision making (e.g. Hunt andVitell, 1986; Jones, 1991; Rest, 1986; Trevino, 1986). In the Rest (1986) and Trevino(1986) models, cognitive moral development is the critical element in the ethicaljudgement phase. For the models of Dubinsky and Loken (1989) and Hunt and Vitell(1986), moral evaluation is used in ethical judgement. Therefore, the individual’sevaluation of the ethicality of peer reporting influences his or her decisions about whetheror not to engage in the practice.

Peer-reporting judgement refers to an individual’s subjective evaluation of theethicality of peer reporting in a specific situation. This encompasses the extent to whichone believes or does not believe that reporting the wrongdoing of peers in the workplaceis inherently a fair, acceptable, and moral action in general, as well as in the particularsituation at hand.

Ethical ideology and peer reporting judgement When confronted with identical ethicalissues in similar situations, the same individual may sometimes make radically differentethical judgements (Forsyth, 1980). The main reason for studying ethical ideology is toexplain such variation in ethical judgements. An individual’s ethical ideology may berelated to judgements about the ethicality of peer reporting in several ways. First,individuals with different ethical ideologies may differ in terms of their sensitivity towrongdoing (Forsyth, 1981). Second, individual differences in ethical ideology maycontribute to differential information processing about ethical issues (Forsyth, 1985).Third, ethical ideologies may vary in their association with positive attitudes about theappropriateness of peer reporting (Miceli and Near, 1992).

Empirical findings suggest that individuals who differ significantly in terms of EPQidealism and EPQ relativism also reason differently about ethical issues. As a result, theyoften reach different conclusions about the ethicality of particular actions (Barnett et al.,1994; Forsyth, 1980; Forsyth and Berger, 1982; Forsyth and Nye, 1990; Stead et al.,1990). Therefore, differences in EPQ classification on ethical ideology are expected toinfluence individual judgement regarding peer reporting directly.

Idealism and peer reporting judgement Those who score high on EPQ idealism willjudge unethical behaviour more harshly (Forsyth, 1985) and have a greater ethic ofcaring (Forsyth et al., 1988). Research suggests that peer reporting is more likely when


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the potential whistle blower believes that the interests of group members will be harmedby the peer’s wrong actions (Trevino and Victor, 1992; Victor et al., 1993). Idealists havea strong concern for the welfare of others, and are more likely to assess the consequencesof a peer’s unethical actions for the group and consider the possible harm that mightcome to the group as a result. With respect to the ethicality of reporting a peer’s wrongbehaviour, the idealist may judge this to be an acceptable way to protect the interests ofthe group against the actions of the wrongdoer. Several empirical studies are relevant tothis issue. One study found that subjects judged the ethicality of peer reporting morefavourably when the wrongdoing had the potential to harm the group as a whole (Trevinoand Victor, 1992). This indicates that idealistic individuals – who are highly sensitive toconcerns of others – may also be more likely than others to judge peer reporting asethical to protect the interests of the group. Another study found a positive relationshipbetween idealism and a favourable judgement on the ethicality of reporting cheating bya fellow student (Barnett et al., 1996). This suggests that subjects who score high on EPQidealism will judge peer reporting to be ethical, whereas those scoring low on EPQidealism will not.

Relativism and peer reporting judgement Highly relativistic individuals are less likelythan others to judge a peer’s wrongdoings harshly. This is because they believe that it isimpossible to make accurate ethical judgements about the behaviour of another withoutknowing all the specific circumstances that led to the behaviour. If, in addition, therelativist considers a particular action justifiable in a given situation, then they will beeven less likely to support corrective action such as peer reporting. Previous researchlends support to this interpretation. For example, highly relativistic individuals are proneto engage in unethical conduct when it is in their own interest (Forsyth and Nye, 1990).This suggests that they may also be more accepting of unethical conduct motivated bypersonal gain or self-interest on the part of other people, including peers. Relativism hasbeen found to be negatively associated with the peer reporting judgement (Barnett et al.,1996), in that subjects who score high on relativism tend to judge peer reporting to beunethical, whereas those who score low on relativism tend to judge it to be ethical. Theabove discussion leads to the following hypotheses about the relationship betweenethical ideology and peer-reporting judgement:

H1: Idealism (as measured by the EPQ) is positively related to the judgement thatpeer reporting is ethical.

H2: Relativism (as measured by the EPQ) is negatively related to the judgement thatpeer reporting is ethical.

Peer reporting intention

Behavioural intention is the subjective probability that an individual assigns to thelikelihood that a given behavioural alternative will be chosen (Ajzen and Fishbein, 1980;Hunt and Vitell, 1986). The theory of reasoned action (Ajzen and Fishbein, 1980)suggests that behavioural intention is a good predictor of actual behaviour.

As the investigation of unethical conduct in the workplace by first-hand observation isimpractical, many studies use the intention to report as their operational variable (Barnettet al., 1996; Trevino and Victor; 1992; Victor et al., 1993). The variable of peer reportingintention refers to the individual’s likelihood of actually engaging in peer reportingbehaviour.


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Both contextual and individual factors have been identified in the literature as possibleinfluences on the individual’s decision to ‘blow the whistle’ on perceived unethicalbehaviour (Miceli and Near, 1992). Key contextual factors thought to influence thewhistle-blowing decision include the seriousness of wrongdoing (Dozier and Miceli,1985; Miceli and Near, 1985), group norms (Greenberger et al., 1987; Trevino andVictor, 1992) and the perceived responsiveness of complaint recipients (Keenanand McLain, 1992). Key individual factors may include religious values (Miceli andNear, 1992), moral standards (Miceli et al., 1991) and the locus of control (Miceli andNear, 1992).

Peer reporting judgement and peer reporting intention

Most of the ethical decision-making models in the literature include ethical judgement asa variable in the formation of behavioural intentions (Dubinsky and Loken, 1989; Jones,1991; Hunt and Vitell, 1986; Rest, 1986). Empirical research has shown that subjectswho judge an action to be highly ethical are more likely than others to harbour thebehavioural intention to perform this action. This is also consistent with the theory ofreasoned action (Ajzen and Fishbein, 1980).

According to the literature, the behavioural inclination to report peers is predictive ofpeer reporting behaviour (Victor et al., 1993). The relationship between ethicaljudgement and behavioural intent has been examined empirically with respect to peerreporting in at least one study (Barnett et al., 1996). A positive association was foundbetween the judgement that peer reporting is ethical and the behavioural intention toreport an unethical peer behaviour. People who believe in the ethicality of peer reportingare more likely to harbour the intention to report a peer’s wrongdoing, and those whobelieve that peer reporting is unethical are less likely to do so. This is expressed in thefollowing hypothesis:

H3: Judgement that peer reporting is ethical is positively related to the intention toreport unethical peer behaviour.

Whistle blowing and locus of control

The locus of control is a characteristic of the individual that is measured with theunidimensional Internal–External Locus of Control (I–E) Scale (Rotter, 1966). Aninternal locus of control indicates that an individual believes that they are responsible forthe reinforcement or outcome experienced. An external locus of control indicates that theperson views his or her outcomes as being primarily determined by external forces, suchas luck, fate, social context or other persons, etc. Hjelle and Clouser (1970) argue thatinternals have also been found to exhibit less conformity than externals, because internalsbelieve in, and actively seek, personal control.

There is an extensive body of research on the relationship between whistle blowingand locus of control. Indeed, the locus of control has been presented as one of theindividual characteristics that affect the individual’s whistle-blowing decision (Near andMiceli, 1985). People who have an internal locus of control tend to blow the whistle insituations where those with an external locus of control will not. Internals believethemselves to be largely in control of their outcomes and see whistle blowing as a stepthey must take to control an activity that they cannot sanction. Externals see questionableactivity as controlled by powerful others whom they cannot stop, which reflects theirbelief that fate, luck or chance determines much of what happens to them.


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Whistle blowers may be strongly motivated by a belief in their own efficacy in specificsituations (Dozier and Miceli, 1985). Thus, they will be more likely to blow the whistlein situations of which they can potentially take control. Moreover, researchers havegenerally found that individuals with internal loci of control are more likely thanexternals to engage in pro-social behaviour (Spector, 1982). As whistle blowing is a pro-social behaviour, internals are therefore considered more likely than externals to engagein whistle-blowing activity.

There are also some whistle-blowing situations in which the distinction betweeninternals and externals appears to be irrelevant. For example, when retaliation appearslikely, the relationship between whistle blowing and locus of control disappears. Ina controlled field study of whistle blowing under threat of retaliation, the internals wereno more likely to blow the whistle than externals (Miceli et al., 1991).

The interactionist view for ethical decision making includes the locus of control asone of several individual-level variables that moderate the relationship between moraljudgement and ethical behaviour. In this model, individuals with external loci of controlare less likely to take personal responsibility for the consequences of ethical or unethicalbehaviour, and are more likely to rely on external forces. Conversely, an internal is morelikely to take responsibility for consequences, and thus to rely on their own internaldetermination of right and wrong to guide behaviour. Accordingly, managers whoselocus of control is internal exhibit more consistency between moral judgement and moralaction than managers whose locus of control is external. This view was supported in anempirical test of the causal effects of locus of control on ethical decision-makingbehaviour (Trevino and Youngblood, 1990).

Peer reporting judgement, locus of control and peer reporting intention

Little research has been conducted on the relationship between peer reporting and thelocus of control. The possible moderating effect of the locus of control on therelationship between ethical judgement and ethical behaviour intention (Trevino, 1986)may also apply to peer reporting. Externals judge peer reporting to be ethical yet do notharbour the intention to report a peer’s wrongdoing, as they tend not to take personalresponsibility for their own behaviour, and attribute outcomes to the influence of externalforces. On the other hand, internals judge peer reporting to be ethical and harbour a peerreporting intention, as they are more willing to take personal responsibility for their ownactions. The relationship between ethical judgement and peer reporting intention wouldtherefore hold more strongly for those individuals who have an internal locus of control.This leads to the following hypothesis:

H4: The locus of control moderates the relationship between peer reportingjudgement and peer reporting intention.

The Hong Kong and Shanghai context

Although China has received scant attention within the field of business ethics, the fielddoes provide a theoretical framework for such a focus through Integrative SocialContracts Theory (ISCT) (Donaldson and Dunfee, 1994). ISCT is based on the conceptof mutual responsibilities between society and the individual. Each society has its ownunique requirements, applicable to all members, which are encompassed in the conceptof a social contract. For example, although the social, political and legal heritage of HongKong is Western capitalist, and in Shanghai it is Chinese socialist, these cities sharea common Chinese cultural heritage. Due to differences in their historical and political


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backgrounds, an examination of the peer reporting behaviour of managers in Hong Kongand Shanghai would further confirm whether peer reporting behaviour is linked to socialnorms.

Shanghai was established as a city in 1843. In the early twentieth century, it becamean important export port and was a successful industrial and commercial city. Before theoutbreak of the war between China and Japan, it was named the ‘Paris of the East’.However, immediately before and after 1949, a large number of its wealthy and talentedresidences left Shanghai and largely moved to Hong Kong, transferring most of theirfortunes and properties out of the city. For forty years, Shanghai sank into poverty due tothe centrally planned economy under communist rule. After the open door policy wasimplemented, Shanghai was one of the first cities to move towards a market economy. Inthe last decade, Shanghai has regained its reputation as a key commercial and industrialcentre in China. The city has attracted investors from neighbouring countries, containsthe regional headquarters of many multinational corporations and now rivals Hong Kongas a major financial centre (Healey and Baker, 2000; Wang, 2001).

Hong Kong was a small fishing port when sovereignty passed to the British from theChinese in 1842. Rapid economic growth began with the city’s transformation into anindustrial city in the 1950s. With help from the wealth, machineries, skills andknowledge transferred from Shanghai after 1949, and with an abundant supply of cheaplabour, Hong Kong began to export light manufactured products such as textiles andelectronics. By the early 1970s, Hong Kong became known as the ‘Pearl of the Orient’.However, Hong Kong’s exports faced competition from newly industrialized countries inSoutheast Asia, as they began to produce more technologically advanced and capital-intensive products. As manufacturing employment declined, the service and financialsectors grew. In recent years, Hong Kong has been one of the fastest growinginternational financial centres. In 1997, its sovereignty was transferred back to China,and it became the largest self-governing capitalist society under communist Chinese rule.However, it suffered a major financial and economic setback from the Asian financialcrisis, and now faces ever-increasing competition from Shanghai and neighbouringeconomic zones (Ibison, 1999).

Research method

Data collection

This study aimed at surveying managers and executives. The prospective subjects werestudents at the time of the survey, in various (part-time) MBA programmes located inHong Kong and Shanghai. However, we intended to use only the information returned bythose respondents who had indicated that (1) they had full-time employment and (2) theywere in a management position. All of the questionnaires were accompanied by a cover-ing letter with a statement of purpose and guidelines for completing the questionnaire.Stamped envelopes were provided to all respondents for returning the completedquestionnaires by mail. Participation in this survey was voluntary. The anonymity andconfidentiality of the responses were guaranteed. Altogether, three hundred copies ofquestionnaires were distributed in Hong Kong, whereas five hundred were sent toShanghai.

Questionnaire

The questionnaire included three sets of instruments and a vignette, specifically writtenfor the purpose of this study, about a situation involving unethical behaviour in which


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peer reporting could occur. Vignettes are used widely in business ethics research becausethey allow researchers to approximate decision-making situations within the context ofa questionnaire (Barnett et al., 1996; Reidenbach and Robin, 1990). In the present study,ethical judgement (relativism versus idealism) and the behavioural intention regardingpeer reporting were tested with a short vignette in which a manager who is participatingin a training programme reports another participant for providing falsified documents.Subjects were asked to respond to questions about the ethicality of this act. Similarvignettes have been used in previous studies of peer reporting (Barnett et al., 1996;Trevino and Victor, 1992).

The Ethical Position Questionnaire (EPQ) (Forsyth, 1980) was designed to measurethe ethical ideologies or philosophies of individuals. The EPQ consists of twenty itemsdivided into two ten-item sub-scales that measure 1) idealism and 2) relativism.Respondents were asked to indicate their level of agreement with the EPQ items ona five-point Likert scale. Representative items for idealism included ‘A person shouldmake certain that their actions never intentionally harm another even to a small degree’and, for relativism, ‘There are no ethical principles that are so important that they shouldbe a part of any code of ethics’. Reliability scores of 0.80 have been obtained for the EPQidealism scale, and 0.73 for the EPQ relativism scale (Forsyth, 1980).

The subjects’ ethical judgement of peer reporting was assessed using the Multi-dimensional Ethics Scale (Reidenbach and Robin, 1990). This is an eight-item semanticdifferential scale. Respondents were asked to express the level to which they believeda specific action was morally acceptable. Those subjects who judged the behaviour to beright or acceptable scored 5, and those who judged the behaviour to be wrong orunacceptable scored 1. The scale has a high level of reliability, and has adequateconvergent and discriminate validity (Reidenbach and Robin, 1990). A satisfactorilyalpha coefficient has been obtained in similar scales (Barnett et al., 1996).

A four-item semantic differential scale was adopted to measure the peer reportingintentions of individual subjects (Barnett et al., 1996). Subjects were asked to assess theprobability that they would engage in peer reporting behaviour based on the scenariogiven. The scale was a five-point instrument, and those who were likely to engage in peerreporting behaviour would score 5, while those unlikely to engage in peer reportingbehaviour would score 1. The alpha reliability for this scale was 0.96.

The Internal-External Locus of Control Scale was used to measure locus of controlorientation (Rotter, 1966). It consists of twenty-three question pairs (excluding six filterquestions), using a forced-choice format. Sample items include the question pairs of‘Many of the unhappy things in people’s lives are partly due to bad luck’/‘People’smisfortunes result from the mistakes they make’ and ‘Becoming a success is a matter ofhard work, luck has little or nothing to do with it’/‘Getting a good job depends mainlyon being in the right place at the right time’. The alpha coefficient for this scale is 0.70(Rotter, 1966).

All instruments were administered in Chinese. The original questions were translatedfrom English into Chinese and then back-translated into English until the English andChinese versions substantially agreed with each other, as outlined by Brislin (1986).

Data analysis

Zero-order correlation, hierarchical regression, moderated regression analysis andsubgroup correlation coefficients were used in this study to test the hypotheses. Therelationships between any two variables were explored with zero-order correlationanalysis.


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Hierarchical regression was used to examine the determinants of peer reportingjudgement. In the first step of the hierarchical regression analysis, the dependent variableof peer reporting judgement was regressed on control variables. These control variables –age (Barton, 1995), education level (Miceli and Near, 1992), work experience (Barnettet al., 1996) and having a religion or not (Glazer and Glazer, 1989) – were considered tobe related to whistle-blowing behaviour and could affect the tested relationship betweenpeer reporting intention and the study variables. The independent variables of idealismand relativism were entered into the regression equation in the second step.

Moderated multiple regression was used to examine the hypothesized moderatinginfluence of the locus of control on the relationship between peer reporting judgementand peer reporting intention. In the first step, the dependent variable of peer reportingintention was regressed on the control variables as indicated above. Next, the main effectvariables of peer reporting judgement and locus of control were entered, followed by theinteraction term of the main effect variables (Cohen and Cohen, 1983).

Results

Since we were interested in the responses only of (full-time) managers or executives, theinformation we used for subsequent data analyses was taken from only 362 usablequestionnaires, of which 43 per cent were from Hong Kong (n = 155) and 57 per centwere from Shanghai (n = 207). The response rate for the two locations was 51.6 per centand 41.4 per cent.

For the Hong Kong sample, 44.5 per cent of the respondents were female, and41.2 per cent were aged from 21 to 30 while 46.4 per cent were aged between 31 and 40years of age. In terms of educational level, sixty-two respondents (40 per cent) wereuniversity graduates and 36.1 per cents of them had at least one master’s degree. At thetime of the survey, about 20.6 per cent of the respondents had six to ten years of workexperience, and 52.2 per cent had between eleven and fifteen years of experience. Onlyabout 25 per cent of the Hong Kong respondents (thirty-nine) had some kind of religiousaffiliation. From the data collected in Shanghai, ninety-two respondents (44.4 per cent)were female, and fifty-one (24.6 per cent) had some form of religion. About 50 per centof the respondents were aged between 26 and 30 and 24.6 per cent were between 31 and35. In terms of educational level, 71.5 per cent were undergraduate degree holders andtwenty-eight (13.5 per cent) had postgraduate qualifications. Finally, 19.8 per cent of therespondents had six to ten years of work experience, 26 per cent had eleven to fifteenyears of experience, and 11.1 per cent had sixteen to twenty years of experience.

In an effort to separate broader Chinese cultural effects from location-specific effectsof the political and legal environment, data were analysed for the overall sample and thenseparately for each location. Findings that were consistent across locations wereconsidered to represent the influence of Chinese culture. On the other hand, findings thatdiffered significantly across locations were considered to represent other influences, suchas those of social, political and legal environments.

The results of statistical analysis are reported first for the overall sample, thenseparately for Hong Kong and Shanghai. These results include alpha reliability scores,means, standard deviations, and intercorrelations among the study variables. TheCronbach alphas for the scales were quite high, ranging from 0.7194 to 0.9243,indicating that each scale had a moderately high internal consistency and could be usedin survey research. The satisfactory alpha coefficients obtained in this study suggest thatthese constructs tested in a Chinese sample were reliable and valid. First of all, the alphacoefficient of each respective study variable is very similar to those obtained in studies


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conducted in Western samples. This result indicated that there is an equivalence in termsof comparability of constructs (Van de Vijver and Leung, 1997). Second, according to thezero-order analysis, the intercorrelation among these constructs fell within the expecteddirections. Thus, it suggests that equivalence of scaling metrics is assumed (Riordan andVandenberg, 1994). The results of testing for alpha reliability, standard deviations andintercorrelations for the overall sample and the two locations are presented in Tables 1a,1b and 1c.

Overall sample

The proposed framework was largely supported for the overall sample. However, thehypothesized relationship between relativism and peer reporting judgement in the firstpart of the model was not confirmed.

Results of hierarchical regression analysis for the first part of the model, whichrepresents the relationship between peer reporting judgement and ethical ideology


Table 1a Overall sample (n = 362): alpha, means, standard deviation and zero order correlationsof study variables

Variables a x SD 1 2 3 4

1 Idealism .8219 3.49 .582 Relativism .8105 3.29 .59 .113*3 Locus of control .7205 11.31 4.26 .088 .230**4 Peer reporting judgement .8697 3.45 .77 .286** .119** .0915 Peer reporting intention .9214 3.14 .91 .037 –.024 –.174** .461**

***p < 0.001; **p < .001; *p < 0.05.

Table 1b Shanghai sample (n = 207): alpha, means, standard deviation and zero ordercorrelations of study variables


1 Idealism .8401 3.53 .602 Relativism .8242 3.29 .59 .0863 Locus of control .7283 11.17 4.30 .016 .161*4 Peer reporting judgement .8596 3.61 .70 .322** –.045 –.0125 Peer reporting intention .9243 3.26 .94 .111 –.060 –.299** .382**

*** p < 0.001; **p < .001; *p < 0.05.

Table 1c Hong Kong sample (n = 155): alpha, means, standard deviation and zero ordercorrelations of study variables


1 Idealism .7943 3.38 .542 Relativism .7983 3.30 .55 .384**3 Locus of control .7194 11.96 4.26 .102 .230**4 Peer reporting judgement .8789 3.42 .78 .228** .275** .222**5 Peer reporting intention .9148 2.99 .91 –.051 .056 –.025 .487**

***p < 0.001; **p < .001; *p < 0.05.

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(comprising idealism and relativism), are presented in Table 2a. Predictors and controlvariables explained 17.4 per cent (R2) of the variance in peer reporting judgement.Idealism (b = .131, p < 0.05) and relativism (b = 114, p < 0.05) each made a significantcontribution to the explained variance in peer reporting judgement (DR2=.088,FD = 11.771, p < 0.001).

This relationship was positive for idealism, i.e. in the predicted direction. Forrelativism, the relationship was also positive but not in the predicted direction. Thus, forthe overall sample, hypothesis 1 was supported but hypothesis 2 was not supported.

To test the moderating effect of a variable, the interaction effect of the independentvariable and moderating variable must be examined (Cohen and Cohen, 1983). Theresults for the second part of the model, which examines the impact of locus of controlon the relationship between peer reporting judgement and peer reporting intent, arepresented in Table 2b. The contribution of peer reporting judgement (b = .432), p < 0.001)to peer reporting intent was highly significant (DR2 = .171, FD = 72.361, p < 0.001), whichstrongly supports hypothesis 3.

In the final equation, the contribution of peer reporting judgement and locus of controlto peer reporting intent was also highly significant, with additional increases in the values


Table 2a Overall sample (n = 362): results of hierarchical regressionfor peer reporting judgement

Step Variables Equation 1 Equation 2

1 Age .064 .016Education level .207* .215*Work experience .070 .100Religion .035 .027

2 Idealism .131*Relativism .114*

R2 .086 .174DR2 .086 .088FD 7.283*** 11.771***

***p < 0.001; **p < 0.001; *p < 0.05.

Table 2b Overall sample (n = 362): results of moderated regression for peer reporting intention

Step Variables Equation 1 Equation 2 Equation 3 Equation 4

1 Age .066 .039 .087 .108Educational .000 –.090 –.111 –.128Work experience .243 .213* .150 .090Religion .066 .051 .039 .028

2 Peer reporting .432*** .456*** 1.161***judgement

3 Locus of control –.191*** 1.095***4 Judgement and control –1.543***R2 .102 .273 .308 .369DR2 .102 .171 .035 .061FD 8.821*** 72.361*** 15.554*** 29.454***

***p < 0.001; **p< 0.001; *p < 0.05.

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for R2 and F(DR2 = .061, FD = 29.454, p < 0.001). Thus, for the overall sample, hypothesis4 was also strongly supported.

Shanghai sample

The results of the hierarchical regression analysis that examined the first part of themodel, representing the contribution of ethical ideology (idealism and relativism) to peerreporting judgement, are presented in Table 3a. The predictors and control variablesexplained 12 per cent (R2) of the variance in peer reporting judgement. Idealism (b= .320,p < .000) made a significant contribution to the explained variance in peer reportingjudgement (DR2 = .098, FD = 11.157, p < .000) in the predicted direction (positive). Thus,hypothesis 1 was supported for the Shanghai sample. The relationship between relativismand peer reporting judgement was not statistically significant, and it was not in thepredicted negative direction. Thus hypothesis 2 was not supported.

The results of the moderated regression analysis of the Shanghai data are presented inTable 3b. Peer reporting judgement made a significant contribution to the explainedvariance in peer reporting intention (DR2 = .124, FD = 32.790, p < 0.001) in the secondequation. Thus for the Shanghai sample, hypothesis 3 was very strongly supported.


Table 3a Shanghai sample (n = 207): results of hierarchicalregression for peer reporting judgement


1 Age –.330 –.059Education level .072 .040Work experience .160 .149Religion .014 –.024

2 Idealism .320***Relativism –.059

R2 .021 .119DR2 .021 .098FD 1.062 11.157***

***p < 0.001; **p < 0.001; *p < 0.05.

Table 3b Shanghai sample (n = 207): results of moderated regression for peer reporting intention


1 Age –.085 –.073 .004 –.027Educational –.102 –.127* –.133* –.129*Work experience .376* .319* .214 .157Religion .076 .071 .056 .046

2 Peer reproting .356*** .357*** .928***judgement

3 Locus of control –.260*** .897**4 Judgement and control –1.306**R2 .117 .241 .306 .351DR2 .117 .124 .065 .045FD 6.697*** 32.790*** 18.777** 13.783***

***p < 0.001; **p < 0.001; *p < 0.05.

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Moreover, the interaction terms of peer reporting judgement and locus of controlcontributed significantly to the explained variance in peer reporting intention (DR2 = .045,FD = 13.783, p < .001). This indicates that locus of control significantly moderates therelationship between peer reporting judgement and peer reporting intention. Thus, for theShanghai sample, hypothesis 4 was very strongly supported.

Hong Kong sample

The predictors and control variables explained 21 per cent (R2) of the variance in peerreporting judgement. The relationship between idealism and peer reporting judgmentwas not statistically significant. Thus, for the Hong Kong sample, hypothesis 1 was notsupported (see Table 4a). Contrary to the results for Shanghai, relativism (b = .206,p < 0.01) was the only predictor variable that contributed significantly to the explainedvariance in peer reporting judgement (DR2 = .053, FD = 5.011, p < .001). However, it wasalso not in the predicted direction. Thus, for the Hong Kong sample, Hypothesis 2 wasnot supported (see Table 4a).

Peer reporting judgement also contributed significantly to the explained variance inpeer reporting intention (DR2 = .224, FD = 46.145, p < .001) in the second equation. Thus,


Table 4a Hong Kong sample (n = 155): results of hierarchicalregression for peer reporting judgement


1 Age .330 .164Education level .042 .159Work experience .060 .040Religion .073 .093

2 Idealism .069Relativism .206**

R2 .158 .212DR2 .158 .053FD 7.048*** 5.011**

***p < 0.001; **p < 0.001; *p < 0.05.

Table 4b Hong Kong sample (n = 155): results of moderated regression for peer reporting intention


1 Age –.142 –.312 –.268 –.234Educational .206 .184 .128 .093Work experience .177* .146* .157* .180**Religion .110 .072 .064 .047

2 Peer reporting .515*** .554*** 1.223***judgement

3 Locus of control –.152* 1.046**4 Judgement and control –1.516**R2 .054 .278 .299 .348DR2 .054 .224 .021 .049FD 2.144 46.145*** 4.491* 11.075**

*** p < 0.001; ** p < 0.001; * p < 0.05.

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hypothesis 3 was not rejected. Also, in the final equation, the interaction term for peerreporting judgement and locus of control contributed significantly to the explainedvariance in peer reporting intention (DR2 = .049, FD=11.075,p<.001). Thus, hypothesis 4was accepted (see Table 4b).

Discussion

The model of peer reporting behaviour in Chinese culture developed in this paper wasfurther explored in an empirical test of four hypotheses derived from the framework. Therelationships among ethical ideology, peer reporting judgement and peer reportingintention were tested with and without the potential moderator variable locus of control.Statistical analysis of data for the overall sample was followed by separate analyses foreach of the two locations. Overall, the findings suggest that the individual’s ethicalideology as measured by the EPQ and locus of control are relevant to the study of peerreporting in Chinese societies. As we have argued in an earlier section, the constructequivalence of these instruments was established (Van de Vijver and Leung, 1997;Ghorpade et al., 1999); hence, our results tended to suggest that there is an impact ofindividual-level variables on the decision to report a peer’s wrongdoings.

To test the first part of the framework, subjects were presented with a hypotheticalethical dilemma and asked to make a determination about the ethicality of engaging inpeer reporting in this case. In general, idealism (positive) and relativisim (positive) bothemerged as significant predictors of peer reporting judgement. However, only oneideology was significant in each location: idealism in Shanghai and relativism (oppositeto the direction predicted) in Hong Kong. To test the second part of the framework,subjects were asked to form behavioural intentions actively to engage or not to engage inpeer reporting. The expected relationship between peer reporting judgement and peerreporting intention was significantly supported by the results. This is consistent with thework of Barnett et al. (1996). The strong observed relationship also supports the theoriesof ethical decision making, which suggest that individuals form behavioural intentionsregarding ethical dilemmas based on reasoned ethical judgements (Ajzen and Fishbein,1980; Hunt and Vitell, 1986; Rest, 1986). The result of the moderated regression analysisrevealed that the locus of control moderates the relationship between peer reportingjudgement and peer reporting intention for subjects in both locations. The interactionterm of peer reporting judgement and locus of control on peer reporting intention wasfound to be significant. Respondents with an external locus of control were not likely totake the responsibility of reporting a peer’s wrongdoing, even when they considered peerreporting to be ethical. In comparison, subjects who considered peer reporting to beethical but had an internal locus of control were more likely to report a peer’swrongdoing. This is consistent with Trevino’s Interactionist Model (1986).

In the Shanghai sample, idealism was the only significant predictor of peer reportingjudgement. This finding is consistent with the peer reporting literature (Barnett et al.,1996; Trevino and Victor, 1992). Idealistic subjects may have believed that the cheateradversely affected the welfare of others. Consequently, the idealist might judge thatreporting the wrongdoing was an ethical means to achieve a positive result for all others(Forsyth, 1992; Trevino and Victor, 1992; Victor et al., 1993). The idealist might evenhave reasoned that, in the long run, the wrongdoer would benefit from being turned in,by learning of the serious consequences that accompany violations of accepted ethicalstandards. In the Hong Kong sample, relativism had a significant positive effect on peerreporting judgement. This finding is consistent neither with the results for subjects fromShanghai nor with the peer reporting literature in general. This result implies that Hong


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Kong subjects who scored high on EPQ relativism tended to think that reporting a peer’swrongdoing was ethical.

Subjects in Hong Kong and Shanghai differed in terms of the relationship betweenidealism and relativism, on the one hand, and peer reporting judgement, on the other hand.In Shanghai, only idealism was strongly related to peer reporting judgment, whereasin Hong Kong, only relativism was. These findings can be explained as follows. First,idealism and relativism are not bipolar aspects of a single continuum, but function as twoseparate dimensions. Some respondents who believe idealistically in justice andrighteousness, on the one hand, may, on the other hand, act like relativists, disregardingbehavioural restrictions imposed by social and cultural constraints. Second, despitegeneral Chinese cultural similarities, current and historical differences in the social,political, and legal environments in these two locations may play an important role inmodifying the influence of culture. Since one’s values are built into the educational,family, political and economic systems of the society where one lives (Leventhal et al.,1980), (sub-)cultural norms influence ethical preferences by limiting a number of choicesor by allowing one to favour some rules over others.

For the Shanghai sample, the strong positive association between idealism and peerreporting judgement can be understood in terms of political and social upbringing in thecommunist ideology. For those who grew up under the communist system as faithfulparty members and responsible citizens, one should report the wrongful acts of others,even neighbours. The teaching of Mao claimed that a true party member or a good citizenof the New China should be more concerned about the Party and the masses than aboutany individual, and more concerned about others than about oneself (Ma, 1996). Thus,everyone should be treated the same, with no tolerance of self-centred behaviour forpersonal gain. Such people are also more concerned with equality than equity (Chiu andKosinski, 1995).

For the Hong Kong sample, the strong positive association between relativism andpeer reporting judgement can be explained by life experiences in a capitalist anddemocratic society. Hong Kong people are very concerned about equity, social justice,harmony and prosperity (Liu, 1988). On the other hand, they are also very materialistic,egoistic and self-centered (Chiu et al., 2001). They evaluate a potential unethicaldilemma based on cost and benefit analysis, and give justification to a wrongful act byreason of personal survival. However, relativists in Hong Kong may support peerreporting because they see this as the means to maintain fair play in a dog-eat-dog world.This result suggests that, to safeguard their own interests, Hong Kong relativists willreport a colleague’s unethical practice.

Limitations and recommendations

This study has several limitations. First, although Ajzen and Fishbein (1980) argued thatbehavioural intention is a good predictor of actual behaviour, it is largely depent ona self-reporting method. Thus, the data obtained may reflect mono-method or self-reportbias, despite the fact that behavioural intention is widely used in socio-behaviouralresearch. When possible, researchers should attempt to collect data concerning individualbehaviour, rather than just the intention to report the wrongdoings of others. In doing so,researchers could be more successful in establishing a relationship between judgement andactual behaviours. Second, this is a cross-sectional study, which restricts any inference ofcausality among the relationships examined. Future research should use a longitudinalmethodology to confirm the causal relationship for the determinants and outcome of peerreporting judgement. Moreover, such a study could obtain data from a larger sample and


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using varied samples and methodologies. Third, many situational variables under thecontrol of organizations, such as open-door policies, telephone ‘hotlines’ and formal‘whistle-blowing procedures’ are also likely to have a strong influence on the decision toreport perceived wrongdoing. More research is needed to determine the relative influenceof individual versus situational factors on peer reporting. For example, where feasible,future studies should be designed to incorporate an explicit empirical focus ongovernmental differences, in addition to cultural and individual differences.

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the ethics of peer reporting in chinese societies: evidence from hong kong and shanghai

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