Business research and teaching institutions play an important role in shaping the way businesses perceive their relations to the broader society and its moral expectations. Hence, as ethical scandals recently arose in the business world, questions related to the civic responsibilities of business scholars and to the role business schools play in society have gained wider interest. In this article, I argue that these ethical shortcomings are at least partly resulting from the mainstream business model with its taken-for granted basic (...) assumptions such as specialization or the value-neutrality of business research. Redefining the roles and civic responsibilities of business scholars for business practice implies therefore a thorough analysis of these assumptions if not their redefinition. The taken-for-grantedness of the mainstream business model is questioned by the transformation of the societal context in which business activities are embedded. Its value-neutrality in turn is challenged by self-fulfilling prophecy effects, which highlight the normative influence of business schools. In order to critically discuss some basic assumptions of mainstream business theory, I propose to draw parallels with the corporate citizenship concept and the stakeholder theory. Their integrated approach of the relation between business practice and the broader society provides interesting insights for the social reembedding of business research and teaching. (shrink)

ABSTRACT:U.S. Organizational Sentencing Guidelines provide firms with incentives to develop formal ethics programs to promote ethical organizational cultures and thereby decrease corporate offenses. Yet critics argue such programs are cosmetic. Here we studied bank employees before and after the introduction of formal ethics training—an important component of formal ethics programs—to examine the effects of training on ethical organizational culture. Two years after a single training session, we find sustained, positive effects on indicators of an ethical organizational culture (observed unethical behavior, (...) intentions to behave ethically, perceptions of organizational efficacy in managing ethics, and the firm’s normative structure). While espoused organizational values also rose in importance post-training, the boost dissipated after the second year which suggests perceptions of values are not driving sustained behavioral improvements. This finding conflicts with past theory which asserts that enduring behavioral improvements arise from the inculcation of organizational values. Implications for future research are discussed. (shrink)

ABSTRACT:U.S. Organizational Sentencing Guidelines provide firms with incentives to develop formal ethics programs to promote ethical organizational cultures and thereby decrease corporate offenses. Yet critics argue such programs are cosmetic. Here we studied bank employees before and after the introduction of formal ethics training—an important component of formal ethics programs—to examine the effects of training on ethical organizational culture. Two years after a single training session, we find sustained, positive effects on indicators of an ethical organizational culture (observed unethical behavior, (...) intentions to behave ethically, perceptions of organizational efficacy in managing ethics, and the firm’s normative structure). While espoused organizational values also rose in importance post-training, the boost dissipated after the second year which suggests perceptions of values are not driving sustained behavioral improvements. This finding conflicts with past theory which asserts that enduring behavioral improvements arise from the inculcation of organizational values. Implications for future research are discussed. (shrink)

Contrary to stockholder theories that place the interests of profit-seeking owners above all else, stakeholder theorists argue that corporate executives have moral and ethical obligations to consider equally the interests of a wide range of stakeholders affected by the actions of a corporation. This paper argues that the stakeholder approach is particularly appropriate for the governance of news media companies and outlines an ethical framework to guide news company executives.

Codes of ethics are directly aimed at behavioral control, but they also affect a company’s ethical culture, which in turn concerns compliance and ethical behavior. To positively influence a company’s ethical culture, employees must be familiar with its code of ethics, perceive that top management is committed to the code, and believe that their peers also comply with the code. The evidence on whether a code’s design affects a company’s ethical culture is limited. This study’s factorial survey experiment contributes to (...) this gap in two ways: first, it investigates whether a code’s design affects how easily the code can be learned and, therefore, contributes to code familiarity. Second, it examines how a code can convey expectations regarding top management’s commitment and peers’ behavior, both of which are part of ethical culture. The results indicate that a positive tone increases code familiarity, and a code signed by top managers sends a strong signal of their commitment to the code. Finally, various implications of the results for research and practice are discussed. (shrink)

The question of whether, and to what extent, business managers have obligations to stakeholders has been the principal theme in much of recent business ethics literature. The question of whether shareholders have obligations to stakeholders, however, has not been addressed sufficiently. I provide some needed attention to this matter by examining the positions of shareholders in the contemporary world of investing. Their positions are considerably different than that often envisioned by business ethicists and economists where shareholders determine the directions of (...) corporate activities through their voting decisions. Typical contemporary investors rarely control corporate activities. If they own corporate securities directly, generally they own too small an interest to exercise control. And, in most cases, they do not even own corporate securities directly, but, rather, own shares in funds. Because of the positions of shareholders today, it is highly questionable whether most have obligations to stakeholders. This has a significant implication for business managers. Whether or not shareholders have obligations to stakeholders, business managers have a greater obligation to educate shareholders about how corporate activities affect stakeholders. I provide a justification for that obligation and comment on how business managers might begin to fulfill it. (shrink)

Faced with the liability of newness, a scarcity of resources, and concerns of survival, new firms frequently encounter difficult ethical decisions and might be pressured to make choices that run counter to the tenets of more developed ethical and moral reasoning. This study explores the impact of newness and entrepreneurial orientation on the ethical climate of firms. Data collected from 304 individuals across 37 firms indicated that firm newness was more strongly related to ethical climate than was an entrepreneurial orientation. (...) Results also revealed that firm newness may be usefully conceptualized in both continuous and categorical terms, with each operationalization holding a somewhat different relationship with climate. Finally, results revealed that firm size was related to several types of ethical climates. (shrink)

Business research and teaching institutions play an important role in shaping the way businesses perceive their relations to the broader society and its moral expectations. Hence, as ethical scandals recently arose in the business world, questions related to the civic responsibilities of business scholars and to the role business schools play in society have gained wider interest. In this article, I argue that these ethical shortcomings are at least partly resulting from the mainstream business model with its taken-for granted basic (...) assumptions such as specialization or the value-neutrality of business research. Redefining the roles and civic responsibilities of business scholars for business practice implies therefore a thorough analysis of these assumptions if not their redefinition. The takenforgrantedness of the mainstream business model is questioned by the transformation of the societal context in which business activities are embedded. Its value-neutrality in turn is challenged by self-fulfilling prophecy effects, which highlight the normative influence of business schools. In order to critically discuss some basic assumptions of mainstream business theory, I propose to draw parallels with the corporate citizenship concept and the stakeholder theory. Their integrated approach of the relation between business practice and the broader society provides interesting insights for the social reembedding of business research and teaching. (shrink)

Creativity and morality are key attributes that stakeholders demand of organizations. Accordingly, higher education institutions and professional training programs also seek to cultivate these attributes in future leaders. However, research has hitherto shown that, under certain conditions, creativity may conflict with morality. This complicates the development of creative individuals who are also moral. We examined the complex relationship between creativity and moral reasoning with data collected from a group of undergraduate students. By considering the cognitive processes behind creativity and moral (...) reasoning, we propose perspective taking as a moderating factor. Specifically, we found that while creative individuals might not necessarily adopt a lower level of moral reasoning, there was a more nuanced moderating relationship among creativity, perspective taking, and moral reasoning. That is, individuals who were weak in perspective taking tended to adopt a lower level of moral reasoning if they were also creative. Perspective taking was also directly and positively associated with moral reasoning. We explore the implications of our findings for future research and curriculum/program design. (shrink)

ABSTRACT:The purpose of this paper is to critically evaluate the instrumental perspective on Corporate Social Responsibility (CSR) in practice and theory by relying on sociological analyses of a well known organization: the Italian Mafia. Legal businesses might share features of the Mafia, such as the propensity to exploit a governance vacuum in society, a strong organizational identity that demarcates the inside from the outside, and an extreme profit motive. Instrumental CSR practices have the power to accelerate a firm's transition to (...) Mafia status through its own pathologies. The boundaries of such instrumentalism are explored and lessons for future CSR research derived, with specific emphasis on a firm's social and normative embeddedness, taking into account the inherent challenge of regulating corporate behaviour in the global economy. (shrink)

Every time another corporate scandal captures media headlines, the ‘bad apple vs. bad barrel’ discussion starts anew. Yet this debate overlooks the influence of the broader societal context on organizational behavior. In this article, we argue that misbehaviors of organizations (the ‘barrels’) and their members (the ‘apples’) cannot be addressed properly without a clear understanding of their broader context (the ‘larder’). Whereas previously, a strong societal framework dampened the practical application of the Homo economicus concept (business actors as perfectly rational (...) and egocentric utility-maximizing agents without any moral concern), specialization, individualization and globalization led to a business world disembedded from broader societal norms. This emancipated business world promotes a literal interpretation of Homo economicus among business organizations and their members. Consequently, we argue that the first step toward ‘healthier’ apples and barrels is to sanitize the larder, that is, adapt the framework in which organizations and their members evolve. (shrink)

Every time another corporate scandal captures media headlines, the ‘bad apple vs. bad barrel’ discussion starts anew. Yet this debate overlooks the influence of the broader societal context on organizational behavior. In this article, we argue that misbehaviors of organizations (the ‘barrels’) and their members (the ‘apples’) cannot be addressed properly without a clear understanding of their broader context (the ‘larder’). Whereas previously, a strong societal framework dampened the practical application of the Homo economicus concept (business actors as perfectly rational (...) and egocentric utility‐maximizing agents without any moral concern), specialization, individualization and globalization led to a business world disembedded from broader societal norms. This emancipated business world promotes a literal interpretation of Homo economicus among business organizations and their members. Consequently, we argue that the first step toward ‘healthier’ apples and barrels is to sanitize the larder, that is, adapt the framework in which organizations and their members evolve. (shrink)

This paper is the Introduction to the Special Issue comprising a selection of papers submitted to the 19th IESE International Symposium on Ethics, Business and Society. The main topic of the Symposium was “Ethical Challenges in Strategic Management.” The paper presents the rationale and context of the Symposium. We begin with a brief historical overview of the evolution of the relationship between ethics and strategy. We propose four pillars that are at the core of a definition of strategy and elaborate (...) on how ethics can contribute to strategy. We present the six papers that make up this selection within the framework of the four aspects introduced in the previous section. We conclude with some proposals for further research that consider the content of the papers. (shrink)

The paper reports on research undertaken in three organisations seeking to explore anomie at work. This research explores whether a distinction in the levels of anomie between people's perception of the work and non-work contexts exists in three organisations, that is whether people are more likely to feel more hopeless and helpless in their work or non-work life. It also looks at whether people in different organisations have significantly different levels of anomie. A significant difference in the non-work anomie between (...) organisations, but no significant difference in work anomie between organisations, was found. In the three organisations researched, the anomie score in the non-work context is lower than in the work context, indicating that respondents perceive the work context as more anomic. The work anomie for the total sample was found to be significantly higher that the non-work anomie. The implications for ethical behaviour at work and business ethics are discussed. (shrink)

The discussions about the reform of state-owned enterprises are so far dominated by economic and legal considerations while the ethical dimension of this highly complex problem is being barely addressed explicitly, much less developed systematically and integrated into a broader analytical framework for companies in China. This paper is a proposal to introduce this kind of ethical considerations. First, the main features of the reform of state-owned enterprises are briefly summarized and a number of critical issues are identified. Second, the (...) "balanced concept of the firm" is presented and compared with other approaches to corporate ethics in chiefly Western literature (discussions on "corporate social responsibility", the stakeholder approach, and social contract theories). Finally, the relevance of this "balanced concept of the firm" for the reform of state-owned enterprises is briefly discussed. (shrink)

How do senior business executives rank their preferences for various ethical principles? And how strongly do the executives believe in these principles? Also, how do these preference rankings relate to the way the executives see the future (wherein business decisions play out)? Research on these questions may provide us with an appreciation of the complexities of ethical behavior in management beyond the traditional issues concerning ethical decision-making in business. Based on a survey of 585 vice presidents of U.S. businesses it (...) was found that: (1) there is a distinct set of principles of ethical conduct that is considered favorable as opposed to another set considered unfavorable among a comprehensive list of 14 ethical principles; (2) the executives believed overwhelmingly that their own individual ethical preferences are better than those of other executives; (3) the strength of their preferences for ethical principles is associated with whether the executives are relatively near-future oriented or more distant-future oriented; and (4), there are very few significant differences in terms of gender, age, education level, private/public education, prestigious/other schools, business/non-business academic backgrounds, and length of job experience. Implications of these findings are discussed. (shrink)

Using a sample of multinational firms in Germany, we develop and empirically examine a model to test the effects of ethical climate and its antecedents on purchasing social responsibility (PSR). Our results show different effects of benevolence dimensions of ethical climate on PSR: employee-focused climate has no effect, but community-focused climate is a significant driver of PSR. The results also show that top management ethical norms and code of conduct implementation impact PSR directly as well as indirectly through ethical climate.

In the process of implementing an ethical code of conduct, a business organization uses formal methods. Of these, training, courses and means of enforcement are common and are also suitable for self-regulation. The USA is encouraging business corporations to self regulate with the Federal Sentencing Guidelines (FSG). The Guidelines prescribe similar formal methods and specify that, unless such methods are used, the process of implementation will be considered ineffective, and the business will therefore not be considered to have complied with (...) the guidelines. Business organizations invest enormous funds on formal methods. However, recent events indicate that these are not, by themselves, yielding the desired results. Our study, based on a sample of 812 employees and conducted in an Israeli subsidiary of a leading multinational High-Tech corporation headquartered in the US, indicates that, of the methods used in the process of implementation, one of the informal methods (namely, the social norms of the organization) is perceived by employees to have the most influence on their conduct. This result, when examined against employee tenure, remains relatively stable over the years, and stands in contradistinction to the formalistic approach embedded in the FSG. We indirectly measure the effectiveness of the percieved most influential implementation process methods by analyzing their impact on employee attitudes (namely, personal ethical commitment and employees'' commitment to organizational values). Our results indicate that the informal methods (manager sets an example or social norms of the organization) are likely to yield greater commitment with respect to both employee attitudes than the formal method (training and courses on the subject of ethics). The personal control method (my own personal values) differs significantly from all the other methods in that it yields the highest degree of personal ethical commitment and the lowest degree of employees'' commitment to organizational values. (shrink)