Hearsay, rumor, and secondhand accounts: How manager lay theories are inconsistent with their behavior

Employees often speak up about problems based on information received from other parties, but lay theories suggest that managers should dismiss these “secondhand accounts.” Drawing on legal evidentiary rules (e.g., hearsay), research on the psychology of rumors, and evidence provided by 100 compliance officers and 140 managers, we confirm the presence of these lay theories that secondhand accounts are seen as less credible and less complete. But contrary to lay theories, we develop theory articulating why managers take action on issues raised by secondhand reporters more often than firsthand concerns. Using archival data of over two million instances of employees speaking up through companies’ internal reporting systems and a follow up experimental study to provide evidence of our proposed mechanisms, we find that, despite lay theories that secondhand accounts should be discounted, managers are more likely to substantiate claims when voiced from secondhand sources compared to firsthand sources.