Unethical behaviour abounds especially in the commercial sector.

Construction machinery giant Caterpillar had to write off some $580 million of its Chinese Siwei acquisition when the latter was alleged to have conducted accounting fraud to inflate revenues. Fabrics company Hontex International had to freeze proceeds from its initial public offering when investigators found that the company had inflated sales and cash balances ahead of its listing.

While these are cases of fraudulent conduct, we wonder whether they emanate from creative personnel who felt warranted to engage in such practices given the potentially lucrative financial returns.

Prior to my joining the National University of Singapore Business School, my co-researchers and I studied the relationship between creative personality and unethical behaviour.

Research has shown that compared to less creative individuals, creative people notice things that others miss. They also tend to interpret problems from a unique perspective.

These stem from a flexible way of thinking where creative individuals can connect information, even those seemingly irrelevant to others, in multiple ways depending on the circumstances.

As a result, creative people are more likely to think “out of the box”, including those with unethical implications.

We conducted three studies involving more than 430 individuals and found that in situations that can activate creativity, creative people may be more likely to engage in unethical behaviour as they can think outside of the box and find justifications to rationalise their morally questionable actions.

We measured how creative each individual is. Additionally, half of them were encouraged to be creative in various tasks such as building Lego blocks or designing a backpack. The other half completed similar exercises without any such encouragement.

We also embedded the possibility of engaging in unethical behaviour. Individuals could cheat by not following the rules of how to complete their tasks. For instance, they could cheat by telling a lie so that they could get a larger remuneration.

Across all three studies, we found that more creative individuals tended to engage in unethical behaviours than their less creative counterparts.

But interestingly, encouraging them to be creative played a key role.

Specifically, when individuals were encouraged to be creative, those who were not creative were the least unethical while those with a creative personality were the most unethical.

When the tasks did not require creativity, creative and less creative individuals were no different in their unethical behaviour.

Importantly, it was the justification for their unethical behaviour that drove creative people to be unethical when doing tasks that called for creativity. This means that when creative people can justify their unethical actions when performing creative work, they are more likely to engage in such questionable practices. When they cannot justify such behaviour, they are less likely to engage in unethical conduct.

Perhaps in the above fraudulent acquisitions and stock listing cases, the massive financial interests at stake had been the motivation and justification for the individuals to resort to wrongdoing.

At a broader level, ours and past research demonstrate that creative employees and employees who are encouraged to be creative may lose their moral compass especially when there is some justification.

Companies seeking to encourage more creativity from their employees should be wary of potential ethical pitfalls where individuals think they can get away with morally ambiguous behaviour.

While it is important to build a corporate culture that promotes ingenuity, companies must also value governance and transparency. Processes must be put in place that ensure business actions do not go overboard and pose a risk to the company.

The message should be clear that while creativity is encouraged, employees should be aware of the consequences of unethical behaviour.

During the recruitment process, management should be more stringent in their checks to see if potential hires had displayed questionable behaviour in the past.

Creativity may be an important skill, but there should be an awareness of the grey side of creativity and its negative impact on the company.

Michael Mai Ke is Assistant Professor in the Department of Management & Organisation at National University of Singapore (NUS) Business School