Members of organizations are continually making decisions that have important consequences for themselves and the firms for which they work. In some cases these decisions affect human well being and social welfare and thus have important ethical impacts for those affected by the decisions.This study examines if certain strategic situations (enhancement of firm profits versus personal economic well being) cause decision makers to act more or less ethically. A questionnaire consisting of two vignettes which depicted actual business situations (...) was used to collect data from 171 managers of a large Southeastern financial and communication conglomerate. Results from multivariate repeated measures tests suggest that managers will vary their level of ethical response when faced with a situation where their own economic well being is at stake. (shrink)

ABSTRACTWhen attempting to articulate the nature and scope of corporate social responsibility , a variety of opinions emerge. The primary CSR issue appears to be: Should firms go “beyond profits”? In order to address this normative question, this article will explore the theoretical underpinnings of CSR and its practical application. Part one of the paper begins by discussing common CSR definitions. Part two outlines the CSR debate in terms of the “narrow view” of CSR versus the “broad view” (...) . Part three applies both the narrow and broad approaches to CSR in analyzing two classic business and society cases: the Ford Pinto; and Merck's river blindness pill. The article concludes with a proposed synthesis of the CSR approaches discussed. (shrink)

: Background: In responsible research and innovation (RRI), innovation is seen as a way in which humankind finds solutions for societal issues. However, studies on commercial innovation show that firms respond in a different manner and at a different speed to the same societal issue. This study investigates what role organizational motives play in the product innovation processes of firms when aiming for socially responsible outcomes. Methods: This multiple-case study investigates the motives of food firms for healthier (...) product innovation by interviewing firms about the organizational motives behind product reformulation and innovation. Results: This study highlights the importance of having both instrumental and moral motives in the innovation process when aiming for socially responsible outcomes, and how both these motives interact and contribute to responsible innovation in industry. Furthermore, the study results question the nature of relational motives as a separate category from the other two categories of motives, as suggested by corporate social responsibility (CSR) scholars. Conclusions: If commercial innovation needs to contribute to solutions for societal issues, the importance of moral motives has to be stressed without annihilating the instrumental objectives of firms. Both motives contribute to the success factors of responsible product innovation in industry. (shrink)

The paper explores the ongoing debate between the narrow version of CSR proposed by Milton Friedman and the broader version of CSR, which includes additional ethical and/or philanthropic obligations. Implications are then discussed.

In this article, we use ideas from stakeholder capital maintenance theory to address tensions in allocating firm profits between stockholders and other stakeholders. We utilize a mediative thought experiment to conceptualize how multiple stakeholder interests might better be served, such that genuine firm profits (from new value creation) versus artificial firm profits (from non-wealth-producing transfers) may be identified and incentivized. We thereby examine how such accounting transfers can be envisioned as stakeholder capital to be maintained for the benefit of (...) both the firm and the economy. We present examples to illustrate the hypothetical model proposed and its implications. (shrink)

Firms are spending billions annually in the name of corporate social responsibility (CSR). Whilst markets are increasingly willing to reward good and responsible firms, they lack the instruments to measure corporate social performance (CSP). To convince investors and other stakeholders, firms invest heavily in building a reputation for good corporate behaviour. This article argues that reputations for CSP are often unrepresentative of true CSP and investigates how differences in 'perceived' and 'actual' – as measured by the Fortune (...) and KLD databases, respectively – can partly be explained by firm characteristics. Amongst other things, it finds that overrated firms are more likely to be relatively big, profitable, operating in non-polluting but competitive industries and with no history of wrong doings to their primary stakeholders. They will also typically spend a lot of effort satisfying the claims of their secondary stakeholders. Above all, the results emphasise the need for researchers to recognise that the databases measure different phenomenon and are not interchangeable. (shrink)

This study comparatively examines the dividends behavior in state-controlled firms versus family-controlled firms. With the sample of large industrial firms listed on the Main Board of Hong Kong Stock Exchange, we investigate the dividends payment rates, stability of dividends payment, the effects of firm size, profitability and growth opportunity on likelihood to pay dividends, as well as the concentration of dividend in state-controlled versus family-controlled firms. Based on the findings, we derive some ethical implications (...) of dividends policy regarding the differences in business ethical behavior, corporate social responsibility, corporate governance, business sustainability, and shareholder activism in state-controlled versus family-controlled firms, as well as the improvement in these respects through cross-listing in Hong Kong. (shrink)

As the need for business to address pressing social and ecological issues intensifies, so does the importance of enhancing the development of sustainable marketing. The current dominant approach to sustainable marketing is based on a Triple Bottom Line (TBL) profit‐centric worldview, which suggests that firms can simultaneously improve their financial well‐being as they reduce negative social and ecological externalities. However, whereas the scope of TBL marketing is limited to sustainability initiatives that enhance profits, there is a growing need (...) for—and interest in—developing a sustain‐centric approach to marketing that relaxes the need to maximize financial well‐being in order to optimize social and ecological well‐being. Even so, because of the dominance of the profit‐centric worldview, hallmarks of sustain‐centric marketing practices remain under‐developed and may even lend themselves to becoming inauthentically mimicked on a piecemeal basis by greenwashing profit‐centric firms. We provide an exploratory empirical study of marketing practices evident in two sustain‐centric firms and draw implications to advance theory for both sustain‐centric and profit‐centric marketing. (shrink)

As a criterion of a good firm, a lucrative and growing business has been said to be important. Recently, however, high profitability and high growth potential are insufficient for the criteria, because social influences exerted by recent firms have been extremely significant. In this paper, high social relationship is added to the list of the criteria. Empirical corporate social performance versus corporate financial performance (CSP–CFP) relationship studies that consider social relationship are very limited in Japan, and there are (...) no definite conclusions for the studies in the world, because of scant data and the inappropriate methods, especially for supporting linear hypothesis which these studies are based on. In this paper, the CSP–CFP relationship is analyzed by an artificial neural networks model, which can deal with a non-linear relationship, using 10-year follow-up survey data. (shrink)

Extant research underlines the critical challenge for firms to rigorously and consistently evaluate their growing number of cross-sector partnerships for sustainability and suggests formalizing evaluation processes by introducing formal practices. However, empirical research is scant and inconclusive. This study aims to develop an empirically grounded understanding of how firms formalize the evaluation processes of such partnerships and of what drives this formalization, to complement the so far mostly conceptual literature. We inductively analyzed 31 semi-structured interviews with 33 experts (...) from firms and their partnering nonprofits and further secondary data on organizations’ partnerships. We contribute to the cross-sector partnership research by analyzing firms’ practices related to the formalization of the internal as well as the joint partnership evaluation process with nonprofits. We propose a conceptual framework to explain why firms implement different formal practices to reduce the dependency on individuals’ skills, experiences, or judgments in evaluating partnerships. (shrink)

This paper presents a short classroom exercise to stimulate student discussion about the rights of shareholders versus the rights of stakeholders. Students are challenged to identify and evaluate their preconceived notions of what constitutes excessive profits. The exercise illustrates why the realization of a large return on investment cannot be used as prima facie evidence that a firm exploited employees, customers, or other stakeholders. This concept is illustrated using datafrom the pharmaceutical industry.

We examine the impact of employing a female, versus a male, leader on future (t + 1) donations and operating margin using a sample of 4387 unique nonprofit organizations (NPOs) between 2011 and 2014. Using two-stage and matched sample designs, we find that NPOs headed by female leaders report higher future operating margins but lower future donations. We interpret these findings to mean that female leaders are more focused on fiscal responsibility than fundraising. We also find that female (...) leaders with past fundraising experience attenuate lower future donations, and at commercial nonprofits, female leaders with prior for-profit experience contribute to even higher operating margins. Moreover, while female leaders identified as the founder of the organization increase future donations, they have no effect on future operating margins. Collectively, the results of our study should increase nonprofit boards’ confidence in hiring female leaders thereby narrowing the gender disparity in leadership in the nonprofit sector. This study expands the extant literature by providing initial evidence on the effects of female leaders in NPOs thereby contributing to research exploring gender, diversity, management, and nonprofit executives. (shrink)

In this article, we examine the effect of corporate social responsibility (CSR) on firms' financial performance (CSR-effect). Two competing hypotheses, social impact hypothesis and shift of focus hypothesis, are proposed to investigate this issue, where the former suggests that CSR has a positive relation with performance and the latter are opposite. In order to ensure the CSR-effect is not contaminated by other faeton or samples are randomly drawn, we employ four matching methods, Nearest, Caliper, Mahala and Mahala Caliper to (...) match the samples of CSR (CSR-firms) and without CSR (NonCSR-firms) with similar characteristics. Although four methods yield slightly different results, firms engaging in CSR activities tend to obtain significantly higher values on pretax income to net sales and profit margin, and adopting CSR at the very least not deteriorate the performance of firms, making our con clusion favors the social impact hypothesis and against shift of focus hypothesis in Taiwan. Thus, ambition and conscience are not conflicting with each other. (shrink)

Firms and industries increasingly subscribe to voluntary codes of conduct. These self-regulatory governance systems can be effective in establishing a more sustainable and inclusive global economy. However, these codes can also be largely symbolic, reactive measures to quell public criticism. Cross-sector alliances (between for-profit and nonprofit actors) present a learning platform for infusing participants with greater incentives to be socially responsible. They can provide multinationals new capabilities that allow them to more closely ally social responsibility with economic (...) performance. This paper examines learning facilitators in cross-sector alliances that enrich corporate understanding of stakeholder concerns. It suggests that these organizational learning experiments can translate into globally responsible practices and processes that improve the content and effectiveness of voluntary corporate codes. (shrink)

Firms and industries increasingly subscribe to voluntary codes of conduct. These self-regulatory governance systems can be effective in establishing a more sustainable and inclusive global economy. However, these codes can also be largely symbolic, reactive measures to quell public criticism. Cross-sector alliances (between for-profit and nonprofit actors) present a learning platform for infusing participants with greater incentives to be socially responsible. They can provide multinationals new capabilities that allow them to more closely ally social responsibility with economic (...) performance. This paper examines learning facilitators in cross-sector alliances that enrich corporate understanding of stakeholder concerns. It suggests that these organizational learning experiments can translate into globally responsible practices and processes that improve the content and effectiveness of voluntary corporate codes. (shrink)

Prior research flags the inherent incompatibilities between for-profit and nonprofit partners and cautions that clashing value creation logics and conflicting identities can stall social innovation in cross sector partnerships. Process narratives of successful versus unsuccessful cross sector partnerships paint a more optimistic picture, whereby the frequency, intensity, breadth, and depth of interactions may afford frame alignment despite partners' divergent value creation approaches. However, little is known about how cross sector partners come to recognize and reconcile their divergent (...) value creation frames in order to co-construct social value. Using longitudinal narratives of four dyads, we show that partners initially contrast their sector-embedded diagnostic frames and then work together to deliberately develop partnership-specific prognostic frames. We extend the literature on framing by developing a four-stage grounded model of frame negotiation, elasticity, plasticity, and fusion which unpacks the relational process of value creation in cross sector partnerships. Our qualitative analyses further show how partners orchestrate multilevel coordination that helps scaffold and calibrate this relational process of frame fusion. (shrink)

Nonprofit organizations play a crucial role in society. Unfortunately, many such organizations are chronically underfunded and struggle to meet their objectives. These facts have significant implications for corporate philanthropy and Kant’s notion of imperfect duties. Under the concept of imperfect duties, businesses would have wide discretion regarding which charities receive donations, how much money to give, and when such donations take place. A perceived problem with imperfect duties is that they can lead to moral laxity; that is, a failure (...) on the part of businesses to fulfill their financial obligations to nonprofit organizations. This article argues the problem of moral laxity rests on a misinterpretation of Kantian ethics and, therefore, is really not a problem at all. As such, we argue corporate philanthropy while an imperfect duty should be interpreted more akin to perfect duties and, as a consequence, moral laxity does not arise for those corporations committed to acting on the basis of the moral law. More specifically, firms have duty-based obligations on the basis of benevolence, and as good corporate citizens, to help fund non-profit organizations. (shrink)

The paper reconstructs in economic terms Friedman's theorem that the only social responsibility of firms is to increase their profits while staying within legal and ethical rules. A model of three levels of moral conduct is attributed to the firm: (1) self-interested engagement in the market process itself, which reflects according to classical and neoclassical economics an ethical ideal; (2) the obeying of the "rules of the game," largely legal ones; and (3) the creation of ethical capital, which allows (...) moral conduct to enter the market process beyond the rules of the game. Points (1) and (2) position the Friedman theorem in economic terms while point (3) develops an economic revision of the theorem, which was not seen by Friedman. Implications are spelled out for an instrumental stakeholder theory of the firm. (shrink)

Why do some organizations suffer more than others in the wake of an industry scandal? Although ex-ante greater opportunistic behavior of organizations is one factor, we argue that ex-post greater targeting of organizations is another important factor. Using the context of microfinance organizations (MFOs), we examine why the financial sustainability of for-profit and non-profit organizations may be heterogeneously affected following a scandal. Leveraging the 2010 Indian microfinance scandal as our research setting and analyzing longitudinal data, we find a (...) substantial decline in the financial sustainability of Indian MFOs relative to their counterparts within the rest of South Asia. Compared to Indian non-profit MFOs, Indian for-profit MFOs suffered substantially more. Intriguingly, these results hold not only in the full sample, but also in the matched sample of comparable for-profit and non-profit MFOs. Further analysis reveals that the adverse impact on for-profit MFOs was much bigger in the scandal’s epicenter. Our findings suggest that some organizations may suffer more than others not only due to their engagement in actual malfeasance but also due to their greater targeting by the social control agents. We discuss the implications of this study for social enterprise managers and policymakers. (shrink)

We evaluate the relationship between the appointment of women to CEO or Chair positions and firm performance, and shed light on the differences between family and nonfamily firms. By using a propensity score matching approach on a sample of 394 French firms over the period 2001–2010, we find major discordances between women’s leadership style and family business expectations relative to firm performance, as measured by return on assets and Tobin’s q. Notably, our results support the conjecture that family (...) firms, which are more conducive to transformational leadership, offer women a more appropriate climate for exercising the function of Chair than that of CEO. In contrast, women CEOs perform better in nonfamily firms. Our findings move away from the predominant focus on barriers and stereotypes images about the female leadership and support the contingency theory of leadership, which states that the effectiveness of a leadership style depends on the organization and culture in which leaders operate, and on task-related positions. (shrink)

:According to an influential argument in business ethics and economics, firms are normatively required to maximize their contributions to social welfare, and the way to do this is to maximize their profits. Against Michael Jensen's version of the argument, I argue that even if firms are required to maximize their social welfare contributions, they are not necessarily required to maximize their profits. I also consider and reply to Waheed Hussain's ‘personal sphere’ critique of Jensen. My distinct challenge to (...) Jensen seems to me fatal to any view according to which firms are normatively required to maximize their profits. (shrink)

For the past half century, there has been a large controversy within academic business ethics, in legal scholarship, and in the larger public about the role that corporations should have in addressing social injustices. Do corporations have a moral obligation to conduct business in a way that reduces poverty, racial inequality, other unjust economic and social inequalities, and unjust threats to the environment? Or should for-profit corporations focus on making money and leave solutions of these social problems to governments, (...) nonprofit organizations, and private individuals? -/- There are related but distinct controversies about corporations’ moral duties of transactional and relational justice. One important question is whether financial agreements or employment contracts can be wrongfully exploitative despite being fully consensual and beneficial to all parties. This question is distinct from the question whether corporations have a duty to promote distributive justice. Transactional unfairness is arguably possible in society with a just economic system, and fair transactions are presumably possible in a society with an unjust distribution. There are also important questions about the extent of firms’ moral obligation to avoid pollution, to refrain from discrimination, to treat employees fairly, and to respect the democratic process. These moral obligations may require more than obeying the relevant law. (shrink)

This paper presents an empirical analysis of the determinants of quantity of health insurance in the context of employer-based health insurance using the micro-level data from the 1987 National Medical Expenditure Survey (NMES). It extends the previous research by including additional factors in the analysis, which significantly affect health insurance offers by employers. This paper emphasizes two determinants of employers’ insurance offer decisions that are particularly relevant: union membership and selfinsured versus not self-insured health plans. The conducted empirical analysis (...) reported in this paper reveals the following predictors of higher health insurance coverage: union membership, not self-insured health plan(s), union membership in Midwest or South, as well as self-insured union membership. Further, other factors such as: age, male, income, for profit and other employer organizational forms, and firm’s size determine a higher level of health insurance. (shrink)

Recent years have seen the flowering of a new literature on the economic nature of firms marked by a concern with their internal organization and contractual characteristics. Related literatures on the principal-agent problem and the theory of financial markets have also contributed to a better understanding of firms as economic institutions. However, the place of the concept of the ownership of the firm is poorly developed in most of this literature, with many writers either ignoring the concept entirely (...) or arguing that it is of no importance. The purpose of the present article is to point out that the concept of ownership of firms is crucial to an understanding of internal governance issues. Most economists implicitly presume that firms must be ownable and saleable if they are to be operated efficiently, and recently this viewpoint has been made more explicit by writers such as Jensen and Fama and Williamson. Their point of view is to some degree at odds with views of the firm as a coalition, which frequently appear in the same literature, and even more fundamentally in conflict with conceptions of the firm as an association or polity within which greater or lesser degrees of democracy in governance may be pursued. The first purpose of this article is to show that the incompletely articulated position of the leading authors on the economics of organization is that the firm is a commodity and must be so for purposes of efficiency. (shrink)

We examine three assumptions commonly held in the corporate reputation literature: (1) reputation ratings of owners and investors are generally representative of all stakeholders; (2) stakeholders will generally provide a higher reputation rating to firms that emphasize corporate social responsibility versus firms that do not; and (3) profitability is the primary criterion of importance to all stakeholders when rating a firm's reputation. Using an exploratory in‐class exercise, our findings suggest that: (1) there are significant differences among stakeholder (...) groups in their reputation ratings; (2) firms that emphasize corporate social responsibility are not rated more highly across all stakeholder groups; and (3) for all stakeholder groups, the ethicality criterion explained more of the variance in firms' reputation ratings than the profitability criterion. (shrink)

Though corporate social responsibility (CSR) is on the agenda of most major corporations, corporate executives still largely support the view that corporations should maximize the returns to their owners. There are two lines of defence for this position. One is the Friedmanian view that maximizing owner returns is the social responsibility of corporations. The other is a position voiced by many executives, that CSR and profits go together. This article argues that the first position is ethically untenable, while the latter (...) is not supported by empirical evidence. The implication is that there may be good reason for firms to deviate from a maxim of profit maximization. (shrink)

Given the urgency of global crises, interest abounds in alternative organizational forms (e.g., multistakeholder social enterprises, MSEs), promising structural solutions to engage diverse stakeholders in the creation of joint social, economic, and democratic values. Yet, studies of the who, how, and why of stakeholder engagement are predominantly rooted in for-profit contexts, assuming objective boundaries between insider/outsider stakeholders and engagement as a means to an end. The context of MSEs challenges both of these assumptions. Based on interviews with leaders of (...) 28 French MSEs, I show how the latter made sense of their expectations versus the reality of stakeholder engagement. Leader sensemaking strategies informed the enactment of (revised) stakeholder engagement strategies to maintain coherence, or address misalignment, between expectations and reality. The article contributes to the literature by challenging assumptions of stakeholder engagement in for-profit firms. It also cautions against an overreliance on designated organizational forms to enable substantive stakeholder engagement. (shrink)

In lieu of an abstract, here is a brief excerpt of the content:Cause, Fault, NormJohn Z. Sadler (bio)Keywordscriminality, mental disorder, responsibilityThanks to the commentators for their fine work. In my brief comments I cannot address all that is raised, but can touch upon everyone’s discussion briefly.In her commentary, Gwen Adshead reflects on her experience as a forensic psychiatrist and therapist for violent offenders. Although Adshead discusses a number of important points, I found her insight into why some vices find their (...) way into psychiatric classification particularly compelling and thought provoking. I will here interpret these in my own terms. Dr. Adshead implies that a (perhaps) assumed folk psychology underlies our motivation to classify (as disorder) some, but not all vices. The contribution of this folk psychology does not depend on particular details, but rather, the folk psychology concerns the degree to which the vice–actor’s actions are amenable to explanation, or are transparently understandable or interpretable. We (think we) understand why prostitutes sell themselves and why tax evaders cheat; their folk psychologies are variously constituted by moralistic constructs like desperation, oppression, licentiousness, greed, opportunism, and indignation. In contrast, some offenses step outside our empathic realm: the pedophile, or the serial killer, or even the persistently acting-out child provoke onlookers to wonder, “There has to be something wrong with a person who does that!” “Loud” symptoms in themselves do not qualify; seemingly incomprehensible loud symptoms fit better into the “sick” category. Indeed, in a recent translation of Foucault’s lectures at the College de France, Foucault describes the “monster” as combining “the impossible and the forbidden.” (Foucault 1999, 56) When confronted with the impossible and forbidden, the lust for classification is irresistible.Adshead’s wonderment about the use of “really” to question the explanation of wrongful conduct (what’s “really” going on) leads naturally to Michael First’s discussion. The Diagnostic and Statistical Manual of Mental Disorders (DSM)-IV really tries to make a firm distinction between vice and mental disorder, and First describes the DSM approach.Drawing on his experience as the DSM-IV Text Editor, Dr. First provides a particularly lucid presentation of the distinction between what I call “vice” and mental disorder. He supplies vivid examples to illustrate his points. The DSM key for distinguishing disorder from vice is whether “the deviance or conflict is a symptom of a dysfunction in the individual.” As other commentators point out later, First notes that the “vice action” (a term coined by Morse in his own commentary following) may disguise a number of possible explanations: the car thief may simply be seeking thrills and profit, or may be motivated by a delusion—leading to alternative explanations for the behavior. Sometimes the explanation for vice actions are transparent—as in the red Mustang example, but other times they are not so clear. The DSM approach requires the clinician to [End Page 51] make an explanatory claim in order to distinguish the appearance of vice versus the appearance of disorder. I think everyone would agree that an explanation of the phenomenon is required in distinguishing vice from disorder, so that much can be accepted.In my view, the problems with the DSM account are three: (1) The requirement for an internal psychological dysfunction is an easy claim to make for virtually any vice condition. The prostitute’s vice may be attributable to childhood trauma, deviant social learning, pathological desire to sexually control others, and so on. The tax evader may in turn have a pathological resentment of authority combined with a desperate financial situation and a pathological denial and avoidance of paying taxes. Every misbehavior has its psychology, and if we proclaim this psychology is abnormal or deviant, then we have an “internal dysfunction.” Indeed, it is easy to proclaim a psychology as abnormal if it is less than an ideal response to circumstances, or even an adequate response to circumstances; after all, not everyone who is exposed to sexual trauma becomes a prostitute nor does every financially desperate individual cheat on taxes. The DSM’s overinclusiveness on this account defaults to an arbitrariness about what counts as a legitimate (or not) internal dysfunction. Here there will be great argument.(2) First (and later, Wells) admits there... (shrink)

This study questions the assumption that firms always prioritize economic stakeholders over social stakeholders. An examination of 468 Chinese private firms reveals three important conditions driving firms to prioritize social stakeholders over economic stakeholders. First, the percentage of family ownership increases the likelihood of social stakeholder priority up to a point, after which further increase in the percentage of family ownership decreases the likelihood of social stakeholder priority. Firms planning initial public offerings and smaller firms (...) are more likely to prioritize social stakeholders. The findings reveal important exceptions and nuances in stakeholder management strategies. (shrink)

This paper briefly reviews the theories that seek to explain the phenomenon of corporate charitable donations and then provides a review of the empirical issues that have arisen in previous studies in this area. The findings of an analysis of charitable donations data from the entire U.K. FTSE index for the years 1985–2000 are then reported. These findings include the observation of a time-related increase in charitable donations, which is compared with an earlier study to give a 24 year history (...) of charitable donations in the U.K. The findings note little responsiveness of the monetary value of charitable donations to the economic performance of firms. An international comparison over time against U.S. trends is also reported and shows how U.S. corporations have traditionally been more generous than U.K. firms, but that the trend in the U.S. is downwards. Membership of a U.K.-based "tithing" club (the PerCent Club) is shown to be associated with higher profit performance against non-members. Members' charitable contributions against profit are shown to be higher than the FTSE mean although short of the 0.5% target figure in "cash" terms. The paper concludes with a brief discussion of these findings in relation to the theoretical positions advanced for corporate philanthropy. (shrink)

The rise in ethical and social responsibility awareness in contemporary businesses has led to assumptions that the associated behaviours would enable competitive advantage to be attained as a firm distinguishes itself from its competitors through such practices. This paper reports on a study conducted on the prevalence of such practices among entrepreneurial ventures in an emerging economy (Malaysia), and the effect of such practices on both financial and non-financial performance. A sequential inter-method mixing design was employed in which during stage (...) 1, a series of semi-structured interviews with ten Malaysian SME founder-owners were conducted. Stage 2 involved a survey in which a total of 212 usable questionnaires were received. The results of the first phase of the research (qualitative) found evidence that entrepreneurial ventures in Malaysia do generally engage in both ethical and socially responsible practices. The subsequent model testing using SEM, however, revealed that while ethical practices were positively associated with venture performance, socially responsible practices were not. This may indicate that while entrepreneurial ventures in emerging economies like Malaysia become quickly aware of the more serious consequences of not adopting ethical practices, the concern for social issues may still be lacking, i.e., in terms of motivations, they may be closer to the profitable end of the philanthropy versus profitability spectrum. While the findings may be equivocal, we believe that the paper makes the following two significant contributions: (1) it provides an empirical test of the importance of ethical and socially responsible practices to entrepreneurial venture performance and (2) it furthers understanding of how and why this may be different in an emerging economy context. (shrink)

The paper introduces a virtue-theoretic critique of recent “prosocial” revisions of shareholder primacy. The paper aims at widening the scope of virtue-based business ethics beyond its nearly exclusive focus on the character and virtue of managers, employees, and organizations. In contrast to MacIntyre-inspired research, the paper takes a “good intentions” approach that looks squarely at shareholders, regarding them as real people (not algorithms or institutions) occupying distinctive roles as principals of firms who are, ideally, virtuous moral agents. It is (...) argued that virtue ethics can play a part in questioning normative features of shareholder primacy and the objective function of the firm. Probing deeper than prudential and instrumental concerns, the paper poses normative questions about interpreting shareholder motivations: what _ought_ shareholders to prefer/want/desire?; _ought_ shareholders to desire profit maximization versus profit satisficing?; _ought_ shareholders to prefer other, prosocial goals, alongside of wealth?; should self-interested motivation in profit-seeking be considered virtuous? To lend focus, the paper taps Hart and Zingales’ recently revised “pro-social” version of shareholder primacy, as well as Munger and Russell’s analysis of “virtuous profit-seekers,” as normative frames of reference. Doing so enables a critical engagement with their respective accounts from the standpoint of virtue theory. Taking a “virtuous shareholders” perspective provides an aretaic standpoint, one that is appropriate, given that shareholders care about matters of justice and the common good. Shareholders are not simply concerned about making money. Hence it is the moral intentions and motivations of ideally virtuous shareholders which ought to modulate the profit-seeking activities of shareholders in accordance with maximizing their welfare. (shrink)

Organizational leaders are increasingly emphasizing a stakeholder perspective in order to address concerns about business ethics. This study examined the choices of 94 groups in the context of a business decision-making simulation to determine how specific actions and communications can facilitate the consideration of different stakeholder perspectives. In particular, we examined whether generally framing the business situation as one involving diverse stakeholders versus a primarily profit-driven operation (referred to as framing), and whether specific suggestions that participants consider the (...) concerns of stakeholders versus stockholders in maximizing the value of the firm (referred to as vision priming), would influence group choices and decision outcomes. We tested four experimental conditions against a control in a 2 × 2 experimental design to determine the effects that group choices had on decision outcomes when groups were exposed to stakeholder versus stockholder decision framing and stakeholder versus stockholder vision priming. The results revealed that the consistent conditions outperformed the control condition and that vision priming has a greater impact on decision outcomes than decision framing. (shrink)

This paper presents a short classroom exercise to stimulate student discussion about the rights of shareholders versus the rights of stakeholders. Students are challenged to identify and evaluate their preconceived notions of what constitutes excessive profits. The exercise illustrates why the realization of a large return on investment cannot be used as prima facie evidence that a firm exploited employees, customers, or other stakeholders. This concept is illustrated using datafrom the pharmaceutical industry.

We examine whether, relative to their global peers, the financial performance of firms from developing countries leads to increases in human rights abuses. We also study the institutional conditions that qualify this relationship. Based on a combination of behavioral and neo-institutional theories, we suggest there is a positive relationship between financial performance and human rights misbehavior as home country liabilities motivate firms to misbehave to achieve their primary goal of economic leadership. We also suggest that strong regulatory and (...) normative pressures attenuate the abovementioned positive relationship, as failure to comply with norms endangers such firms’ secondary goal of achieving international legitimacy. Our analysis, based on a sample of 245 large companies from eight developing countries studied over a 20-year period, supports our hypotheses. Our empirical results suggest that such companies misbehave when they endeavor to strike a balance between maintaining their global economic leadership and sustaining their social legitimacy. (shrink)

Digital capability encompasses the skills and attitudes that firms and employees need to thrive in the modern digital era. Digital capability of a firm involves the effective adoption and use of modern digital technologies such as Industry 4.0. From the individual perspective, digital capability is referred to as knowledge and skill sets of people which are essential to work in digitally enabled firms. Not many studies have been conducted to assess how digital capability can help in twin transition, (...) that is, both at individual and firm levels, and how such digital capability can help in improving profitability for the firms. There is also a lack of studies exploring how firm leadership support can enhance digital capability to improve both organizational and employee performance. In this background, the aim of this study is to assess the role of digital capability for both firm and people perspectives with leadership support as moderator. With the support of resource-based view (RBV) and literature, a research model was prepared conceptually which was later validated using PLS-SEM technique considering 348 responses from employees of different types of industries. Based on the analysis of feedback from participants in India, this study has reached a specific conclusion. Consequently, the results suffer from external validity issues which have been considered as one of the critical limitations of this study. It has been demonstrated that impacts of digital competency could improve both people and firm performance enhancing the profitability of the firms. Such enhancement of profitability is facilitated by the impact of leadership support. (shrink)

The empirical findings in Collins and Porras'' study of visionary companies, Built to Last, and the normative claims about the purpose of the business firm in Centesimus Annus are found to be complementary in understanding the purpose of the business firm. A summary of the methodology and findings of Built to Lastand a short overview of Catholic Social Teaching are provided. It is shown that Centesimus Annus'' claim that the purpose of the firm is broader than just profit is (...) consistent with Collins and Porras empirical finding that firms which set a broader objective tend to be more successful than those which pursue only the maximization of profits. It is noted however that a related finding in Collins and Porras, namely that the content of the firm''s objective is not as important as internalizing some objective beyond just profit maximization, can lead to ethical myopia. Two examples are provided of this: the Walt Disney Company and Philip Morris. Centesimus Annus offers a way to expose such myopia, by providing guidance as to what the purpose of the firm is, and therefore as to what kinds of objectives are appropriate to the firm. (shrink)

The history of the modern oil industry begins along Oil Creek in August 1859 when Edwin Drake and Billy Smith found petroleum at the bottom of their well. Over the next decade and a half, Petrolia, the name given to this region in northwest Pennsylvania, produced more oil than anywhere else on earth. In the process, Petrolia became a massive industrial site and a vivid cultural image. Understanding this profound dual transformation is the object of Brian Black's sensitively drawn portrait (...) of the landscape of America's first oil boom.A landscape, according to Black, is a place where culture and nature meet, and in the 1860s a devastating crash occurred when the natural oil of Oil Creek met the commercial demand for lamp and machine oil. Oil Creek had been a quiet, lightly populated agricultural region whose sense of place was entirely self‐constructed by the local farmers. After Drake's discovery, the area became a place of unprecedented exploitation whose identity was hastily assembled by the thousands of outsiders that flooded the area looking for work, riches, or an exciting newspaper story. Petrolia soon became a mythic boom, a mania, a craze. Distant capitalists and recently arrived entrepreneurs painted fantastic pictures of endless and easy wealth. Oil became a prized commodity, and everything else—animals, plants, people, and even the creek itself—became expendable in a single‐minded market designed to pump as much oil as fast as possible. There seemed no legal, economic, or natural limitation to the exploitation—or to the boom mentality. Petrolia became the very embodiment of greed and speculation, instantaneous wealth and sudden failure. Its mores were as ephemeral as its transient population.All this is grist for Black's ethical mill, and he grinds it well, perhaps too relentlessly. There is no doubt that looking at the exploitation of oil from the obliteration of the wooded valleys, or the filth of boomtown streets, or the emptiness of ghost towns reveals a sacrificial landscape—an environment abused, wasted, ruined, and despoiled in pursuit of profit. Certainly Black is on firm ground when he ties what happened in Petrolia to what happened in Gilded Age America as a whole, but he may overstate the case when he argues that “industrial rationalization would never allow … humanitarianism to penetrate the utilitarian logic of Petrolia” .Was the logic of oil so ruthless and the motives of the Petrolians so shortsighted as to miss what was happening around them and what they were doing to themselves? They took photographs, after all. They criticized and complained endlessly about the mud, the floods, and the fires. Certain towns curbed land speculation, restricted development, and preserved a sense of community. And capitalists, by definition investors who try to reduce risk, worked to bring stability to petroleum production and prices. Black describes these valiant if sometimes vain efforts to restrain the oil rush. But taken together, they seem to suggest more of a struggle—communities versus companies, humanitarianism versus utilitarianism—than Black acknowledges.Many of those involved in the seeming chaos that was Petrolia wanted the oil industry to become a permanent, predictable branch of mining. This was especially true for the engineers, scientists, and other petroleum experts. To this end, Black provides a useful sketch of the technology of oil production along with a brief explanation of petroleum geology. He concludes, however, that none of these experts had much effect on the problems. “Science and technology were clearly tools of industry in Petrolia” .To an extent. In Black's account, the oil “industry” was a collective evil. Equal parts cultural and economic, it acts like a numberless, faceless mob, gripped by “oil on the brain” and motivated by an all‐pervasive ethic of progress and an insatiable drive to make money. It reduces to the sharp end of a rod used to bore through the earth for oil—environmentally insensitive and destructive. As an analytical device, however, “industry” is a blunt tool. Not all wells struck oil, not all companies manipulated knowledge and technique to their own purpose. Experts learned quite a bit and quite quickly about the habits of oil. The divining rod was not the most acceptable method of exploration . Again, there was more of a struggle—sci‐tech versus random wildcatting—than Black allows.The suggestion of situated struggles, however, does not detract from Black's larger theme. Petrolia was environmental hell. Black has rendered this nightmarish landscape into a powerful and at times passionate story about the physical changes to the land and its meaning . If there is a lesson to be found in Petrolia, it is that the modern oil industry is truly an American creation. (shrink)

Responsible Artificial Intelligence (RAI) is a subset of the ethics associated with the use of artificial intelligence, which will only increase with the recent advent of new regulatory frameworks. However, if many firms have announced the establishment of AI governance rules, there is currently an important gap in understanding whether and why these announcements are being implemented or remain “decoupled” from operations. We assess how large global firms have so far implemented RAI, and the antecedents to RAI implementation (...) across a wide range of RAI initiatives. We find that the operationalization of RAI practices is scattered across firms, with only a fringe of companies extensively industrializing RAI. Social pressure pushes RAI design (”saying”) rather than implementation but the reverse is true for competitive pressure. AI capabilities as a bundle of data quality AI architecture, and talents are strongly associated with RAI design to scaling. (shrink)

Economic sanctions are a primary tool the US government and international organizations use to promote human rights abroad, yet they have proven to be largely ineffective and harmful to civilians. There is accumulating evidence that this paradox may be explained by the expressive purposes of sanctions and domestic politics. This article further explores these explanations by examining human rights sanction policy debates. Specifically, I analyzed 27 US Congressional hearings on human rights policy toward China. I argue that moral pressure enabled (...) support for human rights sanctions, high costs fueled opposition to them, and discussions of effectiveness were marginal to the debate. The findings contribute to past studies by identifying the psychological and sociological mechanisms by which legislators circumvent arguments of sanction ineffectiveness and harmfulness and delineating the role of business, human rights, and ethnic interest groups in enabling and constraining support for human rights sanctions. (shrink)