Lies in the Sky: Effects of Employee Dishonesty on Organizational Reputation in the Airline Industry

• Published date: 01 March 2015
• Author: Karen A. Jehn,Elizabeth D. Scott
• Date: 01 March 2015
• DOI: http://doi.org/10.1111/basr.12050

Lies in the Sky: Effects of

Employee Dishonesty on

Organizational Reputation in

the Airline Industry

KAREN A. JEHN AND ELIZABETH D. SCOTT

ABSTRACT

Conventional wisdom suggests that dishonesty on the

part of an organization’s employees has a negative effect

on the organization’s reputation. However, many organi-

zations condone (or even require) dishonesty under

certain circumstances. In this research of 128 airline

passengers, we examine situations in which employees

are perceived to be dishonest within one such industry,

the international airlines, and examine the impact of this

dishonesty on organizational reputation and customer

satisfaction. We found that the reputation of the firm was

most damaged when the lie benefited the company or the

employee, rather than the passenger. In addition, the

view of the airline significantly decreased when the lie

caused a high amount of harm (compared with a low

amount) to the passenger.

Elizabeth D. Scott is a Professor of Business Administration at the Eastern Connecticut State

University, Willimantic, CT. E-mail: scotte@easternct.edu. Karen A. Jehn is a Professor of

Management Melbourne Business School at the University of Melbourne, Melbourne, Vic.,

Australia.

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Business and Society Review 120:1 115–136

© 2015 Center for Business Ethics at Bentley University. Published by Wiley Periodicals, Inc.,

350 Main Street, Malden, MA 02148, USA, and 9600 Garsington Road, Oxford OX4 2DQ, UK.

Ithink there is much need of wise examination into what

sorts of lies are best and wholesomest to be indulged,

seeing we must all lie and do all lie, and what sorts it

may be best to avoid. (Mark Twain, “On the Decay of the Art

of Lying,” 1882)

On either side of the Atlantic, to call someone “economical

with the truth,” “terminologically inexact” or “factually chal-

lenged” can seem almost gentlemanly. (The Economist,

January 13, 1996)

Employees often attempt to deceive customers. A salesperson may

promise a delivery date that is impossible; an insurance agent

may claim that a new policy has coverage it does not, or a clerk may

shortchange a customer. Instances such as these are generally

against the organization’s interest, but there are also instances of

deceit that are aligned with the organization’s interest. In some

professions, deceiving customers is a skill to be learned (Eckman

1992; Kaun 1994; Zeitlin 1971). Many organizations encourage

their employees to deceive their customers in one way or another.

According to a survey conducted in Great Britain, 82 percent of

office workers report that they lie daily at the behest of or to protect

their bosses, claiming “he’s away from his desk” or “the report is on

its way,” when they know this to be untrue (Boesveld 2009). After

the stock market crashed in 1987, 900 company public relations

officers announced plans for stock buybacks, even though they

knew there were no such plans, in large part because their bankers

assured them that buyback announcements were necessary to the

health of the stock market (Picker 1988). Officially sanctioned

deception occurs also in nonprofit and government sectors. For

example, police agencies provide training on how to deceive wit-

nesses in order to obtain confessions (Leo 1992) and no less an

authority than the Supreme Court of the United States has upheld

the practice of falsely telling a suspect that another person has

implicated him or her (Frazier v. Cupp 1969).

Regardless of whether the deceit is encouraged by the organiza-

tion or not, if employees are not effective in convincing customers

that they are being truthful, the customers may view the reputation

of the organizations in a way which reduces the likelihood of

continued business (Sutton and Callahan 1987). In this study, we

examine the motive of the lie (to benefit the company, the employee,

or the customer) and the degree of harm that is done to the

116 BUSINESS AND SOCIETY REVIEW