<p>Unethical behavior has been shown to possess a greater propensity to spread compared to ethical conduct. Organizational characteristics such as reward allocation policies and executive ethical leadership are considered crucial in curbing unethical behavior. The present study undertook an experiment encompassing 37 teams engaging in independent tasks. The aim was to explore the influence of reward allocation method, the identity of unethical behavior initiators, and social network properties on the spread of unethical behavior within work teams. After controlling for demographic variables and individual cognitive moral development, the research findings are presented as follows: (1) The relationship between the competitiveness of reward allocation method and the diffusion of unethical behavior is not-linear. A low competitive reward allocation mode (equal distribution) leads to minimal diffusion, while a high competitive allocation mode (winner-take-all) does not significantly result in more extensive diffusion compared to the medium competitive allocation method (merit-based). (2) When the initiator of unethical behavior is the team leader, unethical behavior spreads more readily within the team. Moreover, the team leader’s unethical behavior is more prevalent in the equal distribution and winner-take-all reward allocation methods. (3) Neither the centrality of an individual’s emotional nor informational relationships, nor the density of team emotional relationships exerts a significant impact on the likelihood of following unethical behavior. However, a higher density of informational relationships within teams is associated with a more severe spread of unethical behavior. Despite several limitations, this study enriches the existing literature on reward allocation, the moral responsibility of leaders, and social networks. Additionally, it provides practical implications for the ethical practices in team building endeavors.</p>