Firms have traditionally responded to environmental violations by increasing information disclosure and/or communication to manage stakeholder perceptions. As such, these approaches may be symbolic in nature, with no genuine intention to improve the environment. We draw from restorative justice grounded in stakeholder theory and explore a relatively new approach in the form of supplemental environmental projects aimed at restoring the environment, and empirically examine the role of corporate governance in firms’ decisions to undertake reparative actions. Using environmental violations and SEPs (...) data from the US Environmental Protection Agency between 2002 and 2015, we find that firms with smaller boards are more likely to undertake SEPs. We also find that firms with higher board independence and CEO duality undertake SEPs more frequently; however, board gender diversity and the existence of a sustainability committee appear to have no impacts. These results are robust to propensity score matching and an alternative data source. We extend the scope of stakeholder theory by emphasizing a new approach—restorative justice—by which corporations can repair damaged relationships and also improve the environment. We also contribute to corporate governance and environmentalism literature by identifying governance structures that promote environmental restorative justice. Thus, our study will inform different stakeholders, including regulators, shareholders, and boards of directors, and will open new avenues for business ethics scholarship. (shrink)

A growing body of literature documents the important role played by moral outrage or moral anger in stakeholders’ reactions to cases of corporate social irresponsibility. Existing research focuses more on the consequences of moral outrage than a systematic analysis of how appraisals of irresponsible corporate behavior can lead to this emotional experience. In this paper, we develop and test, in two field studies, an extended model of moral outrage that identifies the cognitions that lead to, and are associated with, this (...) emotional experience. This research contributes to the existing literature on reactions to corporate social irresponsibility by explaining how observers’ evaluation of irresponsible corporate behavior leads to reactions of moral anger. The paper also helps clarify the difference between moral outrage and other types of anger and offers useful insights for managers who have to confront public outrage following cases of irresponsible corporate behavior. Finally, the analysis of the causes of stakeholders’ anger at irresponsible corporations opens important avenues for future research that are presented in the paper. (shrink)

Organizational leaders are increasingly emphasizing a stakeholder perspective in order to address concerns about business ethics. This study examined the choices of 94 groups in the context of a business decision-making simulation to determine how specific actions and communications can facilitate the consideration of different stakeholder perspectives. In particular, we examined whether generally framing the business situation as one involving diverse stakeholders versus a primarily profit-driven operation (referred to as framing), and whether specific suggestions that participants consider the concerns of (...) stakeholders versus stockholders in maximizing the value of the firm (referred to as vision priming), would influence group choices and decision outcomes. We tested four experimental conditions against a control in a 2 × 2 experimental design to determine the effects that group choices had on decision outcomes when groups were exposed to stakeholder versus stockholder decision framing and stakeholder versus stockholder vision priming. The results revealed that the consistent conditions outperformed the control condition and that vision priming has a greater impact on decision outcomes than decision framing. (shrink)

Many models of (un)ethical decision making assume that people decide rationally and are in principle able to evaluate their decisions from a moral point of view. However, people might behave unethically without being aware of it. They are ethically blind. Adopting a sensemaking approach, we argue that ethical blindness results from a complex interplay between individual sensemaking activities and context factors.

The precautionary principle brings a special challenge to the practice of evidence-based public health decision-making, suggesting changes in the interpretative methods of public health used to identify causes of disease. In this paper, precautionary changes to these methods are examined: including discounting contrary evidence, reducing the number of causal criteria, weakening the rules of evidence assigned to the criteria, and altering thresholds for statistical significance. All such changes reflect the precautionary goal of earlier primary preventive intervention, i.e. acting on insufficient (...) evidence, the least amount, or minimum level, of evidence for causation. Evaluating the impact of these changes will be difficult without a careful study of how well the current methods of causal inference work, their theoretical foundations, and the ethical implications of their applications. That research program will be most productive if it is jointly developed by public health professionals trained in the ethics and philosophy and by bioethicists and philosophers trained in the theories, methods, and practice of public health. (shrink)

Global supply chains enhance value, but are subject to governance problems and encourage evasive practices that deter sustainability, especially in developing countries. This article proposes that the precontractual environment, where parties are interested in trade but have not yet negotiated formal terms, can enable a unique process for building long-term sustainable relations. We argue that precontractual signals based on relation-specific investments, promises of repeated exchange, and reassuring cheap talk can be leveraged in precontract by the power of framing. We show (...) how these framing signals are amplified in precontract because the lack of credible information, minimal time for reflection, and the role of risk-aversion present in supply chain contract negotiations. The result is a process that is uniquely productive for building long-term and value-generating contractual relations in supply chains, particularly in skeptical or even hostile negotiating contexts. We then show how framed precontractual signals generate a joint contractual surplus through a supernormal profit known as a relational rent. This rent can be invested to improve sustainable practices, an efficient option in a competitive market due to the second order effects that sustainable practices generate. This novel process we propose thus potentially generates superior returns to other trust measures and encourages focus on precontract as a fertile environment for building sustainable investments. (shrink)

We examine the framing mechanisms used to maintain a cross-sector partnership that was created to address a complex long-term social issue. We study the first 8 years of existence of an XSP that aims to create a market for recycled phosphorus, a nutrient that is critical to crop growth but whose natural reserves have dwindled significantly. Drawing on 27 interviews and over 3000 internal documents, we study the evolution of different frames used by diverse actors in an XSP. We demonstrate (...) the role of framing in helping actors to avoid some of the common pitfalls for an XSP, such as debilitating conflict, and in creating sufficient common ground to sustain collaboration. As opposed to a commonly held assumption in the XSP literature, we find that collaboration in a partnership does not have to result in a unanimous agreement around a single or convergent frame regarding a contentious issue. Rather, successful collaboration between diverse partners can also be achieved by maintaining a productive tension between different frames through “optimal” frame plurality—not excessive frame variety that may prevent agreements from emerging, but the retention of a select few frames and the deletion of others toward achieving a narrowing frame bandwidth. One managerial implication is that resources need not be focussed on reaching a unanimous agreement among all partners on a single mega-frame vis-à-vis a contentious issue, but can instead be used to kindle a sense of unity in diversity that allows sufficient common ground to emerge, despite the variety of actors and their positions. (shrink)

This article aims at understanding how "ethical public issues" are created, and dealt within a public arena. Here, we view ethical public issues as social constructs, which are the results of issue framing contests. Such an approach will enable us to understand how ethical public issues emerge and are shaped by strategizing actors (including firms, NGOs, the media, and governments), in an attempt to impose their own definition and preferred solution to the issue. We also propose key factors which explain (...) the success of a framing attempt, and evidence of such success. The empirical case of the labor conditions in West Africa's cocoa industry is used to illustrate this theoretical framework and methodological approach. (shrink)

This study expands theoretical understanding of organizational misconduct through qualitative analysis of widespread deceptive sales practices at a large U.S. life insurance company. Adopting a symbolic interactionist perspective, this research describes how a set of taken-for-granted interpretive frames located in the organization’s culture created a worldview through which deceptive sales practices were seen as normal, acceptable, routine operating procedure. The findings from this study extend and modify the dominant theoretical ‘pressure/opportunity’ model of organizational misconduct by proposing that the process engine (...) driving misconduct is not amorally rational organization members, but rather is organizational members acting on socially constructed views of the organization that normalize misconduct. (shrink)

Lack of specificity around stakeholder identity remains a serious obstacle to the further development of stakeholder theory andits adoption in actual practice by business managers. Nowhere is this shortcoming more evident than in stakeholder theory’s treatment of the constituency known as “community.”In this paper we attempt to set forth what we call “the Problem of Community” as indicative of the definitional problems of stakeholdertheory. We then begin the process of gaining greater specificity around our notions of community and the role (...) of community in stakeholder theory and management. In doing so, we identify the emergence of two fairly new forms of community that we believe are particularly relevant to the stakeholder theorist and practicing manager. These two new variants of community—the virtual advocacy group and the community of practice—extend the notion of community in new directions, which have strikingly different implications for stakeholder theory and practice. (shrink)

This article examines Corporate Social Responsibility (CSR) and mining community development, sustainability and viability. These issues are considered focussing on current and former company-owned mining towns in Namibia. Historically company towns have been a feature of mining activity in Namibia. However, the fate of such towns upon mine closure has been and remains controversial. Declining former mining communities and even ghost mining towns can be found across the country. This article draws upon research undertaken in Namibia and considers these issues (...) with reference to three case study communities. This article examines the complexities which surround decision-making about these communities, and the challenges faced in efforts to encourage their sustainability after mining. In this article, mine company engagements through CSR with the development, sustainability and viability of such communities are also critically discussed. The role, responsibilities, and actions of the state in relation to these communities are furthermore reflected upon. Finally, ways forward for these communities are considered. (shrink)

This article explores micro- and macro-level variables that influence the incidence of bribery payouts by firms. A rich data set with information from 55 countries was utilized to achieve this objective. Results of logit regression models indicate that there are a number of micro- and macro-level factors that significantly affect the incidence of bribery payouts. This suggests that it is not only the characteristics of a firm but also the environment of doing business that affect the firm's bribery decision. The (...) results of this study provides information that may help firms develop strategies to reduce corruption in their respective industries and thereby improve their image of corporate social responsibility. The analysis also points to possible policy directions that governments could undertake in order to reduce the incidence of bribery in their country. (shrink)

This article explores micro- and macro-level variables that influence the incidence of bribery payouts by firms. A rich data set with information from 55 countries was utilized to achieve this objective. Results of logit regression models indicate that there are a number of micro- and macro-level factors that significantly affect the incidence of bribery payouts. This suggests that it is not only the characteristics of a firm but also the environment of doing business that affect the firm's bribery decision. The (...) results of this study provides information that may help firms develop strategies to reduce corruption in their respective industries and thereby improve their image of corporate social responsibility. The analysis also points to possible policy directions that governments could undertake in order to reduce the incidence of bribery in their country. (shrink)

During the last decade, any questionable or illegal behaviour on the part of businesses has received considerable attention in the media. Using a critical discursive perspective, we here investigate how the media constructs one type of questionable business as illegitimate. Our data draw upon articles dealing with cartels and cartel agreements in Finnish business media covering the five year period 2002-2007. Our contributions are following: We add to the current literature on CSR and national businesses, suggesting that regardless of globalization (...) sociocultural history plays an important role in constructing the illegitimacy of business practices. We therefore emphasize the importance of media as an arena where social actors construct the social contract between business and society. We further contribute to studies on questionable business by reconstructing a discursive framework used to construct cartels and cartel agreements. (shrink)

In response to numerous recent cases involving materially misstated financial information arising from fraudulent financial reporting, companies, auditors, and academics have increased their focus on strengthening internal controls as a means of deterring such unethical behaviors. However, prior research suggests that stronger controls may actually exacerbate the very opportunistic behavior the controls are intended to curb. The current study investigates whether the efficacy of an implemented control is conditioned on not only the strength of the control, but also on how (...) the firm frames the purpose for implementing the control. A monitoring purpose frames controls as reducing managers’ opportunities to engage in self-interested behavior, while a coordinating purpose frames controls as facilitating coordination between the firm and its managers. We posit that the efficacy of stronger controls to reduce unethical fraudulent reporting depends on the control frame. Using an experiment, this study investigates the interactive effect of control strength and control frame on managers’ fraudulent reporting decisions. As predicted, our results show that when controls are framed for monitoring purposes, stronger controls result in less fraudulent reporting than weaker controls. Conversely, when controls are framed for coordinating purposes, stronger controls result in more fraudulent reporting than weaker controls. Our results suggest that an inconsistency between the firm’s choice of the control strength and the control frame reduces the efficacy of the implemented control to curb unethical reporting behaviors. Furthermore, supplemental analysis shows that managers’ rationalization helps explain the interactive effect of control strength and communicated control purpose on fraudulent reporting. (shrink)

As conflict between multinational corporations and local communities escalates, scholars, executives, activists, and community leaders are calling for companies to become more accountable for the impact of their activities on external stakeholders. In order for business to do so, managers must first understand the causes of conflict with local communities, and communities must understand what courses of action are available to challenge activities they deem harmful to their interests. In this article, I present a framework for examining the factors that (...) contribute to multinational and community conflict including stakeholder power inequality, stakeholder perception gaps and cultural context. Moreover, I describe some of the ways that communities can increase their leverage in conflict situations. (shrink)