Ethical Misfit or the Demand for Leniency? The Impact of Behavioral Attributes on Employee Tenure

In this paper we argue that while ethical misfit between firms and employees may increase the likelihood of attrition, the interaction between organizational and employee ethics may be much more complex. Customer demand for individual and organizational characteristics may impact employee tenure independent of one another. Furthermore, misfit may also create complementarities that benefit both the employer and employee. We use over six million vehicle emissions tests to empirically demonstrate that separating these effects is critical to understanding the role of misfit. We identify pre-hiring levels of fraudulent testing leniency for individual inspectors and facilities, showing that neither ethical fit nor complementarity of misfit has substantial impact on the longevity of tenure. Instead, we find that both inspector and facility leniency lead to longer tenure, with little evidence of interaction between employer and employee ethics.