Business Ethics

Virtue accounts of innovation ethics have recognized the virtue of creativity as an admirable trait in innovators. However, such accounts have not paid sufficient attention to the way creativity functions as a collective phenomenon. We propose a collective virtue account to supplement existing virtue accounts. We base our account on Kieran’s definition of creativity as a virtue and distinguish three components in it: creative output, mastery and intrinsic motivation. We argue that all of these components can meaningfully be attributed to (...) innovation groups. This means that we can also attribute the virtue of creativity to group agents involved in innovation. Recognizing creativity as a collective virtue in innovation is important because it allows for a more accurate evaluation of how successful innovation generally happens. The innovator who takes a collective virtue account of creativity seriously will give attention to the facilitation of an environment where the group can flourish collectively, rather than only nurturing the individual genius. (shrink)

Against the backdrop of a global pandemic, this study investigates how U.S. higher education leaders have centered their crisis management on values and guiding ethical principles. We conducted 55 in-depth interviews with leaders from 30 U.S. higher education institutions, with most leaders participating in two interviews. We found that crisis plans created prior to the COVID-19 pandemic were inadequate due to the long duration and highly uncertain nature of the crisis. Instead, higher education leaders applied guiding principles on the fly (...) to support their decision-making. If colleges and universities infuse shared values into their future crisis plans, they will not have to develop a moral compass on the fly for the next pandemic. This paper suggests the following somewhat universal shared values: engage in accuracy, transparency, and accountability; foster deliberative dialog; prioritize safety; support justice, fairness, and equity; and engage in an ethic of care. To navigate ethics tensions, leaders need to possess crisis-relevant expertise or ensure that such expertise is present among crisis management team members. Standing up formal ethics committees composed of diverse stakeholders also is instrumental in navigating tensions inherent in crises. The next pandemic is already on the horizon according to experts. Through infusing values into future crisis plans, higher education leaders can be confident that their responses will be grounded in their communities’ shared values. (shrink)

The concept of the self and its relation to moral action is complex and subject to varying interpretations, not only between different academic disciplines but also across time and space. This paper presents empirical evidence from a cross-cultural study on the Buddhist and Confucian notions of self in SMEs in Vietnam and Taiwan. The study employs Hwang’s Mandala Model of the Self, and its extension into Shiah’s non-self-model, to interpret how these two Eastern philosophical representations of the self, the Confucian (...) relational self and Buddhist non-self, can lead to moral action. By demonstrating the strengths of the model, emphasizing how social and cultural influences constrain the individual self and promote the social person leading to moral action, the paper extends understanding of the self with empirical evidence of the mechanisms involved in organizational contexts. (shrink)

This study examines how meritocracy as a collective social imaginary promoting social justice and fairness reproduces class and caste inequalities and fosters ethical violence. We interrogate discourse of merit in the narratives of the professional–managerial class-in-making at an Indian business school. Empirically, we draw on interviews, full-text responses to a qualitative questionnaire, and a student’s poem. We describe how business school students articulate merit as a neoliberal ethic, emphasizing prudential, enterprising attitudes, and responsibility. However, this positive, aspirational façade of merit (...) masks practices of ethical violence, wherein individuals invoke an ethical principle as grounds for moral condemnation and linguistic injuries. These practices of ethical violence desubjectify disadvantaged students and result in silence as a form of inequality. We contribute to organizational research on inequalities by foregrounding ethical violence and desubjectification. We detail the possibilities of discursive agency in contesting and interrupting ethical violence. (shrink)

We extend the literature by providing evidence that a cultural variable, intrinsic Islamic religiosity is important in understanding auditors’ judgement in the Islamic context of Pakistan. The intrinsic Islamic religiosity theoretical construct examined is Islamic Worldview which represents deeply held enduring and stable values which are likely to be dominant in influencing professionals’ judgements. Moreover, theoretical underpinning and empirical evidence in social psychology and organisational behaviour have established the critical role of intrinsic religiosity in influencing behaviour. Our first objective is (...) to examine whether IW impacts auditors’ judgements in the context of their acceptance of uncorroborated low-reliability client-provided evidence. Understanding the potential impact of cultural factors on auditors’ acceptance of client-provided information is an essential factor in improving audit quality. Our findings support the hypothesis that auditors with high IW scores are more likely to accept uncorroborated low-reliability client-provided evidence. Our second objective is to examine the relationship between IW and auditors’ preference for exercising more or less judgements. Examining this topic is important because auditing is a judgement-based process: auditors’ judgements determine audit quality and, by extension, the quality of associated financial reports. Our findings provide overall support for the hypothesis that auditors with high IW scores have a preference for exercising more judgement. Our findings have implications for global and national standard setters, regulators, practitioners, and researchers. The results are also relevant to global audit firms and their affiliates, particularly networks operating in Islamic countries, in ensuring global consistency of audits. (shrink)

This study investigates the interaction between suppliers and fraudulent customer firms from the perspective of reputation damage and reputation recovery. Specifically, reputation damage from the regulatory penalty for corporate fraud induces the trust crisis and suppliers respond to fraudulent firms by reducing the trade credit supply. To repair a damaged reputation and rebuild the trust, fraudulent firms raise the ratio of prepayment to purchase volume when purchasing from small suppliers and increase the proportion of purchase from large suppliers in the (...) next year. Channel analysis shows that the declining trust is one of potential mechanisms to reduce the trade credit. Furthermore, the negative effect is more pronounced for fraudulent firms with non-related party suppliers, higher supplier concentration, less analyst coverage, and for fraudulent firms located in regions with less-developed financial environment. Additionally, supplier sanctions have a spillover effect on non-fraudulent customer firms in the same industry. The conclusions are robust to a series of checks, including PSM–DiD, firm and year fixed effect, the alternative measure for trade credit financing, the industry-year fixed effect and the consideration of the monetary policy and financial crisis. (shrink)

We investigate whether religion acts as a deterrent to the types of mortgage misrepresentation that played a significant role in the recent housing boom and bust. Using a large sample of mortgages originated from 2000 to 2007, we provide evidence that local religious adherence is associated with a lower likelihood of home appraisal overstatement and owner occupancy misreporting. The evidence on borrower income misrepresentation is mixed. Religiosity does not appear to reduce the incidence of income misrepresentation; however, it seems to (...) restrain the degree to which income is misrepresented. Our results are generally consistent with the hypothesis that religion, as a set of social norms, fosters ethical behavior, and possibly risk aversion, in the mortgage market. (shrink)

The readability of 10-K reports, in terms of linguistic complexity, determines the usefulness of information disclosure for stakeholders, particularly individual investors. Since investors largely depend on the financial communication in 10-K reports, firms have an ethical and legal responsibility to present disclosures in a language investors can understand. However, motivated by self-interest, managers obfuscate such disclosures to mask their own actions and hide unfavourable information. Building on the managerial obfuscation hypothesis grounded in stakeholder-agency and ethical-sensitivity theories, I hypothesize and empirically (...) test the relationship between board gender diversity and the readability of narrative disclosure in 10-K reports. Based on a relatively large sample of Russell 3000 firms for the years 2002–2018, I find a significant positive impact of BGD on 10-K reports’ readability, which in turn improves firm performance. Channel analysis reveals that the findings are driven by female independent directors, and their representation on audit and compensation committees; however, board activity does not appear to drive this relationship. Finally, I find that although gender discrimination in the appointment of directors spurs complex readability, the BGD-readability relationship is consistent in gender-biased and non-discriminant firms. I also check the robustness of our main empirical results in several ways. My study has important regulatory and managerial implications in that corporate governance is an important determinant of the readability of disclosure documents. (shrink)

We examine whether an unsophisticated investor’s own gender interacts with gender of a sell-side equity analyst to affect the investor’s judgment. Prior research shows two potential sources of gender-based discrimination that affect female investors. First, female investors’ advisors offer less risky hence lower return portfolios to female investors than to male investors with similar risk preferences as female investors are perceived as more risk adverse. Second, female equity analysts are subject to greater barriers to enter and advance in investment firms (...) that act as if they believe clients prefer male investment advisors in a male stereotypical occupation. Using two experiments, we use the judge-advisor framework to predict and find that investor’s gender and analyst’s gender jointly influence investor’s judgment. Specifically, female-female analyst-investor pair generates the strongest reaction to analyst’s advice compared to any other analyst-investor pair, everything else equal. Further, we find that efforts to highlight equal gender performance activates gender stereotypes that reduce female investors’ receptivity to female analysts’ advice. By linking the two previously different sources of discrimination we show that they reinforce each other and find that attempts to “level the playing field” by emphasizing gender performance parity may have unexpected results. (shrink)

Businesses increasingly rely on algorithms that are data-trained sets of decision rules and implement decisions with little or no human intermediation. In this article, we provide a philosophical foundation for the claim that algorithmic decision-making gives rise to a “right to explanation.” It is often said that, in the digital era, informed consent is dead. This negative view originates from a rigid understanding that presumes informed consent is a static and complete transaction. Such a view is insufficient, especially when data (...) are used in a secondary, noncontextual, and unpredictable manner—which is the inescapable nature of advanced artificial intelligence systems. We submit that an alternative view of informed consent—as an assurance of trust for incomplete transactions—allows for an understanding of why the rationale of informed consent already entails a right to ex post explanation. (shrink)

Financial misconduct has come into the spotlight in recent years, causing market regulators to increase the reach and severity of interventions. We show that at times the economic benefits of illicit financial activity outweigh the costs of litigation. We illustrate our argument with data from the US Securities and Exchanges Commission and a case of investment misconduct. From the neoclassical economic paradigm, which follows utilitarian thinking, it is rational to engage in misconduct. Still, the majority of professionals refrain from misconduct, (...) foregoing economic rewards. We suggest financial activity could be reimagined taking into account intrinsic and prosocial motivations. A virtue ethics framework could also be applied, linking financial behavior to the quest for moral excellence and shared flourishing. By going beyond utilitarian thinking and considering alternative models, we offer a fuller account of financial behavior and a better perspective from which to design deterrence methods. (shrink)

Recent structural innovations in global commerce present difficult challenges for legacy understandings of responsibility. The rise of outsourcing, sub-contracting, and mobile app-based platforms have dramatically restructured relationships between and among economic actors. Though not entirely new, the remarkable rise in the prevalence of these “not-quite-arm’s-length” relationships present difficulties for conceptions of responsibility based on interrogating the past for specifiable actions by blameworthy actors. Iris Marion Young invites investigation of a “social connection model of responsibility” that is, in many ways, better (...) suited to this new commercial reality. Scholars working to understand corporate responsibility have invoked Young’s model to some good effect, though often superficially and uncritically. In this paper, we look closely at Young’s social connection model and its potential for helping us understand corporate responsibility in a radically networked world. (shrink)

Whistleblowing is regularly identified as corporate control mechanism to prevent and uncover fraud. We review and compare the legal situation for whistleblowers in the People’s Republic of China and India. In a survey of 942 employees from private companies in both countries, we take a look at the status quo of whistleblowing system implementation, explore preference of channels to disclose fraud or corruption, and analyze under which conditions and what kind of employees prefer external over internal whistleblowing. We find that (...) provisions for mandatory whistleblowing systems can be found in the law of both countries. In China in particular, protection is scattered across many different laws in the private sector. Indian companies seem to have systems in place more often, although this difference becomes smaller the larger the company. The general preference of internal over external channels is similar across countries. Our regression models suggest that external channels are preferred over internal ones when fear of retaliatory measures is higher, the company is smaller, and the whistleblower is female. In line with prior literature, the effect of fear of retaliation is moderated by gender: women are less influenced by retaliation. All in all, implementation of whistleblowing systems seems ubiquitous in both countries; legal protection and comprehensive measures to decrease retaliation are lacking. Additional implications of findings are discussed. (shrink)

Recent studies have investigated connections between Adam Smith’s economic and philosophical ideas and Catholic Social Teaching. Scholars argue that their common background lies in their respective anthropologies, both endorsing a relational view of human beings. I raise one main concern regarding these analyses. I suggest that the relationality endorsed by Smith lacks a central element present in CST—the other-oriented perspective which is the intentional concern for promoting the good of others. Some key elements of CST, such as love, gift, gratuitousness, (...) and fraternity, find a very different space in Smith’s social view and very little space in his economic view. Moreover, I show how CST relationality is more in accordance with a civil economy view of the market as a place of fraternity and mutual assistance. (shrink)

Pragmatists believe that philosophical inquiry must engage closely with practice to be useful and that practice serves as a source of social norms. As a growing alternative to the analytic and continental philosophical traditions, pragmatism is well suited for research in business ethics, but its role remains underappreciated. This article focuses on Richard Rorty, a key figure in the pragmatist tradition. We read Rorty as a source of insight about the ethical and political nature of business practice in contemporary global (...) markets, focusing specifically on his views about moral sentiments, agency, and democratic deliberation. Importantly for business ethicists, Rorty’s approach sets in stark relief our moral responsibility as useful, practical thinkers in addressing the societal challenges of our time. We use “modern slavery” as an empirical context to highlight the relevance of Rorty’s approach to business ethics. (shrink)

I address an interesting puzzle of how marginalized groups gain self-representation and influence firms’ strategies. Accordingly, I examine the case of access to low-cost HIV/AIDS drugs in South Africa by integrating W. E. B. Du Bois’s work into stakeholder theory. Du Bois’s scholarly work, most notably his founding contribution to Black scholarship, has profound significance in the humanities and social sciences disciplines and vast potential to inspire a new way of thinking and doing research in the management and organization fields, (...) including business ethics research. By drawing on Du Bois’s works, I argue that through reconstruction of their selves—knowing their souls—marginalized groups know their capabilities better, enabling them to overcome their political and strategic limitations and ensure their true self-representation. They are also empowered to use political imagination and strategies of resistance against more powerful opponents. This influences powerful actors to accept the demands of marginalized groups. (shrink)

This article uses philosopher Miranda Fricker’s work on epistemic injustice to shed light on the legal concept of the fiduciary, alongside demonstrating the wider contribution Fricker’s work can make to business ethics. Fiduciary, from the Latin fīdūcia, meaning “trust,” plays a fundamental role in all financial and business organisations: it acts as a moral safeguard of the relationship between trustee and beneficiary. The article focuses on the ethics of the fiduciary, but from a unique historical perspective, referring back to the (...) original formulation of the fiduciary within a familial context to investigate presuppositions regarding agential capabilities, whilst also paying attention to the power mechanism embedded in the trustee–beneficiary relationship. Using Fricker’s theory of pre-emptive testimonial injustice, the analysis elucidates the impact of cumulative beneficiary silencing in contemporary contexts, and the article uncovers ethical issues of an epistemological kind at the core of the fiduciary—of epistemic injustice. (shrink)

The state monopoly on violence is a core concept of modern public law, wherein only sovereign nation-states may lay claim to the legitimised usage of physical force. In recent years, however, this is commonly outsourced through Private Military Companies. Using Satz’s model and Weber’s definition of modern democracies, we argue that the market of Private Military Companies is a noxious one with severe ramifications in regards to democracy, freedom, and the autonomy of nation-states globally.

Mezcal is a spirit distilled from the heart of the agave plant. It has been produced via traditional methods in Mexico for centuries, but recently has found popularity in the United States and other countries. The rise in demand for this artisanal product could greatly benefit the eight states in which it is legally distilled with an influx of capital from tourism and export. However, with this popularity comes outside influence and the potential for unfair business practices and cultural appropriation. (...) This case provides a general overview of mezcal and the Mexican state of Oaxaca in which it is produced. Discussion questions are presented as well as a brief teaching note. (shrink)

Workers of stigmatized jobs classified as dirty work normalize the physical, social, and/or moral taint of their occupation to cope with the negative aspects of their daily work. Such normalization strategies include recalibrating, reframing, and refocusing. Social identity theory proposes that individuals seek to identify with a positively perceived in-group, and dirty work literature suggests stigmatized workers use these normalization strategies to separate their personal and work identities. Additionally, corporate social responsibility meets the instrumental, relational, and moral-based motivational needs of (...) employees, suggesting it may serve as a pathway for managing negative aspects of an occupation. Thus, as a part of the Discussion of New Perspectives on CSR and CSP in the 2020 IABS virtual conference, this proposal theorizes corporate social responsibility initiatives as a possible organizational level intervention to help dirty workers normalize their work and manage its associated stigma through applications of social identity theory. (shrink)

Corporate political activity is one of the most prolific academic literatures which examines the political behaviors of corporations. CPA researchers often define it as a non-market strategy which corporations can engage in to influence political outcomes that complement their market objectives. In this paper I argue that, despite continuous theoretical development, CPA has not kept pace with changes in the political role and behaviors of corporations, particularly multinational corporations, which has resulted in an inaccurate view of the corporate political environment. (...) Therefore, CPA theory ought to be updated to be more descriptively and theoretically accurate. (shrink)

The oil and gas industry is viewed as controversial because of its adverse impacts on the environment. This study draws on legitimacy theory to analyze how CSR factors correlate with an increase or decrease in stock prices from 2006 – 2019.

Bob Taylor of US based Taylor Guitars tells a story, on YouTube, of the felling of 10 endangered ebony trees in Cameroon to find one with jet-black ebony – the remaining nine were left to rot. The story continues: Bob Taylor decided to purchase all the ebony, even that regarded as b-grade ‘streaked-ebony’ and incorporate the wood in guitar fretboards. Taylor Guitars used social media to communicate the environmental rationale behind the incorporation of streaked-ebony in the fretboards, and in so (...) doing, consumers were able to view the guitars from the perspective of environmental sustainability, and the aesthetic appeal and sound of the streaked-ebony was appreciated and well received. The initiative created a competitive advantage for the guitar manufacturer and contributed significantly to the sustainability of this endangered wood species. (shrink)

This work firstly aims to develop a sustainability model based on Ibn Haldun’s teaching of sustainability. Religious coloring refers to the spirituality, which is re-discovered in modern ages and transferred to the workplace. Spirituality stimulates virtuousness at personal and organizational level, which in turn generates managerial sustainability meaning the lifespan of a company. While personal virtuousness refers social ethics, organizational level virtuousness could be considered as Corporate Social Responsibility. Secondly, it attempts to evaluate the relevance of Ibn Haldun’s approach to (...) contemporary business organizations. In order to demonstrate the relationship between spirituality, virtuousness, CSR, and sustainability; data collected from Corporate Knights’ Global 100 companies were analyzed using structural equation modelling. According to the results, while workplace spirituality leads to ethical conduct and higher CSR/CS score, the relationship between spirituality or CSR/CS and financial performance is not significant. However, it seems that higher lifespan of business enterprises is related to their CSR/CS score. (shrink)

Despite growing engagement by business practitioners in regenerative sustainability, there is little research into what factors contribute to its successful implementation. This paper offers first steps to close that gap. It examines theoretical foundations of and proposes empirical research for studying such innovative business practices. Our literature review draws on research in natural sciences, organization and management studies, corporate sustainability, and business strategy to theoretically define regenerative sustainability, explore how adopting principles of regeneration can help firms achieve “true business sustainability”, (...) and assess potential benefits, obstacles, and enablers of such radically different business models. We then propose an in-depth interpretive case study methodology to empirically investigate the phenomenon of interest, namely how proactive firms effectively enact regenerative sustainability principles. The paper closes with potential implications of the proposed study for management theory and practice and offers ideas for future research. (shrink)

This article explores adoption rates of B Corps certification and Benefit Corporation incorporation in order to discuss what benefits exist for organizations to adopt sustainable business forms. The analysis of the data identifies states with low and high adoption rates. The study is based on historical analysis of 4686 incorporated Benefit Corporations from 2007 to 2016 and 837 certified B Corps during the same time period. Patterns of adoption are identified and states with high and low adoption rates are categorized, (...) analyzed, and discussed. The patterns reveal which states are most likely to support lasting or short lived legal, peer, and stakeholder benefits for sustainable business. (shrink)

We study the governance of voice in digital platforms in light of contestations and struggles over meaning and resources among their stakeholders. In particular, we argue that social media platforms as fields are subject to power imbalances that might constrain the voices of marginalized and under-represented individuals and groups. Consequently, the governance decisions that private firms undertake are critical in providing users and communities with the capacity to self-present and identify. Through a qualitative longitudinal study of a popular social media (...) platform, we study the means through which a marginalized community leverages the governance tools at its disposal to overcome the contestation within the platform. We present implications for the governance of digital platforms and their evolution. (shrink)

Communities are discussed frequently in the business and management literature, but their main characteristics are not commonly agreed upon. This multiplicity of meanings results in vagueness, which hinders both scholarly research and practice. Building on a sample of 142 papers published in highly ranked business and management journals, this literature review aims to provide clarity on the concept by identifying its main underlying meanings. After conducting qualitative and cluster analysis Keyon the abovementioned sample, we suggest the following four types of (...) communities: of Proximity, of Practice, of Users and of Firms. Their main characteristics are discussed, along with their relationship with business and management. (shrink)

Conflict Zone Entrepreneurs include local businesses operating in conflict settings, which represent the dominant form of employment in poverty-conflict scenarios, often hosting the most vulnerable in society who live on the poverty line. Despite their importance in the peacebuilding equation, little is known about their role in the peacebuilding process, with a variety of ad hoc contributions from assorted fields often assuming peacebuilding links with entrepreneurship, with little empiricism to support these claims. Consolidating prior works, the paper appropriately positions entrepreneurship (...) as a community-level peacebuilding mechanism, presenting a framework that identifies the major entrepreneurial typologies that are present in conflict zones. Entrepreneurs are characterized as being either peacebuilders, destructive entrepreneurs, or ingroup and intergroup contributors. By presenting the paradoxical impact of CZEs, the paper identifies inclusivity and responsible practices as the central factors that determine whether an entrepreneur will be peacebuilding, or destructive. (shrink)

Political CSR scholars have sought to apply the concept of deliberative democracy to the practice of global corporate engagement with stakeholders. Recently, much of this work has focused on the conditions under which the decisions made within multi-stakeholder initiatives should be considered democratically legitimate while relatively less attention has been paid to the practical benefits that such engagements can bring for their effectiveness when properly structured. The arguments in this essay support a shift in focus away from the former and (...) towards the latter. (shrink)

We present a qualitative comparative case study of four European banks, investigating mechanisms that help or hinder the integration of climate change considerations in the banks’ corporate strategies. We find that strategic CC responses are dependent on the following factors: the initial interpretation of the CC issue, the language deployed to advocate for CC and the governance structures that are being invoked to spread attention to CC both within the bank and to external constituents. We contribute to research on corporate (...) CC action by developing a multi-stage process model of CC responses in a low salience industry. (shrink)

In 1538–39 Francisco de Vitoria delivered two relections: De Indis and De iure belli. This article distills from these writings the topic of free trade as a “human right” in accordance with ius gentium or the “law of peoples.” The right to free trade is rooted in a more fundamental right to communication and association. The rights to travel, to dwell, and to migrate precede the right to trade, which is also closely connected to the rights to preach, to protect (...) converts, and to constitute Christian princes. This has significant repercussions on the field of business ethics: the right to free trade is ultimately founded directly on natural law and indirectly on divine law; trade is not independent of ethics; and trade is presented as an opportunity to develop the virtues of justice and friendship, among other repercussions. Vitoria is portrayed as a defender of private initiative and free markets. (shrink)

A product harm crisis undermines a firm’s reputation as well as its managers’ career outlook. To shake off the stigmatization resulting from the PHC and regain a firm’s legitimacy among stakeholders, managers usually face an ethical dilemma as they choose to be transparent about the crisis’ financial implications or to obfuscate them to neutralize the negative impact of the PHC. We find evidence that managers engage in income-increasing earnings management when their firms experience PHCs. Moreover, while income-increasing earnings management in (...) PHCs reduces the likelihood of customer loss and CEO forced turnover in the short run, such behavior can be deemed opportunistic and unethical as it carries long-run negative consequences in terms of a higher likelihood of accounting restatement and weaker future operating performance. Finally, managers in firms that are subject to stricter external monitoring and managers in firms with proactive ethical policies are less likely to engage in upward earnings management in PHCs. (shrink)

The concept of _feeling trusted_, which has received far less attention from researchers than _trusting_, refers to the trustee’s awareness of trustor’s exposed vulnerability and positive expectations. Previous research has merely centered on employees’ feeling of being trusted by their leaders and its influences on their work-related outcomes, but there is little work about the impact of leader feeling trusted by employees. Grounded in social exchange theory and moral licensing theory, the current research centers on explaining why leaders’ sense of (...) being trusted by employees brings about both positive and negative reactions and considering how leaders’ moral identity moderates these effects. One qualitative study and two quantitative studies were conducted to examine the benefits and drawbacks of leader feeling trusted. Results demonstrated that leader feeling trusted has two main consequences: trusted leaders are more likely to have strong feelings of obligation toward their subordinates, and further engage in benevolent leadership behavior to repay the kindness; and leaders’ sense of being trusted may be conducive to the accumulation of moral credits, thereby stimulating leaders to display laissez-faire leadership behavior. Additionally, our findings indicate that the leader’s moral identity would affect the decisions of the trusted leader to behave better or worse, which promotes benevolent leadership behavior through enhanced felt obligation, and lessens laissez-faire leadership behavior via reduced moral credits. (shrink)

This study investigates how managers in firms that have committed fraud strategically use socially responsible activities in coordination with their fraudulent financial reporting practices. Using propensity score matching to select control firms that have a similar probability of fraud in the pre-fraud benchmark period, we find that the corporate social responsibility performance of fraudulent firms in the fraud-committing period is significantly higher compared with the CSR performance of non-fraudulent control firms during this period, and compared with that during their own (...) pre-fraud benchmark periods. This higher CSR performance by fraudulent firms is achieved by means of investing in both stakeholder and third-party CSR categories and by improving in CSR strengths. Furthermore, the increase in CSR performance is more pronounced for fraudulent firms with a weak governance environment, and for firms located in high-religiosity states. Overall, our findings suggest that fraudulent firms strategically adjust their CSR performance to coordinate with their fraudulent financial activities. (shrink)

We investigate whether the geographic concentration of non-EU immigrants in the various Italian provinces affects labour tax avoidance practices adopted by firms located in the same provinces, as well as in the neighbouring provinces, and operating in construction and agriculture industries that mostly employ immigrants in Italy. For this purpose, we develop a LTAV proxy based on the financial accounting information of a sample of 993,606 firm-years, disseminated throughout the 108 Italian provinces, over the period 2008–2016. Our results, based on (...) a Spatial Durbin Model panel regression, reveal a statistically significant positive association between the concentration of non-EU immigrants and LTAV at province level, as well as the presence of spillover effects among neighbouring provinces. Our findings are robust to several additional analyses, including instrumental variable estimations. Our study provides empirical support to previous structuralist or marginalization theories holding that socioeconomically marginalized groups, such as non-EU immigrants, are more likely to be involved in labour exploitation practices, which could underlie our LTAV outcomes. Furthermore, it supports the need for tax authorities to strengthen labour inspections, coordinated at national level, especially in those contexts where non-EU immigrants are mostly employed. On the other hand, a greater social integration, assistance, and recognition of rights of immigrants may help to alleviate their situation of weakness that makes them more vulnerable to LTAV practices. Finally, tackling LTAV, associated with the underemployment of immigrants, may prevent its negative effects for society arising from the reduction of public resources to sustain the social welfare and finance public goods and services. (shrink)

Research on meaningful work has not embraced a shared definition of what it is, in part because many researchers and laypersons agree that it means different things to different people. However, subjective and social accounts of meaningful work have limited practical value to help people pursue it and to help scholars study it. The account of meaningful work advanced in this paper is inherently normative. It recognizes the relevance of subjective experience and social agreement to appraisals of meaningfulness but considers (...) them conceptually incomplete and practically limited. According to this normative account, meaningful work should be meaningful to oneself and to others and is also meaningful independent of them. It sets forth grounds for evaluating some work to be more meaningful than other work, asserting the possibility that one could be mistaken about the meaningfulness of one’s work. While it thus proscribes some claims to meaningful work, it also opens up potential new avenues of inquiry into, among other things, self-aggrandizing and harmful work that is experienced as meaningful, morally valuable work that is not experienced as meaningful, and the distinction between experienced and normative meaningfulness. (shrink)

The state plays a major role in corporate social responsibility in emerging and transitional economies and often influences firms through political connection, and hence knowing how firms respond to the state’s CSR initiatives can inform policy making and has important implication on the sustainability of society and environment. However, existent studies show conflicting results on politically connected firms’ CSR participation. We examine the relationship between political endorsement and firms’ engagement in different types of CSR simultaneously. Using a representative sample of (...) more than 1,000 private firms in the early 2000s, we find that politically endorsed firms engage more in philanthropic donation, but less in environmental practices, which impose higher costs and constraints than philanthropy. This is consistent with our explanation that they attempt to maintain legitimacy and discretion through selective engagement in CSR. Our study contributes to research on CSR in transitional economies by reconciling conflicting findings about the CSR engagement of politically connected firms, provides a new lens to illuminate firms’ strategic response in CSR, and has important policy implications. (shrink)

In Japan, income, authority, and prestige are unequally distributed between men and women, even if they share the same occupational level. These inequalities are perceived as an ethical issue because they go against the principle of equal treatment at work. Nowadays, Japanese companies are under growing political and regulatory pressure to increase the hiring, promotion, and empowerment of female employees. In this context, the first equity index that tracks the financial performance of the best Japanese companies in terms of gender (...) diversity performance—the MSCI Japan Empowering Women Index —was launched in 2010. It aims to satisfy the growing demand of investors who want to reduce gender discrimination in Japanese workplaces. This paper compares the financial performance of the WIN stock index to the conventional parent index over the period 2010–2018, offering a unique setting to assess the effects of gender diversity screens on portfolio risk-adjusted performance. Our results are robust to a battery of risk-adjusted performance indicators and clearly indicate that investing in the WIN equity index does not come at a cost compared to investing in its conventional peer. This evidence is expected to reinforce confidence of investors who have an appetite for justice in increasing their investment in financial products that support the participation and the advancement of women in the Japanese workforce. (shrink)

Recent literature suggests that ethical leadership helps to inhibit followers’ unethical behavior, largely built on the premise that followers view ethical leaders as ethical role models and socially learn from them, thereby engaging in more ethical conduct. This premise, however, has not been adequately tested, leaving insufficient understanding concerning the conditions under which this social learning process occurs. In this study, we revisit this premise, theorizing that not all followers will equally regard the same ethical leader as being a personal (...) ethical role model, thereby bounding the leader’s effects in reducing followers’ unethical behavior. We integrate the role of follower self-concepts into social learning theory, hypothesizing that the extent followers emulate their ethical leaders is contingent on how they identify with ethics as well as the particular leader. We test our hypotheses with three-wave survey data collected from 214 employees, finding that ethical leaders are viewed as being role models only amongst followers higher in moral identity and leader identification, and that followers’ perceptions that the leader is an ethical role model mediated the effect of ethical leadership on followers’ unethical behavior. Interestingly, results for the full-model tests show that ethical leadership evokes unethical behavior amongst followers lower in both moral identity and leader identification. These results suggest that ethical leadership is not a universally useful practice to decrease unethical behavior and that a more nuanced understanding of its contingent effects needs to be better understood. (shrink)