International Evidence on the Determinants of Organizational Ethical Vulnerability (original) (raw)

Organizational Factors in the Individual Ethical Behaviour. The Notion of the “Organizational Moral Structure”

Humanistic Management Journal

Various organizational factors reported in the hitherto literature affect individual (mis)behaviour within a company. In this paper, we conduct a literature review thereof, and propose a notion of the “Organizational Moral Structure” defined as a comprehensive framework of interrelated organizational factors that condition, incite or influence good or bad moral behaviour of individuals within the organization. Drawing from a wide bibliographical review and our own reflection on recent business scandals, we identify seven constituents of the “Organizational Moral Structure”: 1) leader’s values and character, 2) vision and exercise of power, 3) corporate control systems, 4) internal network of influence, 5) organizational culture, 6) internal and competitive pressures, and 7) external influences. The “Organizational Moral Structure” is proposed as a reflective framework for humanistic management and as an invitation to further research in this field. We provide recommendations on how ...

The empirical assessment of corporate ethics: a case study

Journal of Business Ethics, 2000

Empirical analyses of the ethics of corporations with the aim to improve the state of corporate ethics are rare. This paper develops an integrated, normative model of corporate ethics by conceptualizing the ethical quality of organizations and by relating this contextual quality to various expressions of immoral behavior. This so-called Ethics Qualities Model for organizations, which contains 21 ethical qualities, allows one to assess the ethical content of institutional groups of individuals. A proper conceptualization is highly relevant both for the empirical corroboration of business ethics theories and for managerial purposes, such as judging individual and group performance or informing external stakeholders. The empirical applicability of the model is illustrated by an explorative case study of a large, globally operating financial institution. This casestudy demonstrates that the corporate ethical qualities differ with respect to their perceived optimality as well as to their estimated impact on (un)ethical conduct. The various results provide managers with many clues to understand their organization and to take effective measures to improve the ethical content of their organization.

Does a firm’s exposure to ethical failures matter to financial markets? A governance perspective

Journal of Management & Governance, 2016

This paper investigates if a firm's ethical issues, in conjunction with its governance, affect its standing within financial markets. A firm`s ethical reputation arises from its involvement in ethical violations and incidents while a comprehensive index proxies for governance. We assess a firm's standing within financial markets through two complementary perspectives, i.e., the level of information asymmetry between managers and investors as inferred from analyst forecast dispersion and analyst forecast error and the relation between a firm's earnings and its stock market valuation (value relevance). Our results suggest that a firm`s ethical reputation affects financial analysts' forecasts as well as the stock market value assigned to its reported earnings. Moreover, it appears that corporate governance moderates such relations, with strong (weak) governance compensating for a weak (strong) ethical reputation. Overall, our evidence shows that ethical issues do not seem to pay.

Exploration of Ethics as Moral Substance in the Context of Corporate Governance

Asian Social Science, 2011

The Corporate Governance guidelines, rules and regulations were introduced to guide corporations towards good governance practices. However, there seem to be contradicting events that projected otherwise. The series of corporate scandals seems to be giving the impression that there is something lacking in the present corporation governance practices among the corporations, in particular, the public listed companies. Several opinions were gathered in answering this lacuna and the outcome seems to pin point to the lack of moral element in the present corporate governance practices. Thus, this study attempts to explore ethics aspects as a moral substance in relation to corporate governance. Guided by the subjectivity of the research issue, the qualitative approach was used to investigate the subject matter. Specifically, purposive sampling was used. The study found various ways to embed ethics in promoting morality in corporate governance practices among the corporations in the study. The ethical content developed in the corporations guide the corporate business practices, and, hence, motivates good governance, i.e. accountability, responsiveness, responsibility and transparency. Ethical principle, ethical position and ethical structures are the three main elements of ethics that emerged from the analysis of the research data that drive the corporations towards inclusive governance practices. In addition, process of integrating morality in governance is also part of the initiatives able to guide towards good governance. Overall, the study described a new scope of corporate governance framework. The various emergent patterns answered the question ethics is the moral substance that can be incorporated into corporate governance practices. Generalization of the findings would be difficult due to the limitations of the scope, hence an in-depth case study is proposed for future research to generate deeper and rich description of the issue.

Corporate governance as an instrument for ethical behaviour in Organizational success

2012

Corporate governance based on the ethical values is leadership that has the rules, processes, or laws by which businesses are operated, regulated, and controlled, the internal factors are defined by the officers, stockholders or constitution of a corporation, as well as to external forces such as consumer groups, clients, and government regulations. A corporate governance perspective committed to ethical behaviours in business is very essential for business growth, the organization ethical operations and culture has been on the periphery of corporate governance and board leadership, linked mainly to corporate reputation. However, in today's globalized and interconnected world, investors and other stakeholders have come to recognize that environmental, social, and governance based on the ethical responsibilities of a company as integral to its performance and long-term sustainability.

Ethics in organizations: A framework for theory and research

Journal of Business Ethics, 1994

In a climate of increasing interest and activity within the field of business ethics, as yet there exists no coherent conceptual framework for organizational theory and research. From a review of current thinking and previous writings a framework of concepts is suggested to help set an agenda for empirical research. The elements of this are, first, a taxonomy of “ethical domains”: the foci of organizations' and their agents' ethical concerns and conduct. Second, it is considered how “ethical functioning” might be analysed in terms of causal relationships between expressive forms, voluntary action and instituted forms. Third is discussed “ethical process”, the means by which ethical awareness is aroused. Fourth and last, the paper examines how normative evaluations might apply to the “ethical condition” of organizations and their agents, meaning change or stability in reputation and integrity. At each stage of the argument possible objectives for research are developed.

Conceptualizing the Determinants of Ethical Decision Making in Business Organizations

Understanding the role of the determinants of the ethical decision making in business organizations has become increasingly appealing to the field of business ethics. Various ethical decision making models put more emphasis on a narrow set of determinants. In concert with other contextual factors, these determinants appear to drive the ethical decision making in business organizations. However, in the literature there seems to be room for a more holistic set of determinants, which can explain effectively and holisti-cally the diverse ethical rationales underlying the decision making more effectively. In this paper, the authors set out several ethical models and extract the predominant determinants. After portraying the main literature, the authors conclude that the most recent models are based on the first generation of ethical models, which tend to be more theoretical than empirical. They note the lack of empirical research in this area, which can be explained by both the nature and the intricateness of business ethics. They find that empirical analysis, when it exists, tends to focus on specific variables. The authors highlight at the end of the paper the need for integrative ethical models, which tackle not only the " how " but also the " why " of ethical decision making.

Governance and Business Ethics - An International Analysis

Social Science Research Network, 2015

Motivated by increasing investment of South Korean (SK) companies in the Czech Republic CR) and intensifying trade exchange between the two countries, this article investigates two important aspects of Czech business environment-governance and business ethics (BE) practices. With regards to governance, this text finds that although the CR seems to rank somewhat better on four out of six WGI aggregate indicators (Voice and Accountability, Political Stability and Absence of Violence, Regulatory Quality, and Rule of Law), as the confidence intervals for both countries overlap, better CR performance can only be confirmed for one indicator, i.e. Political Stability and Absence of Violence. Similarly, SK seems to outperform the CR on Government Effectiveness and Control of Corruption, however, this result is not clear for the same reason. We find that on all six aggregate indicators, SK and the CR show similar strengths as well as weaknesses, with the main difference being in the ranking, rather than different components or attributes themselves. In terms of BE, we use a questionnaire survey and we then explain our findings through categories of culture based on Hofstede, GLOBE Project and Trompenaars models. Similarly to governance practices, we find that CR and SK ethical attitudes and perceptions are more similar than expected. In general, Korean respondents perceive unethical practices as less of a problem. In both countries, unethical practices related to bribing and unfair pricing practices seem to bother respondents most, while Koreans report difficulties with unfair competitive practices much less often that Czech respondents. In BE promotion, Korean companies rely more heavily on CEO's as opinion leaders, and punishment for unethical behaviour, whereas in the CR, the number one tool is corporate philosophy including ethics. Czech respondents feel less responsible to local community, society, and government and report the experience with ethical conflict between their personal ethics and the interests of their organizations more often than Korean respondents, and they appear much more situational. In making unethical decisions, Korean respondents would more strongly follow their superior and, overall, would place higher importance on ethical climate of the industry that Czech respondents. When faced with four hypothetical situations, in both countries, respondents thought they were more ethical than an average manager. The main difference was that in their behaviour and in how they felt about their own acts Koreans would be more strongly influenced by the overall ethical climate than Czech respondents.