Peer Reporting of Unethical Behavior: The Influence of Jusfce Evaluations and Social Context Factors B a r t V i c t o r Linda Klebe Trevino Debra L. Shapiro ABSTRACT. This field survey in a fast food restaurant setting tested the hypothesized influences of two social context variables (role responsibility and interests of group members) and justice evaluations (distributive, procedural, and retributive) on respondents' inclination to report theft and their theft reporting behavior. The results provided mLxed support for the hypotheses. Inclination to report a peer for theft was associated with role responsibility, the interests of group members, and procedural justice percep- tions. Actual reporting behavior was associated with the inclination to report and with retributive justice evaluations. Implications for future research and for management are discussed. Interest in managing ethical business behavior con- tinues to grow as businesses struggle with the costs of unethical behavior in the workplace. One type of unethical behavior that is particularly costly and difficult to manage is employee theft. The U.S. Chamber of Commerce estimates tha~ workplace theft costs U.S. businesses up to $40 billion each year Bart Victor is Associate Professor of Management in the Kenan Flagler School of Business at the University of North Carolina at Chapel Hill. He earned his Ph.D. in management. His research interests have focused on culture and climates in organizations and problems in organizational design. Linda Ktebe Trevinois Assistant Professor of Organizational Behavior at the Mary Jean and Prank B. Smeal College of Business Administration, The Pennqhmnia StateUniversity. She received her Ph.D. in management. Her research focuses on the management of ethical-unethical behavior in organizations andj~stice in disciplinary situations. Debra LShapiro is Associate Professor of Business Administration in the Kenan Flagter School of Business at the University of North Carolina at Chapel Hill, tier research regards managing cot~ict in organizations, via procedural justice, interactionaI justice, negotiation tactics, and grievance procedures. and employees are thought to be responsible for much of this unethical behavior (Caudill, 1988; Zemke, 1986). Controlling employee theft is a for- midable management problem in large part because it is so difficult to detect. And, although co-workers are more likely than supervisors to be aware of employee theft, powerful work group norms that promote group loyalty and discourage "tattling" inhibit them from reporting others' misconduct to management (Greenberger et al., 1987). Trevino and Victor (1992)have conceptualized peer reporting as a specific kind of whistle-blowing behavior (Near and Miceli, 1985). Whistlebtowing generally refers to an employee's disclosure of per- ceived wrongdoing in the organization. However, the whistle-blowing literature has focused primarily on reporting the wrongdoing of superiors rather than the wrongdoing of peers. Reporting a peer's wrongdoing to higher authorities may be more diffi- cult than reporting a superior (Cerrato, 1988) be- cause of group norms against reporting peers' mis- conduct (Greenberger et al., 1987) and because of stronger identification and empathy with the peer (Randall and Gibson, 1991). This study explores the conditions under which a work group member is more likely to engage in this risk T behavior in order to assist management. This study differs from previous work in several important ways. First, unlike previous studies that have focused primarily on the intentions (Randall and Gibson, 1991) or inclinations to peer report (Trevino and Victor,1992), this study investigates both inclinations and peer reporting behavior. Sec- ond, this study invokes a justice perspective to suggest that peer reportingbehavioris a positive behavioral reaction to justice evaluations, in addition to being influenced by previously studied social context factors. Finally, this study considersthe Journal of Business Ethics 12: 253--263, 1993, © 1993 KluwerAcademic Publishers. Printed in the Netherlands.