Global sourcing largely occurs from so-called emerging markets and developing economies. In these contexts, substantial leverage effects for sustainability in supply chains can be expected by reducing adverse impacts on society and minimising related risks. For this ethical end, an adequate understanding of the respective sourcing contexts is fundamental. This case study of South Africa’s mining sector uses institutional theory and the notion of institutional uncertainty to empirically analyse the challenges associated with establishing social sustainability. The case study research is (...) informed by 39 semi-structured interviews with top management representatives and various state and non-state decision makers in SA. Our findings suggest that sustainability in the institutional field is mainly shaped by the Social and Labour Plan institution, induced by state actors and mining companies’ practices. However, four weakening factors were identified that adversely affect this regulative institution, drive institutional uncertainty and allow for mining companies’ gradual decoupling. Contrastingly, complementing pressures of non-state actors limit institutional uncertainty and push toward mainstreaming the stipulations of the institution. This study contributes to the business ethics literature by providing an in-depth exploration of institutional uncertainty’s drivers and barriers within an upstream SC setting and shedding light on multiple actors’ interplay and relevance in sector-wide sustainability. The findings are condensed into three main propositions as well as an analytical framework as a basis for follow-up research. This case study helps practitioners understand and manage complexity that results from actor plurality and institutional uncertainty in EMDEs. (shrink)

The paper aims to investigate the effects of corporate social performance (CSP) on bankruptcy likelihood in times of economic upswing. This is important because prior related literature focused on data containing times of economic crises. We measure bankruptcy likelihood with the Altman Z score and CSP with Refinitiv ESG scores. By applying static panel data regressions and instrumental variable regressions on a sample of 6696 US-firm-year observations from 2010 to 2019 our main findings are: (i) In contrast to existing research, (...) the level of firms’ CSP seems to have no (positive) effect on the likelihood of bankruptcy during times of economic upswing. (ii) Increasing a firm’s CSP in times of economic upswing leads to a rise in bankruptcy likelihood. We conclude that the positive effects of CSP on stakeholder relationships fail to materialize in flourishing business environments. The costs of increasing CSP, thus, exceed their immediate positive effects and raise bankruptcy likelihood. However, as they reduce financial default risk in subsequent crises, CSP investments can be seen as a balancing measure. Our findings bear implications for scholars, practitioners, and policymakers. (shrink)

This paper examines the market response to the events leading up to the passage of Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act to explore whether investors value mandatory human rights disclosures of conflict mineral usage. Using a sample of 3639 US registrants from January 1, 2008 to September 30, 2014, we document a significant negative stock market reaction to the passage of the Act. Using a sample of 1206 filers, we also find a negative market (...) reaction to conflict mineral disclosures under the Act. The market reaction is more negative and limited to companies that source their minerals from the DRC and adjoining countries, companies with prior records of human rights violations, and companies with ambiguous disclosures. However, the market appears to reward firms that use risk-mitigation strategies. This paper provides preliminary evidence that the mandatory disclosure of conflict mineral information on Form SD poses a threat to firms’ legitimacy, resulting in a net cost to investors. The results of this study provide economic justification for companies with poor records of conflict mineral sourcing to improve their practices for the purpose of avoiding the high costs that will arise if they are forced to disclose human rights abuses related to conflict mineral use. (shrink)

To commemorate 40 years since the founding of the Journal of Business Ethics, the editors in chief of the journal have invited the editors to provide commentaries on the future of business ethics. This essay comprises a selection of commentaries aimed at creating dialogue around the theme Business versus Ethics?. The authors of these commentaries seek to transcend the age-old separation fallacy :409–421, 1994) that juxtaposes business and ethics/society, posing a forced choice or trade off. Providing a contemporary take on (...) the classical question “if it’s legal is it ethical?”, David Hess explores the role of the law in promoting or hindering stakeholder-oriented purpose and governance structure. Jeffrey Harrison encourages scholars to move beyond the presupposition that businesses are either strategic or ethical and explore important questions at the intersection of strategy and ethics. The proposition that business models might be inherently ethical or inherently unethical in their design is developed by Sheila Killian, who examines business systems, their morality, and who they serve. However, the conundrum that entrepreneurs are either lauded for their self-belief and risk-taking, or loathed for their self-belief and risk-taking, is discussed by M. Tina Dacin and Julia Roloff using the metaphor of taboos and totems. These commentaries seek to explore positions that advocate multiplicity and tensions in which business ethics is not either/or but both. (shrink)

The extraction of natural resources is a controversial business practice that has profound ethical and economic risk implications for both firms involved in extractive activities and society at large. In response to these implications, the Dodd–Frank Act of 2010 directed the Securities and Exchange Commission to create the first ever rules requiring annual corporate responsibility disclosures. The two proposed rules, requiring disclosure of the source of “conflict minerals” and of payments to foreign governments by extractive firms, conjured intense debate among (...) stakeholders, largely related to the risks of firms providing the information. These risks span from required disclosures increasing compliance costs for firms to non-disclosure threatening human rights. In this study, we seek to understand the way in which stakeholders perceive the risks associated with corporate responsibility disclosures. We analyze comment letters submitted to the SEC related to the two disclosure rules through the lens of Douglas’s cultural perspectives of risk. We find consistencies across the two proposed disclosures with regard to the presence of three risk perspectives within the comment letter discourse for each proposal. We find inconsistencies, however, in the underlying nature of risk perceived across the two rules, which we argue reveals an aspect of risk that incorporates ethicality and is ultimately linked to reputational considerations. We complement these insights by analyzing the market reaction to the proposed regulations. Overall, our analysis suggests that stakeholders’ perceptions of risk have consequences for how risk is perceived and acted upon in the market. (shrink)