By showing disapproval of unethical follower behavior (UFB), leaders help creating an ethical climate in their organization in which it is clear what is morally acceptable or not. In this research, we examine factors influencing whether leaders consistently show such disapproval. Specifically, we argue that holding leaders accountable for their actions should motivate them to disapprove of UFB. However, this effect of accountability should be inhibited when leaders personally benefit from UFB. This prediction was supported in a lab experiment. Furthermore, (...) a follow-up study showed that followers in fact accurately predict when leaders will most likely disapprove of UFB. These findings imply that followers can thus get away with unethical behavior in some situations and they are capable of accurately predicting such situations. (shrink)

In this paper I examine how the constituent elements of a firm's organizational structure affect the ethical behavior of workers. The formal features of organizations I examine are the compensation practices, performance and evaluation systems, and decision-making assignments. I argue that the formal organizational structure, which is distinguished from corporate culture, is necessary, though not sufficient, in solving ethical problems within firms. At best the formal structure should not undermine the ethical actions of workers. When combined with a strong culture, (...) however, the organizational structure may be sufficient in promoting ethical conduct. While helpful, ethics training and corporate codes are neither necessary nor sufficient in promoting ethical behavior within firms. (shrink)

Regulatory responses to the business failures of 1998–2001 framed them as a general failure of governance and ethics rather than as firm-specific problems. Among the regulatory responses are Section 406 of Sarbanes–Oxley Act, SEC, and exchange requirements to provide a Code of Ethics. However, institutional pressures surrounding this regulation suggest the potential for symbolic responses and decoupling of response from organizational action. In this article, we examine Codes of Ethics for a stratified sample of 75 U.S. firms across five distinct (...) industries and find that content and language converge across organizations in ways undesired by the regulators, and that language is used to minimize the effects of the Code on constraining organizational behavior. There is, however, a noteworthy exception in the sections of the Codes dedicated the ethics of financial reporting. Although this material still contains legalistic boilerplate information, it does offer concrete guidance and emphatic language pertaining to the need to maintain the integrity of reporting practices. This suggests that the corporate understanding of the source of the failures is one of fraudulent financial reporting. Aside from the matter of financial reporting, the vague and stylized content of the Codes was a predicted response and constitutes a rational response to the regulation. The regulation, however, clearly states the belief that Codes should vary from firm to firm and that individual firms should determine the specific content of a Code. Aside from financial reporting matters, the observed result suggests that regulatory efforts may have failed to instigate corporate change in attitudes toward and enforcement of higher ethical standards by corporate actors. (shrink)

Since the introduction of the U.S. Sarbanes-Oxley Act in 2002 and several other national corporate governance codes, whistleblowing policies have been implemented in a growing number of companies. Existing research indicates that this type of governance codes has a limited direct effect on ethical or whistleblowing behaviour whereas whistleblowing policies at the corporate level seem to be more effective. Therefore, evidence on the impact of (inter)national corporate governance codes on the content of corporate whistleblowing policies is important to understand their (...) indirect impact on whistleblowing behaviour. This study analyzes the contents of whistleblowing policies, and parts of corporate codes of conduct and codes of ethics, describing such policies of 56 leading European companies. By classifying the contents in seven categories, an exploratory framework was created. General contents often identified were: applicability to all employees, a group-wide scope and an authoritative tone. The most common general violations to report were breaches of internal policies and external regulations or laws. The more specific violations most frequently mentioned were criminal offences and dangers to health and safety or the environment. Contacts to report to were the direct or indirect supervisors, a compliance officer or a confidential "hotline" facility. A confidentiality guarantee was common and anonymous reporting was often possible, though sometimes discouraged. Protection against retaliation is stated by ensuring that retaliation will not happen, prohibiting it or making it punishable. The requirement of good faith was frequently given. Finally, investigation of the report was often guaranteed. Surprisingly little information is given on the treatment of whistleblowers reporting an unfounded complaint in good faith, or reporting a violation they were involved in. The study's findings are most relevant to companies without a whistleblowing policy or those that intend to benchmark their policies, and to pan-European standard setters. (shrink)

Since the introduction of the U.S. Sarbanes-Oxley Act in 2002 and several other national corporate governance codes, whistleblowing policies have been implemented in a growing number of companies. Existing research indicates that this type of governance codes has a limited direct effect on ethical or whistleblowing behaviour whereas whistleblowing policies at the corporate level seem to be more effective. Therefore, evidence on the impact of (inter)national corporate governance codes on the content of corporate whistleblowing policies is important to understand their (...) indirect impact on whistleblowing behaviour. This study analyzes the contents of whistleblowing policies, and parts of corporate codes of conduct and codes of ethics, describing such policies of 56 leading European companies. By classifying the contents in seven categories, an exploratory framework was created. General contents often identified were: applicability to all employees, a group-wide scope and an authoritative tone. The most common general violations to report were breaches of internal policies and external regulations or laws. The more specific violations most frequently mentioned were criminal offences and dangers to health and safety or the environment. Contacts to report to were the direct or indirect supervisors, a compliance officer or a confidential “hotline” facility. A confidentiality guarantee was common and anonymous reporting was often possible, though sometimes discouraged. Protection against retaliation is stated by ensuring that retaliation will not happen, prohibiting it or making it punishable. The requirement of good faith was frequently given. Finally, investigation of the report was often guaranteed. Surprisingly little information is given on the treatment of whistleblowers reporting an unfounded complaint in good faith, or reporting a violation they were involved in. The study’s findings are most relevant to companies without a whistleblowing policy or those that intend to benchmark their policies, and to pan-European standard setters. (shrink)

Due to the frequent occurrence of ethical transgressions and unethical employee behaviors, there has lately been an increasing interest in the ethical foundations of contemporary organizations. However, large-scale comprehensive analyses of organizational ethics are still comparatively limited. Our study contributes to both management control and business ethics literature by empirically examining potential antecedents as well as resulting effects of ethical work climates on organizational-level outcomes. Based on a cross-sectional survey among 295 large- and medium-sized companies, we find that more informal (...) means of control constitute important elements of a broader organizational control context that are strongly related to the emergence of coherent ethical work climates with an increased awareness of ethical issues. Moreover, our results show that the relationship between ethical work climates and organizational performance can be considered as rather indirect as it is fully mediated by increased mutual trust among employees. Overall, our study thus supports the particular importance of ethical work climates and identifies appropriate means to encourage ethical conduct. (shrink)

Management accounting and control seeks to provide information that substantiates decision-making at all firm levels and thus may also foster ethical decision-making. Against this background, this article presents a systematic literature review of research on management accounting and control and business ethics that has been published in the Journal of Business Ethics. Through this review, we intend to bring to the forefront a research topic that has been widely neglected in broader literature reviews on accounting ethics research and that has (...) been covered by a small number of articles published by traditional leading accounting journals only. Our systematic literature review is guided by a theoretical framework that integrates the decision-facilitating and decision-influencing roles of management accounting and control information and the stages of the ethical decision-making process. Through this theoretical lens, we analyze 64 management accounting and control articles published in the Journal of Business Ethics over more than three decades. Synthesizing and structuring this research, we discuss prior accomplishments and elaborate on avenues for future research. (shrink)

In 1999, the Journal of Business Ethics published its 1 500th article. This article commemorates the journal's quest "to improve the human condition" (Michalos, 1988, p. 1) with a summary and assessment of the first eighteen volumes. The first part provides an overview of JBE, highlighting the journal's growth, types of methodologies published, and the breadth of the field. The second part provides a detailed account of the quantitative research findings. Major research topics include (1) prevalence of ethical behavior, (2) (...) ethical sensitivities, (3) ethics codes and programs, (4) corporate social performance and policies, (5) human resource practices and policies, and (6) professions – accounting, marketing/sales, and finance/strategy. Much remains to be done. (shrink)

The growing body of whistleblowing literature includes many studies that have attempted to identify the individual level antecedents of whistleblowing behavior. However, cross-cultural differences in perceptions of the ethicality of whistleblowing affect the judgment of whistleblowing intention. This study ascertains how Chinese managers/professionals decide to blow the whistle in terms of their locus of control and subjective judgment regarding the intention of whistleblowing. Hypotheses that are derived from these speculations are tested with data on Chinese managers and professionals. Statistical analysis (...) largely supports the hypotheses, which suggests that an individual''s locus of control does moderate the relationship between ethical judgment and whistleblowing. (shrink)

The article examines the challenges involved in the process of developing artificial ethical agents. The process involves the creators or designing professionals, the procedures to develop an ethical agent and the artificial systems. There are two possibilities available to create artificial ethical agents: (a) programming ethical guidance in the artificial Intelligence (AI)-equipped machines and/or (b) allowing AI-equipped machines to learn ethical decision-making by observing humans. However, it is difficult to fulfil these possibilities due to the subjective nature of ethical decision-making. (...) The challenge related to the developers is that they themselves lack training in ethical skills. The creators who develop an artificial ethical agent should be able to foresee the ethical issues and have knowledge about ethical decision-making to improve the ethical use of AI-equipped machines. The suggestion is that the focus should be on training professionals involved in the process of developing these artificial systems in ethics rather than developing artificial ethical agents and thereby attributing ethical agency to it. (shrink)

The article examines the challenges involved in the process of developing artificial ethical agents. The process involves the creators or designing professionals, the procedures to develop an ethical agent and the artificial systems. There are two possibilities available to create artificial ethical agents: (a) programming ethical guidance in the artificial Intelligence (AI)-equipped machines and/or (b) allowing AI-equipped machines to learn ethical decision-making by observing humans. However, it is difficult to fulfil these possibilities due to the subjective nature of ethical decision-making. (...) The challenge related to the developers is that they themselves lack training in ethical skills. The creators who develop an artificial ethical agent should be able to foresee the ethical issues and have knowledge about ethical decision-making to improve the ethical use of AI-equipped machines. The suggestion is that the focus should be on training professionals involved in the process of developing these artificial systems in ethics rather than developing artificial ethical agents and thereby attributing ethical agency to it. (shrink)

Due to the prevalent influence of legal trends in driving ethical homogenization and persistent decoupling between ethical substance and symbolism in today’s organizations, scholars are calling for a renewed interest in the structural makeup of ethical codes. This article explores the disclosure trends and examines the contents of codes of ethics in the context of Canadian publicly listed acquirers. Relying on the analysis of codes’ public availability, structure, purpose, and promoted values, four clusters of behavior are identified. Although many firms (...) avoid the public disclosure of their codes, the results indicate that code of ethics’ patterns in sample firms are not driven merely by regulatory forces but increasingly shaped by aspirations for building a sustainable values-based corporation. The reported differences across clusters demonstrate that many companies in Canada overcome isomorphic pressures by displaying some originality in the writing of their codes. While symbolism in codes of ethics’ design and adoption prevails in publicly listed acquiring firms, the study provides evidence of an emerging trend of substantial commitment to social responsibilities. (shrink)

Using a sample of multinational firms in Germany, we develop and empirically examine a model to test the effects of ethical climate and its antecedents on purchasing social responsibility (PSR). Our results show different effects of benevolence dimensions of ethical climate on PSR: employee-focused climate has no effect, but community-focused climate is a significant driver of PSR. The results also show that top management ethical norms and code of conduct implementation impact PSR directly as well as indirectly through ethical climate.

The purpose of this paper is to provide a basis for a systematic development of signaling theory on CSR initiatives. The paper proposes signaling theory as a framework supportive of a strategic CSR approach; maps extant research on signaling through CSR initiatives; offers a comprehensive assessment of the most diffused CSR initiatives and discusses their eligibility as signaling devices; and outlines a research agenda to further develop and test signaling theory in business ethics. Specifically, the study reconsiders some key assumptions, (...) identifies key gaps in empirical validation, and proposes directions to extend multiple signal, signaling pattern, and target cases. (shrink)

This study examines the extent to which enabling and controlling uses of management control systems moderate the relationship between environmental innovation strategy and organizational performance. Partial least squares structural equation modeling is used to analyze survey data collected from top managers in 175 manufacturing and services sectors representing multinational and local organizations operating in Sri Lanka. We find that while the enabling use of MCS positively moderates the relationship between environmental innovation strategy and organizational performance, in contrast, the controlling use (...) of MCS negatively moderates the relationship. We compare the results for the manufacturing and services sectors. As predicted, we find a significant positive moderating impact of the enabling use of MCS in both manufacturing and services sectors. However, contrary to our expectations, we find no significant moderating impact for both sectors for the controlling use of MCS. We conclude that environmental innovation strategy per se does not lead to performance improvements; however, the extent to which organizations use enabling and controlling MCS determines the relationship. We provide theoretical insights and practical implications concerning the importance of strategic alignment between managerial controls, environmental innovation strategy, and organizational performance. (shrink)

In spite of extensive study and efforts to improve business ethics and increase corporate social responsibility, a quick review of almost any business publication will show that breaches of ethics are a common occurrence in the business community. In this paper we explore reasons for potential discrepancies or gaps between organizational and individual ethical standards, the consequences of such discrepancies, and possible methods of reducing the detrimental effects of these differences. The concept of self-leadership, as constructed through social learning theory (...) is examined, and shown to be a potentially valuable tool for employees'' use in making reasoned decisions in varying organizational ethical climates. Specifically, the authors will show how the practice of self-leadership can be employed as an important means to improve moral action within the firm. (shrink)

In view of recent studies that identified certain interest groups as potential whistleblowers, we propose an integrative conceptual framework to examine whistleblower behavior by whistleblower type. The framework, dubbed the whistleblowing triangle, is modeled on the fraud triangle and is comprised of three factors that condition the act of whistleblowing: pressure, opportunity, and rationalization. For a rich examination, we use a qualitative research framework to analyze 11 whistleblowing cases of corporate financial statement fraud in Canada that were publicly denounced between (...) 1995 and 2012. Our analysis indicates that whistleblowers are not only insiders but also outsiders [financial analysts, auditing firms, journalists, politicians, customers, and investors]. It also suggests that a dynamic relation may exist between whistleblowers. In addition, our findings show that most whistleblowers opt for external channels when they fail to receive an adequate response from management, seek media exposure, are interested in financial benefits resulting from the act of whistleblowing, or are interested in protecting their investment. Lastly, we propose categorizing whistleblowers into four conceptual types: protective, skeptical, role-prescribed, and self-interested. (shrink)

Several researchers have identified codes of ethics as tools that stimulate positive ethical behavior by shaping the organisational decision-making process, but few have considered the information needed for code implementation. Beyond being a legal and moral responsibility, ethical behavior needs to become an organisational priority, which requires an alignment process that integrates employee behavior with the organisation’s ethical standards. This paper discusses processes for the responsible implementation of CoEs based on an extensive review of the literature. The internationally recognized European (...) Foundation for Quality Management Excellence Model is proposed as a suitable framework for assessing an organisation’s ethical performance, including CoE embeddedness. The findings presented herein have both practical and research implications. They will encourage construction practitioners to shift their attention from ethical policies to possible enablers of CoE implementation and serve as a foundation for further research on ethical performance evaluation using the EFQM model. This is the first paper to discuss the model’s use in the context of ethics in construction practice. (shrink)

This paper reports on an investigation of issues surrounding the use of ethical codes/codes of conduct in Irish based companies. Using a comprehensive questionnaire survey, the paper examines the incidence, content and enforcement of codes of conduct among a sample of the top 1000 companies based in Ireland. The main findings indicate that the overall usage of codes of conduct amongst indigenous Irish companies has increased significantly from 1995 to 2000. However, in line with prior research, these codes focus primarily (...) on issues surrounding company and employee protection as opposed to society protection. Almost half of all codes are written by company personnel or provided by head office. Revisions of codes are common but formal ongoing methods of instructing new staff about codes are not prevalent. Less than one-third of companies with codes have formal channels for reporting violations but a high percentage have formal disciplinary procedures in place for breaches of codes. (shrink)

We investigated associations between moral reasoning and epistemological beliefs in an accounting context using the sample of 140 senior accounting students from a public university in Midwestern U. S. We found no significant correlations between accounting students' principled reasoning about Thome's ethical dilemmas and their beliefs about knowledge measured by administering Schommer epistemological questionnaire. We conducted post-hoc power analysis and present the evidence that the lack of associations should not be attributed to the lack of power. Overall, our results suggest (...) that reflective thinking and moral reasoning represent separate dimensions of cognitive process which develop at a different pace. Thus, a stand-alone course of ethics in accounting education is warranted since higher moral reasoning does not automatically follow from extended technical education and improved critical thinking skills. (shrink)

This paper examines the status of Corporate Ethical Policies (CEP) in large companies in Argentina, Brazil and Spain, with a special emphasis on Corporate Ethics Statements (CES), documents that define the firms’ philosophy, values and norms of conduct. It is based on a survey of the 500 largest companies in these nations. The findings reveal many similarities between these countries. Among other things, it emerges that most companies give consideration to ethics in business and have adopted some kind of formal (...) or informal ethical policies. Regardless of whether or not they have a CES, companies agree that ethical conduct must be taken into account when selecting, appraising and promoting personnel as an important ethical policy. There is a growing tendency to draw up formal corporate ethics documents. These documents are perceived, first and foremost, as supporting the development of corporate culture. Most respondents believe that primary responsibility for ethical issues in the company rests with the CEO. Finally, the findings indicate that most companies that devote more resources to communicating and implementing CESs have two or more formal ethics documents. The main differences between the countries included in the study concern the emphasis given to specific aspects, such as avoiding misconduct or taking ethical criteria into account when selecting personnel. The emphasis is greatest in countries where corruption seems most prevalent. (shrink)

This paper analyses the ethical performance of foreign-investment enterprises operating in China in comparison to that of the indigenous state-owned enterprises, collectives and private enterprises. It uses both the deontological approach and the utilitarian approach in conceptualization, and applies quantitative and econometric techniques to ethical evaluations of empirical evidences. It shows that according to various ethical performance indicators, foreign-investment enterprises have fared well in comparison with local firms. This paper also tries to unravel the effect of a difference in business (...) culture and competitive market forces on ethical performance by comparing the behavior of foreign-investment enterprises with that of the indigenous state-owned enterprises and collectives on the one hand, and with that of the indigenous private enterprises on the other. (shrink)

I challenge the appropriateness of the discourse of managerial control of employees in four ways. First, I question arguments which suggest that employees are always subject to organizational control. Second, I contrast workplace conditions which support employee self-determination and autonomy with conditions which permit control of employees. Third, I provide an ethical assessment of the normative use of control talk and fourth, I suggest an alternative discourse, a discourse of accountability which appropriately highlights the reciprocity necessary to build ethical organizations.

The focus of this paper is to further a discussion of codes of ethics as institutionalized organizational structures that extend some form of legitimacy to organizations. The particular form of legitimacy is of critical importance to our analysis. After reviewing various theories of legitimacy, we analyze the literature on how legitimacy is derived from codes of ethics to discover which specific form of legitimacy is gained from their presence in organizations. We content analyze a sample of codes to consider the (...) question of whether a strategic, self-interested rationale lies behind the adoption of a code of ethics. We propose that the process of employing codes of ethics in this strategic manner has become, through isomorphism, an institutionalized practice that itself confers a cognitive form of legitimacy to the organization and further distances the codes from their moral foundation. (shrink)

The focus of this paper is to further a discussion of codes of ethics as institutionalized organizational structures that extend some form of legitimacy to organizations. The particular form of legitimacy is of critical importance to our analysis. After reviewing various theories of legitimacy, we analyze the literature on how legitimacy is derived from codes of ethics to discover which specific form of legitimacy is gained from their presence in organizations. We content analyze a sample of codes to consider the (...) question of whether a strategic, self-interested rationale lies behind the adoption of a code of ethics. We propose that the process of employing codes of ethics in this strategic manner has become, through isomorphism, an institutionalized practice that itself confers a cognitive form of legitimacy to the organization and further distances the codes from their moral foundation. (shrink)