The Price of Unethical Behavior

International as a whole was no different any other company in that it contained a chief executive officer (CEO) that wanted to achieve success. But at some point that success turned into greed. Dennis Kozlowski began working for Tyco in 1975 and was named the CEO in 1992. Kozlowski had a reputation for being aggressive in his field and during his tenure at Tyco was named one of the “Top 25 Managers of the Year” and became one of the highest-paid CEOs (Kaplan, 2009, p. 4). Along his rise to the top, Kozlowski became subjected to a lavish lifestyle of extravagant vacations, company jets and cars, and memberships. During this rise, he also treated himself to a “$31 million Fifth Avenue apartment, a vintage yacht, a Renoir, and a Monet” (Kaplan, 2009, p. 15). However, in 2002, Kozlowski’s world began to crumble around him. He was initially accused of tax evasion, but this accusation by the Manhattan district attorney led to a broader investigation into Kozlowski’s practices.As a result of this investigation, Kozlowski resigned as the CEO, was indicted for looting hundreds of millions of dollars, and was convicted on a range of felonies that led to an eight to 25 year sentence (Kaplan, 2009, p. 15). Dennis Kozlowski, over the course of roughly 25 years made a huge impact on Tyco International, but he did not run the company alone. Tyco was comprised with a chief financial officer (CFO) and board of directors. With a CFO and a board of directors in place, how was Kozlowski able to loot millions of dollars? And how did his unethical behavior continue for as long as it did?Unethical behavior has multiple definitions. Jones defined unethical behavior as “either illegal or morally unacceptable to the larger community” (as cited in Gino & Bazerman, n. d. , p. 709). Although some individuals report observed unethical behavior, others may become susceptible to peer influence of unethical behavior. According to Kohlberg, “individuals are highly susceptible to peer influence because they place a strong emphasis on their social environment and seek social cues to distinguish appropriate from inappropriate behavior” (as cited in O’Fallon & Butterfield, 2012, p. 17). “A fundamental component of [Social Learning Theory] SLT is the notion of vicarious or observational learning; individuals learn which behaviors are acceptable and/or unacceptable by observing and imitating others” (O’Fallon & Butterfield, 2012, p. 118). In the case of Tyco International, investigations stemming from the indictment of Kozlowski uncovered similar unethical behavior among many of the board members. “Employees…are not likely to report the behavior to an authority figure, particularly if the peer is a friend” (as cited in O’Fallon & Butterfield, 2012, p. 117).Kozlowski handpicked individuals he trusted and placed them in key positions including Tyco’s board of directors. These strategically placed individuals observed Kozlowski, the chief executive officer and friend to some, living a lavish lifestyle, and engaged in the same behavior whether they thought it was right or wrong. Kozlowski’s unethical behavior did not happen over night, his actions became more prominent and confident over time. Gino and Bazerman (n. d. ) found that “people are more likely to accept the unethical behavior of others if the unethical behavior develops gradually over time than if it occurs abruptly” (p. 11). When Kozlowski began working for Tyco, he worked under CEO Joseph Gaziano. Kozlowski witnessed the extravagant lifestyle that Gaziano was living and ultimately began living a similar lifestyle. Cojuharenco, Shteynberg, Gelfand, and Schminke (2012) argued, “unethical behavior is commonly defined as behavior that violates widely accepted (societal) moral norms, such as the norms regarding professional conduct or norms regulating interpersonal relationships in a variety of social settings” (p. 447).One of the three self-construal literature points is independent self. “The independent self reflects self-definition through one’s unique traits and independence from others” (Cojuharenco et al. , 2012, p. 448). “Individuals who emphasize their independence are less likely to consider the impact of their decisions on others or, whether these decisions violate social norms” (Cojuharenco et al. , 2012, p. 448). Cross and Madson explain, “For these persons, individual rights, goals, and wishes are the primary basis for moral choices.The goals and needs of society, family members, or others are secondary or subordinate” (as cited in Cojuharenco et al. , 2012, p. 448). Kozlowski’s actions and aggressive work ethic demonstrates the independent self fundamental dimension. His goals and aggressive approach to achieve these goals were not consistent with the goals and approach of the current CEO; however, he was able to convince the board of directors to side with him, which led to the CEO resigning and Kozlowski taking over as CEO.Kozlowski was indicted and received an eight to 25 year sentence; however, he does not believe he deserved that punishment because he recorded everything in the company books (Kaplan, 2009, p. 16). One can perceive from his statement that he did not feel his actions were serious he just used bad judgment. Regardless of his feelings, he made a decision to act in an unethical manner. According to Hechter and Horne, “social order, the effective and efficient functioning of a society, is achieved through adherence to norms and laws that exist within that society” (as cited in Lin, Dahl, & Argo, 2013, p. 4). “Given the importance of social order, individuals seek to restore it if it has been disrupted by violations of a social norm. A common way people respond to these violations is by punishing the individual who breaks a societal norm” (Lin et al. , 2013, p. 64). Kozlowski was using money from Tyco for his personal gain, yet those who were engaged in similar conduct were benefiting as well. But what about the employees that were not aware and were not receiving any benefits? What about the stockholders? At times, when people are not aware of what is happening, they feel deceived.Zemba, Young, and Morris found that “research has shown that individuals with more responsibilities (such as managers) are more likely to be held accountable and punished for organizational…mistakes” (as cited in Lin et al. , 20 Lin et al. , 2013, p. 6413, p. 64). Kozlowski was the CEO. Tyco International was entrusted to his care and he took advantage of his position and the company, and for those reasons, his punishment was justified. “Financial scandals in companies…in the past two decades raised some important and troubling questions about leadership and how leaders influence organizational decisions” (Pendse, 2012, p. 65). According to Pendse (2012), a person with motive, means, and opportunity (MMO) is more likely to commit a crime (p. 270). Dennis Kozlowski had each of those. He wanted the lavish lifestyle, he helped build a successful company, and he handpicked multiple key members in his company. Ultimately, Kozlowski acted in an unethical manner and allowed other members of his company to behave unethically, and for that, he should be held accountable. References Cojuharenco, I. , Shteynberg, G. , Gelfand, M. , & Schminke, M. (2012). Self-construal and unethical behavior.Journal of Business Ethics, 109(4), 447-461. doi:10. 1007/s10551-011-1139-8 Gino, F. , & Bazerman, M. H. (n. d. ). When misconduct goes unnoticed: The acceptability of gradual erosion in other’s unethical behavior. Journal of Experimental Social Psychology, 45(4), 708-719. doi:10. 1016/j. jesp. 2009. 03. 013 Jorg, L. , Christoph, S. , & Denise, P. (n. d. ). Consumer outrage: Emotional reactions to unethical corporate behavior. Journal of Business Research, 65(9), 1364-1373. doi:10/1016/j. jbusres. 2011. 09. 022 Kaplan, D. A. (2009). Koz makes his case.Fortune, 160(11), 14-16. Retrieved from http://ehis. ebscohost. com/ehost/detail? sid=5f4d0572-2720-4941-98ba-b8fac2dc3c4a%40sessionmgr111&vid=2&hid=110&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=bth&AN=45515650 Lin, L. , Dahl, D. W. , & Argo, J. J. (2013). Do the crime, always do the time? Insights into consumer-to-consumer punishment decisions. Journal of Consumer Research, 40(1), 64-77. doi:10. 1086/668641 O’Fallon, M. , & Butterfield, K. (2012). The influence of unethical peer behavior on observers’ unethical behavior: A social cognitive perspective.Journal of Business Ethics, 109(2), 117-131. doi:10. 1007/s10551-011-1111-7 Pendse, S. (2012). Ethical hazards: A motive, means, and opportunity approach to curbing corporate unethical behavior. Journal of Business Ethics, 107(3), 265-279. doi:10. 1007/s10551-011-1037-0 Stephens, W. , Vancel, C. , & Pettegrew, L. (2012). Embracing ethics and morality. CPA Journal, 82(1), 16-21. http://ehis. ebscohost. com/ehost/pdfviewer/pdfviewer? sid=4b5779ae-fc7a-410d-b9a1-21d582129036%40sessionmgr114&vid=2&hid=5

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