Examining the relationship between ethical environment, loyalty, and whistle-blowing in the insurance industry

A continual decline in ethical behavior in the workplace is apparent, yet employees are reluctant to blow the whistle on workplace improprieties. The purpose of the research was to determine if significant relationships existed between the constructs of ethical work environment and whistle-blowing and between employee loyalty and whistle-blowing in the insurance industry. Previous research has not addressed the relationship between the aforementioned constructs. A quantitative correlational study was conducted to test the relationship of ethical work environment, employee loyalty, and the propensity to report unethical behavior. Two hundred and one respondents employed by seven insurance companies or insurance brokers located in the Midwest participated by answering a 45-item questionnaire. Analysis of the results revealed a strong positive correlation between ethical work environment and the propensity to blow the whistle, r(199)=0.53, p<0.001. Additionally, there was a moderately strong positive correlation between employee loyalty and the propensity to blow the whistle, r(200)=0.32, p<0.001. Employee loyalty does not moderate the effect of the ethical work environment on the propensity to blow the whistle. The interaction between ethical work environment and employee loyalty was not statistically significant at p<0.05, (p=0.095). The results support the need for leaders of insurance organizations to create a strong ethical work environment where employees are secure in reporting misconduct before the unethical behaviors reach irreparable conditions. This study may be replicated in other geographical regions and can serve as the basis for a longitudinal study. Additionally, path analysis could be used to better understand the interrelations between the three constructs.