Business Ethics

Drawing on the similarity-attraction perspective and social identity theory, we argue that male versus female interlocking directors are likely to have different experiences when they work alongside female board directors of other firms. The theorized source of such experiences for male interlocking directors is in-group favoritism and/or a social identity threat-related discomfort. Interlocking female directors are theorized to be ambivalent between desiring social support versus experiencing identity threat-based career concerns. These experiences are predicted to motivate male versus female interlocking directors (...) in different ways to reduce or, conversely, to potentially facilitate female representation on focal boards. We additionally predict that economic crisis reduces the biases of male directors against appointing female directors to boards. We test our hypotheses based on a novel data set that includes 25,460 directors in Chinese A-share public companies with a sample of 27,058 firm-quarter observations for 1635 firms between 2006 and 2010 and find most of our hypotheses supported. (shrink)

As conventionally understood, corruption relies on a set of universally agreed rules that determine what constitutes the appropriate allocation of organizational resources. This article explores whether rule-based approaches to corruption are applicable where business organizations, such as public private partnerships, and the public fundamentally disagree about what constitutes an appropriate allocation of resources. Drawing on empirical research about PPPs in Vietnam, this article compares how government, business organizations, and the public conceptualize the transfer of public assets into private ownership. It (...) argues that a public interest approach to corruption is needed where PPPs privatize public assets within the law, but against the express wishes of the public. (shrink)

Sixteen years ago, Prahalad and Hart introduced the possibility of both profitably serving the poor and alleviating poverty. This first iteration of the Bottom/Base of the Pyramid approach focused on selling to the poor. In 2008, after ethical criticisms leveled at it, the field moved to BoP 2.0, instead emphasizing business co-venturing. Since 2015, we have witnessed some calls for a new iteration, with the focus broadening to a more sustainable development approach to poverty alleviation. In this paper, we seek (...) to answer the question: How has the BoP approach evolved over the past 16 years, and has it delivered on its early promise? We conducted a systematic review of 276 papers published in journals in this period, utilizing a rigorous correspondence analysis method to map key trends, and then further examined the 22 empirical studies conducted on the BoP approach. Our results suggest that the field has evolved, passing through a number of trends and coming full circle—with our analysis pointing to more recent BoP literature emphasizing similar themes to those espoused in the initial BoP iteration, rather than reflecting the principles espoused in either BoP 2.0 or BoP 3.0. Our analysis also points to a lack of clear evidence that the BoP concept has delivered on its promise either to businesses or to BoP participants. (shrink)

Arguing that psychology and business ethics are best brought together through a multi-level, broad-based agenda, this essay articulates a vision of psychology and business ethics to frame a future research agenda. The essay draws upon work published in JBE, but also identifies gaps where published research is needed, to build upon psychological conceptions of business ethics. Psychological concepts, notably, are not restricted to phenomena “in the head”, but are discussed at the intra-psychic, relational, and contextual levels of analysis. On the (...) basis of this presentation, I discuss future directions for development in psychology and business ethics, including but not limited to studies of personality, emotion, decision making, motivation, and the biological bases of psychology and business ethics. An inclusive approach to these and related areas, it is argued, will both bring about depth of understanding on the psychological bases of business ethics, and allow dialogue across disciplinary areas within JBE. (shrink)

The view of business ethics that Christopher McMahon calls the “implicit morality of the market” and Joseph Heath calls the “market failures approach” has received a significant amount of recent attention. The idea of this view is that we can derive an ethics for market participants by thinking about the “point” of market activity, and asking what the world would have to be like for this point to be realized. While this view has been much-discussed, it is still not well-understood. (...) This paper seeks to remedy this problem. I begin by showing, against some recent commentators, that McMahon’s view and Heath’s view are fundamentally the same. Second, I clarify the sense of “efficiency” at work in the market failures approach. Finally, I argue that, in its current form, this view has little relevance to the real world of business. I conclude by sketching two ways of modifying it to fit our world. (shrink)

In order to be competitive in an era of ethical consumerism, brands are facing an ever-increasing pressure to integrate ethical values into their identities and to display their ethical commitment at a corporate level. Nevertheless, studies that relate business ethics to corporate brands are either theoretical or have predominantly been developed empirically in goods contexts. This is surprising, because corporate brands are more relevant in services settings, given the nature of services, and the fact that services settings comprise a greater (...) number of customer–brand interactions and touch points than goods contexts. Accordingly, the purpose of this article is to empirically examine the effects of customer perceived ethicality of corporate brands that operate in the services sector. Based on data collected for eight service categories using a panel of 2179 customers, the hypothesized structural model is tested using path analysis. The generalizability theory is applied to test for measurement equivalence between these categories. The results of the hypothesized model show that, in addition to a direct impact, customer perceived ethicality has a positive and indirect impact on brand equity, through the mediators of recognition benefits and brand image. Moreover, brand heritage negatively influences the impact of customer perceived ethicality on brand image. The main implication is that managers need to be aware of the need to reinforce brand image and recognition benefits, as this can facilitate the translation of customer perceived ethicality into brand equity. (shrink)

The use of airbrushed “thin ideal” models in advertising creates major ethical challenges: This practice deceives consumers and can be harmful to their emotional state. To inform consumers they are being deceived and reduce these negative adverse effects, disclaimers can state that the images have been digitally altered and are unrealistic. However, recent research shows that such disclaimers have very limited impact on viewers. This surprising result needs further investigation to understand how women who detect that images have been airbrushed (...) are still harmed by them. Three studies reported in this article address this question. The authors identify a typology, based on a combination of three emotional reactions experienced by women who are exposed to the airbrushed thin ideal. In further analyses, they investigate how detection of airbrushing—whether spontaneous or with the help of a disclaimer—relates to these emotional reactions and women’s attitudes to altered images. Results show that detection of airbrushing does not systematically protect women from either wanting to look like airbrushed thin models or the negative emotions triggered by exposure to thin ideal images, nor does it always generate defensive reactions toward ads using such images. Women who detect that images have been airbrushed may still process these images as realistic. In addition to discussing this irrational process of self-deception, this article suggests policy interventions to prevent it. (shrink)

We attempt to identify and evaluate the association between key characteristics of not-for-profit hospitals and market concentration, as measured by the Herfindahl–Hirschman Index, using data available from the American Hospital Association, the Centers for Medicare and Medicaid Services, and the Internal Revenue Service Form 990. Our goal is to provide decision support to policy makers on factors that contribute to market competitiveness, which has been linked to improvements in efficiency, costs, and access to health care. We find that contributions are (...) positively associated with market concentration. This could indicate that well-run NP hospitals are rewarded both financially as well as with increased market share. We also find that a higher percentage of Medicare patients is positively correlated with market concentration. This could be explained by the fact that Medicare reimbursement rates are generally lower than those paid by private insurers ; thus, hospitals might not necessarily choose to operate in areas with high Medicare populations. Further, median income is negatively associated with market concentration. One explanation for this effect could be the fact that a population with a higher median income is in a better position to pay for services, making them attractive to hospitals as a potential market. Finally, we find that the presence of managers with voting rights on the boards of directors has no significant impact. (shrink)

Increasing numbers of marketers are turning to the crowd—members of the public engaged with brands via the Internet—to develop marketing and advertising campaigns. Some marketers use social media to connect directly with customers, while others use crowdsourcing agencies to harness the power of crowd labor. As more members of the public become aware of creative crowdsourcing, they look to the media to understand more about it. As a result, it is important to examine how the media currently frame creative crowdsourcing (...) to the public, particularly when numerous ethical issues about crowdsourcing have been identified. This study examines media coverage of creative crowdsourcing to examine how benefits and challenges are presented. Informed by a framework developed by Swain, results indicate that most media coverage focuses solely on benefits to the industry: benefits to the ‘crowd’ are rarely discussed, yet drawbacks to the crowd are mentioned more frequently than drawbacks for the industry. This provides a skewed vision of what creative crowdsourcing is and may affect participation in the practice. (shrink)

Acquisition and purchase of counterfeit and pirated products are illicit and morally questionable consumer behaviors. Nonetheless, some consumers engage in such illicit behavior and seem to overcome the moral dilemma by justification strategies. The findings on morality effects on consumer responses to counterfeit and pirated products are diverse, and the underlying theories provide no clear picture of the process that explains how morality and justification lead to particular consumer responses or why consumers differ in their responses. This study presents a (...) meta-analysis of 788 effect sizes from 207 independent samples provided in 196 manuscripts that synthesizes the research on the influence of morality on attitudes, intentions, and behavior toward counterfeit and pirated products. The meta-analysis tests competing theoretical models that describe the morality-justification processes, and identifies the deontological–teleological model as the superior one. The meta-analysis further shows that the institutional and social context of consumers explains the differences in morality effects on justifications and responses to counterfeit and pirated products, and provides evidence for the context-sensitivity of the underlying theories. (shrink)

Transparency is an underpinning of workplace ethics. However, most of the existing research has focused on the relationship between leader transparency and its consequences. Drawing on social and self-regulation theory research, we examine the antecedents of followers’ transparency. Specifically, we propose that followers have higher levels of transparency when they are working with peers who have a high level of transparency. We further suggest that followers’ conscientiousness and agreeableness moderate the relationship between peer transparency and followers’ transparency. Using a time-lagged (...) design, we provide support for the proposed theoretical model. We found that follower conscientiousness substitutes the social regulation effect, while follower agreeableness enhances this social regulation effect. Theoretical and practical implications of these findings are also discussed. (shrink)

In a corporate apology, the apologizer can be either a male or a female. How does the gender of the apologizer influence consumer forgiveness? We suggest that the relative effectiveness of corporate apologies made by males versus females depends on the nature of the corporate wrongdoing, namely whether the wrongdoing is related to performance or to value. Three experiments demonstrate that a male apologizer elicits more consumer forgiveness than a female apologizer for performance-related wrongdoings, while a female apologizer garners more (...) forgiveness than a male apologizer for values-related wrongdoings. These effects are driven by consumers’ social perceptions of the different genders. Specifically, a female apologizer is perceived as warmer which offsets the perceived lack of warmth resulting from values-related corporate transgressions, while a male apologizer is perceived as more competent which compensates for the perceived lack of competence resulting from performance-related corporate transgressions. However, this effect is attenuated when consumers are the same gender as the apologizer, and can be reversed when the apologizer is personally responsible for the wrongdoing. These findings offer novel insights on corporate apologies, gender-trait associations, and gender and forgiveness, while suggesting that companies must carefully consider the gender of the spokesperson in the wake of transgressions. (shrink)

The theoretical understanding of e-commerce has received much attention over the years; however, relatively little focus has been directed towards e-commerce ethics, especially the SMEs B2B e-ecommerce aspect. Therefore, the purpose of this paper is to develop and empirically test a framework that explains the impact of SMEs B2B e-commerce ethics on buyer repurchase intentions and loyalty. Using SEM to analyse the data collected from a sample of SME e-commerce firms in Egypt, the results indicate that buyers’ perceptions of supplier (...) ethics construct is composed of six dimensions and strongly predictive of online buyer repurchase intentions and loyalty. Furthermore, our results also show that reliability/fulfilment and non-deception are the most effective relationship-building dimensions. In addition, relationship quality has a positive effect on buyer repurchase intentions and loyalty. The results offer important implications for B2B e-commerce and are likely to stimulate further research in the area of relationship marketing. (shrink)

This study explores the underlying drivers of US public pension funds’ tendency to tilt their portfolios towards companies with stronger corporate social responsibility. Studying the equity holdings of large, internally managed US state pension funds, we find evidence that the political leaning of their beneficiaries and political pressures by state politicians affect funds’ investment decisions. State pension funds from states with Democratic-leaning beneficiaries tilt their portfolios more strongly towards companies that perform well on CSR issues, and this tendency is intensified (...) when the state government is dominated by Democratic state politicians. Moreover, we find that funds which tilt their portfolios towards companies with superior CSR scores generate a slightly higher return compared with their counterparts. Overall, our findings indicate that funds align their investment choices with the financial and non-financial interests of their beneficiaries when deciding whether to incorporate CSR into their equity allocations. (shrink)

In this paper, we examine the interactive effects of positive affect and perspective-taking on workplace incivility and family incivility, through moral disengagement. We draw from broaden-and-build and moral disengagement theories to suggest a potential negative consequence of positive affect. Specifically, we argue that positive affect increases incivility toward coworkers and spouses through moral disengagement among employees with low, but not high perspective-taking. Data from two time-lagged field studies and one online experiment provide support for our hypotheses. These findings suggest that (...) the beneficial effects of positive feelings are not universal, and the fostering of positive feelings at work might have unintended negative consequences, namely moral disengagement, and increased incivility at work and at home. Implications for theory and research are discussed. (shrink)

What is the proper punishment from the perspective of the libertarian philosophy? More specifically, in what way, if at all, may a thief benefit from his robbery? The present essay attempts to wrestle with these challenging questions.

In this research, we examine the relationship between employee psychological entitlement and employee willingness to engage in unethical pro-organizational behavior. We hypothesize that a high level of PE—the belief that one should receive desirable treatment irrespective of whether it is deserved—will increase the prevalence of this particular type of unethical behavior. We argue that, driven by self-interest and the desire to look good in the eyes of others, highly entitled employees may be more willing to engage in UPB when their (...) personal goals are aligned with those of their organizations. Support for this proposition was found in Study 1, which demonstrates that organizational identification accentuates the link between PE and the willingness to engage in UPB. Study 2 builds on these findings by examining a number of mediating variables that shed light on why PE leads to a greater willingness among employees to engage in UPB. Furthermore, we explored the differential effects of PE on UPB compared to counterproductive work behavior. We found support for our moderated mediation model, which shows that status striving and moral disengagement fully mediate the link between PE and UPB. PE was also linked to CWB and was fully mediated by perceptions of organizational justice and moral disengagement. (shrink)

This study focuses on a third-party perspective of idiosyncratic deals. More specifically, we look into the differential judgments co-workers make about i-deals in their work environment, as well as their reactions. Based on equity theory, we examine to what extent the content of the i-deal and the work context explain co-worker judgments regarding i-deal fairness in addition to subsequent voice behavior. A vignette study with 1988 respondents shows that when i-deals are considered distributively unfair, co-workers try to restore equity through (...) voice behavior, thereby making the i-deal less effective. Furthermore, i-deals spark more distributive injustice perceptions and voice behavior in a highly interdependent work context. Finally, on average, financial bonuses were considered most distributively unfair and, thus, trigger more voice behavior. These results have important implications for i-deal literature as they uncover the criteria that co-workers use to judge i-deals and shape their reactions. (shrink)

Little is known about whether followers who perceive ethical leadership are more easily moved to act compassionately with peers. This study hypothesizes four compassionate feelings as mediators of the relationship between ethical leadership and interpersonal citizenship behavior directed at peers: empathic concern or an other-oriented emotional response elicited by and congruent with the perceived welfare of a peer in need; mindfulness, a state of consciousness in which attention is focused on present-moment phenomena; kindness, understanding the pain or suffering of peers; (...) and common humanity, viewing peers’ experiences as part of the larger human experience. Data were obtained from 300 followers working in three-member groups with a common leader in each of 100 investment banks in the city of London. Results indicated that: ethical leadership was significantly and positively linked to compassion and peer-focused citizenship and common humanity is the only compassionate feeling that mediates the link between ethical leadership and peer-focused citizenship. Findings suggest that supervisors who act morally more easily move their followers to become sensitized to peers’ setbacks and misfortunes and take action in the form of interpersonal OCBs to lessen or relieve their suffering. (shrink)

Drawing from the group engagement model and the moral conviction literature, we propose that perceived leader ethical conviction moderates the relationship between ethical leadership and employee OCB as well as deviance. In a field study of employees from various industries and a scenario-based experiment, we revealed that both the positive relation between ethical leadership and employee OCB and the negative relation between ethical leadership and employee deviance are more pronounced when leaders are perceived to have weak rather than strong ethical (...) convictions. Further, we argued and showed that employees’ feelings of personal control and perceived voice opportunity mediated the interactive effect of ethical leadership and perceived leader ethical conviction on OCB and deviance. Implications of these findings for theory and practice are discussed. (shrink)

We investigate peer influence on managerial honesty under varying levels of transparency. In a laboratory experiment, managers report their costs to a superior to request budget. We manipulate whether the managers learn each other’s report and cost or the report but not the cost. The results show, first, that managers are susceptible to peer influence, as they join peers in reporting honestly and dishonestly both under full and partial transparency. Second, however, the effect of peer influence is asymmetric. While managers’ (...) dishonesty increases much when peers’ reports are higher than they have expected, the opposite is not true. Third, partial transparency reinforces this asymmetry in peer influence. Unlike full transparency, it allows managers to substitute self-serving assumptions for missing information and to thus justify their own dishonesty more easily. The contribution of this study is twofold: It provides evidence for the interaction between transparency and peer influence and it highlights the role of expectations in fueling dishonesty. Our findings warn firms that especially partial transparency may spread dishonesty more than honesty. Transparency may also hurt firms that push honesty norms but fail to enforce compliance, thus raising and disappointing managers’ expectations. (shrink)

Although the role of fairness in tax compliance has been of increasing interest among the academic and professional tax communities, very little is known about the role of interactional fairness. Interactional fairness refers to the quality of the treatment provided to individuals from authority figures, such as tax authority representatives. We conduct an experiment using US taxpayers to examine the role of interactional fairness on tax compliance intentions, and how detection influences this relation. Taxpayers’ detection salience reflects their perceptions that (...) they will be audited by the tax authority. Using insights from conditional cooperation theory, we predict and find that detection moderates the relation between interactional fairness and tax compliance intentions, such that the effect of interactional fairness on tax compliance intentions diminishes with higher detection. We discuss the implications of our results for tax policy. (shrink)

In this study, we built and tested a theoretical model to determine how ethical leadership affects team creativity among teams composed of different characteristics. Following social learning theory and an antecedent–benefit–cost framework, we conducted analyses of multisource data from 50 team supervisors and 186 employees, which revealed an inverted U-shaped relationship between ethical leadership and team creativity. The teams exhibited more creativity when there was a moderate level of ethical leadership than when there were very low or very high levels. (...) Moreover, from an interactional perspective, we found that team faultlines significantly moderated the curvilinear relationship between ethical leadership and team creativity such that the inverted U-shaped relationship was more significant among teams with weak team faultlines. The theoretical and practical implications of these findings are discussed. (shrink)

Growing recognition in both the psychological and management literature of the concept of “good people” has caused a paradigm shift in our understanding of wrongful behavior: Wrongdoings that were previously assumed to be based on conscious choice—that is, deliberate decisions—are often the product of intuitive processes that prevent people from recognizing the wrongfulness of their behavior. Several leading scholars have dubbed this process as an ethical “blind spot.” This study explores the main implications of the good people paradigm on the (...) regulation of employees’ conflicts of interest. In two experiments, we examined the efficacy of traditional deterrence- and morality-based interventions in encouraging people to maintain their professional integrity and objectivity at the cost of their own self-interest. Results demonstrate that while the manipulated conflict was likely to “corrupt” people under intuitive/automatic mindset, explicit/deliberative mechanisms had a much larger constraining effect overall on participants’ judgment than did implicit measures, with no differences between deterrence and morality. The findings demonstrate how little is needed to compromise the employees’ ethical integrity, but they also suggest that a modest explicit/deliberative intervention can easily prevent much of the wrongdoing that may otherwise result. (shrink)

This study uses a sample of 242 European professional purchasers to examine the six characteristics of the decision-making process developed by Jones. The illustration mobilizes six original scenarios reproducing typical purchasing situations. Two versions of each scenario were used, one representing low moral intensity and the other showing high moral intensity. Two populations were sampled: one of 120 purchasers responding to the first version of the questionnaire and a second of 122 different purchasers responding to version two. Each version contained (...) three low-moral-intensity scenarios and three high-moral-intensity scenarios. The research also investigates two concepts suggested by Hannah et al. :663–685, 2011): examining the complexity of ethical decision-making through scenarios and microsocial professional ethical contexts. The findings reveal that neither traditional individual characteristics nor standard company characteristics have a real impact on two stages of Rest’s model. They also show that internal locus of control and a high microsocial ethical environment have a positive impact on purchaser awareness and intention to act ethically for four of the six dimensions: magnitude of consequences, social consensus, temporal immediacy, and concentration of effect. Moral intensity factors also have a positive impact on these four dimensions. The two other dimensions are not related to the independent variables. (shrink)

For decades, scholars have debated the corporate objective. Scholars have either advocated a corporate objective focused on generating value for shareholders or creating value for multiple groups of stakeholders. Although it has been established that the corporate objective can shape many aspects of the corporation—including culture, compensation, and decision making—to date, scholars have not yet explored its psychological impact; particularly, how the corporate objective might influence employee well-being. In this article, we explore how two views of the corporate objective affect (...) employee self-determination, a key component of overall psychological need satisfaction and well-being. We hypothesize that a corporate objective based on creating value for multiple stakeholders will increase employee psychological need satisfaction as compared to one focused on creating value for only shareholders. Across four experimental studies and one field survey, we find consistent support for our hypotheses and test three facets of a stakeholder-focused corporate objective. Theoretical implications and future research directions are discussed. (shrink)

In this study, we evaluate how individual virtues and inter-organizational management control systems influence buyer–supplier performance through relationship quality. Results from a sample of 232 firms confirm that virtues and IOMCS relate positively to relationship quality and performance, respectively. However, IOMCS lose their positive influence on relationship quality when considered along with virtues. That is, when both variables enter the regression model simultaneously, virtues win. This interesting finding has particular resonance at a time when research on ethics still needs to (...) reinforce its positive effects on the practice of management. (shrink)

This study examines how local Protestant belief, as one type of social norms, affects corporate cash policies. We find that firms located in areas with more Protestants hold less cash reserves. The influence of local Protestant belief on cash holdings is more profound for firms with weak corporate governance and firms with one geographic segment. In addition, we find that the difference in cash deployment is reflected in the difference in firms’ investment and payout policies. Overall, our study shows that (...) local Protestant belief is an important factor in determining corporate cash policies and helps to mitigate the potential free cash flow problem. (shrink)

The role of followers in financial statement fraud has not been widely examined, even though these frauds typically involve collusion between followers and destructive leaders. In a study with 140 MBA students in the role of followers, we examined whether two follower personality traits were associated with behavioral intentions to comply with the demands of an unethical chief executive officer to be complicit in committing financial statement fraud. These personality traits are self-sacrificing self-enhancement, a form of maladaptive narcissism characterized by (...) seemingly altruistic behaviors that are actually intended to boost self-esteem and proactivity, a trait characterized by behaviors reflecting efforts to positively change one’s environment. As predicted, follower SSSE was positively associated with follower behavioral intentions to comply with CEO pressure to commit fraud, while follower proactivity was negatively associated with fraud compliance intentions. Also as predicted, follower SSSE interacted with follower proactivity, such that followers high in SSSE and high in proactivity reported greater intentions to resist pressure from the unethical CEO to commit fraud compared to low-SSSE followers. Implications for future research and corporate governance are discussed. (shrink)