Corporate Ethics Codes: A New Generations' Tool for Strategic Global Management and Decision-Making

The premise of this article is that it is important to train domestic and international executives in management ethics using corporate ethics codes. Incorporating ethics codes into the professional development of executives in business and industry contributes to the institutionalization of codes in the global workplace. Ethics institutionalization imbues corporate structures with understanding, both internally and externally, of the concepts of ethics. At an east coast University School of Management a Comparative Code Method (CCM) was developed and tested. Among the major findings, was that the use of corporate codes quickly transitions employees from an individual ethical perspective to a corporate ethical perspective. This revised version was published online in August 2006 with corrections to the Cover Date.     

Sustaining the Financial Value of Global CSR: Reconciling Corporate and Stakeholder Interests in a Less Regulated Environment

In this article we examine the association between corporate social responsibility (CSR) and firm value. This line of research is important since firms continue to invest in CSR even though past studies reveal a limited linkage between financial value and CSR. However, the business case for CSR or “doing good while making a profit,” appears to be advancing within the business ethics literature as a preferred conception of CSR. We conjecture that the greater unification and refinement of both profit maximization and stakeholder interests through corporate acts, not statements alone, will sustain the financial value of CSR in a less regulated global business environment. We study the triangle of what companies say, what companies do, and firm financial performance. We analyze Fortune 250 firms and find a positive association between what companies do based on KLD Research and Analytics, Inc. (KLD) ratings, and what companies state about ethics in their CSR statements. We then employ regression analysis and find that companies’ socially responsible acts are positively associated with overall firm value and financial performance. Yet we do not find a statistically significant association between what companies say regarding ethics in their CSR statements and their financial outcomes. These results suggest that firm value and financial performance is associated with what companies do and not what they say. Our results seem to be driven by multinational corporations (MNCs) and not by non‐MNCs. This is possibly because MNCs generally operate in a less regulated global business environment that often necessitates strong ethical corporate leadership to further stakeholder interests. Overall, these results help reconcile corporate and stakeholder objectives since evidence of a link between financial performance and doing good sustains global CSR.     

How The Europeans Got a Head Start on Policies to Promote Global Corporate Responsibility

This article considers the debate over public policies to promote global corporate responsibility in the United States and in Europe. The debate and the response of policymakers is compared along with an explanation of how Europeans are developing a policy response encouraging corporate social responsibility. Finally, recommendations are made for U.S. policymakers based on encouraging ethical behavior around the world.     

Can we have global ethics in a global economy?

With the collapse of the bi-polar world, we live in an increasingly integrated global economy, which includes economic, political, and cultural dimensions. We argue that there is a need for a global ethic commensurate with a global economy, based upon the claims of interdependence, economic insecurity, multiculturalism, and shared problems. The need to identify some common cross-cultural ethical norms is asserted as an important component of a global ethic and various sources and means for such identification are proposed. Finally, we propose reasons why global corporations ought to embrace cross-cultural ethical norms within their own corporate ethics.A version of this paper was first delivered at a joint business faculty seminar co-sponsored by Anadolu University and Baldwin-Wallace College, held at Anadolu University, Eskischir, Turkey, in December 1992. I express deep gratitude to my losts from Aanadolu University and special thanks to Professor Selva Herekman, who painstakingly translated my English text into Turkish.     

Domestic Violence Spillover into the Workplace: An Examination of the Difference between Legal and Ethical Requirements

Domestic violence is a growing societal concern that often spills over into the workplace. However, employers are not recognizing the spillover of domestic violence as a workplace issue. This is problematic considering the serious financial, legal, and ethical consequences for organizations. We analyzed six cases involving domestic violence that were litigated under specific legal bases: Violence Against Women Act, discrimination laws including Title VII, Family and Medical Leave Act, Americans with Disabilities Act, Social Security Disability, Occupational Safety and Health Act, and associated state and municipal ordinances. We chose cases that illustrate the problems of companies meeting the legal standards but not necessarily reaching ethical expectations. Our approach is congruent with the perspective that both legal and ethical analyses should be used in organizational decision making. We suggest for future research the analysis of additional litigated cases, other ethical perspectives, and additional sources of data. In addition, we suggest that companies who are striving for corporate social responsibility should integrate the ethical treatment of domestic violence victims.     

Positive Deviance on the Ethical Continuum: Green Mountain Coffee as a Case Study in Conscientious Capitalism

Increasingly, stories are emerging about businesses that engage in ethical behaviors above and beyond mere compliance with regulations. These positive deviations along the ethical continuum provide an opportunity to explore how some companies’ business philosophy leads them to pursue an array of outcomes beyond the bottom line. This paper presents a case study of Green Mountain Coffee Roasters, the leading ethical company in the United States as rated by Forbes magazine, exploring the company culture and operating philosophy from a perspective of conscientious capitalism. The three underlying assumptions of conscientious capitalism are: (1) interconnectedness between individuals, businesses, and global society; (2) wealth as a holistically understood state rather than solely a financial status; and (3) relevant time spanning multiple generations. Implications are offered for commerce, business practitioners, and educators.     

International Evidence on the Determinants of Organizational Ethical Vulnerability

This paper proposes a model to explain what makes organizations ethically vulnerable. Drawing upon legitimacy, institutional, agency and individual moral reasoning theories we consider three sets of explanatory factors and examine their association with organizational ethical vulnerability. The three sets comprise external institutional context, internal corporate governance mechanisms and organizational ethical infrastructure. We combine these three sets of factors and develop an analytical framework for classifying ethical issues and propose a new model of organizational ethical vulnerability. We test our model on a sample of 253 firms that were involved in ethical misconduct and compare them with a matched sample of the same number of firms from 28 different countries. The results suggest that weak regulatory environment and internal corporate governance, combined with profitability warnings or losses in the preceding year, increase organizational ethical vulnerability. We find counterintuitive evidence suggesting that firms’ involvement in bribery and corruption prevention training programmes is positively associated with the likelihood of ethical vulnerability. By synthesizing insights about individual and corporate behaviour from multiple theories, this study extends existing analytical literature on business ethics. Our findings have implications for firms’ external regulatory settings, corporate governance mechanisms and organizational ethical infrastructure.     

Does a firm’s exposure to ethical failures matter to financial markets? A governance perspective

This paper investigates if a firm’s ethical reputation, in conjunction with its governance, affects its standing within financial markets. A firm`s ethical reputation, as measured by ethical failures, arises from its involvement in ethical violations and incidents while a comprehensive index proxies for governance. We assess a firm’s standing within financial markets through two complementary perspectives, i.e., the level of information asymmetry between managers and investors, as inferred from analyst forecast dispersion and analyst forecast error, and the relation between a firm’s earnings and its stock market valuation or return (value relevance). Our results suggest that a firm`s ethical reputation affects financial analysts’ forecasts as well as the stock market value assigned to its reported earnings. Moreover, it appears that corporate governance moderates such relations, with strong (weak) governance compensating for a weak (strong) ethical reputation. Overall, our evidence shows that ethical failures do not seem to pay.     

Developing new avenues for growth: Challenges presented by five trends in the global environment

This paper documents five major trends in the global environment, and examines the impact of each on the corporate strategies of multinational firms striving for higher rates of growth in corporate earnings. The five trends documented are: 1. shifts in economic activity and growth between and within regions of the world; 2. increasing demand for goods and services among the very poor in emerging markets; 3. a faster pace and wider locus of technological innovation; 4. Increasingly global labor markets; and 5. increasingly ubiquitous and inexpensive access to information and knowledge.Each of these trends presents multinational firms with a potentially new avenue for growth, or an avenue down which they should consider moving further and/or faster. These potentially new avenues for growth are encouraging managers of multinational firms to challenge the current corporate strategies of their firms, and examine the need to reorient or renew them. The paper discusses the strategic challenges associated with these new avenues for growth, and the need for more research on the concept of country risk, on the concepts of the transnational strategy and organizational structure, and on the challenges of very limited sustainable capacity to consume among the very poor.     

Is HRD in need of an ethics of care?

Human Resource Development (HRD) operates within competitive global environments and the changing expectations of societal moral values, which can be in conflict with organizational values, performance, and profit. These are underpinned by the unquestioning acceptance and ‘orthodoxy’ of free‐market economics, legalism, and codes of conduct that result in a lack of ethical analysis within HRD practice. In response to the forgoing, it will be argued that the ethics of care that espouses the values of human relationships, empathy, dignity, and respect is a legitimate approach to free-market lead ethical rule-based rationality that is often presented as the de facto position for HRD professional practice. It presents the ethical debates in which HRD operates within, before arguing for the ethics of care. Three case examples from practice are offered illustrating how HRD practice might respond through the lens of an ethics of care. Reflections and implications for HRD in the form of objections and responses are considered. It concludes that HRD professionals are faced with many difficulties when making decisions, and that the ethics of care offer is an alternative perspective for HRD practitioners.     

企业融资约束与创新绩效:人力资本社会网络的视角

企业融资约束对创新绩效具有重要的影响作用。现有相关研究对企业融资约束与创新绩效之间可能存在的、更为复杂的非线性关系考虑不足，同时偏重从企业外部宏观的角度提出缓解二者之间消极关系的方法，不利于企业能动性的发挥。本文通过结合领英（LinkedIn）在线简历大数据和国泰安（CSMAR）上市企业相关数据，实证研究了我国上市企业融资约束与创新绩效之间存在的复杂关系以及人力资本社会网络在其中发挥的重要作用。研究结果表明，企业融资约束与创新绩效之间存在显著的倒U型关联，企业中高层管理者、科技人才的流动所形成的人力资本社会网络对企业融资约束与创新绩效之间的关系存在显著的积极调节作用。研究结论延续和深化了企业融资约束与创新的相关研究，并进一步丰富与拓展了人力资本社会网络在企业行为研究中的应用。     

Is philanthropy being used by corporate wrongdoers to buy good will?

While an increasing number of philosophers and community activists argue in favor of corporate philanthropy, the practice is not without its critics. A number of firms that have restated suspect earnings also appear on lists of top corporate givers or are ranked among most ethical firms, prompting the suspicion that companies are using philanthropy as a kind of moral window-dressing. This paper explores whether restating firms are (1) using philanthropy to divert public attention away from suspect financial results; or (2) making donations to buy good will or a better reputation after they have been required to restate suspect earnings. Our results paint a mixed picture of the morality of corporate philanthropy. Firms forced to restate suspect earnings do seem to be using philanthropy either to divert attention away from their lackluster earnings or to elicit good will from the large community after such restatements. However, the reverse is not true. Just because a firm is a top giver, it does not follow that it is more likely to be a restater of earnings. Nor did we find evidence that firms ranked as very ethical are more likely to be restaters than non-restaters. Firms engage in philanthropy for a variety of reasons. We should not uncritically praise them for their giving, but neither should we regard with a cynical eye all corporate reputations for goodness or all corporation donations.     

The influence of psychopathic traits on the acceptance of white-collar crime: do corporate psychopaths cook the books and misuse the news?

Due to several empirical shortcomings in the research of personality characteristics in ethical decision making, we address in this paper the concept of corporate psychopathy in the organizational context. Corporate psychopaths are individuals successfully working in organizations, but are selfish, manipulative, and exhibit a lack of empathy, remorse, and conscience; therefore, they may be viewed as risk factors for organizations. While there is abundant literature on the connection between clinical psychopathy and criminal behavior, such research is scarce in the business context where successful psychopaths operate. Thus, we examine if the malevolent traits of corporate psychopaths predict the acceptance of different forms of white-collar crime. In doing so, we conduct two survey studies in which we first measure participants’ psychopathic tendencies and then assess their acceptance of either an accounting fraud or an insider-trading situation. Consistent with our hypotheses and across both studies, we find a highly significant relationship between personality traits that are associated with corporate psychopathy and the acceptance of white-collar crime. This paper discusses the implications of these findings and identifies some potentially useful approaches for excluding corporate psychopaths from organizations.     

“Good” corporate governance and the quality of internal auditing departments in Italian listed firms. An exploratory investigation in Italian listed firms

One of the most important issue relating to corporate governance reports refers to their ability to provide users with a complete set of information regarding the effective ability of an entity to achieve oversight objectives by the compliance to corporate governance practices required by a specific law or industry code. In addition, other features, such as the quality of the internal auditing function or the sensitivity of top management to issues relating to corporate internal controls and risk management, can also be taken into account when formulating a judgment on the quality of corporate governance practices. Is there an association between the compliance to codes and internal controls effectiveness? We propose to assess the quality of corporate governance through a proxy that considers several characteristics of internal audit departments and combines them to determine an Internal Audit Departments global quality index—IAD Index. To define IAD global quality we consider the effectiveness of an internal audit function analysing its operational aspects. The IAD Index is based on several signalling elements that previous literature assumed as proxies for quality of IADs which are grouped into four pillars: a formal quality index; a static quality index; an activity-related quality index; and a performance-linked quality index. We then test the IAD index on a sample of Italian listed firms and conclude that there are significant associations (positive and negative) between the degree of compliance to some corporate governance regulations for listed firms and the IAD Index for the sample being considered.     

Taking (and Sharing Power): How Boards of Directors Can Bring About Greater Fairness for Dependent Stakeholders

One of the ways in which scholars have sought to broaden the discussion of the social responsibilities of corporations and their managers is through the development of the stakeholder concept. The primacy of shareholder interests in corporate‐governance processes and managerial action is, however, a myth that justifies all sorts of managerial self‐interest seeking and exploitation of particular stakeholder groups. What makes this myth particularly problematic—from the standpoint of fairness and corporate governance—is that not all nonshareholder stakeholders are equally situated with regard to their ability to secure fair treatment. In this article, I explore the ethical dimensions of board responsibilities to dependent stakeholder groups by first describing the differences between shareholders and nonshareholder stakeholders with regard to risk, examining why dependent stakeholders (stakeholders with legitimate and urgent claims, but no power) are particularly important from the standpoint of stakeholder risk, and discussing how stakeholder consultation might provide a partial fix to such problems. I will conclude with proposals for how boards can more faithfully discharge their ethical responsibilities to dependent stakeholder groups, and in so doing facilitate stakeholder involvement in corporate governance in ways that promote fairness in organization–stakeholder relationships.     

Codes of Ethics: What Are They Really and What Should They Be?

Codes of ethics are prevalent in major corporations around the world. They are seen as the first tangible commitment to being ethical. This paper examines codes of ethics and tries to establish what they are, how they are developed and their net utility. We then proffer the idea of codes as the first part of a five-stage process that leads to an overall corporate commitment to being ethical in one's business dealings.     

Individuelle Freiheit als Grundlage normativer Ökonomik

The economic approach to CSR has been increasingly criticized as being too narrow to provide a basis for ethical judgments. However, economic theory makes an implicit but fundamental ethical judgment as it emphasizes individual freedom, premising that everyone should be free to make their decisions in the marketplace. I interpret this ethical judgment explicitly and derive three implications, which allow assessing the legitimacy of corporate action in a globalized world. More specifically, I argue that contracts must rely on the voluntary and informed consent of all people concerned to be legitimate. Companies have the responsibility to ensure that these criteria are met in their contracts.