Can Stress Curb Unethical Employee Behavior? Evidence From Frontline Contexts

ABSTRACT Unethical employee behavior is widespread in frontline service contexts and can severely damage organizations through theft, service sabotage, and reputational harm. Because such unethical behavior can emerge under conditions of work‐related stress, workplace stressors are typically viewed as risk factors that undermine ethical judgment while promoting misconduct. However, demanding frontline situations can also foster competence, responsibility, and growth, raising the possibility that some stressors can reduce rather than increase unethical behavior. Using the challenge–hindrance stressor framework and transactional stress theory, we examine how different stressor types influence unethical employee behavior. Across three studies with 708 frontline employees, we find that challenge stressors (opportunities for achievement) reduce unethical behavior while hindrance stressors (barriers to growth) increase it. Self‐efficacy emerges as a key mechanism, increasing under challenge stressors to reduce unethical behavior and decreasing under hindrance stressors to increase it. In addition, we explore the moderating roles of two coping strategies: self‐led (internally initiated) and peer‐led (externally initiated) development. Self‐led development moderates both stressor types, while peer‐led development only affects challenge stressors. Our findings offer managers valuable insights into harnessing stressors' positive aspects rather than solely mitigating their negative effects.