Showing papers in "Journal of Business Ethics in 2001"

An empirical investigation of the relationship between change in corporate social performance and financial performance: A stakeholder theory perspective

Abstract: Stakeholder theory provides a framework for investigating the relationship between corporate social performance (CSP) and corporate financial performance. This relationship is investigated by examining how change in CSP is related to change in financial accounting measures. The findings provide some support for a tenet in stakeholder theory which asserts that the dominant stakeholder group, shareholders, financially benefit when management meets the demands of multiple stakeholders. Specifically, change in CSP was positively associated with growth in sales for the current and subsequent year. This indicates that there are short-term benefits from improving CSP. Return on sales was significantly positively related to change in CSP for the third financial period, indicating that long-term financial benefits may exist when CSP is improved.

Consumers' perceptions of corporate social responsibilities: A cross-cultural comparison

Abstract: Based on a consumer survey conducted in France, Germany, and the U.S., the study investigates consumers' readiness to support socially responsible organizations and examines their evaluations of the economic, legal, ethical, and philanthropic responsibilities of the firm. French and German consumers appear more willing to actively support responsible businesses than their U.S. counterparts. While U.S. consumers value highly corporate eco-nomic responsibilities, French and German consumers are most concerned about businesses conforming with legal and ethical standards. These findings provide useful guidance for the efficient management of social responsibility initiatives across borders and for further academic inquiries.

Corporate Social and Financial Performance: An Investigation in the U.K. Supermarket Industry

Abstract: The comparison of corporate social performance with corporate financial performance has been a popular field of study over the past 25 years. The results, while broadly conclusive of a positive relationship, are not entirely consistent. In addition, most of the previous studies have concentrated on large-scale cross-industry studies and often with a single variable for corporate social performance, in order to produce statistically significant results. This weakens the richness of understanding that might be obtained from a single industry study with multiple social variables, which would also allow investigation of inter-relationships between individual and sub-sets of social performance measures and between individual and sub-sets of social performance and financial performance measures. There have also been criticisms that the results lack a rigorous theoretical basis, and the paper demonstrates clearly how stakeholder theory must form the basis for this area of research. Following a review of the literature this paper presents the initial findings from a study of the U.K. Supermarket industry which suggest that contemporaneous social and financial performance are negatively related, while prior-period financial performance is positively related with subsequent social performance. Positive relationships between both age and size of the company with social performance are also found.

Codes of Ethics as Signals for Ethical Behavior

Abstract: This study investigated effects of codes of ethics on perceptions of ethical behavior. Respondents from companies with codes of ethics (n = 465) rated role set members (top management, supervisors, peers, subordinates, self) as more ethical and felt more encouraged and supported for ethical behavior than respondents from companies without codes (n = 301). Key aspects of the organizational climate, such as supportiveness for ethical behavior, freedom to act ethically, and satisfaction with the outcome of ethical problems were impacted by the presence of an ethics code. The mere presence of a code of ethics appears to have a positive impact on perceptions of ethical behavior in organizations, even when respondents cannot recall specific content of the code.

The Link Between Organizational Ethics and Job Satisfaction: A Study of Managers in Singapore

Abstract: Based on a survey of 237 managers in Singapore, three measures of organizational ethics (namely, top management support for ethical behavior, the organization's ethical climate, and the association between ethical behavior and career success) are found to be associated with job satisfaction. The link between organizational ethics and job satisfaction is argued from Viswesvaran et al.'s (1998) organizational justice and cognitive dissonance theories. The findings imply that organizational leaders can favorably influence organizational outcomes by engaging in, supporting and rewarding ethical behavior.

Does Firm Size Comfound the Relationship Between Corporate Social Performance and Firm Financial Performance

Abstract: There has been some theoretical and empirical debate that the positive relationship between corporate social performance (CSP) and firm financial performance (FFP) is spurious and in fact caused by a third factor, namely large firm size. This study examines this question by integrating three meta-analyses of more than two decades of research on (1) CSP and FFP, (2) firm size and CSP, and (3) firm size and FFP into one path-analytic model. The present study does not confirm size as a third factor which would confound the relationship between CSP and FFP. That is, even if firm size is controlled for across studies (comprising, on average, over 15 000 observations), CSP and FFP remain positively correlated, showing a "true-score" corrected path coefficient p of 0.37.

Is Guanxi Ethical? A Normative Analysis of Doing Business in China

Abstract: This paper extends the discussion of guanxi beyond instrumental evaluations and advances a normative assessment of guanxi. Our discussion departs from previous analyses by not merely asking, “Does guanxi work?” but rather “Should corporations use guanxi?” The analysis begins with a review of traditional guanxi definitions and the changing economic and legal environment in China, both necessary precursors to understanding the role of guanxi in Chinese business transactions. This review leads us to suggest that there are distinct types of, and uses for guanxi. We identify the potentially problematic aspects of certain forms of guanxi from a normative perspective, noting among other things, the close association of particular types of guanxi with corruption and bribery. We conclude that there are many different forms of guanxi that may have distinct impacts on economic efficiency and the well-being of ordinary Chinese citizens. Consistent with Donaldson and Dunfee (1999), we advocate a particularistic analysis of the different forms of guanxi.

The Nature of the Relationship between Corporate Codes of Ethics and Behaviour

Abstract: A study was conducted in order to examine the relationship between corporate codes of ethics and behaviour. Fifty-seven interviews of employees, managers, and ethics officers were conducted at four large Canadian companies. The study found that codes of ethics are a potential factor influencing the behaviour of corporate agents. Reasons are provided why codes are violated as well as complied with. A set of eight metaphors are developed which help to explain how codes of ethics influence behaviour.

A Corporate Social Responsibility Audit within a Quality Management Framework

Abstract: In this paper a corporate social responsibility audit is developed following the underlying methodology of the quality award/excellence models. Firstly the extent to which the quality awards already incorporate the development of social responsibility is examined by looking at the Malcolm Baldrige National Quality Award and the European Quality Award. It will be shown that the quality awards do not yet include ethical aspects in relation to social responsibility. Both a clear definition of social responsibility and an improved audit instrument are required. A definition and an audit instrument are developed which stimulate movement in that direction and help organisations to reflect on their position in relation to social responsibility.

Corporate social responsibility and financial disclosures: An alternative explanation for increased disclosure

Abstract: Researchers and practitioners have devoted considerable attention to firms' policies regarding discretionary disclosures. Prior studies argue that firms increase demand for their debt and equity issues and, thus, lower their cost of capital, by providing more informative disclosures. However, empirical research has generally not been able to document significant benefits from increased disclosure.This paper proposes an alternative explanation – firms disclose because it is the socially responsible thing to do. We argue that companies have incentives to engage in stakeholder management by undertaking socially responsible activities and that providing extensive and informative disclosures is one such practice.We examine the relationship between firms' disclosures and measures of social responsibility. We use ratings provided by the Council on Economic Priorities as proxies for the degree of social responsibility adopted by the sample firms. Disclosure rankings provided by the annual Association for Investment Management and Research Corporate Information Committee Reports (AIMR Reports) are used to measure disclosure level.Our results indicate that there is a positive relationship between disclosure level and corporate social responsibility. That is, firms that engage in socially responsive activities provide more informative and/or extensive disclosures than do companies that are less focused on advancing social goals. In addition, we find that socially responsible firms are more likely to provide this increased disclosure through better investor relations practices. These results support our contention that increased disclosure is a form of socially responsible behavior.

Ethical Codes of Conduct and Organizational Context: A Study of the Relationship Between Codes of Conduct, Employee Behavior and Organizational Values

Abstract: Codes of ethics are being increasingly adopted in organizations worldwide, yet their effects on employee perceptions and behavior have not been thoroughly addressed. This study used a sample of 613 management accountants drawn from the United States to study the relationship between corporate and professional codes of ethics and employee attitudes and behaviors. The presence of corporate codes of ethics was associated with less perceived wrongdoing in organizations, but not with an increased propensity to report observed unethical behavior. Further, organizations that adopted formal codes of ethics exhibited value orientations that went beyond financial performance to include responsibility to the commonweal. In contrast to corporate codes of ethics, professional codes of ethical conduct had no influence on perceived wrongdoing in organization nor these codes affect the propensity to report observed unethical activities.

An Examination of Differences in Ethical Decision-Making Between Canadian Business Students and Accounting Professionals

Abstract: This study investigates the differences in individuals' ethical decision making between Canadian university business students and accounting professionals. We examine the differences in three measures known to be important in the ethical decision-making process: ethical awareness, ethical orientation, and intention to perform questionable acts. We tested for differences in these three measures in eight different questionable actions among three groups: students starting business studies, those in their final year of university, and professional accountants. The measures of awareness capture the extent to which respondents felt that a particular action was unethical according to each of several ethical criteria. We found few differences between the two student groups on these measures, suggesting that their education had minimal effect on raising their awareness of the ethical issues in the vignettes. Indeed, overall, the graduating student's scores were marginally lower than those of the entry-level students. However, the professionals viewed some actions as significantly less ethical than did the graduating students. The measures of ethical orientation capture the weight respondents placed on each of the criteria above in their evaluation of the overall morality of an action. The differences between the three groups were generally small, and were a function of the vignette, consistent with Jones' (1991) model of issue-contingent ethical reasoning. The measures of intention capture the extent to which a respondent perceives that s/he would perform the action. There were significant differences between the groups in three of the eight vignettes, driven by a difference between the professionals and the other two student groups. The awareness measures were strong predictors of intention. We discuss the implications of these findings for professional training and future research.

The effect of organizational culture and ethical orientation on accountants' ethical judgments

Abstract: This paper examines the relationship between organizational ethical culture in two large international CPA firms, auditors' personal values and the ethical orientation that those values dictate, and judgments in ethical dilemmas typical of those that accountants face. Using an experimental task consisting of multiple judgments designed to vary in "moral intensity" (Jones, 1991), and unique as well as tried-and-true approaches to variable measurements, this study examined the judgments of more than three hundred participants in our study. ANCOVA and path analysis results indicate that: (1) Ethical judgments in situations of high moral intensity are affected by personal values and by environmental variables, such as the professional code of conduct (direct and indirect effects) and previous ethics instruction (direct effect only). (2) Corporate ethical culture, and a relatively strong firm rules-orientation, affect auditors' idealism but not relativism, and therefore indirectly affect ethical judgments. Jones' (1991) moral intensity argument is supported: differences in the characteristics of specific judgment tasks apparently result in different decision processes.

The Effects of Organizational and Ethical Climates on Misconduct at Work

Abstract: Questionnaire data obtained from 97 supervisory and nonsupervisory employees representing the Production, Production Services, Marketing, and Administration departments of an Israeli metal production plant were used to test the relationship between selected personal and organizational attributes and work related misbehavior Following Vardi and Wiener's (1996) framework, Organizational Misbehavior (OMB) was defined as intentional acts that violate formal core organizational rules We found that there was a significant negative relationship between Organizational Climate and OMB, and between the Organizational Climate dimensions (Warmth and Support, and Reward), and OMB Also, the activities of misbehavior reported by both managers and employees were negatively related to the Rules, Instrumental and Caring dimensions of Ethical Climates as defined by Victor and Cullen (1988)

Entering Guanxi: A Business Ethical Dilemma in Mainland China?

Abstract: This paper represents an effort to distinguish between two types of guanxi prevalent in mainland China: favor-seeking guanxi that is culturally rooted and rent-seeking guanxi that is institutionally defined. Different rules of maneuvering the two types of guanxi are identified in light of Chinese cultural and business ethics. Strategies for entering guanxi in mainland China are also suggested.

Emotion and Ethical Decision-Making in Organizations

Abstract: While the influence of emotion on individuals' ethical decisions has been identified by numerous researchers, little is known about how emotions influence individuals' ethical decision process. Thus, it is not clear whether different emotions promote and/or discourage ethical decision-making in the workplace. To address this gap, this paper develops a model that illustrates how emotion affects the components of individuals' ethical decision-making process. The model is developed by integrating research findings that consider the two dimensions of emotion, arousal and feeling state, into an applied cognitive-developmental perspective on the process of ethical decision-making. The model demonstrates that certain emotional states influence the individual's propensity to identify ethical dilemmas, facilitate the formation of the individual's prescriptive judgments at sophisticated levels of moral development, lead to ethical decision choices that are consistent with the individual's prescriptive judgements, and promote the individual's compliance with his or her ethical decision choices. In particular, the model suggests that individuals experiencing arousal and positive affect resolve ethical dilemmas in a manner consistent with more sophisticated cognitive moral structures. Implications for theory and practice are discussed.

International Marketing Ethics from an Islamic Perspective: A Value-Maximization Approach

Abstract: International marketing practices, embedded in a strong ethical doctrine, can play a vital role in raising the standards of business conduct worldwide, while in no way compromising the quality of services or products offered to customers, or surrendering the profit margins of businesses. Adherence to such ethical practices can help to elevate the standards of behavior and thus of living, of traders and consumers alike. Against this background, this paper endeavors to identify the salient features of the Islamic framework of International Marketing Ethics. In particular, it highlights the capabilities and strengths of this framework in creating and sustaining a strong ethical international marketing culture. At the heart of Islamic marketing is the principle of value-maximization based on equity and justice (constituting just dealing and fair play) for the wider welfare of the society. Selected key international marketing issues are examined from an Islamic perspective which, it is argued, if adhered to, can help to create a value-loaded global ethical marketing framework for MNCs in general, and establish harmony and meaningful cooperation between international marketers and Muslim target markets in particular.

Content Analysis of Secondary Data: A Study of Courage in Managerial Decision Making

Abstract: Empirical studies in business ethics often rely on self-reported data, but this reliance is open to criticism Responses to questionnaires and interviews may be influenced by the subject's view of what the researcher might want to hear, by a reluctance to talk about sensitive ethical issues, and by imperfect recall This paper reviews the extent to which published research in business ethics relies on interviews and questionnaires, and then explores the possibilities of using secondary data, such as company documents and newspaper reports, as a source for empirical studies in applied ethics A specific example is then discussed, describing the source material, the method, the development of the research questions, and the way in which reliability and validity were established In the example, content analysis was used to examine the extent to which the executive virtue of courage was observed or called for in items published in four international daily newspapers, and to explore the meaning which was attributed to "courage" in the papers

Examining Female Entrepreneurs' Management Style: An Application of a Relational Frame

Abstract: This paper reports the results of a qualitative analysis of female entrepreneurs' accounts of their role in their organizations using Relational Theory as the analytical frame. Content analysis of focus group comments indicated that the women used a relational approach in working with employees and clients. Relational skills included preserving, mutual empowering, achieving, and creating team. Findings demonstrate that Relational Theory is a useful frame for identifying and explicating women entrepreneurs' interactive style in their own businesses. Implications and future directions for research are discussed.

In Dirty Chains? Purchasing and Greener Manufacturing

Abstract: Against the backdrop of an increasing importance of the purchasing function in manufacturing companies, this paper introduces the notion of a "green multiplier effect" and suggests that purchasing could become an important agent for change regarding environmental initiatives in the supply chain. The literature offers some support for this concept. However, a study into purchasing in Scottish manufacturing companies produces a less optimistic picture, as environmental initiatives involving the supply chain are rare. Where they occur, they are mostly undertaken in a passive fashion, with the main motivation being compliance with legislation. Above-average environmental initiatives are reported from three industries: paper making, chemicals and electronics. Explanations of the discrepancy between anticipated and actual results point to the reactive nature of purchasing and to performance measurement systems that focus on economic criteria.

How virtue fits within business ethics

Abstract: This paper proposes that managers add an attention to virtues and vices of human character as a full complement to moral reasoning according to a deontological focus on obligations to act and a teleological focus on consequences (a balanced tripartite approach). Even if the criticisms of virtue ethics cloud its use as a mononomic normative theory of justification, they do not refute the substantial benefits of applying a human character perspective – when done so in conjunction with also-imperfect act-oriented perspectives. An interactive tripartite approach is superior for meeting the complex requirements of an applied ethic. To illustrate how deficiencies of a "strong" virtue ethics formulation can be overcome by a balanced tripartite approach, this paper compares normative leadership paradigms (each based on a combination of virtue, deontology, or consequentialist perspectives) and the dangers inherent in each. The preferred paradigm is servant leadership, grounded in a tripartite ethic. Effective application of such an ethics approach in contemporary organizations requires further empirical research to develop a greater understanding of the moral language actually used. Meeting this challenge will allow academics better to assist practicing managers lead moral development and moral reasoning efforts.

The Other Objective of Ethics Education: Re-humanising the Accounting Profession – A Study of Ethics Education in Law, Engineering, Medicine and Accountancy

Abstract: Recently within the critical accounting literature Funnell (1998) has argued that accounting was implicated in the Holocaust. This charge is primarily related to the technical, mathematical nature of accounting and its ability to dehumanise individuals. Broadbent (1998, see also DeMoss and McCann, 1997) has also contended that "accounting logic" excludes emotion. She suggests that a more emancipatory form of accounting could be possible if emotion were given a voice and allowed to be heard within accounting discourse (see also Kjonstad and Wilmott, 1995). This paper contends that emotion should be introduced into accounting education and in particular emotional commitment to other individuals should be encouraged. It is suggested that one way to do this may be through business ethics education. It is also suggested that increasing ethical commitment to other individuals may go some way towards combating the tendency for accountancy to dehumanise other people. While there have been specific studies of ethics and accounting education there has, as yet, been little open debate about what the objectives of accounting ethics education should be or the specific techniques that could be used to meet the desired aims. This paper contends that accountancy has become dangerously dehumanised and that one of the most important objectives for any business ethics education must be to develop an empathy with "the other". The paper studies the developments within the medical, legal and engineering profession in order to suggest some specific methods which could be employed in order to re-humanise accountancy and develop a sense of moral commitment towards other individuals.

Some Cross-Cultural Evidence on Ethical Reasoning

Abstract: This study draws on Kohlberg's Cognitive Moral Development Theory and Hofstede's Culture Theory to examine whether cultural differences are associated with variations in ethical reasoning. Ethical reasoning levels for auditors from Australia and China are expected to be different since auditors from China and Australia are also different in terms of the cultural dimensions of long term orientation, power distance, uncertainty avoidance and individualism. The Defining Issues Tests measuring ethical reasoning P scores were distributed to auditors from Australia and China including Hong Kong and The Chinese Mainland. Results show that auditors from Australia have higher ethical reasoning scores than those from China, consistent with Hofstede's Culture Theory predictions.

The Work Ethic Values of Protestant British, Catholic Irish and Muslim Turkish Managers

Abstract: This paper examines the work ethic characteristics of particular practising Protestant, Catholic and Muslim managers in Britain, Ireland and Turkey. Max Weber, argued that Protestant societies had a particular work ethic which was quite distinct from non-Protestant societies. The Protestant work ethics (PWE) thesis of Weber was reviewed. Previous empirical and analytical research results showed that the number of research results which support Weberian ideas were more than those which did not support. Methodological issues were also discussed. Results revealed that there was a considerable difference between Muslim and other groups in terms of PWE characteristics. The Muslim group showed the highest PWE level, while the Protestant group was placed second and the Catholic group third. The Protestant group showed a slightly higher of PWE level than the Catholic group. The possible reasons for the higher level of the PWE values of Muslim managers are discussed in the light of historical, political, social and economic developments in Turkey.

Considerations in Ethical Decision-Making and Software Piracy

Abstract: Individuals are faced with the many opportunities to pirate The decision to pirate or not may be related to an individual's attitudes toward other ethical issues A person's ethical and moral predispositions and the judgments that they use to make decisions may be consistent across various ethical dilemmas and may indicate their likelihood to pirate software This paper investigates the relationship between religion and a theoretical ethical decision making process that an individual uses when evaluating ethical or unethical situations An ethical decision making model was studied for general unethical scenarios and for the unethical behavior of software piracy The research model was tested via path analysis using structural equation modeling and was found to be appropriate for the sample data The results suggest that there is a relationship between religion and the stages of an ethical decision making process regarding general ethical situations and software piracy

Ethical Beliefs of Business Professionals: A Study of Gender, Age and External Factors

Abstract: The present study examined how ethical beliefs and external factors affecting ethical beliefs are related to age and gender of business professionals. The results indicated that business professionals in the younger age group exhibited a lower standard of ethical beliefs. In the younger age groups, the females demonstrated a higher level of ethical beliefs, while in the older age group, the results suggested that the males had a slightly higher level of ethical beliefs. With regards to the influence of external factors on ethical beliefs, the results yielded a significant interaction between age and gender. The younger age groups, males in particular, were more susceptible to external factors. People at home had the most influence on beliefs about ethics, while the individual's supervisor had the least impact. The results were discussed in terms of theories of moral development.

Unpacking the Ethical Product

Abstract: Acknowledging the increasing attention in the literature devoted to the incorporation of ethical considerations into consumers' purchase decisions, this paper explores the notion of an ethical product. It is argued that ethical issues have long been involved in consumers' product evaluations, but that there has been little academic investigation of ethics in terms of product concepts and theories. Ethics are thus examined in the context of the augmented product concept, and two dimensions of ethical augmentation are identified: direction and content. These dimensions are set out and discussed at some length, and then they are used to construct an ethical product matrix. It is shown how this could be used to provide structure and coherence to examinations of the perceived ethics of any given product offering. The implications of the analysis offered in the paper are discussed, and a number of limitations of the ethical product notion are identified. Finally some conclusions and directions for future research are suggested.

Measuring Ethical Ideology in Business Ethics: A Critical Analysis of the Ethics Position Questionnaire

Abstract: Individual differences in ethical ideology are believed to play a key role in ethical decision making. Forsyth’s (1980) Ethics Position Questionnaire (EPQ) is designed to measure ethical ideology along two dimensions, relativism and idealism. This study extends the work of Forsyth by examining the construct validity of the EPQ. Confirmatory factor analyses conducted with independent samples indicated three factors – idealism, relativism, and veracity – account for the relationships among EPQ items. In order to provide further evidence of the instrument’s nomological and convergent validity, correlations among the EPQ subscales, dogmatism, empathy, and individual differences in the use of moral rationales were examined. The relationship between EPQ measures of idealism and moral judgments demonstrated modest predictive validity, but the appreciably weaker influence of relativism and the emergence of a veracity factor raise questions about the utility of the EPQ typology.

When organizations break their promises: Employee reactions to unfair processes and treatment

Abstract: Research has shown that the strongest reactions to organizational injustice occur when an employee perceives both unfair outcomes (distributive injustice) and unfair and unethical procedures and treatment. Utilizing the Referent Cognitions Theory (RCT) framework, this study investigates how a form of distributive injustice, psychological contract breach, along with procedural and interactional injustice influences employees' negative attitudes and behaviors. More specifically, the interactional effects of these forms of injustices should be notably greater than those exhibited when an employee of the organization, following a contract breach, perceives both fair and ethical processes and treatment. Three hundred and twenty-two employees from a variety of organizational settings completed measures of contract breach, procedural injustice, interactional injustice, and negative affect toward the organization. Their respective supervisors completed a measure of deviant work behaviors. Results revealed a three-way interaction between contract breach, procedural injustice, and interactional injustice on negative affect and deviant work behavior. The nature of the interaction was further investigated through simple slope analyses. Consistent with the study's propositions, deviant work behavior was higher following a contract breach when both procedural and interactional injustice were high. However, the association between negative affect and breach was high when both forms of injustices were high and when only interactional injustice was high. Study contributions and limitations as well as theoretical and ethical implications are discussed.

The impact of ethics code familiarity on manager behavior

Abstract: Codes of ethics exist in many, if not the majority, of all large U.S. companies today. But how the impact of these written codes affect managerial attitudes and behavior is still not clearly documented or explained. This study takes a step in that direction by proposing that attention should shift from the codes themselves as the sources of ethical behavior to the persons whose behavior is the focus of these codes. In particular, this study investigates the role of code familiarity as a factor impacting the influence of an ethics code on manager behavior. Data collected from 286 executives from companies in the direct selling industry are used to test hypotheses (1) that the perceived usefulness of ethics codes is positively related to the degree of familiarity with the code, and (2) that ethical climate as assessed by managers is positively related to the code's perceived usefulness. Both hypotheses are supported, and their implications and further research directions are discussed.