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Corporate Ethics  

Thomas Donaldson and Diana C. Robertson

Serious research into corporate ethics is nearly half a century old. Two approaches have dominated research; one is normative, the other empirical. The former, the normative approach, develops theories and norms that are prescriptive, that is, ones that are designed to guide corporate behavior. The latter, the empirical approach, investigates the character and causes of corporate behavior by examining corporate governance structures, policies, corporate relationships, and managerial behavior with the aim of explaining and predicting corporate behavior. Normative research has been led by scholars in the fields of moral philosophy, theology and legal theory. Empirical research has been led by scholars in the fields of sociology, psychology, economics, marketing, finance, and management. While utilizing distinct methods, the two approaches are symbiotic. Ethical and legal theory are irrelevant without factual context. Similarly, empirical theories are sterile unless translated into corporate guidance. The following description of the history of research in corporate ethics demonstrates that normative research methods are indispensable tools for empirical inquiry, even as empirical methods are indispensable tools for normative inquiry.

Article

Corruption and Business Ethics  

Steven G. Koven and Abby Perez

Corruption remains a way of life for many cultures and subcultures, an ethos that is often consistent with the goal of corporate profit maximization. Corruption may yield benefits at the personal or individual firm level, but at the societal level corruption is detrimental to aggregate growth, individual effort, and faith in institutions. Corruption, as defined by the Oxford English Dictionary, is dishonest or fraudulent conduct by those in power, typically involving bribery. Corruption exists on a continuum that can range from rampant to minimal. Rampant corruption exists when entire organizations willingly and knowingly promote actions that are injurious to workers, consumers, or society as a whole. Egregious examples include knowingly producing and selling harmful products or ignoring conditions that impair the health and safety of workers. At the other extreme, minimal corruption can include petty violations such as stealing a small amount of office supplies for personal use. Moral, ethical, and legal guides have evolved over time in efforts to ameliorate the most obvious and egregious forms of corruption. These guides are supported by perspectives of philosophy such as utilitarianism, deontology, virtue ethics, intuition, and ethical relativism. Each of these perspectives represent an important and qualitatively different lens in which to assess ethical behavior. While some philosophical viewpoints emphasize the categorical nature of right or wrong action, others emphasize context, net benefits of actions, or individual virtue reflected in individual actions, and perspectives that are systematically reviewed. Philosophical influences are viewed as highly relevant to an understanding of modern-day corruption. Business ethics is also influenced by various competitive and complementary models that compete for influence. While the market model of business ethics has long endured, alternative perspectives of business ethics such as the stakeholder model of corporate social responsibility and the sustainability model have recently arisen in popular discourse and are explored. These alternative models seek to replace or supplement the market model and advocate for a greater recognition of environmental responsibilities as well as responsibilities to a broad array of stakeholders in society such as workers and consumers. Alternative models move beyond the narrow perspective of profit maximization and consider ethical implications of business decisions in terms of their effects on others in society as well as future generations. Various philosophical perspectives of ethics are examined, as well as how these perspectives can be applied to attain a more complete understanding of the concept of corruption.

Article

Corporate Fraud, Corruption, and Financial Malfeasance  

Harland Prechel

Corporate failures and financial crisis in the early 21st century generated an increased awareness of the pervasiveness of corporate corruption, fraud, and financial malfeasance. In addition to the tremendous financial costs to society and the loss of public confidence in corporations and social institutions, corporate wrongdoing adversely effects corporations by undermining profits, morale, and trust. Understanding contemporary corporate corruption, fraud, and financial malfeasance requires an examination of the extent to which historical variation in organizational, political-legal, and ideology arrangements affect opportunities for managers to engage in these behaviors. These components of the social structure are not mutually exclusive but are part of a dynamic system that consists of many interconnected component parts. As a whole, the literature examined here suggests that the components of the formal and informal structure create incentives, motivations, and opportunities to engage in corruption, fraud, and malfeasance. The emphasis on social structure is critical to advance our understanding of how corporate political embeddedness, the social organization of markets, and corporate characteristics all affect wrongdoing. The main findings include the following. 1.Contemporary research confirms and extends Sutherland’s initial insight that differential social structure creates variation in opportunities to engage in corporate crime. Corporate characteristics, including structure, size, vertical integration, prestige, cognitive assumptions, corporate norms, dependence on institutional investors, bounded rationality, opportunities, and political embeddedness, are associated with corporate corruption, fraud, and financial malfeasance. 2.Corporations in the United States engaged in political behavior to re-regulate multiple spheres of corporations’ political embeddedness that permitted management to enter existing markets, create new markets, and engage in high-risk behaviors in them. 3.Corporate culture and ethics interact with markets and other dimensions of the social structure to create normative conditions conducive to corporate corruption and fraud. 4.Individual characteristics, including chief executive officer’s (CEO’s) age and the networks among top management and corporate boards, affect corporate corruption, fraud, and malfeasance. 5.Given that few policy changes were implement in the 2008 post-crisis era, the political embeddedness and characteristics of corporations continue to provide opportunities for corporations and their agents to engage in corruption, fraud, and malfeasance.

Article

Organizational Ethics and Corporate Social Responsibility  

Steven K. May

Given the scope of various ethical scandals in a wide range of organizations over the last several decades, research on organizational ethics and corporate social responsibility (CSR) has grown significantly. Scholars have sought to better understand factors related to ethical awareness, judgment, and action through descriptive, normative, and analytical approaches. Organizations have established extensive policies and practices to enable employees to address the ethical dilemmas that they experience, drawing upon theories of duty, rights, utility, virtue, and care to facilitate compliance and, ultimately, produce aspirational ethics. In recent years, scholars have argued that organizational ethics is not only an individual-level phenomenon but also one influenced by organizational practices and societal expectations. As a result, debates regarding the role of businesses in society have also proliferated under the umbrella term of CSR, with attention paid to business initiatives such as philanthropy, volunteerism, cause-related marketing, and, most recently, strategic CSR. To better understand the opportunities and challenges of CSR, advocates and critics have turned to theories of shareholder value, stakeholder theory, corporate social performance, and corporate citizenship. In doing so, they have reintroduced an age-old question regarding the rights and responsibilities of business in society.

Article

Corporate Responsibility  

Swati Srivastava

Transnational corporations (TNCs) have assumed a greater share of global power vis-à-vis states. Thus, understanding how to assign corporate responsibility has become more urgent for scholars in international studies. Are corporations fit to be held responsible? If so, what are the existing ways of doing so? There are three research themes on conceptualizing corporate responsibility: (a) corporate criminal liability, in which corporations are assigned responsibility by determining criminal intent and liability in domestic law; (b) corporate social responsibility (CSR), in which corporations are assigned responsibility through praise and blame for adopting voluntary standards that conform with societal values; and (c) corporate international responsibility, a subset of CSR in which corporations are assigned responsibility by hardening international law, especially in human rights and the environment. The three themes feature research on corporate responsibility across a variety of disciplines, including law, criminology, global governance, sociology, business, and critical theory. Each theme prioritizes different debates and questions for research. For corporate criminal liability, the most important questions are about corporate intent in assigning blame for criminal behavior and how to deal with corporate criminal liability in domestic law. For CSR, the most important questions are about determining what obligations corporations take on as part of their social compact, how to track progress, and whether CSR leads to nonsymbolic corporate reforms. For corporate international responsibility, the most important questions are articulating on what grounds corporations should be held responsible for transnational violations of CSR obligations in state-based public international law or contract-based private international law. There are a range of ways to evaluate corporate responsibility in the three research themes. As such, the future of conceptualizing TNCs’ responsibility is diverse and open for examination by scholars of international studies.