This article examines whether the degree of religiosity in an institutional environment can stimulate the emergence of a robust corporate governance system. This study utilizes the Nigerian business environment as its context and embraces a qualitative interpretivist research approach. This approach permitted the engagement of a qualitative content analysis (QCA) methodology to generate insights from interviewees. Findings from the study indicate that despite the high religiosity among Nigerians, religion has not stimulated the desired corporate governance system in Nigeria. The primary (...) explanation for this outcome is the presence of rational ordering over religious preferences thus highlighting the fact that religion, as presently understood and practiced by stakeholders, is inconsistent with the principles underpinning good corporate governance. (shrink)

Corporate governance is often split between rule-based and principle-based approaches to regulation in different institutional contexts. This split is often informed by the types of institutional configurations, their strengths, and the complementarities within them. This approach to corporate governance regulation is mostly discussed in the context of developed economies and their regulatory demands. However, in developing and weak market economies, such as in Sub-Saharan Africa, there is no such explicit split and the debates on such contexts in the comparative corporate (...) governance literature have been meagre. Nonetheless, there are sparks of good corporate governance practices in the region. Drawing from institutional theory and a case study of a largest economy, we explore the appropriateness or suitability of corporate governance regulatory frameworks in Sub-Saharan Africa. Our findings suggest that Nigeria needs an integrated system that combines elements of both rule-based and principle-based regulation, supported by a multi-stakeholder co-regulation strategy. This paper departs from the mainstream rule-based and principle-based categorisations by forging ahead new perspectives on corporate governance regulation, especially in weak market economies. (shrink)

In this paper, we explore the 2008 financial crisis in Iceland through the lens of Donaldson’s concept of normalization of questionable behavior. We study the report published by the Special Investigation Commission, an investigation initiated by the Icelandic Parliament near the end of 2008. The report provides a detailed and systematic account of the processes leading up to the crisis. Our aim is to determine the extent to which the behaviors of professionals in the Icelandic financial sector can be explained (...) as a gradual fading of moral concerns to the point that they perceived the sale of high-risk products to unassuming customers for their own short-term benefit to be morally unproblematic. In doing so, we consider both character and circumstance explanations of moral misbehavior. We expand on Donaldson’s initial description of normalization of questionable behavior by applying the concept of moral neutralization, which is defined by criminologists Sykes and Matza as the process of convincing oneself that an option that initially conflicted with one’s own moral beliefs is actually morally acceptable. We find indications that individuals in the Icelandic financial sector did engage in moral neutralization in their attempts to frame their own actions in an acceptable light. In our study, we identify one way of neutralizing away moral dissonance not captured in the original theoretical framework. Icelandic bankers justified their behavior by claiming that they did not break any relevant rules or regulations when they engaged in what were later labeled questionable activities. Our name for this kind of justification is claim of having breached no rule. (shrink)

Consumer autonomy is a fundamental topic for marketing ethics scholars. Nonetheless, autonomy’s philosophical treatment may have compromised its conceptual clarity. After reviewing the relevant ethics literature on consumer autonomy, the benefits of formally defining consumer autonomy are illustrated, and a novel formalization is adapted from potential performance theory mathematics. The goal is to transfigure a hitherto amorphous topic via a mathematical formalization that defines true autonomy, actual autonomy, reliability of wills, and reliability of product choice. The crucial and surprising result: (...) an action that decreases true autonomy can increase actual autonomy if that action engenders a sufficient increase in one or both types of reliability. Relating the insights from the formalization to the long-standing debates in consumer autonomy suggests fruitful avenues for future research. (shrink)

We critically assess integrative social contracts theory (ISCT) and show that the concept particularly lacks of moral justification of substantive hypernorms. By drawing on Habermasian philosophy, in particular discourse ethics and its recent application in the theory of deliberative democracy , we further advance ISCT and show that social contracting in business ethics requires a well-justified procedural rather than a substantive focus for managing stakeholder relations. We also replace the monological concept of hypothetical thought experiments in ISCT by a concept (...) of practical discourse to better govern business activities on the macro-level of organizational actors such as firms, governments, and NGOs. (shrink)

This paper investigates the effect of enacted ethical and instrumental values on corporate governance effectiveness. It further considers whether and how compliance with formal corporate governance codes influences the effect of these organizational values on governance effectiveness. Empirical evidence based on a sample of firms listed in the Athens Stock Exchange shows that strong ethical values are the key element for effective corporate governance, while instrumental values play a significant role only in the presence of compliance. Compliance, although not sufficient (...) by itself, serves as a complementary mechanism strengthening the effects of ethical values and creating the conditions by which instrumental values can act in favor of corporate governance. The results highlight that governance benefits can emanate from maintaining high ethical standards as well as from synergies between compliance and a focus on organizational values. Overall, our findings provide important implications for managers regarding how to utilize behavioral along with structural governance mechanisms to enhance corporate governance. The findings add to the behavioral perspective of corporate governance bringing aspects of the social fabric into the corporate governance puzzle. (shrink)

Several recent studies and initiatives have emphasized the importance of a strong ethical organizational DNA (ODNA) to create and promote an effective corporate governance culture of trust, integrity and intellectual honesty. This paper highlights the drawbacks of an excessively heavy reliance on rules-based approaches that increase the cost of doing business, overshadow essential elements of good corporate governance, create a culture of dependency, and can result in legal absolutism. The paper makes the case that the way forward for effective corporate (...) governance is to strike an optimal balance between rules-based and principles-based approaches. The recent corporate scandals have demonstrated that the ethical ODNA is critical to the driving force and basis of legal and regulatory requirements. Effective governance means adhering to ethical principles, not merely complying with rules, and is a crucial guardian of a firm’s reputation and integrity. It is through an effective corporate governance program (that is, one that optimally captures and integrates the appropriate aspects of rules-based and principles-based approaches, and identifies and assesses the related risks) that an organization can reconfigure its ODNA for improved performance. Focusing on the ethical ODNA as the basis of new governance measures provides an opportunity to develop a competitive advantage as it represents a potential source of differentiation, strengthens the relationship with all stakeholders of the organization by building a culture of trust and integrity, and re-instills investor confidence. This paper employs dialectical reasoning that links the ODNA through principles-driven rules in developing a risks-based approach. A comparison from a risk assessment perspective between rules-based and principles-based approaches is presented. Although there have been few applications employing dialectical reasoning in business research, this methodology can be extremely useful in isolating ethical issues and integrating them into the business process. The risks-based approach captures the benefits of both rules-based and principles-based approaches, and incorporates trust-based principles such␣as solidarity, subsidiarity and covenantal relationships. (shrink)

Banks have a central role and importance in all commerce and hence in all societies. This thesis investigates the ethical basis of banking practice with the aim of developing an account of the virtues appropriate to bankers and banking. One central issue concerns a conflict between the interests of banks and their customers, and how this conflict plays out in relation to the lending policies and fee structure of banks. Such lending policies can have a significant effect on banks, their (...) customers and a range of stakeholders. This research project investigated empirical evidence through qualitative interviews with senior bankers in two locations, Australia and Hong Kong, to elicit their thoughts on banking areas that involve customer interaction, namely, deposit-taking, credit cards, home mortgage loans, corporate finance, and foreign exchange. The institutions selected hold a substantial segment of banking business in their respective countries and are thus representative of bankers’ perspectives. The dissertation also entailed a case study of the causes and consequences of the American sub-prime crisis that was precipitated by the financial sector. The interviews revealed an assertion of good ethical conduct based on adherence to peer-determined codes of conduct and compliance with regulations. There was also a common predisposition to claims of corporate social responsibility and reputation preservation but these have tended to mask the powerful underlying sales thrust. A key finding of the study points to a lapse in ethical values in banks due to excessive reliance on self-interest. Although self-interest is not in itself wrong, there has been a lack of moderation vis-à-vis the interests of less powerful customers. A related finding is a prevailing resistance to regulation that is necessary to curtail selfish and irresponsible behaviour by banks. The interview subjects prefer industry self-regulation to government supervision. However, the banks in Australia and Hong Kong, which have been subjected to tighter regulation, have survived the global financial crisis better than their American counterparts despite complaints about the severity of their regulatory climate. There is a strong case to ascribe ethical failure to American practices that triggered the sub-prime calamities, which have devastated homeowners and the global economy. American banks and regulators both operated on the erroneous supposition that the quest after extreme profits would be restrained by free market forces. The conclusions allude to virtues that are necessary for banks to espouse moral conduct. These virtues can be embedded through leadership and cultural change. (shrink)