1. Income, Money Ethic, Pay Satisfaction, Commitment, and Unethical Behavior: The Hong Kong Experience Thomas Li-Ping Tang Middle Tennessee State University Randy Chiu Hong Kong Baptist University April 4, 2002

2. The Color of Money Color Size Shape Cross-Cultural Differences: History, Culture, People (Citizen, President, King, Queen), Architecture, National Pride, World View, Euro- 305M 12

3. The Meaning of Money Money is an important factor in the lives of all of us. One can not live without money. It applies to modern citizens in all over the world.

6. The Meaning of Money Money is the instrument of commerce and the measure of value (Smith, 1776/1937). The meaning of money is “in the eye of the beholder” (McClelland, 1967, p. 10).

7. Money is the Measure of Value Who has more value? 1. An Economist Eugen Bohm Bawerk 2. A Psychologist Sigmund Freud 3. An Artist Moritz M. Daffinger

8. In Austria Austrian Schillings (ATS) US$1 = ATS 15.53 (1/1/2002) An Economist ATS 100 A Psychologist ATS 50 An Artist ATS 20 The Value is on the Face of ATS!? Who has the most money?

12. The Meaning of Money: Theory Money is a motivator (Gupta & Shaw, 1998; Lawler, 1981; Locke, Feren, McCaleb, Shaw, & Danny, 1980: 381). Money is a hygiene factor (Herzberg, Mausner & Snyderman, 1959; Kohn, 1998; Pfeffer, 1998). People’s attitudes toward money can be perceived as their “frame of reference” in which they examine their everyday lives (Tang, 1992).

13. Managers *Attract, Retain, and Motivate employees *Achieve Company Goals (Chiu, Luk, & Tang, 1998; Milkovich & Newman, 2002; Tang, Kim, & Tang, 2000; Tang, Luk, & Chiu, 2000).

14. Research: Performance Improvement 4 Methods: 1. Participation 2. Job Design 3. Goal Setting 4. Contingent Payment

15. The Meaning of Money- Motivator Performance Improvement Participation: 0% Job Design: 9% Goal Setting: 16% Contingent Payment: 30%. Movements vs. Intrinsic Motivation. What gets measured gets done (Inc., 1998, June)

16. Motivator No other incentive or motivational technique comes even close to money (Locke, Feren, McCaleb, Shaw, & Danny, 1980: 381).

17. The Meaning of Money-Hygiene Money is a Hygiene factor (Herzberg, Mausner & Snyderman, 1959). 0, 0 point escalates Salary has more potency as a job dissatisfier than as a job satisfier (82). In the lows salary is found almost three times as often in the long-range as in the short-range sequences (82).

18. The Meaning of Money-Hygiene Cameron & Pierce (1994). Review of Educational Research. Kohn (1993, September/October). Harvard Business Review. Kohn (1998, March/April). Compensation and Benefits Review. Pearce (1987). New perspectives on compensation. Pfeffer (1998, May/June). Six dangerous myths about pay. Harvard Business Review.

19. The Meaning of Money Money always represents or signifies something other than itself (Crump, 1981). One is not interested in money, but in what money will buy (Crump, 1981).

20. The ABCs of Money Attitudes Affective: Do you “love or hate” money? Behavioral: What do you “do” with your money? Cognitive: What does money “mean” to you?

21. Measures of Money Attitudes-1 Burgoyne (1990). Money in marriage. Janda (1998). Love & Sex Tests. Holbrook, MA: Adams Media Corp. MES

22. Measures of Money Attitudes-2 Bailey & Gustafson (1986, 1991). Money beliefs and behaviour scale. Handbook of Behavioral Economics. Bailey & Lown (1993). Journal of Consumer Studies and Home Economics. Bailey, Johnson, Adams, Lawson, Williams, & Lown (1994). Consumer Interests Annual. Doyle (1992). American Behavioral Scientist. Fank (1994). Money handling inventory, PAID.

23. Measures of Money Attitudes-3 Furnham (1984). Many sides of the coin: PAID. Furnham & Argyle (1998). The psychology of money. Goldberg & Lewis (1979). Money madness: The psychology of saving, spending, loving, and hating money. Gresham & Footenot (1989). The Money Attitude Scale. Advances in marketing. Hanley & Wihelm (1992). Money Beliefs and Behaviour Scale. JEP.

24. Measures of Money Attitudes-4 Haraoka (1990). Money & value orientation, PJSSP. Lim & Teo (1997). Sex, money and financial hardship, JEP Luna-Arocas, Quintanilla, & Diaz (1995). EAD-6, IAREP. Luna-Arocas (1998). Dinero, Trabajo y Consumo. PROMOLIBRO Lynn (1991). The secret of the miracle economy.

25. Measures of Money Attitudes-5 McClure (1984). Money attitudes and overall pathology, PAQJHB. Mitchell & Mickel (1999). The meaning of money: Money Importance Scale, AMR. Opsahl & Dunnette (1966). The role of financial compensation in industrial motivation, PB

26. Measures of Money Attitudes-6 Quintanilla (1997). Psicologia Economica. McGraw Hill. Richins & Rudmin (1994). Materialism, JEP. Rubenstein (1981). Money & self-esteem, relationships, secrecy, envy, satisfaction, PT. Tang (1992). The Money Ethic Scale, JOB. Tang (1995, PAID; 1999, PPM; in press, PR; Tang et al., 2002), 5 Versions

27. Measures of Money Attitudes-7 Thierry (2000). T he meaning of pay, in Erez & Thierry (Eds.) Work motivation. Wernimont & Fitzpatrick (1972). The meaning of money, JAP. Yamauchi & Templer (1982). Money attitude scale, JPA. Zelizer (1989). The social meaning of money: Special monies, AJS. Zuckerman (1983). Sensation seeking.

28. Mitchell & Mickel (1999) The well-developed measures are those that have been developed more carefully and used more systematically. There are three of these: (1) the money ethics scale (Tang, 1992, 1993, 1995), (2) the money belief and behavior scale (Furnham, 1984; Furnham, Kirkcaldy, & Lynn, 1994), and (3) the money importance scale (Mitchell, Dakin, Mickel, & Gray, 1998) (AMR: 571).

29. Why Do We Study Money Attitude? The Importance of Money (Mitchell & Mickel, 1999) The Meaning of Money (Individual Difference) Money  Materialism Other Attitudes--Pay Satisfaction

30. Why Do We Study Money Attitude? Pay Dissatisfaction has numerous undesirable consequences (Heneman & Judge, 2000) Commitment, Turnover, Counter- Productive Behavior, and Unethical Behavior (Cohen-Charash & Spector, 2001; Hom & Griffeth, 1995; Tang, Kim, & Tang, 2000)

31. The Money Ethic Scale 1. Measures the Meaning of Money 2. Follows the ABC Model 3. Has Multi-Dimensional Constructs (5 versions) 4. Is Well Developed and Systematically Used (17 papers) 5. Reflects Individual Differences

32. The Money Ethic Scale Has been used in many samples, in many countries, and in many languages (published articles): Chinese, English, French, Italian, Spanish, Russian, etc.

33. Research Question: Does money (income) have a direct and/or indirect impact on unethical behavior? Does money attitude (the love of money, the MES) have a direct and/or indirect impact on unethical behavior?

34. MES in This Study 1. Money is a Motivator 2. Money is a sign of my Success 3. Money is Important 4. I want to be Rich 58 items, EFA—US Sample, 14 factors, Select 4 factors (17 items), EFA, CFA--Whole Sample, 12 Countries

35. The Love of Money 1. Motivator 2. Success 3. Important 4. Rich

36. Motivator No other incentive or motivational technique comes even close to money (Locke, Feren, McCaleb, Shaw, & Danny, 1980: 381). Money is a motivator (Gupta & Shaw, 1998; Lawler, 1981). Ex. I am motivated to work hard for money. Money is a motivator.

37. Success In America, money is how we keep score (Rubenstein, 1981). Some people are obsessed with “money as a sign of success” (Furnham & Argyle, 1998: 148) Ex. Money represents my achievement. Money is a symbol of my success.

38. Importance The one consistent thread in this body of work is “the emphasis on its importance” (Mitchell & Mickel, 1999: 569) Ex. Money is important. Money is an important factor in the lives of all of us.

39. Rich Would you like to be Rich or Poor? Most people: Rich Being Rich will make you feel Good, Happy, Powerful, Beautiful, Healthy, etc. Many CEOs are tested G-r-e-e-d positive (Crystal, 1990, Fortune). Ex. Having a lot of money (being rich) is good. I want to be rich.

40. Other Variables Income Pay Satisfaction Organizational Commitment Unethical Behavior Ethical Corporate Culture Sex, Job Changes

41. Pay Satisfaction 18-Item Pay Satisfaction Questionnaire: Pay Level Benefits Raises Pay Administration Heneman & Schwab (1985)

42. Organizational Commitment 15-Item Organizational Commitment Questionnaire. Two Indicators: Commitment, Not to Leave (- items) Mowday, Steers, and Porter (1979)

43. Ethical Culture 5-Item Corporate Ethical Culture Two Indicators: Ethical Policy (3 items), Act Ethically (2 items) (Hunt, Wood, & Chonko (1989).

44. Unethical Behavior 15-Scenario Unethical Behavior Tendency Abuse Position (theft, 5 items) + Ex. Take merchandise and/or cash. Abuse Power (corruption, 5 items) Ex. Accept money, gifts, and kickback from others. Abuse Resources (office supply, 3 items) Ex. Waste company time. Use office supplies. Take No Action for Unethical Behavior (look the other way, 2 items) Ex. Take no action for shoplifting/stealing cash/merchandise.

45. In This Study Is “money” the root of all evil? Is “the love of money” the root of all evil? (Bible: Tim, 6:10)

46. Cross-Cultural Study Australia, Austria, Belgium, Brazil, Bulgaria, Canada, Chile, China, Congo (Zaire), Cuba, Czechoslovakia, Egypt, France, Germany, Hong Kong, Hungary, India, Italy, Macau, Macedonia, Malaysia, Malta, Mexico, Nigeria, Oman, Panama, Peru, Philippines, Poland, Portugal, Puerto Rico, Romania, Russia, Saudi Arabia, Singapore, Slovenia, South Africa, South Korea, Spain, Taiwan, Thailand, Turkey, Ukraine, the UK, the USA, and Venezuela. Need your help to expand this project

47. A Model of Unethical Behavior Model Z Income Money Ethic Culture Commitment Unethical Behavior Pay Satisfaction Jobs Sex

48. Income  Money Ethic Inverted U: +, 0, -- Unsatisfied needs are important, satisfied needs are not (Alderfer, 1971; Maslow, 1970) Financial Hardship  Obsessed with Money (Dittmar, Tang, & Tillery, 2001; Lim & Teo, 1997; Lynn, 1991; Tang et al., 2001) (+ path) Higher Incomes  Lower Marginal Utility of Money (Brandstatter & Brandstatter, 1996) (-- path) Fairly Paid Income  MES: Non-significant (Tang, Luna-Arocas et al, 2001) Compare Income with GDP per Capita (Bill Gates: 52.8B)

49. Income  Money Ethic Among nations: As nations get richer, increases in wealth are associated with diminishing increases in well-being (Ahuvia & Friedman, 1998; Schyns, 1998) Objective Wealth vs. Subjective Appraisals (Ahuvia & Friedman, 1998)

50. Objective Money (Income) Within nations: Increased income is associated with well-being for the poor; once the poverty threshold is crossed, increased income matters little for happiness (Czikszentmihali, 1999;Diener, 2000; Myers 2000; Oishi, Diener, Lucas, & Such, 1999; Oropesa, 1995, Richins & Rudmin, 1994; Schyns, 2000; Tatzel, 2002)

51. Subjective Money (Compare) Subjective well-being increases as income increases from below average to above average within one’s home community (Hagerty, 2000)

52. East Asia The major global market for luxury goods (Wong & Ahuvia, 1998) Materialistic-- Possessions as a measure of Success (Webster & Batty, 1997; Wong & Ahuvia, 1998).

53. Hong Kong Cash Mentality (Chiu, Luk, & Tang, 2001) The Most Popular Car in Hong Kong…Public Visibility--Face

54. MES  Pay Satisfaction Equity Theory (Adams, 1965) Discrepancy Model (Lawler, 1971) Expectation vs. Reality “The Love of Money” as the Frame of Reference, i.e., expectation, standards High MES  High Pay Dissatisfaction

55. Pay Satisfaction  Commitment Job Satisfaction  Commitment (Williams & Hazer, 1986, SEM) There is reciprocal and synchronous causality between commitment and satisfaction, with satisfaction influencing commitment more than vice versa (Home & Griffeth, 1995: 98).

56. Pay Satisfaction  Commitment Perceived unfair procedural and distributive justice  negative attitudes toward the organization (e.g., lower trust and commitment) (Cohen-Charash & Spector, 2001: 288)

57. Commitment  Unethical Behavior From a procedural justice perspective, perceived injustice will lead to negative perceptions of the organization and, hence to counterproductive behaviors that will hurt the organization (Cohen- Charash & Spector, 2001: 287).

58. Business Ethics Taxonomy and Concepts (Forsyth, 1980; Michalos, 1995) Culture (Hofstede, 2001; Trompenaars, 1994) Social Institutions (Parsons, 1990) Personal Values (England, 1975) Cross-cultural (Wines & Napier, 1992)

59. Ethical Culture  Commitment Top-level Manager can reduce unethical behavior (Finn, Chonko, & Hunt, 1988) Attraction-Selection-Attrition (Chatman, 1989; Douglas & Schwartz, 1999; Ponemon & Glazer, 1990; Tang & Frost, 1999) Differences in ethical culture across firms and across offices within the same firm (Jeffrey & Weatherholt, 1996)

60. Ethical Culture  Commitment Ethical Culture  Ethical Behavior (Hunt & Vitell, 1986; Trevino, 1986) “Directly” Ethical Culture  Individual Values (i.e., idealism)  Ethical Judgments (Douglas, Davison, & Schwartz, 2001) “Indirectly” Ethical Culture  Commitment  Unethical Behavior Indirectly

61. Sex  MES Men prefer equity, women prefer equality (Tang, 1996; Tang, Furnham, & Davis, 2000) Men consider money more important than women (Lawler, 1971) Women are more subjectively satisfied with their pay than men, the contented female worker (Crosby, 1982; Major & Konar, 1984; Sauser & York, 1978; Smith, Kendall, & Hulin, 1969)

62. Job Changes  Unethical Behavior Reason for Voluntary Turnover: higher wages/career opportunities (Campion, 1991) Leavers have lower pay satisfaction and receive 20% pay increase on their new jobs The number of job changes is a predictor of management professors’ pay (Gomez-Mejia & Balkin, 1992) Self-Interest vs. Organization

63. Sample 211 Full-Time White-Collar HK Employees HK is a part of China. HK: 7.1 million people, 400 sq. miles Small than LA, CA (3.5 million people)

64. Hong Kong Rich people live in Luxury apartments/houses Others: High-rise Apt. Buildings cement forest Property (flat) size 1,440 sq. ft. HK 3,491/sq ft. (US$ 452/sq ft) in 1995 The cost of an average Apt: US$ 560,160

65. Hong Kong China’s window to the world In 1995, 58.2% of the PRC’s foreign investment came from HK 80% of HK manufacturers have set up production facilities in the PRC In 2000, PRC has absorbed 188,214 direct investment projects from HK US$ 317 billion

66. Hong Kong Cash Mentality (Chiu, Luk, & Tang, 2001) Life achievement is measured by the size of their pay check (Chiu & Kosinski, 1995)

67. Additional Data HK: income = $47,502, *GDP per Capita = $25,100, *ratio = 1.89 *CPI 2001 (1) Rank = 16, (2) Score = 7.6 CPI for HK: Rank = 14, Score = 7.9 Low Corruption > 9; High Corruption < 5

68. Data Analysis Convert income to Z Income 1. Perform CFA for all measures 2. Test the SEM Model for HK

69. A Model of Unethical Behavior Hong Kong Z Income Money Ethic Culture Commitment Unethical Behavior Pay Satisfaction Jobs Sex.50* -.30*.68* -.04.38.28* -.28* -.14.02

70. Main Results The Money Ethic is directly related to Unethical Behavior, whereas Income is not. The “Love of Money” is the root of all Evil. Money is not the root of all evil.

71. Main Results Income reduces “the love of money”. HK: income = $47,502, *GDP per Capita = $25,100, *ratio = 1.89

72. Main Results “The love of money” leads to high Pay Dissatisfaction. Pay dissatisfaction leads to low organizational commitment. Sex (male) is related to the love of money.

73. Ethical Issues Commitment has no impact on unethical behavior. Ethical culture has no impact on commitment.

74. Ethical Issues Mr. Anthony Leung, a former top executive of an American bank in HK, made about HK 20 million dollars a year. He now makes just over HK 2 million dollars as the Financial Secretary of the Hong Kong Special Administration Region Government.

75. Anthony Leung The Importance of money depends on only how much one has to spend, not how much one can make (May 1, 2001, South China Morning Post). Rich People: Make a lot of money, spend a little

76. Unethical Behavior Average Income: US$ 47,509 SD of Income: US$ 45,159, a very large variability in this sample Low-income HK employees: improve standard of living, admire others who have wealth (a large house), cover expenses

77. Ethical Culture Hong Kong was returned back to China in July 1997. The culture of corruption from China may have invaded Hong Kong. The Rule of Man >> The Rule of Law Guanxi (Dunfee & Warren, 2001; Steidlmeier, 1999)

78. Corruption Report in HK The number of cases has been on the rise 1992:2186 1994:3312 1996:3086 1998:3555 2000:4390 China: GDP per Capita = US$3,600 CPI Rank = 57; Score = 3.5 < 5 HK/PRC GDP Ratio: $25,100/$3,600 = 6.97

79. Discussion Employee theft is a $200 million-dollar a year problem in the US Some managers condone theft by looking the other way Treat that as “an invisible wage structure” to compensate for their lower than average wages

80. Discussion Financial loss is attributed to Employee Theft--38.4% Shoplifting—35.6% Administrative Error –19.4% Vender Theft—6.4%

81. Discussion Average Loss Shoplifting—$142.49 per incident Employee Theft–$737.31 Armed Robbery–$2,410 Culture of corruption  Business failures Discourage and Prevent

82. How Do Managers Discourage and Prevent Unethical Behavior? Create Pay Fairness Internal Equity (Vertical Pay Differential) External Competitiveness (Market) and Individual Equity (Merit, Seniority)

83. How Do Managers Discourage and Prevent Unethical Behavior? Procedural Justice (rules of the game, How the decision was made, the means) Distributive Justice (results of the game, What was decided, the ends)

84. How Do Managers Discourage and Prevent Unethical Behavior? Set Role Models Create Ethical Corporate Culture Use Reward and Punishment Establish Ethics Hot Line Develop Profiles of Dishonest Employees Select Good Employees HRM Install Surveillance Systems Provide Training to Employees

85. CEOs’ Pay Corporate Corruptions Enron Chairman Kenneth Lay and his wife own over 30 million dollars worth of real estates and stocks Employees lost their jobs and 1 billion deferred compensation and pension plan

86. CEOs’ Pay Michael Eisner, CEO of Walt Disney made US$575,592,000 in 1998 The average worker made $30,000 in 1998 Pay Differential = 19,320 to 1

87. Conclusion The love of money is the root of evil. (Tim, 6:10)

88. Additional Thoughts It is easier for a camel to go through the eye of a needle, than for a rich man to enter into the kingdom of God. Judas, who betrayed Jesus for a sum of money, was the treasurer of the disciples. John, 12: 6; 13: 29 For when he dieth he shall carry nothing away: his glory shall not descent after him. Psa, 49: 17 Beloved, follow not that which is evil, but that which is good. He that doeth good is of God: but he that doeth evil hath not seen God. John, 11

89. Professional Wrestlers as Ushers: Increased Collection Plate Donations by 72%

90. Thank You Danke Dankeshen Grazie Merci Muchas Gracias