The recent accounting scandals at Enron, WorldCom, and other corporations have helped to fuel a massive loss of confidence in the integrity of American business and have contributed to a very sharp decline in the U.S. stock market. Inasmuch as these events have brought ethical questions about business to the forefront in the media and public consciousness as never before, they are of signal importance for the field of business ethics. I offer some observations and conjectures about the bearing of (...) the recent scandals on the literature on business ethics. I defend the following contentions: 1. Recent events reveal serious weaknesses of the stakeholder theory about the social responsibilities of business which lacks prohibitions against fraud and deception. This is a glaring deficiency of standard versions of the stakeholder theory, but it is easily remedied by adding explicit prohibitions against fraud and deception. In addition, recent events highlight the stakeholder theory's very naive and unrealistic hopes and expectations for business executives as moral arbiters and agents of social improvement. 2. Recent events do not constitute an objection to the shareholder theory about the social responsibilities of business, however, these events make evident the implausibility of strong versions of the invisible hand theory. 3. Schemes of payment and reward often create perverse incentives for individuals to engage in unethical conduct. 4. Both the shareholder theory and the stakeholder theory need to add a constraint that requires executives to respect the professional obligations of employees. (shrink)

Despite the recent emergence of many new ethical decision making models, there has been minimal emphasis placed on the impact of escalating commitment on the ethical decision making process. In this paper a new variable is introduced into the ethical decision making literature. This variable, exposure to escalation situations, is posited to increase the likelihood that individuals will choose unethical decision alternatives. Further, it is proposed that escalation situations should be included as a variable in Jones's (1991) comprehensive model of (...) ethical decision making. Finally, research propositions are provided based on the relationship between escalating commitment and the ethical decision making process. (shrink)

This paper describes and discusses the Enron Corporation debacle. The paper presents the business ethics background and leadership mechanisms affecting Enron''s collapse and eventual bankruptcy. Through a systematic analysis of the organizational culture at Enron (following Schein''s frame of reference) the paper demonstrates how the company''s culture had profound effects on the ethics of its employees.

To date, theory and research on corruption in organizations have primarily focused on its static antecedents. This article focuses on the spread and growth of corruption in organizations. For this purpose, three downward organizational spirals are formulated: the spiral of divergent norms, the spiral of pressure, and the spiral of opportunity. Social Identity Theory is used to explain the mechanisms of each of these spirals. Our dynamic perspective contributes to a greater understanding of the development of corruption in organizations and (...) opens up promising avenues for future research. (shrink)

This book is a provocative contribution to contemporary ethical theory challenging foundational conceptions of character that date back to Aristotle. John Doris draws on behavioral science, especially social psychology, to argue that we misattribute the causes of behavior to personality traits and other fixed aspects of character rather than to the situational context. More often than not it is the situation not the nature of the personality that really counts. The author elaborates the philosophical consequences of this research for a (...) whole array of ethical theories and shows that, once rid of the misleading conception of motivation, moral psychology can support more robust ethical theories and more humane ethical practices. (shrink)

This study examines the relation between firms' corporate philanthropic giving and their performance in three other social domains - employee relations, environmental issues, and product safety. Based on a sample of 384 U.S. companies and using data pooled from 1998 through 2000, we find that worse performers in the other social areas are both more likely to make charitable contributions and that the extent of their giving is larger than for better performers. Analyses of each separate area of social performance, (...) however, indicate that the relation between giving and negative social performance only holds for the environmental issues and product safety areas. We find no significant association between corporate philanthropy and employee relations concerns. In general, these findings suggest that corporate philanthropy may be more a tool of legitimization than a measure of corporate social responsibility. (shrink)

This paper considers future directions of empirical research in business ethics and presents a series of recommendations. Greater emphasis should be placed on the normative basis of empirical studies, behavior (rather than attitudes) should be established as the key dependent variable, theoretical models of ethical decision making should be tested, and empirical studies need to focus on theory-building. Extensions of methodology and the unit of analysis are proposed together with recommendations concerning the need for replication and validity, and building links (...) to managerial and public policy applications. (shrink)

The controversial issue of whether Chief Executive Officer (CEO) compensation is excessive or appropriate is examined in terms of two competing claims: that CEOs are overpaid for the value they provide to an enterprise, and that CEO compensation is inherently equitable. Various arguments and perspectives on both sides of the issue are assessed. Little evidence supports the claim that CEO performance justifies very high compensation. Further, the complex interactive alliance between boards of directors and CEOs compromises rational decision-making about CEO (...) compensation, with the Enron affair offered as an illustration of what can go wrong when dishonest CEO actions combine with lax board oversight. Recommendations for restoring trust in the system include continuing current regulatory actions, using different metrics for determining CEO compensation, making board member-CEO relationships transparent to all company stakeholders, and several more radical ideas for change. Stakeholders must resist being distracted by other social, economic, or political issues from pursuing serious, lasting reform. (shrink)

Within a supportive learning environment, dialogue can allow for the identification and testing of assumptions and tacit beliefs. It can also illustrate the inadequacies in superficial thinking about ethical problems. Internal dialogue allows us to examine our beliefs, and to prepare and evaluate arguments. Each of these elements is important in the study of business ethics. This paper outlines one teaching technique based on Socratic dialogue, and shows how it can be applied to develop business students' thinking about ethics. After (...) justifying the suitability of this technique, and detailing its key elements, the paper offers for consideration an illustration of how the technique may be applied in a classroom setting, using structured role play. The paper concludes with a “teaching agenda”, offering suggestions for how this technique can be applied to teaching business ethics in an undergraduate, or postgraduate module, where it can examine language, structures and practices. (shrink)

When a series of corporate scandals erupted soon after the collapse of the 1990s bull market in equities, policy makers and reformers chiefly responded by augmenting and refining the checks and balances surrounding publicly traded corporations. Through measures such as the Sarbanes-Oxley Act of 2002, securities regulations were intensified and corporate governance was tightened. In essence, reformers followed the tradition of modern political philosophy, developed in the 17th and 18th centuries, in its insistence that pro-social outcomes are best produced through (...) institutional mechanisms that harness self-interest. The empirical evidence, however, suggests the institutional approach will do little to prevent future ethical breakdowns. To corroborate this finding, we survey the literature on board composition, auditor consulting practices, shareholder activism, and executive compensation. Consequently, we look to another stream of political philosophy, the ancient tradition comprising Plato and Aristotle, which argues that social groupings, such as corporations, work best when led by individuals of good character. Applying the ancient view to modern commercial realities, the paper concludes that Benjamin Franklin's attempt to connect virtuous character with enlightened self-interest offers a compelling ethic for corporate leaders. (shrink)

The western-based leadership and ethics literatures were reviewed to identify the key characteristics that conceptually define what it means to be an ethical leader. Data from the Global Leadership and Organizational Effectiveness (GLOBE) project were then used to analyze the degree to which four aspects of ethical leadership – Character/Integrity, Altruism, Collective Motivation, and Encouragement – were endorsed as important for effective leadership across cultures. First, using multi-group confirmatory factor analyses measurement equivalence of the ethical leadership scales was found, which (...) provides indication that the four dimensions have similar meaning across cultures. Then, using analysis of variance (ANOVA) tests each of the four dimensions were found to be universally endorsed as important for effective leadership. However, cultures also varied significantly in the degree of endorsement for each dimension. In the increasingly global business environment, these findings have implications for organizations implementing ethics programs across cultures and preparing leaders for expatriate assignments. (shrink)

The twentieth century has seen countless attempts to appropriate the ideas of Friedrich Nietzsche for diverse cultural and political ends, but nowhere have these efforts been more sustained and of greater consequence than in Germany. In The Nietzsche Legacy in Germany, 1890-1990, Steven Aschheim offers a magisterial chronicle of the philosopher's presence in German life and politics from the turn of the century through the recent reunification. Beginning with the aesthetic frenzy of fin-de-siecle European culture, through the historical convulsions of (...) the Weimar Republic and the Third Reich, Nietzsche, the philosopher who hoped he would never have disciples, emerges in Aschheim's account as a thinker whose work crucially influenced - and was recast to fit - a multitude of contradictory projects. Anarchists, feminists, Nazis, religious cultists, Socialists, Marxists, vegetarians, avant-garde artists, devotees of physical culture, and archconservatives are but some of the groups that marched under a Nietzschean banner. Aschheim explores the significance of Nietzsche not only for such well-known figures as Martin Heidegger, Thomas Mann, and Carl Jung, but also for more obscure thinkers such as the liberal Rabbi Cesar Seligmann, who coined the phrase "the will to Judaism", and the radical psychoanalyst and free love advocate Otto Gross. He provides a judicious and balanced account of the link between Nietzsche and National Socialism and explores the ubiquity of Nietzsche within the major tensions of contemporary German history. The philosopher's "untimely" thoughts are, as Aschheim shows, more relevant than ever to the moral, aesthetic, and intellectual challenges of our own age. (shrink)

Corporate social reporting, while not mandatory in most countries, has been adopted by many large companies around the world and there are now a variety of competing global standards for non-financial reporting, such as the Global Reporting Initiative and the UN Global Compact. However, while some companies (e. g., Henkel, BHP, Johnson and Johnson) have a long standing tradition in reporting non-financial information, other companies provide only limited information, or in some cases, no information at all. Previous studies have suggested (...) that there are, country and industry-specific, differences in the extent of CSR reports (e. g., Kolk et al.: 2001, Business Strategy and the Environment 10, 15-28; Kolk: 2005, Management International Review 45, 145-166; Maignan and Ralston: 2002, Journal of International Business Studies 33(3), 497-514). However, findings are inconclusive or contradictory and it is often difficult to compare previous studies owing to the idiosyncratic methods used in each study (Graafland et al.: 2004, Journal of Business Ethics 53, 137-152). Furthermore, previous studies have relied mainly on simple measures, such as word counts and page counts of reports, to compare the extent of reporting that may not capture significant differences in the content of the reports. In this article, we seek to overcome some of these deficiencies by using textual analysis software and a more robust statistical method to more objectively and reliably compare the CSR reports of firms in different industries and countries. We examine a sample of leading companies in four countries (US, UK, Australia, and Germany) and test whether or not membership of the Global Compact makes a difference to CSR reporting and is overcoming industry and country specific factors that limit standardization. We conclude that GlobalCompact membership is having an effect only in certain areas of CSR reporting, related to the environment and workers, and that businesses from different countries vary significantly in the extent to which they promote CSR and the CSR issues that they choose to emphasize in their reports. These country differences are argued to be related to the different institutional arrangements in each country. (shrink)

Globalization has increased the need for managers (and future managers) to predict the potential for country corruption. This study examines the relationship between Hofstede''s cultural dimensions and how country corruption is perceived. Power distance, individualism and masculinity were found to explain a significant portion of the variance in perceived corruption. A significant portion of country''s risk, trade flow with U.S.A., foreign investment, and per capita income was explained by perceived corruption.

We review both the aspects of values-related research that complicate ideations of what we ought to do, as well as the psychological impediments to forming beliefs about the way things are. We find that more traditional moral theories are without solid empirical footing in the psychology of human values. Consequently, we revise the notion of values to align with their socially symbolic utility in self-affirmation and reformulate our understandings of moral agency to allow for the practicalities of context, circumstance, and (...) connectedness. We close by discussing the research and practical implications for these revisions. (shrink)

Of recent time, there has been a proliferation of concerns with ethical leadership within corporate business not least because of the numerous scandals at Enron, Worldcom, Parmalat, and two major Irish banks – Allied Irish Bank (AIB) and National Irish Bank (NIB). These have not only threatened the position of many senior corporate managers but also the financial survival of some of the companies over which they preside. Some authors have attributed these scandals to the pre-eminence of a focus on (...) increasing shareholder value in Western business schools and/or to their failure to inculcate ethical standards. In this paper, we challenge these accounts and the aetiological view of knowledge from which they derive but are grateful for the consensus that they convey regarding the importance of business ethics. The paper focuses on different approaches to ethical leadership concluding with a view that some hybrid of MacIntyre’s virtue ethics and Levinas’s ethics of responsibility may serve as an inspiration for both educators and practitioners. (shrink)

The current study presents the findings of an empirical inquiry into the effects of Confucian ethics and collectivism, on individual whistleblowing intentions. Confucian Ethics and Individualism–Collectivism were measured in a questionnaire completed by 343 public officials in South Korea. This study found that Confucian ethics had significant but mixed effects on whistleblowing intentions. The affection between father and son had a negative effect on internal and external whistleblowing intentions, while the distinction between the roles of husband and wife had a (...) positive effect on those intentions. The effects of collectivism were also different depending on the specific types of collectivism. Horizontal collectivism had a positive effect on both types of whistleblowing intentions, whereas vertical collectivism did not show any significant effects on whistleblowing intentions. These results indicate that cultural traits such as Confucian ethics and collectivism may affect an individual’s whistleblowing intentions in degree and direction, making blanket predictions about cultural effects on whistleblowing difficult. (shrink)

Abstract:Should the responsibilities of business managers be understood independently of the social circumstances and “market forces” that surround them, or (in accord with empiricism and the social sciences) are agents and their choices shaped by their circumstances, free only insofar as they act in accordance with antecedently established dispositions, their “character”? Virtue ethics, of which I consider myself a proponent, shares with empiricism this emphasis on character as well as an affinity with the social sciences. But recent criticisms of both (...) empiricist and virtue ethical accounts of character deny even this apparent compromise between agency and environment. Here is an account of character that emphasizes dynamic interaction both in the formation and in the interplay between personal agency and responsibility on the one hand and social pressures and the environment on the other. (shrink)

This paper addresses the role of integrity in global leadership. It reviews the philosophy of ethics and suggests that both contractarianism and pluralism are particularly helpful in understanding ethics from a global leadership perspective. It also reviews the challenges to integrity that come through interactions that are both external and internal to the company. Finally, the paper provides helpful suggestions on how global leaders can define appropriate ethical standards for themselves and their organizations.

In this paper we investigate intergroup conflict and examine the impact of strategies to manage and hopefully reduce it. To do this, we use a probabilistic computer simulation model, based on feedback principles. The model examines how conflict between two groups evolves over time. Group differences and the occurrence of intergroup incidents drive the model. Intergroup hostility which depends on past history, recent conflict incidents, and group differences is the key variable that indicates the proclivity toward conflict between the two (...) groups. We use the model to examine various cases and the effect of conflict management strategies. Based on the model results, we develop some conclusions about the applicability of the findings to actual situations, as well as directions for further research. (shrink)

This article studies the effects of social institutions on organizational corruption at the societal level by focusing on the possible interactions between the institutional pillars that have been identified in past research. Based on these three institutional aspects or pillars, this article tests the interactive effects of social institutions among societies throughout the world. The results suggest that the three institutional pillars have significant interactive effects on organizational corruption at the societal level. A discussion of the implications of the research (...) findings for researchers and practitioners is given. (shrink)

Research about codes of corporate ethics has hitherto taken a hypothetical, correct meaning of codes for granted. The article problematises the dichotomous categories intrinsic and subjective meanings of codes. I address the question if professionals in finance accept codes of business. The particular mentality of stockbrokers and traders constructs the way they judge restrictions such as company codes of ethics. While neglecting dimensions of ethics beyond known rules, brokers and traders distrust good ethics as a possible end in itself. Many (...) professionals in the financial market perceive efforts to integrate ethical reasoning in work as only means for maximising business opportunities. (shrink)

By employing the theoretical template provided by agency theory, this article contributes a detailed clinical analysis of a large multinational Canada-headquartered telecommunications company, Nortel. Our analysis reveals a twenty-first century norm of usual suspects: a CEO whose compensation is well above those of his peers, a dysfunctional board of directors, acts of income smoothing to preserve the confidence of volatile investors, and revelations of financial irregularities followed by a downfall. In many ways, the spectacular rise and – sudden – fall (...) of Nortel illustrates excesses of actors within, and contradictions of the system of corporate governance implied by the agency model. Furthermore, this case illustrates limitations of the agency framework in complex situations with short-term oriented investors. (shrink)

This article studies the effects of social institutions on organizational corruption at the societal level by focusing on the possible interactions between the institutional pillars that have been identified in past research. Based on these three institutional aspects or pillars, this article tests the interactive effects of social institutions among societies throughout the world. The results suggest that the three institutional pillars have significant interactive effects on organizational corruption at the societal level. A discussion of the implications of the research (...) findings for researchers and practitioners is given. (shrink)

Corruption can impede commerce and economic development, yet it seems to be tolerated in many countries. The purpose of this study was to develop and test a model that integrates socioeconomic factors related to corruption. The analysis revealed that a negative relationship between economic adversity and wealth was mediated by corruption. Economic adversity was positively related to corruption, and corruption was inversely related to wealth. Uncertainty avoidance moderated the relationship between economic adversity and corruption, whereas power distance and uncertainty avoidance (...) were positively associated with corruption. The implications of these results for enhancing the effectiveness of international agreements are discussed. (shrink)

An important area of business ethics research focuses on how otherwise normal and law-abiding individuals can engage in acts of corruption. Key in this literature is the concept of rationalization. This is where individuals attempt to justify past and future corrupt deeds to themselves and others. In this article, we argue that rationalization often entails a process of overcompensation whereby the justification forwarded is excessive in relation to the actual act. Such over-rationalization provides an impetus for further and more serious (...) acts of illegality. Using a number of high profile cases, it is argued that this dynamic gap between the act and excessive rationalization can explain why corruption often escalates in severity and scope in the organization. (shrink)

Leaders and managers of today's multinational corporations face a plethora of problems and issues directly attributable to the fact that they are operating in an international context. With work-sites, plants and/or customers based in another country, or even several countries, representing a vast spectrum of cultural differences, international trade and offshore operations, coupled with increased globalisation in respect to political, social and economic realities, contribute to new dilemmas that these leaders must deal with. Not the least of these being a (...) Code of Ethics and ethical decision making.This paper examines the differences in culture between a group of managers from the United States and similar group from Croatia using Hofstede's theory of International Cultures. The study explores how these cultural dimensions may help in our understanding of the differences in reported whistleblowing. The authors then postulate four hypotheses regarding various aspects of whistleblowing. These Hypotheses were than tested using a survey administered to a sample of U.S.A. and Croatian managers. Finally, the paper discusses the findings and practical implications for contemporary managers in the international arena. (shrink)

By employing the theoretical template provided by agency theory, this article contributes a detailed clinical analysis of a large multinational Canada-headquartered telecommunications company, Nortel. Our analysis reveals a twenty-first century norm of usual suspects: a CEO whose compensation is well above those of his peers, a dysfunctional board of directors, acts of income smoothing to preserve the confidence of volatile investors, and revelations of financial irregularities followed by a downfall. In many ways, the spectacular rise and – sudden – fall (...) of Nortel illustrates excesses of actors within, and contradictions of the system of corporate governance implied by the agency model. Furthermore, this case illustrates limitations of the agency framework in complex situations with short-term oriented investors. (shrink)

This study examines the relation between firms’ corporate philanthropic giving and their performance in three other social domains – employee relations, environmental issues, and product safety. Based on a sample of 384 U.S. companies and using data pooled from 1998 through 2000, we find that worse performers in the other social areas are both more likely to make charitable contributions and that the extent of their giving is larger than for better performers. Analyses of each separate area of social performance, (...) however, indicate that the relation between giving and negative social performance (cited concerns) only holds for the environmental issues and product safety areas. We find no significant association between corporate philanthropy and employee relations concerns. In general, these findings suggest that corporate philanthropy may be more a tool of legitimization than a measure of corporate social responsibility. (shrink)

We employ a Layers of Workplace Influence theory to guide our study of whistleblowing among public accounting audit seniors. Specifically, we examine professional commitment, organizational commitment versus colleague commitment (locus of commitment), and moral intensity of the unethical behavior on two measures of reporting intentions: likelihood of reporting and perseverance in reporting. We find that moral intensity relates to both reporting intention measures. In addition, while high levels of professional identity increase the likelihood that an auditor will initially report an (...) observed violation, the auditor's commitment to the organization drives perseverance in reporting. Results may assist organizations and researchers in their understanding of antecedents to whistleblowing as a form of corporate governance and of the effect of these antecedents on whistleblowing perseverance. (shrink)

Organizational participants learn that "getting ahead" in organizational life comes from dramatizing a fantasy about the organization's perfection. The fantasy is the return to narcissism, in which the organization and its highest participants are seen as the center of a loving world. Since the return to narcissism is impossible, orienting the organization to the dramatization of this fantasy means that the organization loses touch with reality. The result is organizational decay-a condition of systemic ineffectiveness. Organizational decay is illustrated through the (...) case of General Motors. Specific dimensions considered are: commitment to bad decisions; advancement of participants who detach themselves from reality and discouragement of reality-oriented participants who are committed to their work; creation of the organizational jungle; isolation of management; development of a hostile orientation to the environment; transposition of work and ritual; loss of creativity; dominance of the financial staff; development of cynicism or the loss of reality; and overcentralizatior. Organizational decay may be compared with the consequences of hubris. (shrink)

To date, theory and research on corruption in organizations have primarily focused on its static antecedents. This article focuses on the spread and growth of corruption in organizations. For this purpose, three downward organizational spirals are formulated: the spiral of divergent norms, the spiral of pressure, and the spiral of opportunity. Social Identity Theory is used to explain the mechanisms of each of these spirals. Our dynamic perspective contributes to a greater understanding of the development of corruption in organizations and (...) opens up promising avenues for future research. (shrink)

In this article, I address the question of the apportionment of the consequences of organizational misconduct to individual members of the organizational elite. I argue that this process can be best understood by marrying the behavioral aspects of stigma theory to the economic mechanisms of ex post settling up. Viewed in conjunction with stigmatization, ex post settling up following organizational misconduct can be seen as the result of attempts to avoid stigma by association. Efforts at stigma avoidance on the parts (...) of various stakeholders produce the diminished social interaction associated with ex post settling up: departure from the focal firm, and loss of seats on other boards. This also suggests that the process of stigmatization, and hence ex post settling up, can be influenced by characteristics of social interaction unrelated to the misconduct itself. (shrink)

The paper maps out an alternative to a behavioural (economic) approach to business ethics. Special attention is paid to the fundamental philosophical principle that any moral ‘ought’ implies a practical ‘can’, which the paper interprets with regard to the economic viability of moral agency of the firm under the conditions of the market economy, in particular competition. The paper details an economic understanding of business ethics with regard to classical and neo-classical views, on the one hand, and institutional, libertarian thought, (...) on the other hand. Implications are derived regarding unintentional and passive intentional moral agency of the firm. The paper moves on to suggest that moral agency can be economically viable in competitive ‘market’ interactions, which is conventionally disputed by classical/neo-classical and institutional, libertarian economics. The paper here conceptualises active moral agency of the firm as the utilisation of ethical capital in firm--stakeholder interactions. This yields a reinterpretation of instrumental stakeholder theory. (shrink)