Organisational culture is assumed to be a key factor in large-scale and avoidable institutional failures. Whilst models such as “ethical culture” and “safety culture” have been used to explain such failures, minimal research has investigated their ability to do so, and a single and unified model of the role of culture in institutional failures is lacking. To address this, we systematically identified case study articles investigating the relationship between culture and institutional failures relating to ethics and risk management. A content (...) analysis of the cultural factors leading to failures found 23 common factors and a common sequential pattern. First, culture is described as causing practices that develop into institutional failure. Second, and usually sequentially related to causal culture, culture is also used to describe the problems of correction: how people, in most cases, had the opportunity to correct a problem and avert failure, but did not take appropriate action. It was established that most of the cultural factors identified in the case studies were consistent with survey-based models of safety culture and ethical culture. Failures of safety and ethics also largely involve the same causal and corrective factors of culture, although some aspects of culture more frequently precede certain outcome types. We propose that the distinction between causal and corrective culture can form the basis of a unified and generalisable model of organisational failure. (shrink)

Various international authorities have insisted on the importance of ethical learning in higher education for would-be professionals, including students of Business Administration. As the process of creating the European Higher Education Area gathers pace, first steps have been taken to explicitly incorporate ethics in the common European Qualifications Framework (EQF). However, the authors of this study show how in the course of the EQF development process, the consideration given to ethical qualifications has been curtailed and subjected to serious limitations. In (...) this article, the authors review the historical development and the main elements of the EQF. Then, they analyze the gradual elimination of ethics within the EQF. Finally, they highlight the implications of this gradual elimination and propose avenues for further research. (shrink)

Various international authorities have insisted on the importance of ethical learning in higher education for would-be professionals, including students of Business Administration. As the process of creating the European Higher Education Area gathers pace, first steps have been taken to explicitly incorporate ethics in the common European Qualifications Framework. However, the authors of this study show how in the course of the EQF development process, the consideration given to ethical qualifications has been curtailed and subjected to serious limitations. In this (...) article, the authors review the historical development and the main elements of the EQF. Then, they analyze the gradual elimination of ethics within the EQF. Finally, they highlight the implications of this gradual elimination and propose avenues for further research. (shrink)

ABSTRACT:The purpose of this paper is to critically evaluate the instrumental perspective on Corporate Social Responsibility (CSR) in practice and theory by relying on sociological analyses of a well known organization: the Italian Mafia. Legal businesses might share features of the Mafia, such as the propensity to exploit a governance vacuum in society, a strong organizational identity that demarcates the inside from the outside, and an extreme profit motive. Instrumental CSR practices have the power to accelerate a firm's transition to (...) Mafia status through its own pathologies. The boundaries of such instrumentalism are explored and lessons for future CSR research derived, with specific emphasis on a firm's social and normative embeddedness, taking into account the inherent challenge of regulating corporate behaviour in the global economy. (shrink)

Business research and teaching institutions play an important role in shaping the way businesses perceive their relations to the broader society and its moral expectations. Hence, as ethical scandals recently arose in the business world, questions related to the civic responsibilities of business scholars and to the role business schools play in society have gained wider interest. In this article, I argue that these ethical shortcomings are at least partly resulting from the mainstream business model with its taken-for granted basic (...) assumptions such as specialization or the value-neutrality of business research. Redefining the roles and civic responsibilities of business scholars for business practice implies therefore a thorough analysis of these assumptions if not their redefinition. The taken-for-grantedness of the mainstream business model is questioned by the transformation of the societal context in which business activities are embedded. Its value-neutrality in turn is challenged by self-fulfilling prophecy effects, which highlight the normative influence of business schools. In order to critically discuss some basic assumptions of mainstream business theory, I propose to draw parallels with the corporate citizenship concept and the stakeholder theory. Their integrated approach of the relation between business practice and the broader society provides interesting insights for the social reembedding of business research and teaching. (shrink)

Although the managerial practice of cheating spans complex and heterogeneous situations, most business ethics scholars consider that the very idea of cheating is indefensible on moral grounds, and quickly dismiss it as wrongdoing. This paper proposes to fine-tune this conventional moral assessment by arguing that some forms of cheating can be justified—or at least excused. To do so, it starts with a value-free definition of cheating that covers a wide diversity of situations: “breaking the rules while deliberately leading or allowing (...) others to think they have been respected.” While using this definition at the metaethical level, the paper contends that the moral assessment of cheating depends on the obligation to comply with the rules. There are rules which do not entail moral obligations, and there are special circumstances where other more important obligations override the obligation to comply with the rules. Furthermore, the paper argues that respecting the penalty rules also influences the moral assessment of cheating on the rules. The key interest of this endeavor lies in contributing to building a more solid theoretical framework for the study of cheating in management, which may replace our common prejudices and basic intuitions on this matter. (shrink)

In the Chinese stock market, controlling shareholders often use inter-corporate loans to expropriate a great amount of cash from listed firms, through a process called “tunneling.” Using a sample of 10,170 firm-year observations from the Chinese stock market for the period of 2001–2010, I examine whether and how Buddhism, China’s most influential religion, can mitigate tunneling. In particular, using firm-level Buddhism data, measured as the number of Buddhist monasteries within a certain radius around Chinese listed firms’ registered addresses, this study (...) provides strong evidence that Buddhism intensity is significantly negatively associated with tunneling. This finding is consistent with the view that Buddhism has important influence on corporate behavior and can serve as a set of social norms and/or an alternative mechanism to mitigate controlling shareholders’ unethical tunneling behavior. In addition, my findings also reveal that the negative association between Buddhism intensity and tunneling is attenuated for firms that have high analyst coverage. The results are robust to various measures of Buddhism intensity and a variety of sensitivity tests. (shrink)

This study explores cultural influence on corporate behavior employing the case of merchant guild culture in China and further the moderating role of Marketization. Using hand-collected data on merchant guild culture, we find that merchant guild culture is significantly negatively associated with owner-manager agency costs, suggesting that merchant guild culture in ancient China still has its continuous and remarkable effects on managerial behavior in contemporary corporations. This finding also implies that merchant guild culture motivates managers to upgrade the efficiency of (...) controlling operating costs, reduces agency conflicts between management and shareholders, and eventually mitigates owner-manager agency costs. Moreover, provincial Marketization level attenuates the negative association between merchant guild culture and owner-manager agency costs. Above results are robust to a variety of alternative measures of merchant guild culture and owner-manager agency costs. Furthermore, our findings are still valid after controlling for the potential endogeneity between merchant guild culture and owner-manager agency costs. (shrink)

This article details day-to-day ethics issues facing MBAs who occupy entry-level and mid-level management positions and offers defined examples of the stressors these managers face. The study includes lower-level managers, essentially excluded from extant literature, and focuses on workplace behaviors both undertaken and observed. Results indicate that pressures from internal organization sources, and ambiguity in letter versus spirit of rules, account for over a third of the most frequent unethical situations encountered, and that most managers did not expect to face (...) those issues. Various contextual factors accounted for 32% of the organizational factors that affected decisions. We discuss implications for the workplace, especially the unique ethics challenges for newer managers. (shrink)

Explanations of organizational misconduct frequently point to declining firm performance and/or the actions of unethical or suspect leaders. Evidence that high-performing firms act illegally or unethically is an enigma. The purpose of this paper is to address these issues by exploring organizational performance using aspirational rather than absolute measures and examining the effect that suspect leader succession has on the increased probability of organizational misconduct. Our analysis of 128 collegiate football programs competing between 1953 and 2016 reveals an increased likelihood (...) of misconduct among organizations with strong as well as weak performance, most notably in comparison to competitive peer programs. Social- and self-referenced aspirations produced distinct relationships between relative performance and misconduct. The impact of leader succession was conditional. The data revealed an increased likelihood of infraction episodes with the appointment of suspect leaders. In some instances, however, a reduced likelihood of misconduct accompanied succession events involving untainted leaders. (shrink)

This article examines why firms engage in Corporate Social Responsibility (CSR). Specifically, it investigates the relationship between a firm's motivation to engage in CSR and the depth of its commitment. I propose that the enduring debate over CSR and financial performance is misaligned, and that scholars should instead focus on the underlying components of CSR engagement. This research sheds light on the motivational antecedents of a firm's engagement in CSR and their effect on CSR commitment. Despite calls for scientific investigation (...) of this linkage, it has received scant attention in the literature. Pursuing this area of research requires the construction of measures of CSR motivation and CSR commitment, as prior work generally lacks objective analysis. I present measures and a research methodology that test hypotheses about how CSR motivation relates to different levels of CSR commitment. The results of this research both validate and challenge current theory. This refined understanding of CSR engagement may enhance firm transparency and accountability to stakeholders. It may reduce the uncertainty in both internal and external assessments of firm CSR and the potential for social and financial impact. (shrink)

We propose a liminality-based analysis of the process of ethical leadership/followership in organizations. A liminal view presents ethical leadership as a process taking place in organizational contexts that are often characterized by high levels of ambiguity, which render the usual rules and preferences dubious or inadequate. In these relational spaces, involving leaders, followers, and their context, old frames may be questioned and new ones introduced in an emergent way, through subtle processes whose evolution and implications may not be easy to (...) grasp even by those participating in them. (shrink)

This paper reassesses the domain of the business ethics curriculum and, drawing on recent shifts in the business environment, maps out some suggestions for extending the core ground of the discipline. It starts by assessing the key elements of the dominant English- language business ethics textbooks and identifying the domain as reflected by those publications as where the law ends and beyond the legal minimum. Based on this, the paper identifies potential gaps and new areas for the discipline by drawing (...) on four main aspects. First, it argues that the domain of business ethics requires extensions dependent on the particular geographic region where the subject is taught. A second factor for broadening the scope is the impact of recent scandals, which arguably direct the focus of ethical inquiry towards the nature of the business systems in which individuals and corporations operate. Third, the impact of globalization and its result on growing corporate involvement in regulatory processes is discussed. Fourth and finally, business ethics reaches beyond the traditional constituencies of economic stakeholders as new actors from civil society enter the stage of ethical decision making in business. We conclude by suggesting that a reconsideration of the domain of business ethics, especially in Europe, is timely, but that to do so represents a major challenge to business ethics educators. (shrink)

This paper reassesses the domain of the business ethics curriculum and, drawing on recent shifts in the business environment, maps out some suggestions for extending the core ground of the discipline. It starts by assessing the key elements of the dominant English-language business ethics textbooks and identifying the domain as reflected by those publications as 'where the law ends' and 'beyond the legal minimum'. Based on this, the paper identifies potential gaps and new areas for the discipline by drawing on (...) four main aspects. First, it argues that the domain of business ethics requires extensions dependent on the particular geographic region where the subject is taught. A second factor for broadening the scope is the impact of recent scandals, which arguably direct the focus of ethical inquiry towards the nature of the business systems in which individuals and corporations operate. Third, the impact of globalization and its result on growing corporate involvement in regulatory processes is discussed. Fourth and finally, business ethics reaches beyond the traditional constituencies of 'economic stakeholders' as new actors from civil society enter the stage of ethical decision making in business. We conclude by suggesting that a reconsideration of the domain of business ethics, especially in Europe, is timely, but that to do so represents a major challenge to business ethics educators. (shrink)

Often overlooked once they are remanded to custody, incarcerated former business executives can provide valuable insight into the inner workings of organizations while also contributing to the dialogue on of business ethics within the undergraduate business curricula. This paper summarizes experiences of white collar offenders obtained through a questionnaire-based research method to elicit lessons on ethics from prisoners and to provide a unique learning experience for undergraduate business students. Data was collected from 12 questionnaire responses (n = 12) which resulted (...) in four major themes involving business ethics: core values, ethical responsibility, ethics training, and ethical culture. Narrative responses, integration of ethical decision-making research and student discoveries are included for each theme. (shrink)

What is the impact of mission on ethical business culture? This question was analyzed through a qualitative case study of a large nonprofit organization in the human services industry with a solid history of ethical business practices and consistent use of a values-based decision-making model. This research explored ethical decision making, ethical business culture, and congruence between enacted and espoused institutional values. Institutional values were identified, and the following pair of research questions was examined: To what extent were incongruent values (...) found between espoused and enacted values? To what extent did incongruent values impact the ethical business culture? Incongruent enacted values were present in the culture, but negative impact was diminished by a larger number of congruent enacted values. Additional findings revealed that an intense commitment to the mission by all employees was the common thread that wound throughout the organization’s ethical business culture and essentially abrogated the undesirable effects of incongruent and negative values. (shrink)

This paper critically examines the language drawn on to describe socially responsible activities (CSR) in the context of the corporate web page. I argue that constructions of CSR are made plausible and legitimised according to the context of the expression. The web site is a genre of communication which addresses a broad and discerning audience; hence fractures in the institutionalised nature of argument may be apparent. The focus of this paper is to examine how the rhetoric of CSR is legitimised (...) and to develop a framework of argumentation repertoires that operate in this context. (shrink)

Due to the nature of lending practices and support services offered to the poor in developing countries, portfolio risk is a growing concern for the microfinance industry. Though previous research highlights the importance of risk for microfinance organizations, not much is known about how microfinance organizations can mitigate risks incurred from providing loans to the poor in developing countries. Further, though many microfinance organizations practice corporate social responsibility to help create economic and social wealth in developing countries, the impact of (...) such CSR practices remains an underdeveloped area of inquiry. We use a normative ethics lens to develop an ethics-based CSR theory that differentiates between three forms of ethics-based CSR—virtue, consequentialist, and deontological. We argue that while all three forms can help mitigate risk, virtue ethics-based CSR is potentially the most useful form of CSR toward mitigating microfinance portfolio risk. We test our hypotheses using a sample of microfinance organizations from across the world. Our findings suggest that virtue ethics-based CSR is not just an important philosophical paradigm; it can actually help mitigate microfinance portfolio risk when implemented in practice. (shrink)

This research shows how business students’ disciplinary specializations can affect their sense of personal responsibility by providing rationalizations for moral disengagement. It thereby conceptualizes business students’ disciplinary specializations as a key dimension of the business school responsibility learning environment. Students use four main rationalizations to displace responsibility variously away from their own disciplinary specializations, to claim responsibility as the prerogative of their specialization, and to shiftirresponsibility onto disciplinary out-groups. Yet despite their disciplinary identifications, students largely rationalized that their sense of (...) responsibility was an individual matter that was unlikely to be affected by contextual influences, and they attributedirresponsible behavior to incorrigible ‘bad apples.’ A theoretical model is offered which illustrates these dynamics by combining Bandura’s social cognitive theory with social identity theory. The research is based on secondary data, specifically focus-group interviews conducted with undergraduate students at a major Scandinavian business school in connection with the implementation of the UN Principles for Responsible Management Education (PRME) initiative. The implications for management education include the need to strengthen students’ ‘disciplinary reflexivity,’ and to explicitly address the tension between students’ disciplinary solidarities and their faith in their own individual moral infallibility. (shrink)

Recent calls in the corporate social reporting (CSRep) literature have emphasized the importance of giving voice to non-managerial stakeholder groups in the social reporting process. The research, presented in this paper, employs recent work in stakeholder theory and CSRep to examine the perceptions of a diverse set of non-managerial stakeholders in the context of a developing country, Bangladesh. A series of semistructured interviews were conducted with individuals who identify with various non-managerial stakeholder groups. Interviewees generally believed that the motivation and (...) practice of CSRep in Bangladesh is developing in response to pressures from international markets and is producing largely cosmetic responses. Also, they expressed concerns that, given the economic, political, and social conditions in Bangladesh, premature adoption of strict CSRep standards may lead to increased corruption and other unintended consequences. Whilst some of the interviewees sharply criticized the current process of imposing social accounting codes/standards on developing countries which fail to consider the important local socio-economic context, the findings suggest that there is overwhelming support for mandatory externally verified CSRep based on the principles of peoples' right to know, full disclosure/completeness, and relevance, which are anchored in the broader principles of transparency and stakeholder accountability. (shrink)

This study proposes a conceptual model to explain persistent, accepted-as-normal corporate wrongdoing (hereafter banality of wrongdoing), particularly for high performance organizations. The model describes five explanatory variables: the culture of competition, ends-biased leadership, missionary zeal, legitimizing myth, and the corporate cocoon. Our thesis is that the nature of competition drives both legitimate and illegitimate goal-seeking to adopt an iconoclastic (rule-breaking) orientation. High performance organizations are favorable hosts for wrongdoing because high performance requires aggressive behavior at the ethical margins of what (...) is acceptable. The way leadership reacts to competition sets the stage for ethical or unethical cultures to develop. Ends-biased leadership will project strong vision, using ideology and legitimizing myth as tools to inspire and motivate. The resulting missionary zeal justifies using questionable means because of the perceived value of the end. One critical method for building strong culture is creating a sense of being separate and apart from the ordinary. This cocoon effect may create a self-referential value system that is significantly at odds with mainstream culture and in which wrongdoing is banal. We intend an empirical study of the variables described in this model. (shrink)

Business schools are the “nurseries” of the corporate world. This article offers an empirical analysis of the business student ethos on the basis of research conducted at three Dutch universities. A theoretical framework in the tradition of virtue ethics and dubbed “moral ethology” is used to identify the values business schools convey to their students. The central research question is: What types of ethos do Dutch business students have? Forty‐three undergraduate students participated in Q‐methodological research, a mixed qualitative–quantitative small‐sample method. (...) Five different types of ethos were generated: Do‐Good Managers, Market Managers, Searching Managers, Balancing Managers, and Radical Market Managers. Some general characteristics that apply to all the types of ethos were identified, such as the search for efficiency. It is argued that business schools should pay much more attention to the values that are endorsed in both life and business and should help students to address situations in which values are neglected. (shrink)

This article explores the link between CEOs’ language and hubristic leadership. It is based on the precepts that leaders’ linguistic utterances provide insights into their personality and behaviours; hubris is associated with unethical and potentially destructive leadership behaviours; if it is possible to identify linguistic markers of CEO hubris then these could serve as early warnings sign and help to mitigate the associated risks. Using computational linguistics, we analysed spoken utterances from a sample of hubristic CEOs and compared them with (...) non-hubristic CEOs. We found that hubristic CEOs’ linguistic utterances show systematic and consistent differences from the linguistic utterances of non-hubristic CEOs. Demonstrating how hubristic leadership manifests in CEO language contributes to wider research regarding the diagnosis and prevention of the unethical and potentially destructive effects of hubristic leadership. This research contributes to the wider study of hubris and unethical leadership by applying a novel method for identifying linguistic markers and offers a way of militating against the risk of unethical and destructive CEO behaviours induced or aggravated by hubristic leadership. (shrink)

Nowadays there is a growing interest in business ethics, both in academia and professionally. However, moral lapses continue to happen in business activities, leading academicians and professionals to rethink what is being done and reinventing new strategies to successfully manage ethics in business organisations. Thus, whereas efforts to promote ethics are basically oriented to using and developing explicit, written formal mechanisms, the literature suggests that other instruments are also useful and necessary to achieve this. Thus, studying the role of the (...) Human Resource Management (hereafter, HRM) in promoting ethics is an emerging research topic due to the heavy influence that HRM practices are thought to have on employees. This paper is aimed at developing a thorough analysis of HRM's role in promoting ethics, and specifically at focusing on one of its practices, training. As an illustrative example of the utility of this practice, an empirical study was conducted on a range of Spanish banking companies in which an impact was found on the employees' ethical behaviour when ethics training was being provided inside the organisation. Finally, the practical implications of these findings and directions for future research are presented. (shrink)