Current organizations are underpinned by utilitarian ethics of Modernity. Pure economic motive driven organizations detach themselves from larger societal interest. Rising number of corporate scandals and intraorganizational income inequalities are breeding similar trends in society at large. Current organizations base their competitive advantage on resources and capabilities which boils down to economic supremacy at all cost whether it is named I/o or RBV of the firm. This theoretical article posits Ethics-based Trust as the main competency and capability for attaining sustained (...) competitive advantage. It in no way condemns utility view of the firms but treats it as a natural yet secondary outcome of genuine ethicality of the firm. Cultivating an ethical culture in the firm through identifying antecedents, organizational practices, and the outcomes where profitability is an automatic but secondary outcome under the supremacy of ethics is detailed in the multilevel model presented in this article. The main call of this article is to posit ethics and morality over and above short-term profits so that organizations fulfill their trustee role for society through enacting socio-humanistic theories within organizations. A brief analysis of the proposed ethical theory of firm is undertaken in light of the “schooling” notion in the contemporary organization theory literature. (shrink)

The organizational trust literature relies strongly on the notion of trust and trustworthiness as a calculative cause-and-effect relationship aimed at assessing the advantages and disadvantages between two actors. This utilitarian notion of trust has been critiqued by studies that highlight _construct inconsistencies_ related to utilitarian trust, which, it is argued, is deficient, incomplete and misleading. Our empirical study of the Dutch insurance sector identifies and categorizes three _process inconsistencies_ that help to explain why the calculation of trust in a utilitarian (...) sense is seemingly impossible in practice and is a barrier to the unambiguous assessment of individual needs and individual utility. These process inconsistencies successively concern insufficient information, complex behavioural dynamics, and a convoluted pattern of stakeholder influence to assess utility in trust relationships, specifically within complex socio-economic systems. Our findings contribute to the trust literature by proposing a classification of the previous critiques on utilitarian trust, and by showing that in scenarios of systematic rather than dyadic trust, process inconsistencies may be too strong to endure a ‘leap of faith’, at least with regard to suspension and assessing utilitarian trust in these more complex socio-economic systems. (shrink)

This research documents consumers’ potential to monitor corporations’ License to Operate through their consumption responses to corporate social responsibility failures. The premise is that the type of social contracts or standards in place may determine how consumers, through their individual and collective behaviors, can play a direct role in influencing corporate behavior, when corporations fail to meet social responsibility standards. An experiment conducted with a large sample of consumers in the United States shows that consumers respond differently to a company’s (...) failure in its social responsibilities depending on whether the violated standard is a government mandate or a voluntary commitment and depending on the consumers’ own environmental consciousness. The findings highlight the potential power of individual consumers and consumer collectives in narrowing the governance gaps relative to social and environmental issues and reducing the likelihood of CSR failures. (shrink)

Although trustworthiness has been described as a source of competitive advantage, its value extends to organizational governance and wealth creation. We identify the importance of the commitment—compliance continuum in the decision to trust and note that trustworthiness is a subjective perception viewed through each person's mediating lens. That lens and each person's interpretation of the social contract impact one's commitment to cooperate. We suggest five propositions that integrate trustworthiness, governance, and wealth creation.

Trust is a crucial factor for the long-term economic success of a company. However, not only does the company establish trust, but the CEO representing the company builds up trust as well and, therefore, also influences the company's success. Our study examines how different dimensions of trust (i.e., ability, integrity, benevolence, and information quality) influence the degree of overall trust in a company and in CEOs. Nevertheless, dimensions that influence trust in a CEO can be completely different to those influencing (...) trust in companies. Companies and CEOs that act on an international level can hardly be experienced individually, and thus people get information about the company via media use. Therefore, additionally we examine which kind of media is used for getting information about a company or CEO and whether a relationship exists between media use and trust. Findings from a survey in Switzerland (n = 245) show that companies are more trusted than CEOs and that the items which influence overall trust differ between CEOs and companies. Social responsibility as a benevolence item is important for both groups. Regarding information on different media channels, users of traditional media like newspapers, TV, and radio are most critical regarding trust in companies and CEOs. (shrink)

This conceptual article introduces behavioral perspectives into the governance arena and undertakes a psychological assessment of managerial decision making in organizations by elaborating on the treatment of trust and pride in the extant literature. While trust is conceived by governance scholars as a device for monitoring relationships with others, we argue that authentic pride, contrary to hubris, could operate as an attribute of emotional self-regulation allowing corporate leaders to govern the social behavior of their own self. Contrasting the features of (...) trust and authentic pride, we advance several propositions to capture their relevance and simultaneous importance as viable governance mechanisms in light of a manager's level of cognitive moral reasoning. Our study builds a unified theoretical framework of governance which integrates human agency, psychological states, and moral judgment to foster a deeper understanding of complex self-regulatory processes that are activated by decision makers in the execution of their roles. (shrink)

Free riding involves benefiting from common resources or services while avoiding contributing to their production and maintenance. Few studies have adequately investigated the propensity to overestimate the prevalence of free riding. This is a significant omission, as exaggeration of the phenomenon is often used to justify control and coercion systems. To address this gap, we investigate how the common good approach may mitigate the flaws of a system excessively focused on free-riding risk. In this conceptual paper featuring illustrative vignettes, we (...) argue that the common good perspective is realistic and effective in preventing this excessive attention by promoting trust as an unconditional gift and a response to vulnerability. We discuss the common good perspective’s originality over the dominant approaches and propose a set of ethical and managerial recommendations that may be the best protection against this excessive focus and maybe even against free riding itself. (shrink)