New ESMT Berlin research explains how companies drift into unethical behavior

The new study, “The Emergence of Collective Moral Disengagement,” was co-authored by Ulf Schaefer (ESMT), Urs Müller (SDA Bocconi School of Management), and Johannes Habel (C.T. Bauer College of Business, University of Houston) and has been published in the peer-reviewed Journal of Business Ethics. The researchers examine how unethical behavior becomes normalized inside organizations before major misconduct occurs. While previous research has often focused on individuals or on rationalizations after wrongdoing has already happened, the new study examines how unethical behavior becomes socially normalized within groups before major misconduct occurs. 

The paper develops a theoretical framework explaining how “collective moral disengagement” emerges inside organizations. Drawing on moral disengagement theory, multilevel theory, and research on complex adaptive systems, the researchers outline a three-phase process through which unethical behavior gradually becomes accepted within groups through shared justifications and social reinforcement. To illustrate these dynamics, they analyze several major corporate scandals, including Volkswagen’s Dieselgate emissions scandal, the Siemens bribery case, the Wells Fargo fake accounts scandal, and Purdue Pharma’s promotion of OxyContin. 

“Many major corporate scandals are not driven by isolated individuals, but by groups of people who gradually come to normalize problematic behavior together,” says Ulf Schaefer, senior lecturer at ESMT Berlin. “Employees may continue to see themselves as ethical people while collectively redefining what is considered acceptable inside the organization.”

The study identifies several factors that make organizations more vulnerable to unethical drift, including influential employees who legitimize questionable behavior, internal narratives that justify misconduct, and strong group loyalty that discourages employees from speaking up. 

The findings suggest companies should pay closer attention to the early organizational dynamics that can allow questionable behavior to spread and become embedded over time. The research highlights the importance of leadership signals, internal discussions, and incentive structures in shaping how employees collectively interpret ethical boundaries before misconduct escalates into larger organizational crises.