The Upper Echelon Theory: An Examination of the Link between Integrity and Values - Corporate Governance and Business Ethics

For the purposes of their study, Gay and Dulewicz (1997) defined someone who has integrity as someone who this competency-based definition captures some important aspects of integrity. In a meta-analysis of integrity in the literature, Palanski and Yammarino (2007) summaries five attributes of integrity: (i) wholeness, (ii) authenticity, (iii) words/action consistency, (iv) consistency in adversity, and (v) morality. Words/action consistency or the importance of leaders’ “walking the talk” is a key aspect of integrity that runs through the literature (e.g., Aitken 2007). Simons (2002) stress the importance of “behavioral integrity” the consistency of words and actions. In this context, “the talk” refers to the personal values of directors and leaders. Badaracco and Ellsworth (1992) describe integrity as consisting of a manager’s personal values, daily actions, and basic organizational aims.

A number of authors relate integrity to understanding and owning one’s set of values and acting accordingly (Palanski and Yammarino 2007). In this sense, integrity is a director’s or managers “authentic talk”, not just the espoused values which are uttered to “get along” in the organization. Simons (2002) actually measures integrity by the consistency of a leader’s espoused versus actual values. Srivastva observes,

Srivastva (1988) contends that different actors see things differently due to different “mental maps” and “world views” due to their (our) different values and norms. An actor’s or leader’s integrity is ultimately determined by other actor’s perception that varies by one’s values.

This view of values acting as a perpetual filter is supported by the upper echelon theory, which posits that values act as a filter impacting executives’ and directors’ decisions as seen in Figure.

The-upper-echelon-theory

The-upper-echelon-theory

Extending this to integrity, the literature indicates that actors’, i.e., leaders’, directors’, managers’, and employees’ perceptions of integrity are filtered by their values. Therefore, the board values dynamic, i.e., the dynamic between the values of the CEO and the rest of the board, influences the varying perceptions of integrity that might exist in the board as well as the board “talk” (the board agenda) and how it behaves (the “walk”).

The key element of integrity is words/action consistency that has been briefly reviewed. Key to integrity and words/action constancy is personal values. Values are the authentic “talk” whose consistency with the “walk”, i.e., behaviors, is the crux of integrity. The next section will pull the various strands together to make a proposition to be researched.

The following proposition builds on Gay and Dulewicz’s (1997) research that integrity is the most important quality to board performance and several authors’ (e.g., Badaracco and Ellsworth 1992; Simons 2002) contention that understanding one’s dominant values is integral to understanding one’s perception of integrity. This is supported by the upper echelon theory that contends that values filter executives’ perception of integrity and Srivastva’s (1988) view that different actors see things differently due to different “mental maps” and “world views” due to different values and norms that leads us to the following proposition.

This proposition is examined through exploratory research by empirically analyzing and interpreting different value systems of respondents, which is outlined in the next section.


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