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Book ChapterDOI

Principals, Agents, and Ethics

About: This article is published in The Ruffin Series in Business Ethics.The article was published on 1992-04-01. It has received 63 citations till now.
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Journal ArticleDOI
TL;DR: In this paper, the authors discuss trust in ethics and management as a qualified and conditional good, arguing that researchers should focus on optimal trust, a mixture of trust and distrust appropriate in most contexts, including business.
Abstract: In this article we discuss trust in ethics and management as a qualified and conditional good, arguing that researchers should focus on optimal trust—a mixture of trust and distrust appropriate in most contexts, including business. Trust is an important part of strategic choice, and managers who develop optimal trust in relationships with stakeholders will improve firm performance. We offer a definition of optimal trust, develop propositions based on the definition, and include indicators managers might use to assess whether trust is optimal in relationships with various stakeholders.

791 citations

Journal ArticleDOI
TL;DR: This article argued that the preferred alternative is not to split the difference, but to move beyond the positivism vs. antipositivism debate and work from an alternative framework, which allows researchers to put this debate to the side and, in the process, develop research that is focused on serving human purposes.
Abstract: The central claim of this paper is that organization studies needs to be fundamentally reshaped. Such change is needed to provideroom for ethics and to increase the relevance of research. We argue that the new pragmatism provides critical resources forthis change. Pragmatism is a particularly helpful tool to use in that it highlights the moral dimensions of organizing (is thisuseful for our purposes?) while at the same time avoiding entrenched epistemological distinctions that marginalize ethicsand make research less useful. The paper begins by discussing the relative absence of ethics within the mainstream of organization studies, indicates why this relative absence is problematic, and proceeds to show how pragmatism offers a preferable approach. Epistemology-specifically the debate between positivists and anti-positivists-becomes a central issue because the framework of positivism is overtly hostile to ethics (and other nonquantitative approaches to studying organizations), rendering it a marginal subject. While anti-positivism holds promise for overcoming this hostility towards ethics, it retains some of the destructive elements of positivism that create new and equally troubling difficulties. The paper claims, in contrast to the proposals of others (e.g., Zald's 1993 position) that the preferred alternative is not to split the difference, but to move beyond the positivism vs. antipositivism debate and work from an alternative framework. Pragmatism allows researchers to put this debate to the side and, in the process, develop research that is focused on serving human purposes-i.e., both morally rich and useful to organizations and the communities in which they operate.

547 citations

Journal ArticleDOI
TL;DR: In this paper, the authors analyzed how the interests of the actors in the supply chain can be aligned with the terms of the codes, and showed that non-compliance can have severe consequences for the initiator.
Abstract: In the wake of globalization, companies are becoming increasingly aware of the social and environmental aspects of international production. Companies of today not only have to be profitable, but they also have to be good corporate citizens. In response to the increasing societal pressure, many companies adopt the concept of corporate social responsibility (CSR) by introducing codes of conduct that are expected to ensure socially responsible business practises throughout the chain—from supplier of raw materials to final end-users. However, there are several challenges to the management and control of codes of conduct in global supply chains. Active commitment is a precondition for the successful implementation of the codes, but the incentive to comply with the codes does not necessarily extend to all the actors in the chain. Moreover, it is difficult to enforce codes of conduct in global supply chains, because the involved companies are separated geographically, economically, legally, culturally and politically. In consequence, introducing codes of conduct in global supply chains raises a series of agency problems that may result in non-compliance. Realizing that non-compliance can have severe consequences for the initiator (due to consumer sanctions, negative press, capital loss, government interventions, damaged brand etc.), the article analyses how the interests of the actors in the supply chain can be aligned with the terms of the codes. IKEA is used as a ‘best case’ example to illustrate how codes of conduct can be effectively managed in the supply chain. Copyright © 2006 John Wiley & Sons, Ltd.

244 citations

Journal ArticleDOI
TL;DR: In this article, the authors examine how information asymmetry affects reputation and ethical concerns, and test the effects of these concerns on budgetary slack, finding that budgetary slack is negatively associated with a measure of ethical responsibility from a pre-experiment personality questionnaire as well as reputation and ethics expressed in an exit questionnaire.
Abstract: This experimental study tests the effects on budgetary slack of two potential controls for opportunistic self‐interest—reputation and ethics. I manipulate the level of information asymmetry between the subordinate and the superior regarding productive capability and measure the subordinate's reputation and ethical concerns regarding budgetary slack. In this setting, I examine how information asymmetry affects reputation and ethical concerns, and test the effects of these concerns on budgetary slack. Consistent with prior findings, subordinates restrict the slack in their budgets to well below the maximum under a slack‐inducing pay scheme, even after five periods of experience. Budgetary slack is negatively associated with a measure of ethical responsibility from a pre‐experiment personality questionnaire as well as reputation and ethical concerns expressed in an exit questionnaire. Subordinates express lower reputation concerns as information asymmetry regarding productive capability increases, thereby re...

202 citations


Cites background from "Principals, Agents, and Ethics"

  • ...Further, ethical concerns are determined by the individual’s value system, which evolves from internalized social norms (Dees 1992)....

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  • ...Further, ethical concerns are determined by the individual s value system, which evolves from internalized social norms (Dees 1992)....

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  • ...Dees (1992, 26) observes that society expects conformance to social norms, including honesty, trustworthiness, fairness, justice, a sense of public duty, respect for the autonomy of others, and avoidance of gratuitous harm....

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Journal ArticleDOI
TL;DR: In contrast to conventional deposits, such investment accounts therefore yield a variable periodic return which may be negative (a loss) as discussed by the authors, and are thus a form of limited-duration equity investment.
Abstract: Because Islamic banks are prohibited from entering into transactions based on riba (interest), they mobilise funds mainly on the basis of the mudaraba (profit-sharing) form of contract. Thus, in the place of interest-bearing customer deposits, Islamic banks offer investment accounts the return on which depends on the return on the pool of assets in which the customers' funds are invested by the bank. In contrast to conventional deposits, such investment accounts therefore yield a variable periodic return which may be negative (a loss). Islamic investment accounts are thus a form of limited-duration equity investment.

158 citations