PHL paper PHYLLIS

Decision-Making Process of Internal

Whistleblowing Behavior in China:

Empirical Evidence and Implications

Julia Zhang Randy Chiu

Liqun Wei

ABSTRACT. In response to the lack of empirical studies

examining the internal disclosure behavior in the Chinese

context, this study tested a whistleblowing-decision-mak-

ing process among employees in the Chinese banking

industry. For would-be whistleblowers, positive affect and

organizational ethical culture were hypothesized to

enhance the expected efficacy of their whistleblowing

intention, by providing collective norms concerning

legitimate, management-sanctioned behavior. Question-

naire surveys were collected from 364 employees in 10

banks in the Hangzhou City, China. By and large, the

findings supported the hypotheses. Issues of whistleblowing

in the Chinese context and implications were discussed.

KEY WORDS: whistleblowing, Chinese culture, ethi-

cal organizational culture, positive affect

Introduction

Incidents of organizational wrongdoing have made

headlines recently. Examples include fraud, corrup-

tion, and other unethical acts within organizations like

Enron, WorldCom, Andersen, and Tyco. Many of

these scandals came to light because of the actions of

employees or ex-employees of those companies, who

believed that the wrongdoing should be stopped, and

reported it to the authorities. This kind of behavior is

called whistleblowing: ‘‘the disclosure by a current or

former organizational member of illegal, unethical or

illegitimate practices under the control of their

employers, to persons or organizations who may be

able to effect action’’ (Near and Miceli, 1985, p. 4).

Internal disclosure as whistleblowing behavior

The term whistleblowing can be used for any

disclosure about unethical acts of an organization

via non-hierarchical means (Kaptein, 2002;

Vandekerckhove and Commers, 2004). Miceli and

Near (1992) suggest that there are two types of

whistleblowing: internal and external disclosure.

However, individuals or employees who witness

wrongdoings within their company may not choose

to blow the whistle because of a fear of retaliation

from their employer or organizational members in-

volved in the unethical doing. Over 90% of whis-

tleblowers were made to end their career early, or

were blacklisted, treated as insane, and/or lost their

life savings from lawsuits, their marriage or even lives

(Greene and Latting, 2004). In order to keep

themselves out of trouble and to avoid being called a

rat or a snake, these individuals would choose not to

disclose anything. If and when dissonance is too

great and unbearable, they would choose to ‘‘exit’’

out instead of to ‘‘voice’’ out (Gong, 2000). That is

why whistleblowing, both external and internal, is

considered as a taboo in the minds of people in many

countries, may they be in developed, developing, or

underdeveloped economies (Carroll and Cannon,

1997).

Studies have shown that differences exist between

external and internal whistleblowing in terms of the

seriousness of the wrongdoing whistleblowers wit-

ness, the retaliation they experience, and the effec-

tiveness of their intervention (Dworkin and Baucus,

1995; Miceli et al. 1991). It is considered that

internal disclosure is the only moral action, unless

the whistleblower expects that this channel will

result in personal retaliation. In fact, scholars in

moral philosophy have generally presented a ‘‘strong

moral case’’ supporting internal reports. Ethical

issues will arise particularly in external disclosure

because disclosing insider information to outsider’s

breaches obligations to the organization, violates the

Journal of Business Ethics (2009) 88:25–41 � Springer 2008 DOI 10.1007/s10551-008-9831-z

written or unspoken contract, and elicits damaging

publicity. That is why although one can argue that

external whistleblowers may believe that the public

revelations will actually help the organization in the

long run, it is much safer for the management to

encourage whistleblowing internally (e.g., Dozier

and Miceli, 1985). Internal disclosure or whistle-

blowing is recognized as beneficial to organizations

as well; however, management does not or cannot

handle effectively this issue and can expect to incur

considerable loss of the company resources as a result

of negative company image, poor business relation-

ships, and disrupted work routines (Laczniak

and Murphy, 1991; Miceli and Near, 1994; Van-

dekerckhove, 2006). Hence, this research will focus

on examining the internal disclosure as a whistle-

blowing behavior which is more important since

internal disclosure commonly precedes external

disclosure (Miceli and Near, 1992).

Whistleblowing-decision-making process

Ethic scholars in the past have had concern about

the question, ‘‘Who blows the whistle and why?’’

(Miceli et al., 1991). Researchers in various disci-

plines have attempted to answer this question with

different perspectives, such as business ethics (e.g.,

Glazer, 1983), psychology (e.g., Brabeck, 1984),

pro-social behavior (Miceli et al., 1991), organiza-

tional change (Near and Miceli, 1987), and social

influence (Greenberg et al., 1987). There is a com-

mon interest found in these studies and that is to

identify the antecedents, correlations, moderators,

and consequences of the decision to blow the

whistle, and analyzing the decision process of

potential whistleblowers. At first, they tried to

model the ethical decision-making process of po-

tential whistleblowers (cf., Greenberger et al., 1987;

Hooks et al., 1994; Lampe and Finn, 1992; Miceli

and Near, 1992; Near and Miceli, 1985, 1987;

Ponemon, 1994). Later on, researchers have also

examined various individual and situational variables

and their interaction in the psychological process of

whistleblowing decision making (e.g., King, 1997;

Miceli et al., 2001; Rothschild and Miethe, 1999).

The four-component theory (Rest, 1986) portrays

the psychological processes that underlie any moral

action. This theory has four stage, they are: ethical

sensitivity, ethical reasoning, ethical intention, and

the ethical behavior or action. It is noteworthy that

these features of Rest’s model were echoed by other

positive ethical decision process models (Ferrell et al.,

1989; Hunt and Vitell, 1986; Jones, 1991). A review

of these representative models reveals that the ethical

decision process occurs in a fixed sequence of stages,

consisting of moral perception, judgment, intention,

and behavior, which are consistent with Rest’s four

stages. Specifically, Ponemon’s (1994) application of

Rest’s model to the whistleblowing phenomenon is

particularly useful.

Based on Rest’s Four-Component Theory (1986),

Ponemon (1994) suggested a decision-making model

labeling each of the four stages slightly different so that

it fit into the whistleblowing scenario. The first stage is

the awareness that the wrongdoing is occurring, and

the interests of a party are being hurt. The second stage

is the ethical judgment that blowing the whistle is the

ideal moral choice. The third stage involves balancing

different values to formulate the intention of blowing

the whistle. The fourth stage is to implement the

ethical choice–to blow or not to blow the whistle.

Along with the process, individual and situational

factors serve as moderating factors that explain how

the outcome of each step affects the next step. Later

on, Miceli and her associates (2001) published an

article, proposing additional individual and situational

characteristics, such as positive affectivity that may

intervene in people’s whistleblowing-decision-mak-

ing process and make their model more complete.

However, most of the models are proposed con-

ceptually, or are built upon others’ theoretical work.

This maybe due to the fact that lacking validated

instruments, the impossibility of carrying out studies

on actual whistleblowers, the difficulty of getting

detailed information about both individuals and

organizations, or other method-related issues (Chiu,

2003). Nonetheless, the paucity of empirical research

regarding the whistleblowing-decision-making pro-

cess has substantially impeded the development of the

field. Thus, conducting such a study will be important

for scholars concerned with the psychological process

of internal disclosure behavior. Moreover, ethics is

culture-specific. Therefore people with different

cultural upbringings, and living under different socio-

economical influences, may have different views of

what is ethical or unethical (Chen, 2001; Patel, 2003).

The study of the decision-making process of internal

26 Julia Zhang et al.

whistleblowing behavior in China is a necessary step

for Chinese policy makers or managers who wish to

make good use of internal whistleblowing to benefit

their organizations and society at large.

Studying the Chinese context

In fact, there are many other recorded incidents

about whistleblowing around the world, for

instance, Enron, Abbey National, NSAS, Dow

Corning, BCCI, WorldCom, Rockwell, etc. As a

result, a number of countries have established

law/procedures for dealing with whistleblowing

(De Maria, 2006; Vandekerckhove, 2006) to protect

whistleblowers (Miceli and Near, 1994) and their

employers as well (Davis, 1997), such as the

Sarbanes-Oxley Act of the United States, Protected

Disclosures Act of New Zealand, Whistleblowing

Policy of France, Audit Reform and Corporate

Disclosure Act of Australia, and Public Interest

Disclosure Act of the United Kingdom. These

actions have prompted Asian countries to reap the

benefits of whistleblowing.

Back to the China front, scholars and researchers

have subscribed to the myth that Chinese people do not

approve of external disclosure (e.g., Chiu, 2003;

Vinten, 1999), despite encouragement from the gov-

ernment (Gong, 2000). In fact, ‘‘telling’’ can be con-

sidered unacceptable and unethical behavior by any

Chinese employee for this act is considered a break of

trust between employees and employers and is disloyal

and ungrateful (see Fukuyama, 1995; Greene and

Latting, 2004; Redding, 1990). Therefore, when

Dr. Jiang Yanyong, a retired Chinese surgeon of Peo-

ple’s Liberation Army General Hospital 301, blew the

whistle on the Chinese Health Ministry to Time Mag-

azine concerning the Ministry’s handling of the SARS

epidemic (Jakes, 2003), he surprised the whole world

and aroused great interest among western whistle-

blowing scholars. In recent years, there are other

reports on external whistleblowing in China. For

example, a physiotherapist from Shanghai reported the

problems regarding buying old medical equipments as

new and a pharmacist from Hunan Province blew the

whistle on the drug administration for problematic

medicine. (China Daily, February 13, 2007).

Given these cases, more awareness and concern

could be observed among Chinese business people.

A recent survey of business managers indicates that

Chinese managers perceive that the corruption of

government has not decreased, and illegal business

practices remain a problem (Wright et al., 2003).

Despite the ongoing business reform and restruc-

turing of legal and political schemes recently, busi-

ness ethical practices endure slow improvement due

to path dependence effect and the inertia of insti-

tutional changes (Nee, 1992; North, 1990). How-

ever, it is just such a continuous changing process

that provides us an opportunity to examine the

emergence and development of ethical behaviors

such as whistleblowing in Chinese firms. Therefore,

research on the Chinese perception toward whis-

tleblowing can provide valuable information for

international human resource managers, and help

them to employ, predict, and manage internal

whistleblowing more effectively.

Contributions of the study

The objective of this study is to validate a decision-

making process of internal disclosure behavior

by examining the moderating effects of individual

and situational characteristics on the relationship

between Chinese people’s judgments concerning

whistleblowing and their whistleblowing intentions.

This research attempts to make three contributions

to the whistleblowing theory and practice. The first is

to establish theoretical link between whistleblowing

judgment and whistleblowing intention. In order to

have better understanding of the psychological pro-

cess of making whistleblowing decisions, we identify

judgment behavior to be an antecedent of whistle-

blowing intention. Moreover, we tested the mod-

erating effects of individual and organizational

characteristics in the judgment-intention relationship

so as to further explore the dynamics of this psycho-

logical process. The second contribution is to extend

whistleblowing research to a Chinese context. By

gaining knowledge about the perceptions of Chinese

employees with respect to internal whistleblowing, it

contributes to international and cross-cultural whis-

tleblowing research as a whole. Third, this research is

intended to provide normative guidance to both

practitioners and policy-makers. Business managers

that understand the decision-making processes

of whistleblowers will be able to deal with internal

Decision-Making Process of Internal Whistleblowing Behavior in China 27

disclosure more effectively, reaping positive benefits

while avoiding negative consequences. Hence, con-

sistent with China’s recent anti-corruption cam-

paigns, internal whistleblowing could be utilized as a

useful internal control mechanism to stop misconduct

in the banking sector.

The hypotheses

Whistleblowing judgment and whistleblowing intention

Behavioral intention refers to the process of choosing

a particular behavior from a set of alternatives (Hunt

and Vitell, 1986). Most of the ethical decision-making

models propose that intention modifies the relation-

ship between ethical judgments and ethical behavior.

According to the theory of planned behavior (Ajzen,

1991), attitude is evaluative in that it leads to a judg-

ment of the object and behavioral intention is the

immediate predictor of the actual behavior. Thus, in

the whistleblowing context, whistleblowing inten-

tion is an individual’s probability of choosing whis-

tleblowing under certain circumstances. Previous

studies have documented the significant relationship

between whistleblowing intention and whistleblow-

ing behavior in the peer reporting context (Barnnet

et al., 1996; Chiu and Erdener, 2003; Victor et al.,

1993). Therefore, an individual’s whistleblowing

intention can be strongly predictive of his or her final

behavior.

Ethical judgment represents a person’s belief that a

particular action is the most ethical alternative or

the ideal ethical choice (Hunt and Vitell, 1986;

Rest, 1986). Whistleblowing judgment encompasses

the extent to which one agrees or disagrees with

the proposition that reporting the wrongdoing in the

workplace would be an inherently fair, just, accept-

able, and moral action. Since people have different

opinions about what is right or wrong, early research

on whistleblowing has first investigated the ethicality

of whistleblowing. In essence, they ascertained how

people judge whether blowing the whistle was moral

and ethical (Miceli et al., 1991). Scholars have raised

various issues relevant to the morality of whistle-

blowing, such as anonymity, exhaustion of normal

remedies before blowing the whistle, confidentiality

of organizational information, loyalty to coworkers or

organizations, and seriousness of the wrongdoing

(e.g., Jubb, 1999). Moreover, some people consider

whistleblowing ‘‘tattling’’ or ‘‘ratting’’, and would

never approve of it. Surveys have also showed that

people chose to keep silent because they thought

blowing the whistle violated the loyalty they owed to

other parties.

On the other hand, there is evidence that profiles

of inactive observers versus whistleblowers indicated

that whistleblowers tended to have stronger belief in

the desirability of whistleblowing (Miceli and Near,

1984). For example, some anecdotal evidence indi-

cated that whistleblowers were just doing what they

thought was the ‘‘right’’ thing, and they would do it

again when faced with the same situation (Jos et al.,

1989; Rothschild and Miethe, 1999). Since whis-

tleblowing involves a lot of ethical tension points, an

individual’s evaluation of the ethicality of whistle-

blowing is a necessary prior step, the outcome of

which will predict his or her decision about whether

or not to engage in the practice. Given the con-

nection between moral attitude and behavioral

intention and given that intention is a strong ante-

cedent of behavior (Ajzen, 1991); people who judge

an action to be highly ethical are more likely to

arrive at the behavior intention to perform that

action. The first hypothesis is presented as:

H1: There is a significant correlation relationship

between whistleblowing judgment and whis-

tleblowing intention in the decision-making

process of whistleblowing.

Moderating role of positive affect and organizational

ethical culture

A substantial body of literature on ethical decision-

making shows that people’s ethical preferences do

not necessarily always result in behavioral intentions.

The discrepancy could be explained by anticipated

undesirable outcomes, or costs that outweigh the

benefits. Hunt and Vitell’s model (1986) suggest that

after people reach an ethical judgment, namely the

ideal ethical choice of behavior, the next step is to

consider whether to put the ethical choice into

practice. Rest (1986) suggested affect may influence

the individual’s anticipation of future consequences

of ethical decision making. Affect is an umbrella

term encompassing a broad range of feelings that a

person has, including feeling states and trait states

28 Julia Zhang et al.

and it affects one’s decision-making process, choice

of prosocial behavior, and conflict resolution mode

(Barsade and Gibson, 2007). In addition, since an

ethical dilemma often requires a person to exercise

his/her decision on value judgment, prosocial

behavior and resolving conflicts, therefore, affect can

increase or decrease the likelihood of transforming

the ethical judgment into an ethical intention. This

proposition is applicable to the whistleblowing case.

Since people with positive affect will have a more

positive expectation of the complaint recipient’s

benevolence, and ability to correct the wrongdoing,

they will be more likely be motivated to act. In

addition, people in a positive affect are found to

think less about potential risks, and are more likely to

be involved in risk-taking activities (Bless et al.,

1996). Therefore, high positive affect will diminish

people’s expectations of negative outcomes, and

make people believe that there is little risk involved

in blowing the whistle, and that severe retaliation

will not take place.

Apart from the effects noted above, positive affect

has other peripheral effects. People in a positive

affect tend to use direct, problem-focused coping

strategies (Parkes, 1990), and engage in upward

influence activities to affect organizational change

(Forgas, 2001; Isen et al., 1987). People with posi-

tive affect are also usually found to be more self-

efficacious and have better self-confidence (Laucas,

2000). These characteristics will add more idiosyn-

crasy credits to the person, so that he or she will have

more power to resist pressure and influence others

(Greenberger et al., 1987), perhaps through whis-

tleblowing.

Moreover, the role of positive affect in helping

behavior implies that people with positive affect are

more moral, more empathetic, less fearful, and have

more self-confidence as well as concern for other’s

welfare. Therefore, when positive affect people have

to make a moral judgment of what is right or wrong,

and the judgment affects others’ welfare, they are

more likely to transform their judgment of what is

right into an intention to do what is right. In order

to summarize, positive affect will bias the perception

and evaluation of the whistleblowing outcome, and

make people more willing to help the others. Gau-

dine and Thorne (2001) proposed that positive affect

may interact with cognition in the whistleblower’s

decision-making process because people in positive

affect are more likely to perform the ‘‘ideal’’ ethical

choice they arrive at. We therefore hypothesized, in

the decision-making process of whistleblowing,

that:

H2a: The relationship between whistleblowing

judgment and whistleblowing intention is

moderated by positive affect. The relationship

will be stronger for employees with more

positive affect.

Organizational ethical culture represents a multidi-

mensional interplay among various formal and

informal systems of behavioral control that have an

effect on one’s ethical or unethical conduct (Trevino

et al., 1995) and, as an organizational factor, influ-

ences one’s ethical behavior (Hunt and Vitell, 1986;

Trevino, 1986). Previous empirical studies further

demonstrate that ethical conduct should be higher in

organizations when leaders and norms encourage

ethical conduct, and where ethical conduct is re-

warded and unethical conduct is punished, than in

organizations without such characteristics (Trevino

et al., 1985). Therefore, the ethicality of top man-

agement sets up an ethical model of normative

behavior that determines what is acceptable in the

organization; that is, what is good and appropriate

behavior (Brown et al., 2005). Research shows that

perceptions of what peers and top management do

in their usual business activities have the greatest

influence on self-reported unethical behavior

(Ferrell and Gresham, 1985; Zey-Ferrell and Ferrell,

1982). This is consistent with what was suggested by

Ajzen (1991) in his theory of planned behavior: that

one’s intention to take certain action has to be in line

with the views of his/her peers.

Rest (1986) also suggested that in the progress

from ethical judgment to ethical intention, personal

interests are likely to compromise ethical choice.

Possible organizational reinforcements either posi-

tive or negative represent powerful personal inter-

ests. An ethical organizational culture will provide

guidance about what is legitimate, encouraged

behavior in the organization. If organizations are

perceived to encourage ethical behaviors and disci-

pline unethical behaviors, observers will have more

confidence that their reporting will be considered as

legitimate and appropriate, and accepted by man-

agement and coworkers. If the organizational culture

Decision-Making Process of Internal Whistleblowing Behavior in China 29

is ethical, decision makers will feel less fear of

reporting the wrongdoing because possible retalia-

tion is less likely to take place, and their intervention

may lead to a desirable outcome. An ethical culture

may also educate employees to conduct ethical

behavior and reward people who terminate unethi-

cal behavior in the organization. It follows that

employees in such an environment will feel pre-

scribed responsibility to behave ethically – that is, to

follow their ethical choice.

In order to summarize, value congruence be-

tween observers and their organizations could lead

to more reporting of wrongdoing (Enz, 1986) and

Near and Miceli (1996) indicating that whistle-

blowing was more likely to happen when individuals

expected support from colleagues and supervisors,

and in organizations that supported whistleblowing

in various ways. Given that organizational ethical

culture is proposed to have an impact on observers’

disclosure behavioral choice, we therefore hypoth-

esized, in the decision-making process of whistle-

blowing, that:

H2b: The relationship between whistleblowing

judgment and whistleblowing intention is

moderated by organizational ethical culture.

The relationship will be stronger for employees

with higher organizational ethical culture.

Method

The sample

Previous studies of whistleblowing have utilized a

wide range of samples; however, a few studies have

been conducted in internal disclosure behavior in

the banking industry. This is a significant omission.

First, the banking industry has a high rate of orga-

nizational malfeasance. For instance, in 2005, 1,272

crimes and irregularities were detected in banks in

China, causing a total monetary loss of 1.47 billion

RMB (Xin, 2006). Second, most of the crimes in

the banking sector were difficult to detect because of

low visibility and high complexity; therefore, find-

ing and reporting wrongdoing falls on the individ-

uals within the banks. Third, instead of distributing

the information about wrongdoing to be the public

and in order to keep the image of the bank, would-

be whistleblowers would see the desirability to blow

the whistle internally to regulatory agencies.

However, it has been argued that the merit of single

industry research is undesirable (Delery, 1998). This is

because industry context has an important effect on

the relationships between variables of interest, and

thus constrain the external validity of the research

findings. However, by focusing only on the banking

industry, researchers can get an in-depth under-

standing of bank employees’ perception of whistle-

blowing behavior, and identify their decision-making

process and correlates. This approach was adopted

previously in a number of studies (e.g., King, 1997;

Miceli et al., 1991; Near, et al., 2004), which high-

lighted the advantage that ‘‘the unknown sources of

variance due to organization type could be con-

trolled’’ (Near et al., 2004, p. 224).

The sample target chosen in this study was

employees in ten major banks in the Hangzhou City,

PRC, one of the most developed cities with respect to

economic and modernization. Questionnaires were

distributed to the prospective participants through the

assistance of friendly contacts in each bank. Respon-

dents returned the completed questionnaire, sealed in

an envelope, by dropping them into the box to be

collected by the principal researcher

The instruments

The questionnaire included four sets of items

(whistleblowing judgment, whistleblowing inten-

tion, positive affect, organizational ethical culture)

and a scenario. The scenario approach was utilized in

this study because it provided a more realistic con-

text for the respondents, who were able to put

themselves in the position of a character portrayed in

a hypothetical situation (Patel, 2003).

A four-item semantic differential scale of behav-

ioral intention (Barnett et al., 1996) was used to

measure the dependent variable – whistleblowing

intention. Respondents first read a short scenario

that placed them in the role of a bank teller dis-

covering embezzlement conducted by his/her senior

colleague. Based on the scenario given, participants

were asked to assess the probability of blowing the

whistle to the general manager both in terms of

‘‘supposing you were in the same situation’’ and

30 Julia Zhang et al.

‘‘supposing your peers were in the same situation’’.

The purpose of asking them to imagine their peers’

behavioral intention was to identify any social

desirability response bias that might be present in the

response (Watkins and Cheung, 1995). The scale

included five points ranging from 5 (definitely

would) to 1 (definitely would not). The alpha reli-

ability for this scale was 0.96.

Whistleblowing judgment was measured by

Reidenbach and Robin’s (1988, 1990) multidi-

mensional ethics measure. The utilization of this

multidimensional instrument was justified by prior

research that suggested that multiple attribute scales

were generally more valid, more reliable and less

error-prone than single attribute measures (Cohen

et al., 1993). Previous researchers have adopted this

measure in business ethics and whistleblowing

studies (Barnett et al., 1996; Chiu, 2003; Patel,

2003).

After reading the scenario, respondents were

asked to judge the actions of the whistleblower

in the scenario. The actions were assessed ‘‘just

(unjust), morally right (not morally right)’’ etc. The

responses ranged from 1 (strongly agree with

the positive statement) to 5 (strongly agree with the

negative statement). This scale was shown to have

high levels of internal, convergent, and discriminant

validity by previous researchers (Reidenbach and

Robin, 1988, 1990). The alpha reliability for this

scale was 0.80.

The Chinese version of Positive Affect Negative

Affect Scale (PANAS) (Watson et al., 1988), trans-

lated by Yik and Russell (2003), was used to assess the

positive affect of the participants. In this study,

10 Positive Affect (PA) items from the scale were used

to measure positive affect. Subjects were presented

with adjectives related to affect; e.g., ‘‘active’’,

‘‘excited’’, ‘‘interested’’. Each respondent indicated

the extent to which each adjective described him or

her on that day, using a 5-point scale ranging from

1 (very slightly) to 5 (extremely). Yik’s Chinese ver-

sion of PANAS has been validated using a Hong Kong

sample, showing a similar affective structure for both

English-speaking and Chinese-speaking respondents

(Yik and Russell, 2003). The Cronbach’s alpha for this

scale was 0.83.

The ethical culture scale developed by Trevino

et al. (1995) was used to measure organizational eth-

ical culture. This 21-item scale has been shown to tap

multiple dimensions of organizational ethical culture,

including ethical environment, obedience to author-

ity, and ethics code implementations. Respondents

were asked to indicate how strongly they agreed or

disagreed with statements about their organization’s

culture, such as ‘‘the top managers of this organization

represent high ethical standards’’ or ‘‘management in

this organization disciplines unethical behavior when

it occurs.’’ The responses ranged from 1 (strongly

agree) to 5 (strongly disagree). The scale was shown to

have a high alpha reliability of 0.94.

Since our sample target was Chinese bank

employees, all of the respondents’ first language was

Chinese. Therefore, the questionnaire was adminis-

tered in Chinese. All the scales except ‘‘positive affect’’

were developed in the English language, and Chinese

versions had not yet been translated and validated.

Thus, for the purposes of this study, the scale items

were translated to Chinese using the back-translation

method as outlined by Brislin (1986). In order to

ensure a good study design, a pilot study was con-

ducted in Shenzhen, P. R. China. As suggested by

Baker (1994), a pilot study can be a small-scale study,

done in preparation for the major study. A total of 67

usable questionnaires were collected from a company

located in Shenzhen.

Data analysis

Demographic variables were measured at the end of

the questionnaire. Previous researchers included

gender (e.g., Near and Miceli, 1985), age (e.g.,

Brewer and Selden, 1995), educational level

(e.g., Keenan and Sims, 1995), tenure (e.g., Barnett

et al., 1996), and job position (e.g., Trevino and

Victor, 1992) in whistleblowing studies. Although

there has been no consistent evidence to date

regarding the direction of the relationships between

these demographic variables and internal whistle-

blowing behavior, any possible effect of these factors

should be minimized.

All the data were recorded and analyzed. Cron-

bach’s alpha for the four scales ranged from 0.76 to

0.91, which indicated acceptable reliability. Demo-

graphic information of respondents was analyzed.

Sample size, means, standard deviations, and ranges

among the studied variables were calculated and

reported. Confirmatory Factor Analysis (CFA) was

Decision-Making Process of Internal Whistleblowing Behavior in China 31

conducted on the dependent variable and indepen-

dent variables to see if the factor loadings of these

measures showed a good model fit in agreement

with their underlying constructs. Zero-order corre-

lation, linear regression, and hierarchical moderated

regression analyses were used to test the hypotheses.

Results and discussion

A total of 399 usable questionnaires were collected

from 10 banks, representing a 57% response rate.

After excluding a number of incomplete responses,

364 usable questionnaires were used, with an effec-

tive response rate of 52%. The demographic char-

acteristics of respondents are shown in Table I.

A series of confirmatory factor analyses were

carried out with the aid of the LISREL 8.51 software

package (Joreskog and Sorbom, 1993). The result of

the refined scale showed improvement in the fit

indices suggesting that the model fitted the data

reasonably well (Hair et al., 1998) (Table II). In

general, the average variance explained by items

representing each construct was larger than the

acceptable level at 0.45 (Hair et al., 1998). The

composite reliability for each construct in this study

was encouragingly high, ranging from 0.841 to

0.896, which showed a good reliability of the

translated measures. Cronbach alpha reliability of all

the studied variables was also well above 0.70, the

acceptable threshold recommended by Nunnally

(1978).

Table III shows the means, standard deviations,

and zero-order Pearson correlations among control,

independent, and dependent variables. The overall

means score of whistleblowing judgment and whis-

tleblowing intention were 2.24 and 2.39, respec-

tively. Being lower than the mid-point of the scales

used for both of these items, these figures appeared to

be somewhat on the low side. The average score of

respondents in positive affect was 2.84 which again

reflecting that Chinese people tend to score low on

dispositions (Chiu and Kosinski, 1999). However, we

are delighted to see that the means score of organi-

zational ethical culture was at 3.33 indicating that

most respondents were happy with the ethical stan-

dard and norm demonstrated in their respective

banks. The correlation matrix shows that whistle-

blowing judgment was significantly positively related

to the whistleblowing intention (r = 0.49, p < 0.01).

All demographic characteristics were found to be

significantly negatively related to the whistleblowing

TABLE I

Gender, age, tenure, education level, position in the

company, and bank distribution (Sample size = 364)

Demographics Number of

respondents

Percentage

Gender

Male 187 48.6

Female 177 51.4

Age

25 or below 157 43.1

26–35 146 40.1

36–45 46 12.7

46 or above 15 4.1

Tenure

3 years or below 207 52.5

4–8 years 74 18.8

9–13 years 53 13.5

14–18 years 22 5.6

Over 18 years 38 9.6

Education level

Junior high school 32 8.8

Senior high school 84 23.1

Bachelor’s degree 224 61.5

Master’s degree 24 6.6

Position in the bank

General staff 301 82.7

Middle manager 60 16.5

Senior manager 3 0.8

TABLE II

Confirmatory factor analysis and reliability results

(Sample size = 364)

Indice/Variable Result p value/Alpha

v2 1452.15 p = 0.00 Degree of freedom 612

IFI 0.89

GFI 0.86

CFI 0.88

RMSEA 0.04

Positive affect 0.853 Alpha = 0.848

Ethical culture 0.811 Alpha = 0.801

Whistleblowing judgment 0.799 Alpha = 0.790

Whistleblowing intention 0.896 Alpha = 0.891

32 Julia Zhang et al.

intention. It suggested that for Chinese, younger

people, with less tenure in the organization, and in a

lower position, would be more likely to blow the

whistle. It also implied that older Chinese employees

would be more tolerant of the wrongdoing, and were

less likely to use the whistleblowing strategy. Though

the conclusions of the effects of demographic char-

acteristics such as age, gender, tenure, and position

on whistleblowing is inconsistent in the literature

(Miceli and Near, 1992), the findings of this study

showed that there is just the opposite to American

findings. For Americans, age, tenure and position are

positively related to the whistleblowing behavior

(Near and Miceli, 1996).

Hypothesis 1 investigated whether there was a

significant correlation between whistleblowing

judgment and whistleblowing intention. This was

tested using linear regression and revealed that the

predictors and control variables explained a total

30% (R 2 ) of the variance in whistleblowing inten-

tion (Table IV). Apart from the effect of control

variables, whistleblowing judgment made a signifi-

cant contribution to the explained variance, DR2 = 0.23, b = 0.48, p < 0.001 and final step DF (1,356) = 115.67, p = 0.000. Thus, Hypothesis 1 is

supported.

Hypotheses 2a and 2b predicted that there was a

moderating effect contributed by positive affect and

organizational ethical culture respectively on the

relationship between whistleblowing judgment and

whistleblowing intention. Though positive affect

correlates with whistleblowing judgment and whis-

tleblowing intention representatively, the results of

the hierarchical moderated regression analysis, dis-

played in Table V, showed no significant two-way

interaction effect between whistleblowing judgment

and positive affect, DR2 = 0.00, b = 0.05, p > 0.05; final step DF (1,354) = 1.32, p = 0.25. In other words, positive affect was not a moderator of the

relationship between judgment and intention, and

adding positive affect in the model did not

contribute a significant increment in variance.

Hypothesis 2a is rejected as a result. Hierarchical

moderated regression analysis revealed that the two-

way interaction term organizational ethical culture

by whistleblowing judgment was significant, b = 0.09, p < 0.05, DR2 = 0.01. The overall model fitted very well, F change for the final step DF (1,354) = 3.966, p = 0.047. Table VI shows that

apart from the aforementioned control variable ef-

fect and main effect, the moderating effect of orga-

nizational ethical culture added a significant

TABLE III

Means, standard deviations, and pearson correlation coefficients of studied variables (Sample size = 364)

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

1. Gender 0.52 0.50

2. Age 28.84 7.12 0.17**

3. Education 2.66 0.73 0.08 )0.08 4. Tenure 6.23 7.10 0.18** 0.82** )0.16** 5. Position 1.17 0.42 0.14** 0.38** 0.16** 0.36**

6. Per.Exp. 0.17 0.38 0.08 0.20** 0.04 0.23** 0.24**

7. Oth.Exp. 0.43 0.50 0.08 0.17** 0.00 0.22** 0.17** 0.38**

8. PA 2.84 0.70 0.07 0.01 0.09 0.03 0.14** 0.02 0.02

9. OEC 3.33 0.53 )0.01 )0.14** )0.03 )0.11* )0.02 )0.07 0.07 0.19** 10. WBJ 2.24 0.87 0.07 0.02 0.01 0.01 0.00 )0.09 )0.03 0.00 )0.14** 11. WBI 2.39 1.05 0.03 )0.17** )0.00 )0.12* )0.13* )0.20** )0.12* )0.05 )0.05 0.49**

Per.EXP., Personal experience of whistleblowing; Oth.Exp., Knowledge of other’s experience of whistleblowing; PA,

Positive affect; OEC, Organizational ethical culture; WBJ, Whistleblowing judgment; WBI, Whistleblowing intention.

Gender: 1 = ‘‘male’’ 0 = ‘‘female’’; Education: 1 = ‘‘junior high school’’ 2 = ‘‘senior high school’’ 3 = ‘‘bachelor de-

gree’’ 4 = ‘‘master degree’’;

Position: 1 = ‘‘general staff’’ 2 = ‘‘middle manager’’ 3 = ‘‘senior manager’’; Personal/Other Experience: 1 = ‘‘have

experience’’ 0 = ‘‘have no experience’’.

*p < 0.05, **p < 0.01 (Two-tailed test).

Decision-Making Process of Internal Whistleblowing Behavior in China 33

increment in variance. Thus, Hypothesis 2b is

therefore supported.

In view of the moderating analysis results

obtained in H2b, a plot diagram is drawn to illustrate

the moderating role of Organizational Ethical Cul-

ture on the relationship between Whistleblowing

Judgment and Whistleblowing Intention (Figure 1).

Based upon theories of ethical decision-making

models in the literature, whistleblowing judgment

and whistleblowing intention were hypothesized to

be the two major decision-making steps in the

whistleblowing decision-making process. It was

predicted that an individual’s whistleblowing judg-

ment would be positively related to his/her whis-

tleblowing intention. This hypothesis was strongly

supported by the findings of the Chinese sample.

This confirmed the prediction that if people are in a

whistleblowing dilemma, and if they judge blowing

the whistle to be the acceptable, fair, ethical, and

right choice, then they are more likely to form

an intention to blow the whistle. However, one

additional interesting observation derived from

the descriptive statistics of the findings is that

our respondents appeared to score lower on both

whistleblowing judgment and whistleblowing

intention than those in similar studies conducted by

Chiu (2003) and Chiu and Erdener (2003), using

very similar instruments. These studies covered

subjects of Chinese ethnic origin from Shanghai,

Guangzhou, and Hong Kong respectively. We

suggest that there could be possible that the

employees from the banking industry in Hangzhou

tend to be more uncomfortable with the ethicality of

whistleblowing than are their counterparts in these

three Chinese cities.

The concept of organizational ethical culture, as

developed by Trevino et al. (1995), is a multi-

dimensional construct that provided cues about the

organization’s efforts to promote either ethical or

unethical behavior. It was hypothesized to be a

contextual influence on people’s whistleblowing

decision-making process, in that it affected people’s

tendencies to transform their whistleblowing

judgment to the whistleblowing intention. This

TABLE IV

Results of hierarchical regression analyses on the rela-

tionship of Whistleblowing Judgment (WBJ) to the

whistleblowing intention

Independent variables Step 1 Step 2

ba b

Control variable

Gender 0.07 0.03

Age )0.20* )0.22** Education 0.01 0.00

Tenure 0.10 0.11

Position )0.05 )0.05 Personal experience )0.16* )0.12 Other’s experience )0.04 )0.04

Main effect variable

WBJ 0.48***

DF 3.69*** 115.68*** R

2 0.07 0.30

DR2 0.07 0.23

a Standardized regression coefficients.

*p < 0.05.

**p < 0.01.

***p < 0.001.

TABLE V

Results of hierarchical regression analyses of regressing

whistleblowing intention on controls, Whistleblowing

Judgment (WBJ), Positive Affect (PA), and their

Interactions (WBJ�PM)

Independent variables Step 1 Step 2 Step 3

ba b b

Control variable

Gender 0.07 0.03 0.03

Age )0.20* )0.22** )0.21** Education 0.01 0.00 0.01

Tenure 0.10 0.11 0.10

Position )0.05 )0.04 )0.05 Personal experience )0.16** )0.12* )0.12* Other’s experience )0.04 )0.04 )0.04

Main effect variable

WBJ 0.48*** 0.48***

PA )0.04 )0.04 Moderation effect

WBJ�PA 0.05 DF 3.69*** 58.27*** 1.32 R

2 0.07 0.30 0.30

DR2 0.07 0.23 0.00

a Standardized regression coefficients.

*p < 0.05.

**p < 0.01.

***p < 0.001.

34 Julia Zhang et al.

assumption was also held true by the findings. Thus,

employees’ perception of their organizational ethical

culture positively interacts with their whistleblowing

judgment to the produce whistleblowing intention.

Therefore, people who perceive their organizations

as highly ethical will have less concern about retal-

iation, and have more confidence that their report-

ing will be considered as legitimate and appropriate

by the management. They will also have a more

optimistic outlook concerning the success of their

intervention, because the ethical culture provides

them with the cue that ethical conduct is encour-

aged, and unethical behavior is disciplined. Since

people feel a sense of ‘‘value congruence’’ with their

organization when they perceive that their ethical

judgment agrees with organization’s ethical culture,

they will be more likely to report the wrongdoing

(Enz, 1986). Therefore, if people perceive their

organization to be ethical, the relationship between

their whistleblowing judgment and whistleblowing

intention will be stronger.

On the other hand, research in social psychology

indicated that people experiencing positive affect

were more likely to protect their organization and

make constructive suggestions to improve their

organization well-being (George, 1991; Van Scotter

and Motowidlo, 1996) and Gaudine and Thorne

(2001) suggested that positive affect might interact

with cognition in the whistleblowing phenomenon.

However, our finding does not support these argu-

ments and this result was evident by the poor rela-

tionship between positive affect and whistleblowing

intention (r = )0.05). That Chinese people with positive affect are unlikely to conduct whistleblow-

ing may be because they would avoid unnecessary

troubles, a significant behavioral outcome under the

influence of traditional Chinese cultural values.

Theoretical implications in the Chinese context

Whistleblowing provides ordinary citizens in China

with a legal weapon to fight against official malfea-

sance, misfeasance, and nonfeasance (Gong, 2000,

p. 1899) because it is used in the context of an anti-

corruption campaign in recent years. As our findings

suggest, younger and less experienced respondents

tended to have higher potential to blow the whistle

if the cause is just; it is not so of older counterparts.

TABLE VI

Results of hierarchical regression analyses regressing

whistleblowing intention on controls, Whistleblowing

Judgment (WBJ), Organizational Ethical Culture

(OEC), and their Interactions (WBJ�OEC)

Independent variables Step 1 Step 2 Step 3

ba b b

Control variable

Gender 0.07 0.03 0.03

Age )0.20* )0.22** )0.22** Education 0.01 0.00 0.00

Tenure 0.10 0.11 0.11

Position )0.05 )0.05 )0.04 Personal experience )0.16** )0.12** )0.12* Other’s experience )0.04 )0.04 )0.04

Main effect variable

WBJ 0.48*** 0.47***

OEC 0.00 0.00

Moderation effect

WBJ�OEC 0.09* DF 3.69*** 57.68*** 3.97* R

2 0.07 0.30 0.30

DR2 0.07 0.23 0.01

a Standardized regression coefficients.

*p < 0.05.

**p < 0.01.

***p < 0.001.

Figure 1. Plots of the moderating role of organizational

ethical culture on the relationship between whistle-

blowing judgment and whistleblowing intention.

Decision-Making Process of Internal Whistleblowing Behavior in China 35

Perhaps, older Chinese people are more conservative

and obedient (Gong, 2000; Patel, 2003) and are less

likely to challenge the status quo and less willing to

speak out their true opinion (Bond, 1996). On the

other hand, younger Chinese people today are less

influenced by the traditional values of the five-

cardinal relationships and subsequently they do not

accept the notion and practice of paternalism (Chiu

and Erdener, 2003; Redding, 1990). Thus, they do

not consider listening without question to senior

colleagues and organizational authorities as virtues of

courtesy, obedience, and loyalty. Furthermore, in

China, the younger generations are taught to speak

up and expose the unjust in order to protect the

common benefits or welfare of the community, even

speaking up against their significant others on self-

centered behavior for personal gain (Chiu, 2003;

Ma, 1996). This was evidenced in cross-cultural

whistleblowing literature, which highlighted the

impact of cultural characteristics such as power dis-

tance and collectivism on whistleblowing (Tavakili

et al., 2003) when it was suggested that the younger

generation of Chinese are more individualist and are

less concerned about power distance than their older

counterparts.

However, we should be mindful if we attempt to

conclude that the sharp cross-cultural differences

about the desirability of whistleblowing action

which have been found in the whistleblowing lit-

erature (e.g., Keenan, 2002; Park et al., 2005; Patel,

2003) does not necessarily stand here, especially

when ethicality of whistleblowing appears to be a

universal phenomenon. Looking at the mean score

of our respondents on whistleblowing judgment and

whistleblowing intention, they were rather on the

low side on a scale of 1 to 5 indicating that, although

Chinese people despise corruption, many of our

respondents would not take the initiative to fight

against the authority on corruption or unethical

charges. Among various explanations to this obser-

vation, we believe that there are two major ones.

First, in the Chinese societies, there is still a very real

and demanding pressure to keep unity within the

in-group, to mind one’s own business, to conform

to the norm and to maintain harmony (Bond, 1996;

Greenberger et al., 1987; Redding, 1990). This is by

far a contradiction of the characteristics of whistle-

blowers as suggested by the literature including,

but not limited to, utilitarian, unconformity, and

altruism (Greene and Latting, 2004). These Chinese

cultural characteristics, such as high power distance

and high uncertainty avoidance (Hofstede, 1980)

may even explain why people with positive affect

would choose not to blow the whistle in order to

not put themselves in any undesirable consequences.

Second, it is commonly seen in the literature that

often most whistleblowers have to pay for their

honesty and courage because retaliation is most

certain and severe especially when there is no law

protecting them at the time. An example, Gong, in

his article ‘‘Whistleblowing: What does it mean in

China?’’ published in International Public Administra-

tion in 2000, reported that, cited from Renmin

Xinfang (January 1992), ‘‘an official estimate, by

1991 more than 10,000 whistleblowers had suffered

different forms of reprisal ranging from dismissal, job

transfer, demotion, to harassment and intimidation,

with three being murdered’’ (p. 1903).

Again, referring to the psychological process of

whistleblowing decision making, Chinese traditional

cultures, social values, and political ideology con-

cerning whistleblowing do influence Chinese peo-

ple’s perception on the ethicality of whistleblowing

overall; but, its impact may be different from one city

to the other in the country. As Chen (2001) suggested,

people with different societal backgrounds and subject

to different socio-economical influences have differ-

ent views on what is ethical or unethical. In fact, the

work by Chiu and Erdener (2003) indicates that there

is a significant difference between Hong Kong

Chinese and Shanghai Chinese in whistleblowing

judgment because of differences in, on one hand,

social, political, and legal environments, and on the

other, ethical ideology and social norms. However,

having said that, whistleblowing is likely to be found

in big cities in the country because of the exposure to

international ethical business standards and there are

great challenges ahead for business executives to bal-

ance their ‘‘good business’’ and ‘‘good ethics’’ under

the conditions of the contemporary market economy

in China.

Practical implication in the Chinese context

The results of this study provide valuable insights for

senior executives who are in charge of human

resource management (HRM) in the banking

36 Julia Zhang et al.

industry of China. Internationally, the importance of

disclosure of organizational wrongdoing as a mis-

conduct control mechanism is most clearly illustrated

by Time magazine at the end of 2002 (December, 22,

2002), which selected three whistleblowers at

Enron, WorldCom, and the FBI as Persons of the

Year for 2002. The disclosure of unethical behavior

can protect companies from expensive lawsuits,

financial loss and decreased morale. In fact, whis-

tleblowing can be seen as a core strategic and

operational component to maintain and improve

quality (Lewis, 1997). An early detection of

wrongdoing, and early intervention, may be bene-

ficial in both the short and long run. It is an espe-

cially important aspect to Chinese businesses, which

are competing in both domestic and international

arenas. When disclosure is positively encouraged and

proper channels are provided, whistleblowing will

not challenge the authority. On the contrary, when

appropriate mechanisms are not available, would-be

whistleblowers have no alternative but to take and

place the issue under the public spotlight. Unfortu-

nately, this is the usual avenue observed in China

recently. Therefore, the research findings of this

study have significant management implications

concerning how Chinese banking firms may en-

hance their ability to deal with proper internal dis-

closure behavior when things get out of hand.

First, there is a clear demand for people devel-

opment in China. Indeed, improving the overall

quality of their human capital is an eminent task

ahead. According to the findings, given that whis-

tleblowing judgment was an important antecedent of

whistleblowing behavior, employees who perceive

whistleblowing as an ethical behavior will be more

likely to blow the whistle. Since a person’s moral

development level can be enhanced by some inter-

vention strategies (Trevino, 1986), human resource

department should provide various training pro-

grams to further develop employees’ moral sensi-

tivity, such as T-group, in-basket exercise, attitude

training, behavioral modification workshops and

so forth. This could include opportunities for

employees to perform role-taking exercises and

resolve moral conflicts in the workplace. These

complementary approaches could help employees to

develop their ethical sensitivity, reinforce their

ethical values, and take more ethical behavior

responsibility.

Second, the results of this study clearly demon-

strated that an ethical corporate culture, functioning

as an informal organizational system, dictates indi-

vidual ethical behavior of the organizational mem-

bers. Therefore, fostering a company-wide ethical

culture is a way for managers to encourage positive

reporting in Chinese businesses. Effective HRM

delivery is particularly important in sustaining a

strong corporate culture (Robbins, 1993). Social

learning theory indicates that employees would learn

to model their behavior after that of their superiors

(Brown et al., 2005), hence senior management

should view themselves as standard moral leaders of

the organizations, and show concern for, as well as

exhibit, ethical behavior. In China, such effect will

be more prominent, due to the authoritarian nature

often found in Chinese business management con-

texts. If only the leaders would clearly express an

ethical orientation, other management people may

follow to openly emphasize the powerful effects of

moral beliefs on the decision to blow the whistle.

Such practices will encourage employees to behave

more ethically and strengthen the ethical atmosphere

of the organization. Specifically, policy makers in

Chinese business are expected to make more effort

to establish due system, including definition of the

issues, avenues to raise concerns, and channels for

receiving feedback.

Finally, this study provides insights for westerners

conducting business in China. Different from their

western counterparts, Chinese employees tend to be

bounded more by the group due to a collectivism

culture. That is why developing a moral corporate

culture is most critical in encouraging the disclosure

behaviors in Chinese firms. To this end, we would

suggest to employ a formal organizational system to

encourage positive and healthy internal whistle-

blowing behavior, such as an ethical standards com-

mittee, a code of conduct, an ethic officer, and/or an

internal disclosure policy (Vinten, 1992). In fact, it is

suggested that having internal reporting procedures

encourages internal disclosures but not external

whistleblowing (Keenan, 2002). A sensible internal

disclosure policy could include definition of the

issues, avenues to raise concerns, channels for receiv-

ing feedback, appeal system, and confidentiality

(Lewis, 1997). Anonymity is an essential prerequi-

site to safe guard confidentiality and to encourage

healthy whistleblowing behaviors. Unlike people

Decision-Making Process of Internal Whistleblowing Behavior in China 37

from individualist societies, Chinese employees may

not be ‘bold’ enough to conduct whistleblowing

behaviors, simply because of their cultural orientation

and personality traits. Failure of this individual factor

in determining the whistleblowing behavior also calls

for more cautiousness and patience of westerners

doing business in China. Therefore, while anonymity

is usually adopted to encourage healthy whistle-

blowing behaviors, it may be useful enough in China

due to the complexity of the guanxi concept (Xin and

Pearce, 1996) and a much higher extent of fear in

employees, derived from a hierarchical management

system.

Limitations and conclusion

First, this cross-sectional study cannot shed light on

the causal directions of the relationships (Churchill

and Iacobucci, 2002). Longitudinal studies and field

experiments would help to map the causal rela-

tionships among judgment and other predictors of

whistleblowing intention, when other researchers

have suggested that ethics studies based on cross-

sectional survey data have serious doubts (Keenan,

2002; Victor et al., 1993). Second, in this study, the

scenario approach was utilized as a substitute for an

experimental setting to investigate the whistle-

blowing-decision-making process. While scenarios

provide a close to reality picture to capture behav-

ioral intentions, the scenario approach has limita-

tions. Only one scenario is used; and it did not

contain all the information that would be available in

a real-world situation. Third, the data obtained may

reflect some self-reported bias and common method

bias, even though the social desirability response bias

was found to be insignificant. However, as suggested

by Chiu (2003), it is quite difficult to find a second

source of information about an individual’s ethical

behavior, one that is neither distorted nor biased.

Fourth, the sample was predominantly general

banking staff in a Chinese city. Although a cross-

industry design could provide some evidence of the

general perceptions of people toward whistleblow-

ing, it is doubtful whether the results of such

research design could be exempted from the con-

founding effects of industry-related contingencies

involved in a wide range of industry types. Applying

the results of this study to employees working in an

industry other than the banking sector should be

made with caution (Shaw et al., 1998). As suggested

by Miceli and Near (1992), the workforce attracted

to certain industries may be different from that at-

tracted to other industries, and this could have an

impact on their propensity to blow the whistle.

Individuals who join banks, for example, may have

more ethical training and more experience in

blowing the whistle. Thus, this result limits the

generalization of the study to other populations, in

different regions and different industries. Hence,

future research is needed to examine that of other

business sectors and geographic locations.

In order to conclude, this study was the first

attempt to test a whistleblowing decision-making

model among Chinese employees working in the

banking industry. Based on a decision-making

model derived from western theories, we would like

to explain the psychological processes of Chinese

employees in regards of internal whistleblowing

behavior. This study enriches the literature of

whistleblowing psychological process by testing in a

context with unique cultural characteristics. This

study has shown that in China, people’s perception

of their organizational ethical culture is a significant

factor influencing people’s judgment of whistle-

blowing and the whistleblowing intention during

their decision-making process whether or not to

blow the whistle. With the institutional transfor-

mation and government’s campaign to root out

corruption, we would expect more improvement in

establishing an effective ethics management system,

along with the reform and internationalization of

Chinese businesses.

References

Ajzen, I.: 1991, ‘The Theory of Planned Behavior’,

Organizational Behavior and Human Decision Processes 50,

179–211.

Baker, T. L.: 1994, Doing Social Research (McGraw-Hills,

New York).

Barnett, T., K. Bass and G. Brown: 1996, ‘Religiosity, Ethical

Ideology, and Intentions to Report a Peer’s Wrongdoing’,

Journal of Business Ethics 15(11), 1161–1174.

Barsade, S. G. and D. E. Gibson: 2007, ‘Why does Affect

Matter in Organizations’, Academy of Management

Perspectives 21(1), 36–59.

38 Julia Zhang et al.

Bless, H., G. L. Clore, N. Schwarz, V. Golisano, C. Rabe

and M. Wolk: 1996, ‘Mood and the Use of Scripts:

Does a Happy Mood Really Lead to Mindlessness?’,

Journal of Personality and Social Psychology 71, 665–679.

Bond, M.: 1996, The Handbook of Chinese Psychology

(Oxford, London).

Brabeck, M.: 1984, ‘Ethical Characteristics of Whistle-

Blowers’, Journal of Research in Personality 18, 41–53.

Brewer, G. A. and S. C. Selden: 1995, ‘Whistleblowers in

the Federal Civil Service: New Evidence of the Public

Service Ethic?’, Revised version of paper presented at

the annual meeting of the American Political Science

Association, Chicago, IL.

Brislin, R. W.: 1986, ‘The Wording and Translation of

Research Instruments’, in W. J. Lonner and J. W.

Berry (eds.), Field Methods in Cross-Cultural Research

(Sage, Newbury Park, CA).

Brown, M. E., L. K. Trevino and D. A. Harrison: 2005,

‘Ethical Leadership: A Social Learning Perspective for

Construct Development and Testing’, Organizational

Behavior and Human Decision Processes 97(2), 117–135.

Carroll, S. J. and M. J. Cannon: 1997, Ethical Dimensions

of International Management (Sage, London).

Chen, T. T. Y.: 2001, ‘Ethical Control Mechanism: A

Comparative Observation of Hong Kong Companies’,

Journal of Business Ethics 30(4), 391–400.

Chiu, R.: 2003, ‘Ethical Judgment and Whistleblowing

Intention: Examining the Moderating Role of Locus

of Control’, Journal of Business Ethics 43, 65–74.

Chiu, R. and C. Erdener: 2003, ‘The Ethics of Peer

Reporting in Chinese Societies: Evidence from Hong

Kong and Shanghai’, International Journal of Human

Resource Management 14(2), 335–353.

Chiu, R. and F. Kosinski: 1999, ‘The Role of Affective

Dispositions in Job Satisfaction and Work Strain:

Comparing Collectivist and Individualist Societies’,

International Journal of Psychology 34(1), 19–28.

Churchill, G. A. Jr. and D. Iacobucci: 2002, Marketing

Research: Methodological Foundations (South-Western,

Thomson Learning, Ohio).

Cohen, J. R., L. W. Pant and D. J. Sharp: 1993, ‘A Vali-

dation and Extension of a Multidimensional Ethics

Scale’, Journal of Business Ethics 12, 13–26.

Davis, P. W. F.: 1997, Current Issues in Business Ethics

(Routledge, London).

Delery, J. E.: 1998, ‘Issues of Fit in SHRM: Implication

for Research’, Human Resource Management Review 8,

289–309.

De Maria, W.: 2006, ‘Common Law: Common Mis-

takes? Protecting Whistleblowers in Australia, New

Zealand, South Africa and the United Kingdom’,

International Journal of Public Sector Management 19(7),

643–658.

Dozier, J. B. and M. P. Miceli: 1985, ‘Potential Predictors

of Whistle-blowing: A Prosocial Behavior Perspective’,

The Academy of Management Review 10(4), 823–836.

Dworkin, T. M. and M. S. Baucus: 1995, ‘Internal Versus

External Whistleblowers: A Comparison of the

Whistleblowing Process’, Paper presented at the

meetings of the Academy of Management, Vancouver.

Enz, C. A.: 1986, Power and Shared Values in the Corporate

Culture (University of Michigan Research Press, Ann

Arbor).

Ferrell, O. C. and L. G. Gresham: 1985: ‘A Contingency

Framework for Understanding Ethical Decision

Making in Marketing’, Journal of Marketing 49(3),

84–96.

Ferrell, O. C., L. G. Gresham and J. Fraedrich: 1989, ‘A

Synthesis of Ethical Decision Models for Marketing’,

Journal of Macromarketing 9(2), 55–64.

Forgas, J. P. (ed.): 2001, The Handbook of Affect and Social

Cognition (Lawrence Erlbaum, Mahwah, New Jersey).

Fukuyama, F.: 1995, Trust (Free Press, New York).

Gaudine, A. and L. Thorne: 2001, ‘Emotion and Ethical

Decision-Making in Organizations’, Journal of Business

Ethics 31(2), 175–187.

George, J. M.: 1991, ‘State or Trait: Effects of Positive

Mood on Prosocial Behaviors at Work’, Journal of

Applied Psychology 76(2), 299–307.

Glazer, M.: 1983, ‘Ten Whistle-Blowers and How they

Fared’, Hastings Center Report (December), 33–41.

Gong, T.: 2000, ‘Whistleblowing: What does It Mean in

China?’, International Journal of Public Administration

23(11), 1899–1923.

Greenberger, D. B., M. P. Miceli and D. Cohen: 1987,

‘Oppositionists and Group Norms: The Reciprocal

Influence of Whistle-Blowers and Co-Workers’,

Journal of Business Ethics 6, 527–542.

Greene, A. D. and J. K. Latting: 2004, ‘Whistle-Blowing

as a Form of Advocacy: Guidelines for the Practitioner

and Organization’, Social Work 49(2), 219–231.

Hair, J. F. Jr., R. E. Anderson, R. L. Tatham and W. C.

Black: 1998, Multivariate Data Analysis, 3rd Edition

(Prentice-Hall, New Jersey).

Hofstede, G.: 1980, Culture’s Consequences: International

Differences in Work-Related Values (Sage, London).

Hooks, K. L., S. E. Kaplan, and J. Schultz Jr.: 1994,

‘Enhancing Communication to Assist in Fraud Pre-

vention and Detection’, Auditing: A Journal of Practice &

Theory (Fall), 86–117.

Hunt, S. D. and S. J. Vitell: 1986, ‘A General Theory of

Marketing Ethics’, in N. C. Smith and J. A. Quelch

(eds.), Ethics in Marketing (Irwin, Boston, MA), pp.

757–774.

Isen, A. M., K. A. Daubman and G. P. Nowicki: 1987,

‘Positive Affect Facilitates Creative Problem Solving’,

Decision-Making Process of Internal Whistleblowing Behavior in China 39

Journal of Personality and Social Psychology 51, 1122–

1131.

Jakes, S.: 2003, Beijing’s SARS Attack: Doctor and Party

Member Insists There are Many More Cases than Officials will

Admit (April, 8). Retrieved May 17, 2006, from http://

www.time.com/time/asia/news/article/0,9754,4416

15,00.html.

Jones, T.: 1991, ‘Ethical Decision-Making by Individuals

in Organization: An Issue-Contingent Model’, Acad-

emy of Management Review 16(2), 366–395.

Joreskog, K. G. and D. Sorbom: 1993, LISREL 8:

Structural Equation Modeling with SIMPLIS Command

Language (Scientific Software International Inc,

Chicago, IL).

Jos, P. H., M. E. Tompkins and S. W. Hays: 1989, ‘In

praise of Difficult People: A Portrait of the Committed

Whistleblower’, Public Administration Review 49(6),

552–561.

Jubb, P. B.: 1999, ‘Whistleblowing: A Restrictive Defi-

nition and Interpretation’, Journal of Business Ethics

21(1), 77–94.

Kaptein, M.: 2002, ‘Guidelines for the Development of

an Ethics Safety Net’, Journal of Business Ethics 41,

217–234.

Keenan, J. P.: 2002, ‘Whistleblowing: A Study of Man-

agerial Differences’, Employee Responsibilities and Rights

Journal 14, 17–32.

Keenan, J. P. and R. L. Sims: 1995, ‘The Organizational

and Intrapersonal Influences on Whistleblowing’,

Paper submitted to the Social Issues in Management

Division of the Academy of Management.

King, G. III: 1997, ‘The Effects of Interpersonal Close-

ness and Issue Seriousness on Blowing the Whistle’,

The Journal of Business Communication 34(4), 419–437.

Laczniak, G. R. and P. E. Murphy: 1991, ‘Fostering

Ethical Marketing Decision’, Journal of Business Ethics

10, 259–271.

Lampe, J. and D. Finn: 1992, ‘A Model of Auditors’ Ethical

Decision Process’, in K. Woldring (ed.), Auditing: A

Journal of Practice & Theory (Supplement), 1–21.

Lennane, J.: 1996, ‘What Happens to Whistleblowers and

Why’, in Business Ethics (Nelson, Melbourne).

Lewis, D.: 1997, ‘Whistleblowing at Work: Ingredients

for an Effective Procedure’, Human Resource Manage-

ment Journal 7(4), 5–11.

Lucas, R. E.: 2000, ‘Pleasant Affect and Sociability:

Towards a Comprehensive Model of Extraverted

Feelings and Behaviors. Unpublished doctoral disser-

tation, University of Illinois.

Ma, S. K.: 1996, Administrative Reform in Post-Mao China

(University Press of America, New York).

Miceli, M. P. and J. P. Near: 1984, ‘The Relationship

Among Beliefs, Organizational Position, and Whistle-

blowing Status: A Discriminant Analysis’, Academy of

Management Journal 27(4), 687–705.

Miceli, M. P. and J. P. Near: 1992, Blowing the Whistle:

The Organizational and Legal Implications for Companies

and Employees (Lexington Press, New York).

Miceli, M. P. and J. P. Near: 1994, ‘Whistleblowing:

Reaping the Benefits’, The Academy of Management

Executive 8(3), 65–72.

Miceli, M. P., J. P. Near and C. R. Schwenk: 1991,

‘Who Blows the Whistle and Why?’, Industrial and

Labor Relations Review 45(1), 113–130.

Miceli, M. P., J. R. Van Scotter, J. P. Near and M. T.

Rehg: 2001, ‘Response to Perceived Organizational

Wrongdoing: Do Perceived Characteristics Matter?’,

in J. M. Darley, D. M. Messick and T. R. Tyler (eds.),

Social Influences on Ethical Behavior in Organizations

(Erlbaum, London), pp. 119–135.

Near, J. P. and M. P. Miceli: 1985, ‘Organizational

Dissidence: The Case of Whistle-Blowing’, Journal of

Business Ethics 4, 1–16.

Near, J. P. and M. P. Miceli: 1987, ‘Whistle-Blowers in

Organizations: Dissidents or Reformers’, in B. M.

Staw and L. L. Cummings (eds.), Research in Organi-

zational Behavior, Vol. 9 (JAI Press, Greenwich, Conn),

pp. 321–368.

Near, J. P. and M. P. Miceli: 1996, ‘Whistleblowing:

Myth and Reality’, Journal of Management 22(3), 507–

526.

Near, J. P., M. T. Rehg, J. R. Van Scotter and M. P.

Miceli: 2004, ‘Does Type of Wrongdoing Affect the

Whistleblowing Process?’, Business Ethics Quarterly

14(2), 219–242.

Nee, V.: 1992, ‘Organizational Dynamics of Market

Transition: Hybrid Forms, Property Rights, and

Mixed Economy in China’, Administrative Science

Quarterly, 37.

North, D. C.: 1990, Institutions, Institutional Change and

Economic Performance (Cambridge University Press,

Cambridge).

Nunnally, J. C.: 1978, Psychometric Theory, 2nd Edition

(McGraw-Hill, New York).

Park, H., M. T. Rehg and D. Lee: 2005, ‘The Influence of

Confucian Ethics and Collectivism on Whistleblowing

Intentions: A Study of South Korean Public Employ-

ees’, Journal of Business Ethics 58, 387–403.

Parkes, K. R.: 1990, ‘Coping, Negative Affectivity, and

the Work Environment: Additive and Interactive

Predictors of Mental Health’, Journal of Applied

Psychology 75, 399–409.

Patel, C.: 2003, ‘Some Cross-Cultural Evidence on

Whistle-Blowing as an Internal Control Mecha-

nism’, Journal of International Accounting Research 2,

69–96.

40 Julia Zhang et al.

Ponemon, L. A.: 1994, ‘Comment: Whistle-Blowing as

an Internal Control Mechanism: Individual and

Organizational Considerations’, Auditing: A Journal of

Practice & Theory 13(2), 118–130.

Redding, G.: 1990, The Spirit of Chinese Capitalism

(Walter de Gruyter, New York).

Reidenbach, R. E. and D. P. Robin: 1988, ‘Some Initial

Steps Toward Improving the Measurement of Ethical

Evaluations of Marketing Activities’, Journal of Business

Ethics 7, 871–879.

Reidenbach, R. E. and D. P. Robin: 1990, ‘Toward the

Development of a Multidimensional Scale for

Improving Evaluations of Business Ethics’, Journal of

Business Ethics 9, 639–653.

Rest, J.: 1986, Moral Development: Advances in Research and

Theory (Praeger, New York).

Robbins, S. P.: 1993, Organizational Behavior (Prentice-

Hall, New Jersey).

Rothschild, J. and T. D. Miethe: 1999, ‘Whistle-Blower

Disclosures and Management Retaliation’, Work and

Occupation 26(1), 107–128.

Shaw, J. D., J. E. Delery, G. D. Jenkins Jr. and N. Gupta:

1998, ‘An Organizational-Level Analysis of Voluntary

and Involuntary Turnover’, Academy of Management

Journal 41, 511–525.

Tavakoli, A. A., J. P. Keenan and B. Crnjak-Karanovic:

2003, ‘Culture and Whistleblowing: An Empirical

Study of Croatian and United States Managers Uti-

lizing Hofstede’s Cultural Dimensions’, Journal of

Business Ethics 43, 49–64.

Trevino, L. K.: 1986, ‘Ethical Decision Making in

Organizations: A Person-Situation Interactionist

Model’, The Academy of Management Review 11(3),

601–617.

Trevino, L. K., K. D. Butterfield and D. L. McCabe:

1995, ‘Contextual Influences on Ethics-Related Out-

comes in Organizations: Rethinking Ethical Climate

and Ethical Culture’, Paper presented at the Annual

Academy of Management Meeting, Vancouver, BC.

Trevino, L. K., C. D. Sutton and R. W. Woodman:

1985, August, ‘Effects of Reinforcement Contingen-

cies and Cognitive Moral Development on Ethical

Decision-Making Behavior’, Paper presented at the

Annual Academy of Management Meeting, San

Diego, CA.

Trevino, L. K. and B. Victor: 1992, ‘Peer Reporting of

Unethical Behavior: A Social Context Perspective’,

Academy of Management Journal 35(1), 38–64.

Van Scotter, J. R. and S. J. Motowidlo: 1996, ‘Inter-

personal Facilitation and Job Dedication as Separate

Facets of Contextual Performance’, Journal of Applied

Psychology 81, 525–531.

Vandekerckhove, W.: 2006, Whistleblowing and Organi-

zational Social Responsibility: A Global Assessment

(Ashgate, Portland).

Vandekerckhove, W. and M. S. R. Commers: 2004,

‘Whistle Blowing and Rational Loyalty’, Journal of

Business Ethics 53, 225–233.

Victor, B., L. K. Trevino and D. L. Shapiro: 1993, ‘Peer

Reporting of Unethical Behavior: The Influence of

Justice Evaluations and Social Context Factors’, Journal

of Business Ethics 12, 253–263.

Vinten, G.: 1992, ‘Whistleblowing: Corporate Help or

Hindrance?’, Management Decision 30(1), 44–48.

Vinten, G.: 1999, ‘Whistleblowing – Hong Kong Style’,

Public Administration and Policy 8(1), 1–19.

Watkins, D. and S. Cheung: 1995, ‘Culture, Gender, and

Response Bias’, Journal of Cross-Cultural Psychology

26(5), 490–504.

Watson, D., L. A. Clark and A. Tellegen: 1988, ‘Devel-

opment and Validation of Brief Measures of Positive

and Negative Affect: The PANAS Scales’, Journal of

Personality and Social Psychology 54(1), 1063–1070.

Wright, P. C., W. F. Szeto and S. K. Lee: 2003, ‘Ethical

Perceptions in China: The Reality of Business Ethics

in an International Context’, Management Decision

41(1/2), 180–189.

Xin, H: 2006, ‘Banking Crimes Detected by China

Banking Regulatory Commission Cost 767.1 Billion

RMB, with 6828 Employees Involved in Year 2005’,

(Feb. 7). Retrieved Feb 7, 2006, from http://

news3.xinhuanet.com/legal/2006–02/07/content_

4386270.htm.

Xin, K. R. and J. L. Pearce: 1996, ‘Guanxi: Connections

as Substitutes for Formal Institutional Support’, Acad-

emy of Management Journal 39(6), 1641–1658.

Yik, M. and J. A. Russell: 2003, ‘Chinese Affect

Circumplex: 1. Structure of Recalled Momentary

Affect’, Asian Journal of Social Psychology 6, 185–200.

Zey-Ferrell, M. and O. Ferrell: 1982, ‘Role-Set

Configuration and Opportunities as Predictors or

Unethical Behavior in Organizations’, Human Relations

587–604.

Julia Zhang

KPMG,

Shanghai, Peoples’ Republic of China

Randy Chiu and Liqun Wei

Department of Management,

Hong Kong Baptist University,

Kowloon Tong, Hong Kong

E-mail: [email protected]

Decision-Making Process of Internal Whistleblowing Behavior in China 41