Disclosing sales compensation and its impacts on misleading sales behaviors: some observations from Taiwan’s life insurance salespeople

Abstract

Purpose The purpose of this paper is to explore how sales compensation disclosure, salespeople’s perception of corporate social responsibility (CSR) toward customers (i.e. customer-focused CSR), regulatory knowledge and coworkers’ ethical behavior may influence life insurance salespeople’s moral intensity and intentions to engage in misleading sales behaviors. Design/methodology/approach The hypotheses are analyzed using partial least squares (PLS) regression with the data gathered from full-time life insurance salespeople in Taiwan. Findings The main findings indicate that disclosing sales compensations will alter the ethical decision-making process of life insurance salespeople. The findings further point out that customer-focused CSR is an important variable affecting moral intensity and ethical intentions. Originality/value There has not been any research on the effects of compensation disclosure on moral intensity and misleading sales behavior. The literature gap has led to a poor understanding of the relationship between the compensation disclosure policy and ethical sales behavior. Moreover, previous studies indicate that specific factors (such as moral intensity and ethical intention) are directly associated, while the research shows that as long as a regulatory policy (e.g. the policy of compensation disclosure) changes, the correlation between these variables may shift from significant to nonsignificant (or vice versa). The results are interesting enough to warrant more research, and they also show that the direct link between variables mentioned in previous research is not always stable or universal.