In this study, we propose and test a model of the effects of organizational ethical culture and organizational architecture on the perceived unethical behavior of employees towards customers. This study also examines the relationship between organizational ethical culture and moral acceptability judgment, hypothesizing that moral acceptability judgment is an important stage in the ethical decision-making process. Based on a field study in one of the largest financial institutions in Europe, we found that organizational ethical culture was significantly related to the (...) perceived frequency of unethical behavior towards customers and to the moral acceptability judgment of this type of unethical behavior. No support was found for the claim that features of organizational architecture are associated with the perceived frequency of unethical behavior towards customers. This is the first study to document the differential effects of organizational architecture and organizational ethical culture on perceived unethical behavior of employees towards customers, in wholesale banking. Implications for managers and future research are discussed. (shrink)

This article embarks on ethical trade-offs at the sustainability/finance interface by contrasting shareholders’ interest in short-term financial returns with society’s interest in counteracting ecological and social grievances. Scrutinizing share repurchases, we investigate a firm’s communicated sustainability orientation (i.e., its environmental and social value orientation) as well as its environmental and social sustainability performance. Our results are based on a large-scale panel dataset of 491 U.S. firms observed from 2004 to 2016. The dataset combines share buyback data with sustainability orientation scores (...) from shareholder letters and sustainability performance ratings. The econometric models suggest no association between social value orientation and repurchase volumes, but a significantly negative relationship between environmental value orientation and buybacks in a cubic form. Executive stock options partially attenuate this relationship. Share repurchases in turn negatively affect future environmental and social performance. This study grasps the consequences of firms’ short-term shareholder satisfaction and discusses its ethical implications in the context of firms’ contribution to sustainable development, thereby providing important insights to the business ethics discourse. (shrink)

This paper explores links between different ethical motivations and kinds of corporate social responsibility activities to distinguish between different types of business cases with regard to sustainability. The design of CSR and corporate sustainability can be based on different ethical foundations and motivations. This paper draws on the framework of Roberts which distinguishes four different ethical management versions of CSR. The first two ethical motivations are driven either by a reactionary concern for the short-term financial interests of the business, or (...) reputational, driven by a narcissistic concern to protect the firm’s image. The third responsible motivation works from the inside-out and seeks to embed social and environmental concerns within the firm’s performance management systems, and the fourth, a collaborative motivation, works to bring the outside in and seeks to go beyond the boundaries of the firm to create a dialogue with those who are vulnerable to the unintended consequences of corporate conduct. Management activities based on these different ethical motivations to CSR and sustainability result in different operational activities for corporations working towards sustainability and thus have very different effects on how the company’s economic performance is influenced. Assuming that corporate managers are concerned about creating business cases for their companies to survive and prosper in the long term, this paper raises the question of how different ethical motivations for designing CSR and corporate sustainability relate to the creation of different business cases. The paper concludes by distinguishing four different kinds of business cases with regard to sustainability: reactionary and reputational business cases of sustainability, and responsible and collaborative business cases for sustainability. (shrink)

This study examines how the CSR committee and CSR-linked executive compensation jointly affect CSR performance as governance mechanisms. Prior studies provided mixed results on the CSR committee’s effect on CSR performance. We posit that a CSR committee has both a direct and an indirect positive effect on CSR performance, with CSR-linked compensation playing the role of mediator in the relationship. We base our analysis on a sample of 164 Canadian firms covering the period 2012–2018, for a total of 952 firm-year (...) observations. We propose a regression-based approach for our mediation research design. Our findings reveal that CSR-linked compensation mediates the CSR committee’s positive effect on performance, but the type of mediation depends on whether the performance is social or environmental. We provide evidence of both direct and indirect effects on environmental performance but only a positive indirect effect on social performance. These results suggest that demands from the firm’s internal and external stakeholders are treated differently, with the former receiving priority. (shrink)

To deal with potential conflicts between the triple-bottom-line expectations of investors and the performance of executives, firms can use incentives by integrating corporate social performance targets into executive compensation. No evidence yet exists that CSP targets in executive compensation actually lead to an improvement of CSP results. Using a panel data set of 400 firms for the years 2008–2012 leading to 1846 firm-year observations, the relationships between CSP targets and CSP results and CSP improvements are analyzed. The results show that (...) the level of CSP has no effect on the use of CSP targets, the use of CSP targets in general does not automatically lead to better CSP results, and the use of quantitative, hard CSP targets is an effective way to improve CSP results, especially to lower CSP weaknesses. (shrink)

This study investigates the performance measurement systems adopted by companies to manage their social responsibility activities, a theme that remains under-researched despite the important role that these mechanisms may play in helping firms control and improve their social performance. An integrative model is developed to examine how the three fundamental drivers of corporate social strategies, i.e., business motivations, perceived stakeholder pressures, and top management’s social commitment, influence the use of social performance indicators for internal decision-making and control and how such (...) use impacts companies’ social and economic performance. The results from a survey of 97 Italian companies suggest that economic motivations and top management’s commitment are associated with a more intensive use of social performance indicators for decision-making and control, whereas perceived pressures from stakeholders do not represent a significant determinant of such use. The use of social performance indicators, in turn, is found to directly influence a firm’s social performance and, indirectly, its bottom line. (shrink)

This paper investigates the association between board characteristics and the company’s corporate social responsibility assurance decision in China. By examining 2054 firm-years of Chinese listed companies with CSR reports from 2008 to 2012, we find that firms with a large board size, more female directors, and separation of CEO and chairman positions are more likely to engage in CSR assurance. Gender diversity also influences the CSR assurance provider choice. However, board independence and overseas background of the CEO do not affect (...) the CSR assurance decision. Inconsistent with our prediction, firms with foreign directors are less likely to engage in voluntary CSR assurance. In summary, this research provides in-depth insights into the determinants of Chinese firms’ voluntary CSR assurance. (shrink)

Management of organizational tensions can facilitate the simultaneous advancement of economic, social, and environmental priorities. The approach is based on managers identifying and managing tensions between the three priorities, by employing one of the three strategic responses. Although recent work has provided a theoretical basis for such tension acknowledgment and management, there is a dearth of empirical studies. We interviewed 32 corporate sustainability managers across 25 forestry and wood-products organizations in Australia. Study participants were divided into two groups: those considered (...) effective at corporate sustainability and a status-quo group. Contrary to current theory, our findings showed that acknowledgment of organizational tensions was widespread in the Australian forestry and wood-products industry and not limited to those managers who are effective at managing corporate sustainability. What differed was the degree to which managers did something about the perceived tensions—with the effective group more consistently acting to manage and resolve paradoxical scenarios. Our findings suggest that existing theoretical constructs of tension management may not adequately capture the individual-level complexity involved with managing tensions in practice. (shrink)

This paper proposes a systematic framework for the analysis of tensions in corporate sustainability. The framework is based on the emerging integrative view on corporate sustainability, which stresses the need for a simultaneous integration of economic, environmental and social dimensions without, a priori, emphasising one over any other. The integrative view presupposes that firms need to accept tensions in corporate sustainability and pursue different sustainability aspects simultaneously even if they seem to contradict each other. The framework proposed in this paper (...) goes beyond the traditional triad of economic, environmental and social dimensions and argues that tensions in corporate sustainability occur between different levels, in change processes and within a temporal and spatial context. The framework provides vital groundwork for managing tensions in corporate sustainability based on paradox strategies. The paper then applies the framework to identify and characterise four selected tensions and illustrates how key approaches from the literature on strategic contradictions, tensions and paradoxes—i.e., acceptance and resolution strategies—can be used to manage these tensions. Thereby, it refines the emerging literature on the integrative view for the management of tensions in corporate sustainability. The framework also provides managers with a better understanding of tensions in corporate sustainability and enables them to embrace these tensions in their decision making. (shrink)

In this study, we propose and test a model of the effects of organizational ethical culture and organizational architecture on the perceived unethical behavior of employees towards customers. This study also examines the relationship between organizational ethical culture and moral acceptability judgment, hypothesizing that moral acceptability judgment is an important stage in the ethical decision-making process. Based on a field study in one of the largest financial institutions in Europe, we found that organizational ethical culture was significantly related to the (...) perceived frequency of unethical behavior towards customers and to the moral acceptability judgment of this type of unethical behavior. No support was found for the claim that features of organizational architecture are associated with the perceived frequency of unethical behavior towards customers. This is the first study to document the differential effects of organizational architecture and organizational ethical culture on perceived unethical behavior of employees towards customers, in wholesale banking. Implications for managers and future research are discussed. (shrink)

This paper examines the effectiveness of the use of executive compensation linked to Corporate Social Responsibility (CSR) goals across US firms. Empirical analysis of a cross-industry sample of 746 listed companies for the period 2002–2013 showed that the use of CSR-linked compensation contracts for Named Executive Officers (NEOs) promotes CSR performance. More specifically, we found that linking NEOs’ compensation to CSR goals produces positive effects in the 3rd year after adoption. As firms accumulate experience and learn how to use the (...) system over the following eight periods, CSR performance increases monotonically. Furthermore, experience accumulated over time affects the different specifications of CSR performance asymmetrically, by reducing both environmental and social CSR concerns and increasing only environmental CSR strengths. Interestingly, we also found that the simultaneous use of other CSR-focused governance systems moderates the effect of a firm’s accumulated experience in using CSR-linked executive compensation on CSR performance: the existence of a CSR committee at the board level and the public release of a CSR report are likely to have a positive moderating effect, while the purchase of a CSR audit has no moderating effect. (shrink)

Addressing climate change is among the most challenging ethical issues facing contemporary business and society. Unsustainable business activities are causing significant distributional and procedural injustices in areas such as public health and vulnerability to extreme weather events, primarily because of a distinction between primary emitters and those already experiencing the impacts of climate change. Business, as a significant contributor to climate change and beneficiary of externalizing environmental costs, has an obligation to address its environmental impacts. In this paper, we explore (...) the role of firms’ climate change targets in shaping their emissions trends in the context of a large multi-country sample of companies. We contrast two intentions for setting emissions reductions targets: symbolic attempts to manage external stakeholder perceptions via “greenwashing” and substantive commitments to reducing environmental impacts. We argue that the attributes of firms’ climate change targets are diagnostic of firms’ underlying intentions. Consistent with our hypotheses, while we find no overall effect of setting climate change targets on emissions, we show that targets characterized by a commitment to more ambitious emissions reductions, a longer target time frame, and absolute reductions in emissions are associated with significant reductions in firms’ emissions. Our evidence suggests the need for vigilance among policy-makers and environmental campaigners regarding the underlying intentions that accompany environmental management practices and shows that these can to some extent be diagnosed analytically. (shrink)

This study analyzes how the board’s characteristics could be associated with globally corporate social responsibility CSR and specific areas of CSR. It is drawn on all listed firms, in 2016, on the SBF120 between 2003 and 2016. Our results provide strong evidence that diversity in boards and diversity of boards globally are positively associated with corporate social performance. However, they influence differently specific dimensions of CSR performance. First, we show that large boards are positively associated with all areas of CSR (...) performance, while specific and overall CSR scores are negatively associated with CEO-chair structures. Second, board gender diversity is positively associated with human rights and corporate governance dimensions. Third, age diversity is positively associated with corporate governance, human resources, human rights, and environmental activities. Also, our results provide evidence that outside directors care about CSR performance. Specifically, the presence of foreign directors is positively associated with environmental performance and community involvement, whereas CSR-Governance dimension is positively associated with the presence of independent directors. Regarding the director’s educational level, post-graduated directors are positively and significantly associated with overall CSR score and all CSR sub-scores, except the corporate governance one. When directors have multiple directorships, they are more concerned about human resources, environmental performance, and business ethics. Finally, our findings are robust only in non-family firms. In fact, family boards are less diverse than non-family ones; specifically, they have a lower number of independent, foreign, and high-educated directors. (shrink)

Companies are expected to monitor sustainable behaviour to help improve performance, enhance reputation and increase chances of survival. This paper examines the relationship between sustainability committees and independent external assurance on the inclusion of sustainability-related targets in CEO compensation contracts. Using a sample of UK FTSE350 companies for 2011–2015 and controlling for governance and firm characteristics, we find both board-level sustainability committees and sustainability reporting assurance have a positive and significant association with the inclusion of sustainability terms in compensation contracts. (...) However, there is no joint impact between the voluntary use of independent external assurance and the role of sustainability committees on CEO compensation contracts. Sustainability-related terms in compensation contracts are more likely to be included, and higher compensation is likely to be paid, when assurance is provided by a Big4 firm and when a company operates in a sustainability-sensitive industry. Our findings highlight the potential of assured sustainability reports in assessing CEO performance in sustainability-related tasks, especially when sustainability metrics are included in CEO compensation contracts. Overall, our results suggest companies that invest in voluntary assurance are more likely to monitor management’s behaviour and be concerned about the achievement of sustainability goals. (shrink)