Research paper critique

Guilt, Shame, and Reparative Behavior: The Effect of Psychological Proximity

Majid Ghorbani • Yuan Liao •

Sinan Çayköylü • Masud Chand

Received: 10 January 2012 / Accepted: 6 May 2012

� Springer Science+Business Media B.V. 2012

Abstract Research has paid scant attention to reparative

behavior to compensate for unintended wrongdoing or to the

role of emotions in doing the right thing. We propose a new

approach to investigating reparative behavior by looking at

moral emotions and psychological proximity. In this study,

we compare the effects of moral emotions (guilt and shame)

on the level of compensation for financial harm. We also

investigate the role of transgressors’ perceived psychologi-

cal proximity to the victims of wrongdoing. Our hypotheses

were tested through a scenario based questionnaire on a

sample of 261 participants. Analyses indicate that (1) guilt

has a stronger effect on the level of compensation than

shame; (2) psychological proximity influences the level of

guilt, shame, and compensation; and (3) shame interacts

with psychological proximity to predict compensation,

whereas guilt mediates the relationship between psycho-

logical proximity and compensation.

Keywords Construal level theory � Emotional ethics � Ethical decision making � Guilt � Shame � Psychological proximity � Reparative behavior � Unintended transgression

Introduction

The wish to relieve guilt may motivate a confession,

but the wish to avoid the humiliation of shame may

prevent it.

Paul Ekman, Telling Lies

The issue of managerial ethical decision making and

doing the right thing has gradually gained considerable

attention in both academic and practitioner circles. Three

of the past four themes of the Academy of Management

Meetings focused on issues related to ethical decision-

making: ‘‘Dare to Care’’ in 2010, ‘‘Green Management

Matters’’ in 2009, and ‘‘Doing Well by Doing Good’’ in

2007. However, despite the focus in academic research, as

well as calls for ethical decision making among businesses

by public officials as diverse as President Barack Obama

(Connor 2010) and Pope Benedict XVI (Butt 2009), the

enactment of laws such as the Dodd Frank Wall Street

Reform and Consumer Protection Act of 2010 and the

Sarbannes-Oxley Act of 2002, we still face scandals such

as Bernie Madoff’s ponzi scheme, financial meltdowns,

and News of the World’s tapping of individuals’ phones. It

thus becomes imperative to find ways in which organiza-

tions and managers can voluntarily and more effectively

repair the damages that result from such actions. This will

also help us understand how organizations or individuals in

This research was partially supported by the Fundamental Research

Funds for the Central Universities, and the Research Fund of Renmin

University of China (Project No. 12XNF032).

M. Ghorbani (&) Department of General Management, School of Business,

Renmin University of China, Mingde Business Building,

No. 59 Zhongguancun St. Haidian Dist., Beijing 100872,

People’s Republic of China

e-mail: [email protected]

Y. Liao � S. Çayköylü Beedie School of Business, Simon Fraser University,

500 Granville St., Vancouver, BC V6C 1W6, Canada

e-mail: [email protected]

S. Çayköylü

e-mail: [email protected]

M. Chand

Wichita State University, 1845 Fairmount, Box 88, Wichita,

KS 67260, USA

e-mail: [email protected]

123

J Bus Ethics

DOI 10.1007/s10551-012-1350-2

organizations responsible for wrongdoing and bad decision

making can be best made to compensate their victims not

just because of the fear of the law but also because they

believe that they have done something that deserves

restitution.

In this paper, we propose a new approach for investi-

gating reparative behavior by looking at moral emotions

and psychological proximity. Our study sheds some light

on the differences between the effects of guilt and shame

on compensation, in the context of different levels of

psychological distance between transgressors and victims

in business transactions. Previous research by management

scholars has largely overlooked how emotions affect

reparative behavior. For example, a search (as of Septem-

ber 2011) in 28 top management journals (e.g., Academy of

Management Review, Academy of Management Journal,

Journal of Management, Administrative Sciences Quar-

terly, and Business Ethics Quarterly) including the Journal

of Business Ethics found less than thirty articles studying

the effect of emotions on ethical behavior (e.g., Bodolica

and Spraggon 2011; Cohen 2010; Connelly et al. 2004;

Fulmer et al. 2009; Hartman 2008; Ho and Redfern 2010;

Mencl and May 2009; Natale and Sora 2010; Payne et al.

2011; Schweitzer and Gibson 2008), and on compensating

laid-off workers (e.g., McMahon 1999; Pfeifer 2007). More

than half of these articles appear in a single source, the

Journal of Business Ethics, and none of the articles dealt

with the issue of how emotions and psychological prox-

imity affect reparative behavior.

In many purely psychology and social psychology

related journals, the relationships among emotions, ethical

decision-making and general reparative behavior have been

studied for decades (e.g., Eisenberg 2000; Maitlis and

Ozcelik 2004; Tangney et al. 1996; Tangney et al. 2007).

Shame and guilt are two of the emotions that are recog-

nized as especially relevant to ethical decision-making and

compensatory behavior (Eisenberg 2000; Tangney 1991;

Tangney et al. 2007). While scholars agree that shame and

guilt are two distinct emotions and lead to different actions,

the exact effect of guilt and shame on compensating the

worse-off party is an understudied area (Brown et al.

2008). Studies that have investigated these emotions and

their effects on compensation found inconsistent and

sometimes contradicting results (e.g., Bateman et al. 2003;

Iyer et al. 2003; Iyer et al. 2007; Leach et al. 2006). While

these studies and their findings are important, they do not

resolve the question about what makes transgressors

compensate victims of a wrongdoing. Despite evidence of

their importance in social psychology, constructs such as

guilt and shame and their effects on ethical decision-

making have not been studied to the same degree in

management and business scholarship. This becomes even

more important when we realize that even well intentioned

people sometimes make bad decisions, or engage in

unethical acts with the desire to benefit their firms

(Umphress and Bingham 2011), and organizations need to

deal with the consequences of these decisions. This study

offers a concrete investigation of transgressors’ compen-

sation level based on their level of guilt and shame, and

provides an explanation as to why we see these differences.

To understand ethical decisions and behavior, it is

important to study the role of emotions. Emotionally

motivated behaviors are ordered in the sequence of (a) an

action occurring, (b) an emotion is experienced, and

(c) subsequent behaviors based on the experience (e.g.,

Deci 1996). For example, when an individual does some-

thing that harms (or benefits) another party, the agent

experiences emotions such as guilt (or fulfillment). This

emotion subsequently encourages the agent to avoid (or re-

engage in) such behavior, at least, in the near future and

under similar situational factors.

In addition, we examine the role of psychological

proximity between transgressors and their victims (Brass

et al. 1998). It is not surprising that people tend to favor

those whom they feel close to (e.g., family and friends) and

thus offer them higher compensations (Wellman and

Wortley 1989). Yet, it is not clear whether the mechanism

leading to compensation (in this study, guilt and shame)

works the same way when the transgressor feels close to

the victim, as it does when the transgressor feels distant

from the victim. While the term ‘‘proximity’’ can refer to

more than only ‘‘psychological proximity,’’ for ease of

discussion we use proximity to indicate psychological

proximity only, unless clearly stated otherwise. Proximity

here means actors’ perceived psychological closeness to

others.

In the next section, we put forth a series of hypothesis by

reviewing literature on shame and guilt. Then, we expand

on the concept of psychological proximity and its impli-

cations to develop hypotheses about its interaction with

shame and guilt in determining levels of compensation to

the victims of a wrongdoing. We then outline our meth-

odology and explain our results, and discuss their impli-

cations for both theory and practice.

Literature Review

This study investigates the effect of moral emotions on

compensatory decision-making and compares these effects

across different levels of perceived psychological distance.

Moral emotions are the link between internal standards and

behaviors and decisions that are morally acceptable to the

agent (Tangney et al. 2007). These self-conscious emotions

are not based purely on internal validations of self, but are

also based on agents’ understanding of how they have been

M. Ghorbani et al.

123

evaluated by others (Leary 2007). From the pool of moral

emotions that can determine behavior, we have chosen the

two most referenced emotions, guilt, and shame (Tangney

et al. 2007). We argue that these two emotions, while often

used interchangeably by managers (Leith and Baumeister

1998; Tangney 1991), have different effects on decisions.

Several studies have investigated the psychological dif-

ferences between shame and guilt (Brown et al. 2008;

Leary 2007; Leith and Baumeister 1998; Lindsay-Hartz

1984; Orth et al. 2010; Tangney 1991; Tangney et al.

2007); however, their differences in affecting ethical

decision-making remain substantially under investigated

(Brown et al. 2008). Furthermore, their effect is unknown

when the transgressed are at different levels of psycho-

logical distance from the perpetrator. To explore the effect

of these two emotions on compensation, we first introduce

the two concepts and describe how they are different from

each other.

Shame and Guilt

Many people can recall moments of feeling guilty or

ashamed distinctively, but they might also use the two

terms interchangeably, as these emotions have many sim-

ilar characteristics (Leith and Baumeister 1998; Tangney

1991). Both guilt and shame are considered negative

emotions (Leary 2007; Tangney 1991; Tangney et al. 1998;

Tangney et al. 2007), but they differ in their relationships

to morality. Smith et al. (2002) suggested that shame is

relevant to both moral and non-moral related transgres-

sions, but guilt is only a result of moral transgressions.

Both emotions are cognitive responses as one perceives

being viewed by others following a behavior or decision

(Leith and Baumeister 1998; Tangney et al. 2007).

Each of these emotions has distinctive causes and effects

on the actor and people around them. Guilt is defined as an

agitation-based emotion of regretting a wrong action or

decision (Ferguson and Stegge 1998). Based on this defi-

nition, guilty transgressors perceive the wrongdoing aspect

of their actions or decisions, assume responsibility for

them, and desire to find a way to either undo the wrong or

punish themselves (Eisenberg 2000; Lindsay-Hartz 1984).

In this way, the transgressor is capable of putting him or

herself in victims’ shoes and seeing the issue from their

perspective (Leith and Baumeister 1998; Tangney 1991);

hence these emotions are called cognitive responses to a

behavior. Since guilty people can feel the pain as the vic-

tims feel, they are motivated to take other-oriented actions,

such as apologizing to and compensating the victim, in

order to eliminate the negative feeling. Guilty people per-

ceive their behavior, but not themselves, as the target of

criticism (Tangney 1991); therefore they can correct their

wrongdoings without feeling humiliated or threatened.

Shame, on the other hand, is a dejection-based emotion

of condemning one’s entire self (Ferguson and Stegge

1998; Gramzow and Tangney 1992; Leary 2007; Tangney

et al. 1996). When ashamed, the transgressor feels like the

target or even victim of criticism (Tangney et al. 1996).

People feel ashamed when they feel they are bad people

(Leary 2007). Feeling ashamed, the transgressors devalue

themselves and fear contempt from others (Ferguson and

Stegge 1998). Emotions of shame are more painful than

those of guilt, because ashamed people perceive an attack

to their self and identity (Lindsay-Hartz 1984; Tangney

1991; Tangney et al. 2007). Because of the threat to the self

and fear of scorn, ashamed people feel like the target of

criticism and usually respond by self-oriented actions, such

as avoiding others and hiding away (Orth et al. 2006; Orth

et al. 2010; Tangney 1991).

Ashamed people perceive that blame is focused on

themselves, but guilty people perceive it to be focused on

their behavior (Leary 2007; Tangney et al. 2007). Ashamed

individuals are more likely to blame others or get angry at

them for creating shame-eliciting situations, and are not

likely to undertake any measure to change the wrongdoing

(Leith and Baumeister 1998; Tangney 1995). Guilt, in

contrast, being based on the ability to take other people’s

perspectives, a cognitive ability that did not result from

shame, is more likely to activate senses and behaviors that

can benefit others (Leith and Baumeister 1998). For

example, de Hooge et al. (2007) found that ashamed people

are not motivated to cooperate. However, they found that

individuals, who would usually act on self-interest, are

more likely to cooperate when they feel guilty. Unlike

shame-prone individuals, guilt-prone individuals are more

likely to take responsibility for their actions and correct

their wrongdoings (Tangney et al. 2007).

Therefore, it seems that the guilt and shame produced by

transgressions are not equally responsible for the compen-

satory behavior that follows. Guilty individuals would try to

correct the transgression, and either accept retribution from

the victim or give out compensation. We expect guilty

people to take some measures to compensate their victims.

Ashamed transgressors, on the other hand, would be more

likely to feel like they want to hide from everyone and as a

result, would be less likely than transgressors who consider

themselves guilty to compensate their victims (Leith and

Baumeister 1998; Tangney 1995). Therefore, we propose

that guilty people would be more willing than ashamed

people to compensate victims of their transgression.

H1 Guilt is more likely than shame to lead to compen-

sating victims.

Both emotions, as discussed at the beginning of this

section, are based on discrepancies between one’s behavior

and other people’s expectations. Since people evaluate

Guilt, Shame and Psychological Proximity

123

themselves from the perspectives of significant others (e.g.,

friends, relatives, spouses, and children) as well as every-

body else around them, the level of guilt and shame in

people should be a product of strength and weakness of ties

with the victim. In the next section, we discuss how psy-

chological proximity affects the level of guilt, shame, as

well as compensation.

Psychological Proximity

Based on the theory of self-discrepancies (Higgins 1987),

there is an actual self and an ought self, and they are dif-

ferent from each other most of the time. Actual self refers

to what we are and how we behave. Ought self is derived

from other people’s, especially family and friends’,

expectations of us. When there are inconsistencies between

what we actually do (actual self) and what we are expected

to do (ought self), we may feel guilty or ashamed. For

example, we are expected to look out for our family

members. If someone secretly puts his or her family at risk

for his or her own financial gains, this person will feel

guilty and/or ashamed in front of the family. These

assumptions are consistent with the theory of planned

action (Fishbein 1967; Fishbein and Ajzen 1975).

The theory of planned action (Fishbein 1967; Fishbein

and Ajzen 1975) suggests that individuals’ actions are

affected by normative beliefs and subjective norms. Nor-

mative beliefs refer to behaviors that are acceptable by

people close to us—collectively categorized as ‘‘significant

others’’—such as parents, siblings, spouse, friends, and

family. For example, being honest to each other is a nor-

mative belief among family members and close friends.

Subjective norms are derived from norms in the broader

society, and include people with looser ties to us than

significant others. These people, in addition to significant

others, could include community, acquaintances, and any-

one related to us based on the context, location and time

circumstances. Both normative beliefs and subjective

norms play an important role in construing our ought self.

What our significant others expect and what the general

society expects us to do are both parts of our obligations.

At the center of this discussion is whether people closer

to us (e.g., significant others) have more impact on our

ought selves than strangers. If so, when significant others

are involved, discrepancies resulting from the violation of

normative standards have stronger influence on emotions

compared to when strangers are involved. While both the

theory of planned action and theory of self-discrepancy

give equal weight to significant others and to general

society, it seems intuitive that people closer to us might

play a more important role in influencing our behavior.

First, significant others are fewer in number compared to

the broader community and society where individuals live,

but each category has an almost equal weight in the theo-

ries. Therefore, any individual significant other being a

friend, relative, teacher, or colleague, has more influence

over our behavior and what is accepted from us than an

individual member of the broader society. Second, signif-

icant others are also members of the broader society.

Their influence in setting or defining acceptable rules of

subjective norms is minor, but it still exists. Therefore,

significant others have a larger influence on us and our

behavior than others.

The importance of significant others is manifested as

perceived closeness to significant others, termed ‘‘psycho-

logical distance’’ or inversely put ‘‘psychological proxim-

ity’’. Psychological distance can also be used to describe

actors’ subjective experience of objects, events, or other

people in terms of their proximity in time and location

(Trope and Liberman 2010). The point of reference for

psychological distance is self, and distance is measured

based on perceived proximity to self (Trope and Liberman

2010). For instance, the physical distance between two

people on a crowded bus is an absolute value, such as one

foot. However, one person might perceive this distance as

too close and the other might think this is an acceptable

distance. In terms of relationships, psychological proximity

(or psychological distance) toward another person is one’s

subjective experience of the perceived closeness (or dis-

tance) to that person. This latter definition is what we have

used in our study.

The idea of psychological proximity has been used in

research on management and ethical decision-making

(Brass et al. 1998; Flannery and May 2000; Jing et al.

2009; Jones 1991; Mencl and May 2009; Novicevic et al.

2008). For example, Jones (1991) proposed an issue-con-

tingent model that includes six constructs: (1) magnitude of

consequences, (2) social consensus, (3) probability of

effect, (4) temporal immediacy, (5) proximity, and (6)

concentration of effect. In making ethical decisions, Jones

argued that ‘‘intuitively, people care more about other

people who are close to them (socially, culturally, psy-

chologically, or physically) than they do for people who

are distant’’ (Jones 1991, p. 376). Perpetrators’ ethical

actions are contingent on how close they perceive their

victims to be; the closer the victim is perceived, the more

likely the decision will be ethical.

Brass et al. (1998) used social network theory to explain

the importance of proximity in ethical behavior. Our social

ties, they argued, are grouped as strong ties and weak ties.

Close relationships such as those we have with our in-

groups (e.g., family and close friends) are stronger ties, and

relationships with acquaintances and people we only know

(i.e., out-groups) are weak ties (Granovetter 1973). Brass

et al. (1998) also proposed that stronger ties diminish the

effect of situational and normative constructs.

M. Ghorbani et al.

123

Mencl and May (2009) tested the influence of psycho-

logical and physical proximity in interaction with magni-

tude of consequences on ethical decision-making. They

defined psychological proximity as agents’ perceived

closeness to others, and physical proximity as the physical

distance to a potential victim. They suggested that deci-

sion-makers’ decisions about employees are affected by the

interaction between their information about the conse-

quences of their decision and how close they feel to the

employee (Mencl and May 2009). They did not, however,

find the two types of proximity to have significantly dif-

ferent effects on ethical decision-making.

The research reviewed so far indicates that emotions are

created by peoples’ actual behavior violating their set of

expected behavior (Higgins 1987). So the set of stan-

dards—whether set by subjective norms, normative

behavior, ought self, ideal self or actual self—determine

peoples’ actual behavior as well as their intended behavior

(Higgins 1987). Emotions derived from the inconsistencies

between standards and behaviors are products of peoples’

relationships with others (Tangney 1995). Baumeister et al.

(1994) also posited that the more people feel concerned

about one another, the more likely they would feel guilty if

they did something wrong. This indicates that guilt arises

from within relationships, as transgressions against people

important to the wrongdoer creates more guilt (Baumeister

et al. 1994). Therefore, we propose here that as the psy-

chological distance between perpetrator and victim redu-

ces, failure in matching standards with behavior would

result in more negative emotions of guilt and shame.

H2a The closer the perpetrators perceive their psycho-

logical proximity to their victims, the guiltier they feel.

H2b The closer the perpetrators perceive their psycho-

logical proximity to their victims, the more ashamed they

feel.

Although there has been limited attention on the rela-

tionship between psychological proximity and compensa-

tion, there is a strong body of literature about advantages

people enjoy from relationships and ties (Chand and

Ghorbani 2011; Chow and Ng 2004; Cohen et al. 2006;

Ibarra 1995; Neyer and Lang 2003; Rowley 1997; West-

phal and Milton 2000). For example, theories of kinship

(Korchmaros and Kenny 2006; Neyer and Lang 2003) and

network theories (e.g., Chand and Ghorbani 2011; Grano-

vetter 1973; Jing et al. 2009; Stam and Elfring 2008; Zhang

et al. 2008) suggest that stronger ties (e.g., family and close

friends) are more helpful during difficult times than weaker

ties (e.g., acquaintances). Korchmaros and Kenny (2006)

also suggested that family relationships and perceived

closeness could predict helping behavior. Together, these

studies indicate a potential connection between proximity

and favors. When one is closer to another and has stronger

tie with the person, he or she is more likely to act in ways

which will benefit the other party (Wellman and Wortley

1989).

While there is a lack of direct empirical support from the

literature because of the dearth of studies done in this

regard, we consider compensation after wrongdoing as a

benefit to the victim, and based on our deductions from

kinship and network theories, expect proximity to affect the

potential for compensation.

H2c The closer the perpetrators perceive their psycho-

logical proximity to their victims, the more likely they are

to compensate them (victims) for the wrongdoing.

Interaction of Shame and Guilt with Proximity

Other than the direct impact on compensation, proximity

may also interact with shame and guilt in determining the

level of compensation. As indicated earlier, there is a

dearth of empirical evidence on behavioral consequences

of shame and guilt with respect to compensating others

(Brown et al. 2008). Nonetheless, studies on compensation

of out-groups provide some indirect evidence of the role of

proximity.

In one study, Iyer et al. (2003) investigated the effect of

group-level guilt and shame on the tendency to compensate

out-groups, and they concluded that ‘‘White guilt,’’ felt by

European Americans, could predict support of this group

for programs such as affirmative action that attempt to

compensate African Americans (i.e., out-group members)

for historical racial discrimination. However, this study

does not distinguish between the effects of guilt vis-à-vis

shame, because shame was included as an item measuring

guilt. In another study, Iyer et al. (2007) investigated the

effect of guilt and shame separately and did not find guilt to

predict any action or behavior. The results of this study

were somewhat contradicted by Brown et al. (2008) who

also examined group-level shame and guilt, and compen-

sation of out-groups for historical wrongdoings. They

found guilt to have a longitudinal causal effect on com-

pensating out-groups for historical wrongdoing, but did not

find shame to have a similar effect. While there are dif-

ferences in the outcomes of these studies, one clear theme

that we can distil is that guilt works the same when it

comes to out-groups and in-groups; therefore, we do not

expect a moderating effect of proximity on the relationship

between guilt and compensation.

H3a Guilt’s effect on compensation is the same across

different level of psychological proximity.

However, shame seems to have a stronger predictive

power on compensation when the victims are out-group

Guilt, Shame and Psychological Proximity

123

members. One common theme in all the above studies

(Brown et al. 2008; Iyer et al. 2003) is that they follow

Lickel et al. (2006) to suggest that shame determines

compensation because the group tries to remove the neg-

ative image from the in-group and restore its own good

reputation. For example, Brown et al. (2008) noticed that

historical group shame could predict the tendency to

compensate out-groups, but this effect was mediated by the

intention to improve or maintain in-group reputation. Iyer

et al. (2007) found that American and British peoples’

shame of their countries’ occupation of Iraq predicted

reparative behavior (i.e., support for withdrawal of foreign

troops from Iraq). While these studies focus on group level

shame and guilt, we argue that the same logic should be

applicable, to some extent at least, to individuals as well.

Individuals’ shame is related to their personal image.

Once individuals feel that their image has been tarnished, it

is important for them to restore their reputations. However,

transgressions do not easily ruin one’s reputation in the

eyes of significant others. Those with close psychological

proximity have a thorough understanding of one another,

so reputations are relatively stable. On the other hand, there

are usually fewer interactions with individuals who are

psychologically distant, and each individual interaction,

good or bad, has a stronger impact on one’s reputation.

Therefore, endorsing or engaging in compensatory actions

can dramatically improve reputations in the eyes of people

who are psychologically distant. As such, we suggest that

perpetrators’ shame for wrong doing predicts their com-

pensatory action more when victims are psychologically

distant.

H3b Psychological distance positively moderates shame’s

effect on compensation, such that the higher distance, the

stronger effect of shame on compensation.

Interactions between the two moral emotions and psy-

chological proximity are different. When individuals feel

guilty about transgressions, they want to compensate the

victims regardless of their psychological proximity. In

contrast, individuals who feel ashamed of their transgres-

sions are more likely to compensate people who are more

psychologically distant, than those who are psychologically

close.

Methodology

We designed a within-subject scenario study to investigate

our hypotheses. Participants read a story about a manager

who was facing a decision to compensate for his or her

wrongdoing toward different victims. We manipulated the

type of victims along the dimension of psychological

proximity, and tested whether the level of shame and guilt

influenced the ethical decisions regarding compensations

made toward victims at different levels of psychological

proximity. Types of victims included family members,

friends, strangers with concrete descriptions, and strangers

with abstract descriptions. Construal Level Theory sug-

gests people feel psychologically closer when the

description of the target is concrete than when it is abstract

(Trope et al. 2007), and thus creating two types of strangers

leads to further examination of the role of psychological

distance.

Participants

Two hundred and sixty-one undergraduate business students

from a large west coast university participated in exchange

for partial course credit. There were 145 females and 116

males. Their mean age was 21.17 years (SD = 2.53).

Procedure

Participants were asked to imagine that they were manag-

ers and read about an ethical dilemma they must solve. In

the scenario, the manager had sold garden-level housing

units to different people. Later, the manager receives a

report from an architect suggesting if a flood occurs there is

a significant possibility of massive damage to the units.

The manager had not done anything to make these homes

flood proof. One year later a flood occurs in the area and

most units are flooded. However, lawyers are in disagree-

ment as to whether the manager is legally responsible to

compensate homeowners. Participants were then asked to

indicate how much they would like to compensate each of

the following owners: (1) their parents, (2) close family

members or relatives other than their parents, (3) close

friends, (4) a retiree who is looking for a low maintenance

investment that could generate rental income for him or

her, (5) a middle-income couple who are expecting their

first child and in need of a bigger and more affordable

house, (6) a stranger they met at a social occasion, and (7) a

total stranger they know nothing about. Participants were

also asked to report how ashamed and guilty they felt

facing each of the above owners before they made the

decision to compensate. They then answered questions

on control variables and filled in their demographic

information.

Measurements

Shame and Guilt

Shame and guilt were measured with items drawn from pre-

vious studies (e.g., Dahl et al. 2005; Harder and Zalma 1990).

We drew selected items from previous studies to create the

M. Ghorbani et al.

123

shame and guilt scale for the current research because (1)

existing scales focus on shame- and guilt-proneness instead of

feelings after transgressions, and (2) we were concerned the

survey would be too long for our participants if we used a

16-item scale. We asked a five person focus group to choose

items from Harder and Zalma’s (1990) 16-item pool whose

meanings most resembled feelings of guilt and shame. Three

items for shame and four items for guilt, which were thought

to relate to corresponding constructs where selected. Con-

sultation with three experts in scale development suggested

those items have high face validity. The three items mea-

suring shame are ashamed, embarrassed, and foolish; and the

four items measuring guilt are guilty, remorseful, worried

about upsetting someone, and worried about hurting some-

one. The internal consistency reliabilities, as indicated by

Cronbach’s alpha, were above 0.80 for shame and 0.83 for

guilt on all seven target owners.

Compensation

Participants indicated the portion of the total damage they

would be willing to compensate to each owner on a 5-point

Likert scale (1 = 0 %, 2 = 25 %, 3 = 50 %, 4 = 75 %,

and 5 = 100 %).

Proximity

Participants indicated how close they felt to each owner on

a 5-point Likert scale (1 = not close at all, 5 = very

close). Proximity was used as manipulation check.

Internal Locus of Control

Locus of control was measured by an eight-item sub-scale

of internal locus of control from Levenson and Miller

(1976) and included as a control variable in line with

previous research (Tangney et al. 1996; Tracy and Robins

2006; Treviño 1986). Participants reported their locus of

control by rating a statement about themselves on a 5-point

Likert scale (1 = strongly disagree to 5 = strongly agree).

The internal consistency reliability, as indicated by Cron-

bach’s alpha, was 0.75. The average score of the eight

items was calculated and used as a control variable in

regressions (Detert et al. 2008; Treviño 1986).

Religiosity

Participants indicated how religious they were on a 5-point

Likert scale (1 = not religious at all, 5 = very religious).

This variable was used as a control variable in regressions

in line with related previous research (de St Aubin 1996;

Quiles and Bybee 1997; Tangney 1992).

Results

Manipulation Check

A pilot study showed the seven types of owners gathered

around three clusters based on the psychological distance

participants felt toward them. Based on Construal Level

Theory and the results from the pilot study, we categorized

the seven owners into three groups: (1) in-groups including

parents, close family members or relatives other than par-

ents, and close friends, (2) strangers with concrete

descriptions (strangerCON) including retiree and middle

class couple, and (3) strangers with abstract descriptions

(strangerABS) including a stranger they meet at a social

occasion, and a total stranger they knew nothing about. The

average proximity scores were calculated for each group.

In order to confirm the three groups were different on

psychological distance, we first ran a repeated measures

analysis of variance (ANOVA) and found a significant

difference in proximity among the three groups (F(2,

259) = 1186.73, p \ 0.01). Two post hoc paired-samples t tests showed participants felt closer to their in-groups than

to strangerCON (t(260) = 33.18, p \ 0.01), and they felt closer to strangerCON than to strangerABS (t(260) =

10.34, p \ 0.01). These results indicated that participants felt closest to their in-groups, followed by strangerCON,

and felt most distant to strangerABS. The results supported

our logic of grouping, and thus all key variables were

averaged within each group. We conducted the following

analyses within each group first and then examined how the

hypothesized regression model differed across the three

groups. Means, standard deviations, and correlations of key

variables can be found in Table 1.

Regressions

In order to test Hypothesis 1, we examined whether and

how shame and guilt predict ethical decision-making

(compensation) within each group. We ran a multiple

regression to investigate the proposed model in each group

separately. Age, gender, degree of religiosity, and internal

locus of control were entered as control variables. For in-

groups, guilt (b = 0.44, p \ 0.01), but not shame (b = -0.06, p = ns), predicted compensation. For stranger-

CON, both shame (b = 0.30, p \ 0.01) and guilt (b = 0.30, p \ 0.01) predicted compensation. For strangerABS, both shame (b = 0.25, p \ 0.01) and guilt (b = 0.27, p \ 0.01) predicted compensation. The results partially supported Hypothesis 1 as guilt was a stronger predictor

than shame for in-groups, but both emotions predicted

compensation equally well for strangers. Detailed regres-

sion results are presented in Table 2.

Guilt, Shame and Psychological Proximity

123

ANOVAs and t Tests

In order to test whether proximity affects the level of

shame, guilt, and compensation (H2a-c), we ran three

repeated measures ANOVAs with group as a within-sub-

ject factor. Results indicated a significant difference on

shame across the three groups (F(2, 259) = 185.41,

p \ 0.01). Two post hoc paired-sample t tests showed that participants indicated higher levels of shame to their in-

groups than to strangerCON (t(260) = 8.85, p \ 0.01), and higher levels of shame to strangerCON than to stranger-

ABS (t(260) = 13.87, p \ 0.01). Analyses on guilt and compensation showed similar patterns. Participants felt

most guilty and offered the highest compensation to their

in-groups, followed by strangerCON, and felt least guilty

and offered lowest compensation to strangerABS. Consis-

tent with our predictions, lower levels of psychological

proximity lead to higher levels of shame, guilt, and com-

pensation. Results of repeated measures ANOVAs and

paired-sample t tests for each variable can be found in

Table 3.

Moderation Analyses

To test Hypothesis 3, we examined whether the regression

model differs across the three groups. We first compared

the in-group with both stranger groups to determine whe-

ther there is an overall effect of grouping between in-

groups and strangers. Following guidelines for testing

moderation using ordinary least squares (OLS) regression

in within-subject designs (Judd et al. 2001), we found a

marginally significant difference in the regression coeffi-

cient of shame on compensation among the three groups

(t = 1.69, p \ 0.10), but no difference in the regression coefficient of guilt on compensation (t = -1.20, p = ns).

In addition, guilt (t = 4.64, p \ 0.01) mediated the effect of grouping of proximity on compensation.

Next, we ran two post hoc regressions to further inves-

tigate the moderating effect of proximity on the relation-

ship between shame and compensation. Comparing in-

group and strangerCON, we found evidence that the effect

of shame on compensation was moderated by proximity

(t = -2.44, p \ 0.05). Comparing strangerCON and strangerABS, we found shame was not moderated by

proximity (t = 0.50, p = ns). Overall the results suggest

that when facing in-groups, the more guilty people feel, the

more likely they are to offer higher levels of compensation

to victims. However, the level of shame does not affect the

decision in the same way as that of guilt does. When facing

strangers, regardless of how concretely or abstractly

they are described, people make decisions based on both

how ashamed and guilty they feel toward the strangers.

Regression results are depicted in Fig. 1.

Taken together, our results supported our hypothesis that

the degree to which perpetrators feel guilty or ashamed,

and their subsequent decisions to compensate victims, are

Table 1 Means, standard deviations, and correlations of key variables

Variable 1 2 3 4 5 6 7 8 9 10 11 12

1. Proximity in-group -

2. Proximity stranger

concrete

0.11 -

3. Proximity stranger

abstract

-0.14* 0.42** –

4. Shame in-group 0.21** 0.07 -0.08 –

5. Shame stranger

concrete

0.13* 0.24** 0.06 0.59** –

6. Shame stranger abstract -0.00 0.16** 0.26** 0.27** 0.69** –

7. Guilt in-group 0.38** 0.11 -0.11 0.78** 0.53** 0.24** –

8. Guilt stranger concrete 0.27** 0.32** 0.06 0.48** 0.77** 0.52** 0.64** –

9. Guilt stranger abstract 0.09 0.21** 0.30** 0.26** 0.48** 0.88** 0.34** 0.65** –

10. Compensation in-

group

0.30** 0.13* -0.02 0.28** 0.30** 0.18** 0.39** 0.34** 0.19** –

11. Compensation stranger

concrete

0.18** 0.29** 0.16* 0.20** 0.55** 0.39** 0.25** 0.56** 0.40** 0.50** –

12. Compensation stranger

abstract

0.09 0.17** 0.22** -0.02 0.24** 0.45** -0.00 0.27** 0.47** 0.21** 0.65** –

M 4.34 2.10 1.51 3.50 2.98 2.31 3.93 3.35 2.53 3.87 3.16 2.46

SD 0.63 0.96 0.66 1.06 1.03 0.96 0.93 1.01 1.01 0.94 1.04 1.10

* p \ 0.05, ** p \ 0.01

M. Ghorbani et al.

123

functions of perceived psychological distance to the victim.

The closer people feel toward the target, the more likely

they will feel ashamed and guilty about the past harmful

behavior, and therefore offer higher compensation. More-

over, the effect of ethical emotions on decision-making

varies when the victim is an in-group member versus when

the victim is a stranger. When the victim is an in-group

member, guilt is a predictor of compensation while shame

is not. When the victim is a stranger, both shame and guilt

predict compensation equally well.

Discussion

We tested the impact of individuals’ perceptions of psy-

chological distance on the level of guilt and shame, and on

their tendency to compensate the victim of wrongdoing.

There were three groups representing three different levels

of psychological proximity on a continuum from very close

relationship to the parents to total strangers that we know

absolutely nothing about and have no prior relationship

with.

Regression analyses (Table 2) indicate partial support

for our first hypothesis that guilt is a better predictor for

compensation than shame. Guilt predicted compensation in

all groups, whereas shame only predicted compensation to

strangers. This is consistent with previous predictions that

guilt is more responsible for reparative actions than shame

(Lindsay-Hartz 1984; Orth et al. 2010; Smith et al. 2002;

Tangney 1991). Shame was not predictive of in-group

compensation, which is consistent with the literature on

shame. Tangney (1992) had posited that ashamed indi-

viduals are unlikely to rectify their wrongdoings. When

feeling ashamed, the perpetrator is not thinking of going

and amending the wrongdoing, but thinking of hiding from

Table 2 Regressions across three groups

Group IV Controls

b Model b Adj

R2 F

In-group 0.14 21.81**

Age 0.04 0.05

Gender -0.04 0.05

Religious -0.12 -0.08

Locus of

control

0.02 0.03

Shame -0.06

Guilt 0.44**

Stranger 0.35 59.78**

Concrete Age 0.04 0.06

Gender -0.14* -0.04

Religious -0.08 -0.06

Locus of

control

0.08 0.05

Shame 0.30**

Guilt 0.30**

Stranger 0.26 36.86**

Abstract Age 0.18** 0.14*

Gender -0.05 0.00

Religious -0.09 -0.04

Locus of

control

0.05 0.04

Shame 0.25**

Guilt 0.27**

* p \ 0.05, ** p \ 0.01

Table 3 Results of repeated measures ANOVA and paired-sample t test on key variables

DV Repeated

measures

ANOVA F

Paired-sample t test

In-group vs.

strangerCON t

StrangerCON vs.

StrangerABS t

Proximity 1186.73** 33.18** 10.34**

Shame 185.41** 8.85** 13.87**

Guilt 293.34** 11.39** 15.65**

Compensation 225.66** 11.66** 12.46**

* p \ 0.05, ** p \ 0.01

Fig. 1 Regression of shame and guilt on compensation among the three groups

Guilt, Shame and Psychological Proximity

123

others (Lindsay-Hartz 1984). In-groups are comprised of

parents, other close relatives, and close friends, and it is

difficult to avoid them. Therefore feelings of shame, while

they may cause individuals to want to hide from in-groups,

may not in reality be acted upon since it is difficult to do

this in case of in-groups. This might explain why shame

does not predict in-group reparative behavior. This is not to

say that individuals do not experience shame when trans-

gressing people close to them. In fact, levels of shame were

higher when victims were members of in-groups, versus

out-group victims. It is possible that individuals expect

people who are close to them to be more forgiving and as

such do not think shame is a reason to compensate them.

Another possible explanation is that individuals see com-

pensation to in-group members as an obligation and noth-

ing to do with their level of shame.

We also found support for our second set of hypotheses.

We posited that psychological proximity can influence the

level of shame, guilt and compensation, in that the closer

individuals feel to their victims, the more likely they would

be to feel guilty and ashamed, and offer higher compen-

sation as a result. Participants reported the highest levels of

guilt, shame, and compensation when the victim was an in-

group member, followed by when the victim was a stranger

with a concrete description, and the lowest levels of guilt,

shame, and compensation resulted when the victim was an

abstractly described stranger.

In the third set of hypotheses, we predicted how psy-

chological proximity interacts with shame and guilt in

individuals’ decisions to compensate victims of transgres-

sion. While the levels of guilt and compensation increased

as perpetrators felt closer to the victims, the interaction of

proximity and guilt in predicting the level of compensation

were not significant. However, we found some support for

the mediating effect of guilt between perceived psycho-

logical proximity and the level of compensation.

This latter finding is perhaps not too surprising because

guilt is the emotion affects individuals through empathy

(Leith and Baumeister 1998; Tangney et al. 2007). Empa-

thetic people are capable of taking the perspective of others

(Mehrabian and Epstein 1972). Empathy is a source of

altruistic behavior as people who help others out of empathy

actually relieve themselves of negative feelings (Batson et al.

1981; Detert et al. 2008). Consistent with this logic, when

perpetrators feel close to victims of their wrongdoings, they

feel pain as the victim does, regret their behavior, and want to

do things to relieve the victims’ pain to relieve the perpetra-

tors’ own painful feelings. Guilt is associated with other-

oriented empathy (Tangney 1991; Tangney et al. 2007).

Mencl and May (2009) also suggested that empathy

increases as proximity decreases. The more individuals

can relate to others and become familiar with them, the

more they can empathize with them (Brass et al. 1998).

Mikulincer et al. (2005) posited that individuals distance

themselves from the suffering of others to reduce empathy

and the possibility of altruistic help. The closer individuals

feel to their victims the more empathetic and guiltier they

feel for transgressing them. Higher levels of guilt also

indicate higher levels of compensation. As such, guilt

could be a good mediator for the effect of proximity on the

level of compensation.

We found partial support for hypothesis 3b, which pro-

poses that proximity moderates the effect of shame on levels

of compensation. Our findings suggest that psychological

proximity moderates the effect of shame as a categorical

variable instead of a continuous variable. We found dissimi-

larities in compensation offered to in-group members versus

strangers. However, despite our findings (H2) that people

perceived different levels of shame, compensated varying

amounts, and felt like they were at different psychological

distances toward the two stranger groups, there was no dif-

ference in the predictive power of shame on compensation

between the two stranger groups. When perpetrators decided

on the level of compensation to offer in-group members,

shame was not a determinant of the amount. On the other

hand, when deciding on the level of compensation to offer

strangers, shame was a significant predictor of compensation.

This finding indicates that ashamed transgressors cate-

gorized their psychological distances to their victims based

on victims’ statuses as either in-group or out-group mem-

bers. This type of dyadic categorization and moderation is

consistent with previous studies about group-level ten-

dencies to compensate out-groups (Berscheid et al. 1968;

Berscheid and Walster 1967; Brown et al. 2008). Shame is

caused by violations of character (Keltner and Buswell

1997) and is related to individuals’ identities. Transgres-

sors try to compensate victims to reduce their feelings of

shame and restore their reputations. Therefore, shame can

transform perpetrators’ image and gives them a lower

evaluation of themselves; an image different and less

worthy of one to self (Lindsay-Hartz 1984).

Perpetrators do not defend their images and reputations

in front of in-group members to the same extent as they do

in front of out-group members, since in-groups are

expected to accept each other even when it is difficult. In

addition, it is hard to imagine a damaged in-group image

resulting from one mistake, when in-group members know

one another so well. Therefore, compensating an in-group

member is not likely to change how the in-group members

perceive the transgressor if the damage was caused by a

one off event. This could explain why shame was not a

significant predictor of in-group compensation. If we look

closer at shame, it is associated with running away and

hiding from others (Tangney 1991; Tangney et al. 2007;

Tangney et al. 1992). Transgressors might still feel

ashamed to face members of their in-groups, as indicated

M. Ghorbani et al.

123

by the first two sets of supported hypotheses. However,

results do not indicate that shame is the reason for trans-

gressors to compensate the in-group.

In contrast, transgressors try to protect and restore their

own images in front of out-group members. When perpe-

trators feel ashamed and condemn themselves, they still

want to keep a positive image in front of other people who

do not know them well. After all, strangers often judge

each other based on one action or behavior. So it is

important for perpetrators to make the wrong right in the

eyes of strangers, in order to restore a good image. In

addition, a single act such as compensation can make a

large difference in their image with strangers, but will

probably not make as much of a difference with the in-

group. By offering compensation, transgressors send out

the message that they take responsibility for their behavior.

This positive image can help restore reputations that were

damaged during transgressions. Therefore, when trans-

gressors feel distant to their victims and think their images

are vulnerable, they need to take actions to protect or

improve their image from victims’ point of view.

Implications and Directions for Future Studies

Our findings indicate that while guilt increases as prox-

imity decreases, guilt can predict transgressors’ tendencies

to compensate victims. This is an important finding as it

indicates that increasing the level of guilt in managers and

entrepreneurs could improve their ethical behavior. We

suggested that guilt works through empathy and empathy is

also linked with psychological proximity. We also posited

that empathy increases as concrete knowledge of victim

increases. While our suggestions needs further testing,

these findings indicate that when people provide more

information to firms, they seem more concrete to managers.

As the level of abstraction decreases, managers are likely

to feel more empathetic. Higher levels of empathy and

more concrete information about clients could insure better

treatment by managers.

This better treatment could occur in two ways. The first is

that managers who feel more empathetic toward clients may

avoid decisions that cause transgressions. For example, man-

agers might develop preemptive guilt through interactions with

the board of directors when the board emphasizes the reality of

the people who can be hurt by these decisions. The second way

that clients could be protected against wrongdoing is through

compensation. Managers who feel closer to their clients are

more likely to compensate them in the event of any trans-

gression. Therefore, the frequency of compensation might

increase when clients and customers have the opportunity to

meet face-to-face and get to know one another better. Both of

these mechanisms provide opportunities for further research.

Another area that would benefit from further study is the

implication for online businesses where almost all cus-

tomers are known only at an abstract level. Abstract rela-

tionships in an online environment are less prone to being

influenced by feelings of guilt. Based on our findings, we

expect that the possibility and level of compensation would

diminish in e-commerce situations compared to brick-and-

mortar businesses. However, shame is more likely than

guilt to determine compensation in this case. Bringing

issues of wrong doing to the public could increase victims’

chances of being compensated. Perhaps this explains why

blogs and online customer opinions are increasingly

important. From the point of view of online customers, it is

important that they make their voices heard in an organized

and systematic manner regarding corporate wrongdoing,

since this would create more shame for the concerned

organization and increase the chances of victims of cor-

porate fraud being compensated.

One final area for future research is to combine this line

of research with antecedents of guilt and shame. Person-

ality traits, values, culture, guilt-proneness, and shame-

proneness have all been shown to have some relationship

with feelings of guilt or shame. Culture, values, and per-

sonality possibly influence levels of guilt and shame and

could change individuals’ perceptions of psychological

proximity (e.g., some cultures value family more than

others, while in some other cultures societal or out-group

collectivism could be higher). These antecedents could

help explain how the level of guilt and shame can be

increased or decreased. For example, how does guilt-

proneness lead to the level of guilt when levels of concrete

knowledge and psychological proximity are controlled? Do

psychological proximity and guilt-proneness interact in the

same ways as guilt and proximity?

Conclusion

Our purpose was to provide an explanation as to how and

why people attempt to compensate others for their uneth-

ical decisions. In this study, we investigated the effect of

guilt, shame, their interaction with the perceived psycho-

logical proximity to the victim in affecting the transgres-

sor’s reparative behavior. We found that guilt increases as

proximity decreases, and that guilt can predict transgres-

sors’ tendencies to compensate victims. Shame interacts

with psychological proximity to predict compensation,

whereas guilt mediates the relationship between psycho-

logical proximity and compensation. Through this study,

we increased our knowledge about the effects of guilt,

shame, and psychological proximity on decisions leading

to reparative behavior. We hope that this research can help

with improving the frequency of moral reparative actions,

Guilt, Shame and Psychological Proximity

123

including righting previously committed wrongs. While we

do recognize that there are always anomalies and excep-

tions (for example, Madoff personally knew many of his

victims), we believe that this study has helped us gain a

better understanding of how organizations and decision

makers in organizations can better compensate their vic-

tims and right their previously committed wrongs.

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