Abstract
How do employees react when an organizational leader commits a value breach (i.e., behaves in a way that employees perceive as inconsistent with the organization’s espoused values)? Prior research provides a mixed view: Employees may conclude that the leader lacks integrity, or they may maintain their perception of the leader’s integrity, despite the breach. We focus on the role of person–organization value congruence in determining employee reactions and propose competing predictions that value congruence is positively (“blind eye effect”) or negatively (“critical eye effect”) associated with employee perceptions of leader behavioral integrity following a breach. In Study 1, field survey data suggested that value congruence was positively associated with the perceived integrity of a leader who had committed a breach. However, two follow-up studies using an experimental vignette methodology revealed additional nuance. An integration of our three studies indicated that before the occurrence of any breaches, employees with high value congruence perceive leaders as higher in integrity than do employees with low value congruence (pre-breach sacralization), but when leaders commit one or more value breaches, high value congruence employees react more harshly—lowering their integrity perceptions to a greater extent (the critical eye effect). As a result, as leaders commit more and more breaches, the initially positive relationship between value congruence and perceived leader integrity weakens and eventually becomes negative. Our findings offer important contributions to theory, research, and practice related to organizational values and leadership.