Amplifying a Relational Ethic: A Contribution to PRME Praxis

Western economically driven instrumental ethics fuel the dominant institutional logic in many business schools and are associated with the negative social and environmental situation widely linked to the mode of global development. Other ethical framings have been subordinated, marginalized, or denied. Through the explicit commitment of prominent international certifying bodies of management education, educators, researchers, and practitioners will be encouraged to give increasing effect to the Principles for Responsible Management Education (PRME). The PRME is a United Nations‐led, institution‐level mechanism for reorienting the direction of business schools and for increasing both educator and student capacities to contribute to a more inclusive and sustainable mode of development globally. We propose greater emphasis be given to various forms of relational ethics from which to guide the functional aspirations of institutions. We explore the creative opportunity for institutional change by contrasting the prevailing Western economically driven instrumental institutional logic with indigenous ethical framings. We draw upon Seo and Creed's conceptual framework of institutional change to discuss two films—Mann v. Ford and Waste = Food—to bring greater attention to the generative potential of indigenous perspectives in institutional praxis. Our examples could equally invite an application of other systems of relational ethics that have been overshadowed by the current domination of economic instrumentalism in almost all realms of decision making. We conclude by providing some teaching resources that can be used or adapted for geographical‐ or disciplinary‐specific attention to the issues we raise.     

Working Adults and Personal Business Ethics in South East Asia: a Comparative Study in Thailand and Vietnam

Global leaders and managers have been facing new challenges in the twenty-first century since globalization has created a much more integrated and borderless business environment. One of the key issues that they constantly deal with is business ethics. The global economy has made ethical issues become more complex and challenging. Businesses nowadays face urgent demands to act ethically and responsibly. In order for global leaders and managers to manage such a cultural diverse and complex workforce, they must have the ability to understand these complex issues and act ethically. They also need to possess adequate leadership skills to lead an ethical organization in a multinational environment. Thus, understanding and recognizing the cultural differences as well as the ethical standards of people in different countries are critical to the success of global leaders and managers. The purpose of this study is to investigate the perception of working professionals on business ethics in the two high-context cultures in South East Asia: Thailand and Vietnam. Using the Univariate Analysis of Variance method and adopting the widely-used Clark and Clark’s Personal Business Ethics Scores (PBES) measure, this study will compare the level of ethical maturity of the respondents based on a variety of variables including gender, business law course taken, code of conduct, ethics training, and government work experience. The authors will provide a thorough literature review on business ethics as well as the current ethical issues, i.e., bribery and corruption, in the two countries, together with practical suggestions and implications for educators, managers, and employees.     

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.     

Discourses about Righting the Business ← → Society Relationship

This article engages the question—what is the right business‐society relationship? We consider three perspectives that seek to address the relationship: corporate social responsibility (CSR), social entrepreneurship (SE), and conscious capitalism (CC). We take a macroapproach considering how commentary about these approaches establishes a direction for corporate practice and its relationship to key stakeholder groups. We argue that these perspectives are ‘D'iscourses that provide arguments for and articulations about the direction of corporate practice and the business‐society relationship. To organize our review of each perspective, and focus our critique, for each we highlight (a) drivers and influencers, (b) core assumptions and defining features, and (c) approaches and exemplars. Although distinct, all emphasize effective business practices as key to meeting social needs. CSR suggests legitimizing business practice; SE relocates business practices; and CC seeks to reimagine/rehabilitate business for social good. Ultimately, we conclude that these Discourses lack a clear communicative focus in terms of decision making within these organizations. We attend to this and other implications, and offer avenues for further research.     

Stakeholder Theory: The State of the Art

Abstract

For the last 30 years a growing number of scholars and practitioners have been experimenting with concepts and models that facilitate our understanding of the complexities of today’s business challenges. Among these, “stakeholder theory” or “stakeholder thinking” has emerged as a new narrative to understand and remedy three interconnected business problems—the problem of understanding how value is created and traded, the problem of connecting ethics and capitalism, and the problem of helping managers think about management such that the first two problems are addressed. In this article, we review the major uses and adaptations of stakeholder theory across a broad array of disciplines such as business ethics, corporate strategy, finance, accounting, management, and marketing. We also evaluate and suggest future directions in which research on stakeholder theory can continue to provide useful insights into the practice of sustainable and ethical value creation.     

Sustainable Luxury Marketing: A Synthesis and Research Agenda

Sustainability has become a pervasive issue for the luxury sector, gaining traction with brand managers, scholars, policy‐makers, the media, and academia. The purpose of this paper is to examine the state of sustainable luxury research in marketing and consumer behaviour by critically reviewing and synthesizing the growing but fragmented body of scholarly work on sustainable‐luxury marketing. The paper critically assesses where, how and by whom research on sustainable luxury is being conducted, and it identifies gaps for future investigation. The paper reviews research published between 2007 and 2018 within major peer‐reviewed English‐language scholarly publications in business, marketing, ethics, fashion, food and tourism journals. The research is identified using the keywords sustainable luxury, green luxury, eco‐luxury and organic luxury. Three core themes emerge from this review: (1) consumer concerns and practices; (2) organizational concerns and practices; and (3) international and cross‐cultural issues. The review confirms that research on sustainable luxury is significantly underdeveloped. This paper provides the first critical and comprehensive assessment and categorization of the emergent literature streams on sustainable luxury. The authors argue for a broader, deeper and more critical research agenda on the relationship between sustainability and luxury. Potential avenues for future research on sustainable luxury are proposed, with calls for theoretical and cross‐cultural reflections that tackle broader systemic and institutional issues within the field.     

Local Management Response to Corporative Restructuring: A Case Study of a Company Town

This is a case study of top management in a Swedish pulp industry at Skutskär. After decades of proactive response to change, starting in 1976 the pulp industry experienced a rapid and significant restructuring. In 1992, and after a prolonged hold on local investments, came a large‐scale investment with major labor reductions, which created a local crisis. The aim of this study is to analyze how top managers of a local business plant perceive and explain their citizenship relationship to the community of the company town during a transition period from 1976 to 2007. Our study shows that too much reliance on top management cost reduction requirements and not caring, or underscoring, local social concerns created gaps and local stakeholder distrust. We discuss how prolonged distrust of the company to bear social responsibility ended up in a broken relationship between the company and the local community. Our case indicates at least two problems that must be handled for successful corporate citizenship. First, the traditional control‐oriented management view is too narrow and not adjusted to today's citizenship reality, including how to handle corporate social responsibility. Second, we can see a possibility where the conceived needs on a global corporate level may lead to situations to obscure local needs and consequences.     

Your E‐mail Trail: Where Ethics Meets Forensics1

This article addresses ethical and legal issues arising from the increasing use of e‐mail and other forms of instant written communication in the conduct of business. E‐mail communications are often casual and informal. Yet e‐mail is a written record that can be more permanent and widely accessible than a paper communication. This article focuses on the implications of this fact, including (1) how individuals compromise their own privacy by the voluntary use of e‐mail; (2) how e‐mail has complicated the duty of confidentiality of employees to employers, and professionals to clients; (3) whether the use of e‐mail affects ethical deliberation and choice; and (4) the use of e‐mail as evidence of corporate conduct and intent in civil and criminal litigation. The article suggests that e‐mail users think “forensically” about their e‐mail—i.e., consider its potential as evidence in the context of other emails and underlying events—before pressing the “send” button.     

Operational Best Practices in Business Ethics: A Practical and Systematic Benchmarking Tool

This article describes a benchmarking tool managers can use to determine operational policies and processes that could enhance an organization's social and ethical performance. The benchmarking tool consists of a 13‐dimension, 110‐item survey based on an Optimal Ethics Systems Model. These best practices in business ethics are derived from an analysis and assessment of seven institutional infrastructures and accountability standards developed to help managers improve organizational social and ethical performance.     

The Emergence of Flood Insurance in Canada: Navigating Institutional Uncertainty

Flood insurance has remained unavailable in Canada based on an assessment that it lacks economic viability. In response to Canada's costliest flood event to date in 2013, the Canadian insurance industry has started to develop a framework to expand existing property insurance to cover flood damage. Research on flood insurance has overlooked why and how insurance systems transition to expand insurance coverage without evidence of economic viability. This article will address this gap through a case study on the emergence of flood insurance in Canada, and the approach to its expansion. Between 2013 and 2016, insurance industry officials representing over 60% of premiums collected in Canada were interviewed. These interviews revealed that flood insurance is being expanded in response to institutional pressure, specifically external stakeholder expectations that the insurance industry will adopt a stronger role in managing flood risk through coverage of flood damage. Further evidence of this finding is explored by assessing the emergence of a unique flood insurance model that involves a risk‐adjusted and optional product along with an expansion of government policy supporting flood risk mitigation. This approach attempts to balance industry concerns about economic viability with institutional pressure to reduce flood risk through insurance. This analysis builds on existing research by providing the first scholarly analysis of flood insurance in Canada, important “empirical” teeth to existing conceptual analysis on the availability of flood insurance, and the influence of institutional factors on risk analysis within the insurance sector.     

Equator Principles: Bridging the Gap between Economics and Ethics?

The hypothetical conflict between self‐interest, corporate interest, and the common good is one of the hottest debated issues in business ethics. This article focuses on a particular corporate social responsibility approach within the field of sustainable (project) finance, which has the potential—given that certain reform measures are adopted—to overcome the alleged trade‐off between self‐interest and the common good. The approach is labeled as the Equator Principles (EPs) framework, which celebrated its tenth anniversary and the formal launch of the third generation of the EPs (EP III) in 2013. The article shows how companies can theoretically be both profitable and socio‐environmentally responsible by adhering to the EPs. The article proceeds as follows: Before moving on to the EPs, section 2 defines the key terms self‐interest and common good. Section 3 then analyzes the EPs from a business ethics perspective. Section 4 shows how the EPs can help in solving the potential trade‐off between self‐interest and the common good—provided that the EPs are substantially revised. These required reform steps are discussed in section 5. The article ends with a summary of the main findings.     

Insider Information: The Ethicality of the High Frequency Trading Industry

This study explores the ethical perceptions of employees in the financial industry. Focusing on the high frequency trading (HFT) industry, it analyses a series of interviews with HFT employees (managers, computer programmers and traders). It shows that regulations and firm rules profoundly affect HFT practices. However, they do not provide employees with answers for their ethical questions. To judge the ethicality of HFT, employees choose reference stakeholder groups and assess the way HFT impacts them. The perception that HFT has a positive effect on stakeholder groups is associated with moral satisfaction, whereas the perception that it has a negative effect is related to emotional detachment, sense of meaninglessness and turnover intent. The high variance in employees’ choices of stakeholder reference groups emphasizes the subjectivity and uncertainty that HFT ethicality entails. Therefore, this study suggests that the financial industry may lack moral leadership. It makes empirical and theoretical contributions to the ‘business ethics as practice’ theory and examines management and regulatory applications.     

Reverse Auctions to Innovate Procurement Processes: Effects of Bid Information Presentation Design on a Supplier's Bidding Outcome

Information technologies (ITs) are being used to innovate various procurement processes. This research study focuses on the supplier‐side effects of IT design choices to conduct reverse auctions, which are increasingly used to procure a wide range of products and services. IT–enabled reverse auctions enhance supplier participation across geographical boundaries, leading to more efficient pricing. However, there are growing concerns about the adverse effects of IT–enabled reverse auctions on a supplier's performance. Supplier‐side issues are gaining prominence in the reverse auction literature and are critical for the long‐term success of reverse auctions. Therefore, we focus on suppliers’ bidding outcomes and assess how the design of an IT–enabled reverse auction facilitates the auction bidding outcomes of participating suppliers. Specifically, we examine the effects of two types of bid information presentation design—full price visibility and partial price visibility—on supplier's auction bidding outcomes, across auctions with different cost certainty and suppliers bargaining power vis‐à‐vis the buyer. The results of this study contribute new knowledge about the ways to use IT for creating effective auction designs and innovating procurement through auctions to enhance both the buyer's and suppliers’ performance. We present the detailed theoretical contributions of our study and discuss the managerial implications for designers of reverse auctions.      

The Emergence of Service Science: Toward Systematic Service Innovations to Accelerate Co‐Creation of Value

The current growth of the service sector in global economies is unparalleled in human history—by scale and speed of labor migration. Even large manufacturing firms are seeing dramatic shifts in percent revenue derived from services. The need for service innovations to fuel further economic growth and to raise the quality and productivity levels of services has never been greater. Services are moving to center stage in the global arena, especially knowledge‐intensive business services aimed at business performance transformation. One challenge to systematic service innovation is the interdisciplinary nature of service, integrating technology, business, social, and client (demand) innovations. This paper describes the emergence of service science, a new interdisciplinary area of study that aims to address the challenge of becoming more systematic about innovating in service.     

Was müssen Führungskräfte können?

Ethics Education complements business administration only if it teaches strategic competencies that help managers to become better leaders. To this end, this article sketches an ordonomic approach to an economic ethics for competitive markets, to a business ethics for firms (corporate citizens), and to a process ethics for new governance. The core idea of this ordonomic approach is the win-win concept of mutually beneficial value creation. Thus, ordonomics is compatible with the market economy and at the same time supplements the management education in business schools: This approach systematically identifies strategic competencies that enable managers to display the kind of entrepreneurial leadership that is necessary for firms to fulfill their social function of value creation—by making use of moral commitments as a factor of production.     

The Impact of Stakeholder Management on Corporate International Diversification

This article explores the relationship between stakeholder management and international diversification. We differentiate between strengths and concerns in stakeholder management to demonstrate the differential effects of the two aspects of stakeholder management. Previous research on stakeholder theory often focuses on the importance of stakeholder relations, trying to build a business case of relational capital that results from strong stakeholder management. Such a relational approach, however, overlooks the process of managing stakeholders, a process that allows firms with strengths in stakeholder management to develop an important capability of managing tensions. In this study, we argue that this capability, an inherent part of stakeholder management, can be critical when firms face increased complexity during the process of international diversification. We therefore propose that strengths in stakeholder management are positively related to international diversification, while concerns in stakeholder management are negatively related to international diversification. Using panel data for 169 US multinational firms over a 10‐year period, we find support that strengths in stakeholder management facilitate international diversification. We discuss the contributions of our findings to stakeholder theory and international business research.     

Do Business Leaders Have Role‐Model Obligations to Be Good Political Actors?

This article raises an issue about corporate political activity that is different from those typically addressed by business ethicists. It examines the role‐model status and obligations of the business leaders who direct such activity. This approach has two potential benefits. First, since ethicists often appeal to role‐model obligations and many are concerned about corporate political activity, business ethics literature would benefit from expanding the examination of role‐model status and obligations to encompass the business leaders who direct political activity. Second, it will help ethicists determine what we should demand from business leaders who direct such activity. This is important given the U.S. Supreme Court's Citizens United decision in 2010 that guarantees corporations the free‐speech right to make political expenditures in support of political causes. I seek to demonstrate that we should hold business leaders morally accountable for how they direct political activity because of their role‐model status that arises from their greater fame, authority, or power than ordinary persons possess.     

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.     

Managerial Risk‐taking in International Acquisitions in the Brewery Industry: Institutional and Ownership Influences Compared

This paper deals with the role that institutional differences play in managerial risk‐taking when firms engage in international acquisitions. It is assumed that multinational corporations (MNCs) have different interests and capabilities when dealing with international acquisition, which in the authors’ view are significantly shaped by specific home country institutional influences. This study concerns the question of how different forms of ownership – concentrated (e.g. family and bank based) and dispersed (stock market based) – influence risk‐taking and managerial decision‐making in large international acquisitions. Comparing a total of 12 large acquisitions of four leading MNCs in the global brewery industry, the paper shows that mutually reinforcing influences of country of origin (coordinated vs liberal market economies) and ownership (family ownership vs stock market ownership) lead to different risk profiles and managerial risk‐taking with regard to international acquisitions.