The Love of Money is the Root of All Evil:

Pay Satisfaction and CPI as Moderators

Paper Presented at

Academy of Management San Antonio, TX, August 12-16, 2011

Thomas Li-Ping Tang, Ph.D.

And Members of the Cross-Cultural Research Team

Best Paper Proceedings of AoM 2011 (online program)

Toto Sutarso, Middle Tennessee State University, U.S.A.,Mahfooz A. Ansari, University of Lethbridge, Canada, Vivien Kim Geok Lim, National University of Singapore, Singapore,Thompson Sian Hin Teo, National University of Singapore, Singapore,Fernando Arias-Galicia, Universidad Autónoma del Estado de Morelos,

Mexico,

Ilya Garber, Saratov State University, Russia,Peter Vlerick, Ghent University, Belgium, Jian Liang, Shanghai Jiao Tong University, China,Adebowale Akande, International Institute of Research, South Africa,Michael W. Allen, University of Sydney, Australia,Abdulgawi Salim Alzubaidi, Sultan Qaboos University, Oman,Mark G. Borg, University of Malta, Malta,Brigitte Charles-Pauvers, University of Nantes, France,Bor-Shiuan Cheng, National Taiwan University, Taiwan,Randy K. Chiu, Hong Kong Baptist University, Hong Kong, Linzhi Du, Nankai University, China,Consuelo Garcia De La Torre, Technological Institute of Monterrey,

Mexico,Rosario Correia Higgs, Polytechnic Institute of Lisbon – Portugal, Portugal, Abdul Hamid Safwat Ibrahim, Iman University, Saudi Arabia, Chin-Kang Jen, National Sun-Yat-Sen University, Taiwan,Ali Mahdi Kazem, Sultan Qaboos University, Oman,Kilsun Kim, Sogang University, South Korea,

Roberto Luna-Arocas, University of Valencia, Spain,Eva Malovics, University of Szeged, Hungary, Alice S. Moreira, Federal University of Pará, Brazil, Richard T. Mpoyi, Middle Tennessee State University, the U.S.A., Anthony Ugochukwu Obiajulu Nnedum, Nnamdi Azikiwe University, Nigeria, Johnsto E. Osagie, Florida A & M University, U.S.A.,AAhad M. Osman-Gani, Nanyang Technological University, Singapore,Francisco Costa Pereira, Polytechnic Institute of Lisbon – Portugal, Portugal,Ruja Pholsward, Rangsit University, Thailand, Horia D. Pitariu, Babes-Bolyai University, Romania,Marko Polic, University of Ljubljana, Slovenia,Elisaveta Sardzoska, University St. Cyril and Methodius, Macedonia, Petar Skobic, Middle Tennessee State University, U.S.A.Allen F. Stembridge, Andrews University, U.S.A.,Theresa Li-Na Tang, Affinion Group, Brentwood, TN, U.S.A., Marco Tombolani, University of Padua, Italy,Martina Trontelj, University of Ljubljana, Slovenia,Caroline Urbain, University of Nantes, France,Luigina Canova, University of Padua, Italy,Anna Maria Manganelli, University of Padua, Italy

Recognize

Members of the Research Team Who Attend the AoM 2011, Please Stand Up

Best Paper Proceedings of AoM 2011 (Leslie A. Toombs (Ed.))

Corruption the illicit use of one’s position or

power for perceived personal or collective gain

both a state and a process that reflects not only the corrupt behavior of an individual but also the dangerous, viruslike infection of a group, organization, industry, country (Ashforth, Gioia, Robinson, & Treviño, 2008; Tepper, Carr, Breaux, Geider, Hu, & Hua, 2009).

Proposition: The Love of Money is the Root of All Evil

“People who want to get rich fall into temptation and a trap and into many foolish and harmful desires that plunge men into ruin and destruction. For the love of money is the root of all evil”.

(1 Timothy 6: 9-10; Tang & Chiu, 2003)

Proposition Hypothesis

Proposition: The Love of Money

Poverty consists, not in the decrease of one’s possessions, but in the increase of one’s greed. Plato (427-347 BC)

Whoever loves money never has money enough; whoever loves wealth is never satisfied with his income. (Ecclesiastes 5:10)

Corruption: A multilevel real-world phenomenon

Bad Apples, Bad Cases, and Bad Barrels (Kish-Gephart, Harrison, & Treviño, 2010)

Bad Apples: Individual differences; LOM (Level 1) Bad Cases: Context Sensitive (within Organization,

experienced by people); PSQ (Level 1) Bad Barrels: General Organizational Environment

(climate/culture); CPI (Level 2) at the entity level Unethical Choice (OD): Corrupt Intent (Dependent

Var.)

Theory of Planned Behavior

1. Attitude* Behavior Intention*

2. Subjective Norm* 3. Perceive Control (Ajzen, 1991)

The Love of Money is the Root of All Evil

Love of Money (LOM) Corrupt Intent

Justice and Deviant BehaviorGood vs. Bad Barrels (CPI)

Stealing in the name of justice (Greenberg, 1993, 2002)

Pay satisfaction (Heneman & Judge,

2000) reflects perceptions of pay equity and distributive justice.(Cohen-Charash & Spector, 2001; Colquitt, Conlon, Wesson, Porter, & Ng, 2001; Gino & Pierce, 2009; Greenberg, 1990; Huseman, Hatfield, Miles, 1987; Moorman, 1991)

CPIIs a composite index that draws on 14 expert

opinion surveys Provides data for 180 countries and

territories on a scale from zero to ten, 10 = low levels of perceived corruption0 = high levels of perceived corruption < 5 = "serious" perceived levels of

corruption,< 3 = "rampant" corruption

The Income Pyramid Prahalad & Hammond (2002)

Harvard Business Review GDP CPI (TI)

1. GDP > $20,000 CPI > 6.52. $20,000 > GDP > $2,000 6.4 > CPI >

3.53. GDP under $2,000 CPI under

3.4 High GDP High CPI (Low Corruption)

Love of Money Corruption Pay Satisfaction as a Moderator CPI as a Moderator 3-Way Interaction: Love of Money, Pay

Satisfaction, CPI on Corrupt Intent Cross-Level Analysis (Hitt, Beamish, Jackson, & Mathieu,

2007) Mplus (Muthén & Muthén, 1998-2010.

Method N = 6,382

High CPI Group (n = 1,956, 8 entities): the USA, Belgium, Australia, France, Spain, Singapore, Hong Kong, & Portugal;

Medium CPI Group (n = 2,763, 14 entities):

Slovenia, South Korea, Taiwan, Malta, Oman, Hungary, Mexico, South Africa, Malaysia, Thailand;

Brazil, Bulgaria, Peru, & Turkey;

Low CPI Group (n = 1,663, 9 entities): Croatia, Russia, Romania, Macedonia, China, Egypt, the Philippines, Congo, & Nigeria.

Sample N = 6,382 GDP = $13,800 CPI = 5.25 Age = 34.56 Yr. Gender = 51% Male Education = 15.39 Yr

The Love of Money Scale

Factor 1: Rich (Affective)1. I want to be rich.2. It would be nice to be rich.3. Having a lot of money (being rich) is good.

Factor 2: Motivator (Behavior)4. I am motivated to work hard for money.5. Money reinforces me to work harder.6. I am highly motivated by money.

Factor 3: Importance (Cognitive)7. Money is good.8. Money is important.9. Money is valuable.

(Cited in: Colquitt et al., 2011; Furnham & Argyle, 1998; Kish-Gephart et al., 2010; McShane & Von Glinow, 2008; Milkovich, Newman, & Gerhart, 2011; Rynes & Gerhart, 2000; Tang, 1992, 1993; Tang & Chiu, 2003)

Corrupt Intent Organizational

Deviance (Robinson & Bennett, 1995)

1. Reveal company secrets for several million dollars2. Accept money, gifts, and kickbacks from others3. Sabotage the company to get even due to unfair treatment 4. Lay off managers to save the company money and increase

my personal bonus 5. Abuse the company expense accounts and falsify

accounting records6. Overcharge customers to increase sales and to earn higher

bonus

7. Take merchandise and/or cash home. (Cited in: Bateman & Snell, 2011; Kish-Gephart et al., 2010; Chen & Tang, 2006; Tang & Chen, 2008, Tang & Chiu, 2003;

PSQ (4-factor, 18 Items)

1. Pay Level 2. Pay Raise3. Benefit4. Pay Administration

(Heneman & Schwab, 1985; Judge & Welbourne, 1994; Williams, McDaniel, & Nguyen, 2006)

Mplus Estimate S.E. Est./S.E. p-Value

Within Level Corrupt Intent ON Love of Money 0.14 0.08 1.79 0.07 (p < .10)

Pay Satisfaction 0.02 0.08 0.19 0.85 Residual Variances Corrupt Intent 0.31 0.03 10.01 0.00***Between Level S1† ON CPI -0.01 0.00 -2.61 0.01** Corrupt Intent ON CPI 0.03 0.02 1.57 0.12 Intercepts Corrupt Intent 1.39 0.30 4.69 0.00*** S1 0.03 0.03 0.97 0.34 Residual Variances Corrupt Intent 0.05 0.01 3.19 0.00*** S1 0.00 0.00 2.55 0.01**

†The random slope S1 is defined by the linear regression of the dependent variable corrupt intent on the interaction effect between love of money and pay satisfaction.

Dawson & Richter (2006) JAP Slope 3 > 4*

Love of Money Corrupt Intent: Magnitude (Intercept)

Highest: High Pay Satisfaction + Low CPI

Lowest: High Pay Satisfaction + High CPI

Love of Money Corrupt Intent: Intensity (Slope)

Highest: Low Pay Satisfaction + High CPI

Lowest: Low Pay Satisfaction + Low CPI

LOM, CEV, CPI on CorruptionSlopes 4 < 1**, 2*, & 3***

Love of Money Corrupt Intent: Magnitude (Intercept)

Highest: Low CEV + Low CPI

Lowest: High CEV + High CPI

Love of Money Corrupt Intent: Intensity (Slope)

Highest: Low CEV + High CPI

Lowest: Low CEV + Low CPI

Same Magnitude and Intensity:Low CEV/High CPI vs. High CEV/Low CPI

Conclusion Love of Money Corrupt Intent High Pay Satisfaction + Low CPI

Highest Magnitude (The Matthew Effect)

Low Pay Satisfaction + High CPI Highest Intensity (Justice)

Pay Satisfaction plays a different role in High vs. Low CPI entities

Conclusion Low CEV/High CPI = High CEV/Low

CPIMagnitude/Intensity Same

High CPI:Pay Satisfaction & CEV are Important

CEOs have control over Pay Satisfaction & CEV

Conclusion: The Matthew Effect “To anyone who has, more will be

given and he will grow rich; from anyone who has not, even what he has will be taken away” (Matthew 13:

12). (Merton, 1968; Tang, 1996, Tang et al., 2000)

“When cheating is one step removed from cash”, people tend to “justify” their dishonesty easily (Ariely,2008: HBR, 24).

Thank YOU Very Much! Danke Dankeshen Děkuji Dziękujemy Grazie Hvala vam Kiitos Merci Muchas Gracias Obrigado RingraziarLa Takk Deg Teşekkür Ederiz Va multumesc Vi tackas Спасиб ありがとう 너를 감사하십시요 Σας ευχαριστώ רבה תודה متشکرم धन्यवा�द ขอบคุ�ณคุ�ณ 謝謝 谢谢 Please contact Dr. Tang at:

ttang@mtsu.edu

A New Cross-Cultural Study

100 Data Sets (Groups) for Each Country1 Manager3 Subordinates: A, B, C

Manager – Subordinate AManager – Subordinate BManager – Subordinate C

Bor-Shiuan Chen: Paternalistic LeadershipICP, July 21, 2008, Berlin, Germany

Contact Dr. Thomas Tang at ttang@mtsu.edu

26 Countries: Belgium,* China, France, Greece, Hong Kong,

Hungary, India, Indonesia, Italy, Japan, Kyrgyzstan, Malaysia, Mexico,* Nigeria, Poland, Portugal, Russia, Sudan, Singapore,* South Africa, South Korea,* Taiwan,* Thailand,* Turkey, Ukraine*, the US.

*Data Collection Completed