Hushed Whispers or Watchful Eyes? How Employees’ Source of Misconduct Information Differentially Affects Employees’ Whistle-Blowing and Managers’ Corrective Actions

Internal whistleblowing begins with employees becoming aware of ethical misconduct in their organization. While current research focuses on observation or direct evidence of wrongdoing as primary sources of knowledge of wrongdoing, it overlooks an important source of awareness: employees may also learn about misconduct, indirectly, by hearing about it from others. Drawing on cognitive appraisal theory, we investigate how employees’ source of knowledge (observing vs. hearing about the wrongdoing) influences both employees’ whistleblowing tendencies and managers’ willingness to take corrective actions. Across a critical incident study, a two-wave field study, an immersive behavioral experiment, and a scenario experiment, we find that employees are less likely to report misconduct they hear about than misconduct they observe. Managers, however, are equally willing to take corrective action regardless of whether a report originates from an employee who observed the misconduct or heard about it. We further find that the effect of knowledge source on taking action is mediated by anticipated guilt, even after accounting for felt obligation, perceived futility, and fear of retaliation. Together, our findings identify an important asymmetry in the whistleblowing process: indirect knowledge substantially reduces employees’ willingness to report misconduct, even though it does not diminish managers’ willingness to act on those reports.