Although microfinance organizations are generally considered as inherently ethical, recent events have challenged the legitimacy of the sector. High interest rates and the excessive profitability of some market leaders have raised the question of how to define a fair profit level for social enterprise. In this article, we construct a fair profit framework based on four dimensions: profitability, social mission, pricing, and surplus distribution. We then apply this framework using an empirical sample of 496 microfinance institutions. Results indicate that satisfying (...) all four criteria is a difficult, although not impossible, task. According to our framework, 24 MFIs emerge as true double bottom line organizations. These MFIs are characterized by higher outreach to women, lower portfolio risk, and higher productivity in high-density environments such as South Asia. We argue that excessive profits can be better understood relative to pricing, the outreach of the MFI, and organizational commitment to clients in the form of reduced interest rates. (shrink)

This paper seeks to identify a mid-level unifying ethical principle that may help clarify and articulate the ethical responsibilities of business firms in the field of marketing ethics. The paper examines critically the main principles which have been proposed to date in the literature, namely consumer sovereignty, preserving the conditions of an acceptable exchange, paternalism, and the perfect competition ideal, and concludes that all of them are vulnerable to damaging criticisms. The paper articulates and defends the mutuality principle as the (...) most plausible candidate for the role of master principle in the relations between a firm and its customers. This principle requires that sellers look for reciprocity in their relations with their customers, seeking to provide to their customers something that helps them improve in some way their well-being and is commensurate with what they receive from them. (shrink)

In the mid-1960s and 1970s the field of business ethics saw a basic shift in emphasis from personal responsibility to corporate responsibility. While the notion of corporate responsibility has come to be a dominant concept in the field of business ethics since that time, it is a contested concept that admits of a range of conceptions. A concern underlying this paper is that many of these conceptions are less adequate than they might be. This paper has two overlapping goals. First, (...) it seeks to elaborate a more adequate conception of corporate responsibility by drawing upon critical theory to distinguish three different normative realms (viz., legitimacy, morality and ethics). Second, the paper attempts to indicate from a critical theory perspective the nature of corporate responsibilities in each of these realms. The paper begins with a short introduction to German critical theory and an explanation of the different normative realms. The following three sections elaborate in turn the responsibilities of corporations in each on the three normative realms. Finally, the conclusion attempts to indicate some of the advantages of a critical theory conception of corporate responsibility. (shrink)

This study adds to the empirical evidence supporting a significant connection between ethics and profitability by examining the connection between published reports of unethical behaviour by publicly traded U.S. and multinational firms and the performance of their stock. Using reports of unethical behaviour published in the Wall Street Journal from 1989 to 1993, the analysis shows that the actual stock performance for those companies was lower than the expected market adjusted returns. Unethical conduct by firms which is discovered and publicized (...) does impact on the shareholders by lowering the value of their stock for an appreciable period of time. Whatever their views on whether ethical behaviour is profitable, managers should be able to see a definite connection between unethical behaviour and the worth of their firm's stock. Stockholders, the press and regulators should find this information important in pressing for greater corporate and managerial accountability. (shrink)

Abstract:This article elaborates a normative Stakeholder Management Theory (SHMT) from a critical theory perspective. The paper argues that the normative theory elaborated by critical theorists such as Habermas exhibits important advantages over its rivals and that these advantages provide the basis for a theoretically more adequate version of SHMT. In the first section of the paper an account is given of normative theory from a critical theory perspective and its advantages over rival traditions. A key characteristic of the critical theory (...) approach is expressed as a distinction between three different normative realms, viz., legitimacy, morality, and ethics. In the second section, the outlines of a theory of stakeholder management are provided. First, three basic tasks of a theoretically adequate treatment of the normative analysis of stakeholder management are identified. This is followed by a discussion of how a critical theory approach to SHMT is able to fulfill these three tasks. (shrink)

This paper examines whether and to what extent the overall business strategy influences the firm’s mismanagement of sustainability. Specifically, an empirical measure for the mismanagement of sustainability is developed by exploiting the newly available materiality guidelines for US firms to define industry-specific material sustainability issues. Using this measure, this paper shows that mismanagement of sustainability can represent unethical business behavior when firms intentionally perform better on immaterial issues than on material issues by diverting stakeholders’ attention from the firm’s low overall (...) sustainability performance. This paper assumes that the right business strategy can prevent such unethical actions. Based on Miles and Snow’s organizational theory, this paper distinguishes between Prospector and Defender business strategies. By employing multiple firm-level panel regressions, the findings suggest that Prospector-type firms are more likely to mismanage sustainability issues compared to Defender-type firms intentionally. The results give implications for researchers, regulators and standard setters, auditors, sustainability practitioners, and scholars. (shrink)