Moral Reasoning in Business

This paper examines the association between board characteristics and the ethical reputation of financial institutions. Given the pivotal governance role of the board of directors and the value-relevance of ethical corporate behavior, we postulate a positive relationship between ethical reputation and board features that foster more effective monitoring and oversight. Using a sample of large financial institutions from 13 different countries, we run several alternative panel regressions of ethical reputation on board characteristics and firm-specific controls. Our results demonstrate that the (...) ethical reputation of financial institutions is positively associated with board size, gender diversity, and CEO duality, while being negatively related to the busyness of the board members and a composite index reflecting poor monitoring. Nevertheless, inconsistent with our hypothesis, we also document that financial institutions with less frequent board meetings have better ethical reputation. Overall, our empirical findings suggest that stronger board oversight may promote ethical behavior in the financial industry. (shrink)

The terminology employed to explore consumption ethics, the counterpart to business ethics, is increasingly varied not least because consumption has become a central discourse and area of investigation across disciplines. Rather than assuming interchangeability, we argue that these differences signify divergent understandings and contextual nuances and should, therefore, inform future writing and understanding in this area. Accordingly, this article advances consumer ethics scholarship through a systematic review of the current literature that identifies key areas of convergence and contradiction. We then (...) present the articles in this Journal of Business Ethics Symposium and analyse how these articles fit within the interdisciplinary themes. Subsequently, we develop a transdisciplinary theoretical framework that encapsulates the complexity and contextual nature of consumption ethics. We conclude by outlining how genuinely transdisciplinary research into the intersection of ethics with consumption may develop. (shrink)

This paper deals with Keynes’s distinction between entrepreneurship and speculation, regarding business people in general and especially investors’ behaviour. Based on Keynes’s thoughts about financial markets, it analyses how different motivations influence the decision-making process of investors and its consequences for stock markets and the real economy and clarifies that Keynes’s considerations are still useful for understanding contemporary developments and risks in the financial system. Furthermore, it points out that Keynes’s theories and policy recommendations should be understood in the context (...) of his moral considerations, especially relating to individual responsibility of investors. Finally, Keynes’s moral thoughts can be taken as a foundation for a contemporary approach to investors’ responsibility. (shrink)

This study examines the influence of mood on corporate philanthropic giving. Drawing on group emotions theory and affect-infused decision theory, we advance the argument that firms allocate greater resources to philanthropy when headquarters-based employees are in a more positive affective state. We also describe three boundary conditions in this relationship—executives’ embeddedness in the firm, executives’ latitude to engage in philanthropic giving, and the firm’s track record of corporate social irresponsibility. We test our arguments using a longitudinal dataset of philanthropic giving (...) by U.S. firms. Our study contributes to the literature by shedding light on the role of affect in shaping the decision to allocate resources to corporate philanthropy. (shrink)

This paper argues, through conceptual analysis, against an objection to the disapproval of banks for the 2007-8 crisis: the idea that they could not have acted otherwise (at least not rationally) and that no one should be blamed for a fact one could not have avoided. If true, it would threaten the justification of corporate social responsibility and the legal liability of managers. Identified as the ‘inevitability thesis’, this objection is illustrated by an analysis of the film Margin Call (2011) (...) and associated with other investigations on ethics and responsibility. The target thesis stems from a confusion between different notions of responsibility (for a task, for a decision, for causing an event and for repairing it) and leads to an incoherent form of fatalism. Finally, it is suggested that the invocation of ‘inevitability’ may be a way of rationalizing the decision, obscuring reasons to the contrary. (shrink)

This essay argues, through conceptual analysis, against an objection to reproaches addressed to financiers after the Crisis of 2007-8: the idea that they could not have acted otherwise (at least, not rationally) and that no one should be blamed for a fact one could not have avoided. If correct, this would threaten the justifiability of corporate social responsibility and legal responsibility of directors. Identified as the “thesis of inevitability”, this objection is illustrated by an analysis of the film Margin Call (...) (2011) and associated with other investigations on ethics and responsibility. This target-thesis follows from a confusion between different notions of responsibility (for an assignment, for a judgment, and causal and liability responsibility) and leads to an inconsistent form of fatalism. It is suggested, finally, that invoking the “inevitability” can be a way to rationalize the decision, obscuring reasons against it. (shrink)

This paper seeks to show how MacIntyre’s concept of a practice can survive a series of ‘scope problems’ which threaten to render the concept inapplicable to business ethics. I begin by outlining MacIntyre’s concept of a practice before arguing that, despite an asymmetry between productive and non-productive practices, the elasticity of the concept of a practice allows us to accommodate productive and profitable activities. This elasticity of practices allows us to sidestep the problem of adjudicating between practitioners and non-practitioners as (...) well as the problem of generic activities. I conclude by suggesting that the contemporary tendency to regard work as an object of consumption, rather than undermining MacIntyre’s account of practices, serves to demonstrate the potential breadth of its applicability. (shrink)

Some interesting exceptions notwithstanding, the traditional logic of economic efficiency has long favored hierarchical forms of organization and disfavored democracy in business. What does the balance of arguments look like, however, when values besides efficient revenue production are brought into the picture? The question is not hypothetical: In recent years, an ever increasing number of corporations have developed and adopted socially responsible behaviors, thereby hybridizing aspects of corporate businesses and social organizations. We argue that the joint pursuit of financial and (...) social objectives warrants significant rethinking of organizational democracy’s merits compared both to hierarchy and to non-democratic alternatives to hierarchy. In making this argument, we draw on an extensive literature review to document the relative lack of substantive discussion of organizational democracy since 1960. And we draw lessons from political theory, suggesting that the success of political democracy in integrating diverse values offers some grounds for asserting parallel virtues in the business case. (shrink)

This volume explores various aspects of risk taking. It offers an analysis of financial, entrepreneurial and social risks, as well as a discussion of the ethical implications of empirical findings. The main issues examined in the book are the financial crisis and its implications for business ethics. The book discusses unethical behaviour as a reputational risk (e.g., in the case of Goldman Sachs) and the question is raised as to what extent the financial crisis has changed the banks’ entrepreneurial strategy. (...) The book presents an analysis of the reasons leading to the crisis and identifies them as ethical dilemma structures. In addition, it looks at general questions regarding ethical behaviour and risk taking, such as: To what extent does the social embeddedness or abstraction play a role in guaranteeing ethical behaviour? What conclusions can be drawn from institutional or evolutionary perspectives on risk management? Finally, the book discusses further issues that become factors of risk within and between societies, such as work insecurity, corruption or the problem of facilitation payments as a risk in international transactions. (shrink)

Many traditional conceptions of ethics use categories and arguments that have been developed under conditions of pre-modern societies and are not useful in the age of globalisation anymore. I argue that we need an economic ethics which employs economics as a key theoretical resource and which focuses on institutions for implementing moral norms. This conception is then elaborated further in the area of business ethics. It is illustrated in the case for banning child labour.

How can a business institution function as an ethical institution within a wider system if the context of the wider system is inherently unethical? If the primary goal of an institution, no matter how ethical it sets out to be, is to function successfully within a market system, how can it reconcile making a profit and keeping its ethical goals intact? While it has been argued that some ethical businesses do exist, e.g., Johnson and Johnson, the argument I would like (...) to put forth is that no matter how ethical a business institution is, or how ethical its goals are, its capacity to act in an ethical manner is restricted by the wider system in which it must operate, the market system. Unless there is a fundamental change in the notion of the market system itself, the capacity for individual businesses to act in an ethical manner will always be restricted. My argument is divided into two parts. The first part is to show the inherent bias towards unethical outcomes that is inherent in the market system. The second part is to suggest how to reorient the general economic framework in order to make ethical institutions more possible. The question then becomes, how to define economic behavior in terms other than competition for profit. (shrink)

The orientation of this paper is that there is no special science of "business ethics" any more than there is one of "medical ethics" or "legal ethics". While there may be issues that arise in medicine or law that require special treatment, the ways of relating to such issues are derived from a basic ethical stance. Once one has evolved such an ethical stance and thus has incorporated a fundamental mode of relating to her or his fellow human beings, the (...) "how" to deal with various ethical "issues" will follow as a natural consequence of one's ethical stance or modality. It is not necessary, in the formation of one's fundamental ethical stance to know if one is a utilitarian or a deontologist. It is doubtful whether Buddha knew what kind of ethics he was practising. If one conceives of ethics as something extrinsic to various disciplines and attempts to first practise a discipline and then to apply ethics to modify the results of that discipline it is entirely possible that conflicts will result between what is perceived of as the proper pursuit of that discipline and the ethical considerations. The argument of this paper is that it is more efficacious (in addition to being more true) to take ethical considerations into account in the construction of the definition of the discipline. This paper is devoted to showing that business and ethics are not two different and competing fields of interest (thus requiring a discipline of business ethics to be grafted onto the study of business enterprise), but that ethical concerns are part and parcel of the very concept of a business enterprise and the internal operation of a business organization. (shrink)

This article discusses the implications of moral dissonance for managers, and how dissonance induced self justification can create an amplifying feedback loop and downward spiral of immoral behaviour. After addressing the nature of moral dissonance, including the difference between moral and hedonistic dissonance, the writer then focuses on dissonance reduction strategies available to managers such as rationalization, self affirmation, self justification, etc. It is noted that there is a considerable literature which views the organization as a potentially corrupting institution and (...) a source of acute levels of moral dissonance. A simplified process model linking immoral behaviour, dissonance and rationalization is mooted, and some recent theories which question traditional dissonance models, including the free choice paradigm (FCP), are considered. The writer concludes that in the light of the above mentioned critical theories, it may be assumed that the levels of moral dissonance, and the extent of rationalization/self justification amongst managers, are more a function of personality and situational factors than previously assumed. (shrink)

In this paper, we conceptually explore the role of empathy as a connectedness organising mechanism. We expand ideas underlying positive organisational scholarship and examine leading-edge studies from neuroscience and quantum physics that give support to our claims. The perspective we propose has profound implications regarding how we organise and how we manage. First, we argue that empathy enhances connectedness through the unconscious sharing of neuro-pathways that dissolves the barriers between self and other. This sharing encourages the integration of affective and (...) cognitive consciousness which facilitates the ability to find common ground for solution building. Second, empathy enhances connectedness through altruistic action. In giving to others, feelings of joy and harmony are activated. This in turn allows personal freedom to be enriched and transcendence from the rational ego-self is reduced to develop a more expansive, integrated and enlightened state underlying connectedness. Finally, empathy enhances connectedness which results in sharing the quantum field of coherence where there is little separation between self and other. This means living beyond self-interest in a coherent world based upon interdependent wholeness rather than atomization and separation. Empathy allows us to find that state of coherent connectedness. (shrink)

Successful psychopaths, defined as individuals in the general population who nevertheless possess some degree of psychopathic traits, are receiving increasing amounts of empirical attention. To date, little is known about such individuals, specifically with regard to how they respond to ethical dilemmas in business contexts. This study investigated this relationship, proposing a mediated model in which the positive relationship between psychopathy and unethical decision-making is explained through the process of moral disengagement, defined as a cognitive orientation that facilitates unethical choice. (...) The results of the study supported this model, and implications for theory and practice are discussed. (shrink)

While decision making scholarship in management has specifically addressed the objectivist assumptions within the rational choice model, a similar move within business ethics has only begun to occur. Business ethics scholarship remains primarily based on rational choice assumptions. In this article, we examine the managerial decision making literature in order to illustrate equivocality within the rational choice model. We identify four key assumptions in the decision making literature and illustrate how these assumptions affect decision making theory, research, and practice within (...) the purview of business ethics. Given the breadth of disciplines and approaches within management decision making scholarship, a content analysis of management decision making scholarship produces a greater range of assumptions with finer granularity than similar scholarship within business ethics. By identifying the core assumptions within decision making scholarship, we start a conversation about why, how, and to what effect we make assumptions about decision making in business ethics theory, research, and practice. Examining the range of possible assumptions underlying current scholarship will hopefully clarify the conversation and provide a platform for future business ethics research. (shrink)

We conduct an empirical study on the determinants of the psychological costs of tax evasion, also known as tax morale. As a preliminary step, we build a model of tax evasion including non-monetary considerations, show the relationship between tax compliance and tax morale. In the empirical analysis of tax morale we find, using a binomial logit model, that the justification of tax evasion can be explained by the presence of grievance in absolute terms (those who feel that taxes are too (...) high, those who feel that public funds are wasted, and those who accept underground economic activities); and grievances in relative terms (the suspected level of others’ tax evasion). The sense of duty and the level of solidarity are also relevant factors, but to a lesser extent. (shrink)

To better illuminate aspects of stress that are relevant to the moral domain, we present a definition and theoretical model of “moral stress.” Our definition posits that moral stress is a psychological state born of an individual’s uncertainty about his or her ability to fulfill relevant moral obligations. This definition assumes a self-and-others relational basis for moral stress. Accordingly, our model draws from a theory of the self (identity theory) and a theory of others (stakeholder theory) to suggest that this (...) uncertainty arises as a manager faces competing claims for limited resources from multiple stakeholders and/or across multiple role identities. We further propose that the extent to which the manager is attentive to the moral aspects of the claims (i.e., moral attentiveness) moderates these effects. We identify several consequences of managerial moral stress and discuss theoretical, empirical, and practical implications of our approach. Most importantly, we argue that this work paves an important path for considering stress through the lens of morality. (shrink)

This study examines the work ethic characteristics of Protestant, Catholic, and Muslim people who are living in the US. People originally from Turkey were targeted under the Muslim group. Since a significant number of people selected “none” as their religious affiliation in the survey, this group has also been included in the final analysis. Eight hundred and three people (313 Protestants, 180 “none”, 96 Muslims, 86 Catholics, and 128 other) participated in this questionnaire study. The analyses revealed that Muslim Turks (...) reported greater scores on four of the five Protestant work ethic (PWE) characteristics. Protestants scored higher than Catholics on all characteristics, but there was no significant difference. (shrink)