A study conducted by researchers at The University of Texas at Dallas’ Naveen Jindal School of Management sheds light on how perceived unfair treatment of different stakeholder groups within companies—such as employees, executives, or customers—can lead workers to report organizational wrongdoing to outside authorities.
The paper — titled “Stakeholder Treatment Disparity and Employee Whistleblowing: A Multi-Stakeholder, Multidimensional Framework of Social Comparison” — was published in the April 2025 issue of the Strategic Management Journal.
The research team includes three faculty members from the Jindal School’s Organizations, Strategy, and International Management Area:
- Cuili Qian, Ashbel Smith professor and lead author;
- Riki Takeuchi, Dr. Joseph Picken Distinguished Professor in Innovation and Entrepreneurship; and
- Junfeng Wu, associate professor.
They were joined by Yilin Liu, a doctoral student in the International Management Studies PhD program, who will join Western University in Canada as an assistant professor in fall of 2025.
“Our study investigates the psychological process by which stakeholder treatment disparity leads to employee loyalty which, in turn, leads to whistleblowing,” Liu said. “In this process, justice perceptions are an immediate outcome of social comparison processes — in our study, the social comparison is manifested as treatment disparity in a firm. More importantly, justice perceptions lead to organizational loyalty, which is a proximal psychological predictor of whistleblowing. We knew from a previous study that loyalty and a personal sense of rightness are the two most significant psychological forces behind the decision to blow the whistle.”
Qian said that perceived fairness serves as the foundation of trust.
“When employees feel they’re treated equitably, not just relative to other employees but also compared to external stakeholders like customers or community partners, it strengthens loyalty and identification with the organization,” she said. “Conversely, when employees feel undervalued while other stakeholder groups are visibly prioritized, this perceived unfairness can erode trust and loyalty.”
The study shows that not only does that perception of unfairness lead to dissatisfaction, it may also motivate employees to act, including external whistleblowing if they believe internal channels will not respond effectively.
Although disparities in the treatment of various company stakeholders might have a strategic rationale — an example would be highly competitive CEO pay to attract talent while providing non-competitive pay for front-line personnel — these justifications become ethically questionable when they create or reinforce an imbalance of treatments across stakeholder groups.
“It’s difficult to justify a firm presenting an ethical and responsible image externally while neglecting the welfare of its own employees — a mismatch that employees readily notice,” Qian said. “Our study shows that employees — who are a key stakeholder group — are sensitive to such discrepancies. When they perceive that other groups are being favored at their expense, it can trigger not only dissatisfaction but also concrete actions like whistleblowing.”
Although the study focuses on external whistleblowing and does not directly compare it to internal reporting channels, Qian said that social comparisons may strongly shape the direction of whistleblowing.
“Unfavorable comparisons — such as observing executives or external stakeholders being prioritized — can reduce employees’ loyalty and their belief in the organization’s internal fairness,” she said. “When employees perceive that internal systems will not address their concerns effectively, especially in the context of perceived inequality, they may turn to external channels. So internal and external whistleblowing can coexist, but the decision to go public may be more likely when trust in internal mechanisms is compromised. Social comparison doesn’t just cause dissatisfaction—it can shift how employees assess whether the firm is worth protecting from within.”
Qian advises companies, especially in diverse, global operations, to implement systems or practices that can effectively monitor and manage stakeholder treatment equity.
“There are several steps organizations can take,” she said. “First, track data across stakeholder groups — not just on executive pay or corporate social responsibility spending, but also on internal investments like employee development, safety, and inclusion. Look for imbalances between internal and external stakeholder priorities. Second, monitor external employee sentiment. External review sites and informal channels can provide early warnings about emerging treatment gaps. Finally, strengthen internal reporting systems. Firms need to establish structured opportunities for employees to voice concerns about perceived inequities before they report externally.
Building trust with employees is essential, especially when employees know that raising concerns will lead to fair and timely responses.
“Transparent, independent internal channels are critical for preventing external whistleblowing,” she said.
Liu said there are specific organizational cultures or structures that might unintentionally increase the risk of external whistleblowing due to stakeholder treatment gaps.
“In terms of culture, organizational cultures that emphasize secrecy, control and image management over openness and accountability tend to discourage internal speaking up,” she said. “When employees feel psychologically unsafe to raise concerns, they are more likely to look outside the organization for recourse. Leadership style also matters — authoritarian leaders may unintentionally lead to more external whistleblowing.”
According to Qian, organizations that have a highly centralized decision-making process may miss early warning signs of stakeholder dissatisfaction.
“In global operations, inconsistent treatment across locations — say, investing heavily in one region’s community programs while neglecting worker conditions elsewhere — can also foster perceptions of inequity that fuel whistleblowing,” she said.
Practical takeaways from the study include the critical need for organizations to align internal practices with external messaging and ensure that their internal treatment of employees reflects the same standards they project to investors, customers, and the public. Equally important is the need to balance stakeholder interests transparently.
“Excessive executive compensation, particularly in times of internal crisis, sends a powerful signal about whose interests matter most,” Qian said. “Firms should regularly assess and communicate how they balance investments across stakeholder groups, including frontline workers.”
Qian said empowering and protecting internal voices is also important.
“Whistleblowers often try to raise concerns internally first,” she said. “Companies should foster a culture where those concerns are not only welcomed but acted upon. This includes independent reporting systems, anti-retaliation safeguards and executive accountability.”
Establishing proactive feedback and listening systems is critical to fostering a culture of trust among stakeholders.
“Firms can use anonymous surveys, exit interviews and platforms like Glassdoor to detect early signs of discontent,” Qian said. “Listening shouldn’t be reactive — it should be embedded in decision-making structures.”
Liu emphasized that the study’s findings underscore the critical role of cultivating an equitable workplace that fosters open and transparent communication.
“When employees feel they are treated fairly and that their voices are heard, they are more likely to raise concerns internally rather than resorting to external whistleblowing, which can result in reputational damage to the organization,” she said. “Moreover, our research reveals that employees’ perceptions of fairness extend beyond treatments within the organization — how the organization engages with and treats its external stakeholders also matters. This finding underscores that even stakeholder practices not directly involving employees can significantly influence how loyal employees feel to the organization.”
