Ethical Behavior as a Strategic Choice by Large Corporations: The Interactive Effect of Marketplace Competition, Industry Structure and Firm Resources

Analysis of ethical conduct of business organizations has hitherto placed primary emphasis on the conduct of that corporation’smanagers because ethical conduct, like all conduct, must manifest itself through individual behavior. This paper argues that in the realworld corporate actions are influenced, to a considerable extent, by external market-based conditions. Therefore, a more comprehensive explanation of ethical business conduct must incorporate both corporate, i.e., internal considerations, and competitive, industry structure-based, i.e., external considerations. A framework is presented that provides a systematic analysis of the interactive effect between different types of external market-based competitive conditions, institutional opportunities to engage in ethical behavior, and the likelihood that corporations would do so. The analytical framework leads to recommendations as to the types of actions that might be more effective in improving business ethical conduct under varying sets of market-based competitive conditions