Ethical Rationality: A Strategic Approach to Organizational Crisis

In this paper, we present an ethical and strategic approach to managing organizational crises. The proposed crisis management model (1) offers a new approach to guide an organization’s strategic and ethical response to crisis, and (2) provides a two-by-two framework for classifying organizational crises. The ethically rational approach to crisis draws upon strategic rationality, crisis, and ethics literature to understand and address organizational crises. Recent examples of corporate crises are employed to illustrate the theoretical claims advanced. Finally, the paper provides guidelines for a morally optimal outcome for the organization and its stakeholders. Peter Snyder is a Ph.D. student in Organizations and Strategic Management at the University of Wisconsin-Milwaukee. His research interests include strategy making and corporate governance. Molly Hall is an attorney who practices international and environmental law in Milwaukee, Wisconsin. She teaches adjunct courses in business ethics, environmental policy, and the European Union. Joline Robertson is a Ph.D. candidate in Organizations and Strategic Management at the University of Wisconsin-Milwaukee. Her research interests include international business. Tomasz Jasinski is a Ph.D. student in Organizations and Strategic Management at the University of Wisconsin-Milwaukee. His research interests include strategic alliances. Janice S. Miller received her Ph.D. from Arizona State Univerity in Business Administration with a concentration in Human Resource management. She has been on the faculty at the University of Wisconsin-Milwaukee UWM since 1996 and has served as the Associate Dean for Academic Programs in the School of Business Administration since 2002. Dr. Miller’s primary research interests include performance management, compensation and ethical issues in organizations.     

Consistent Questions of Ambiguity in Organizational Crisis Communication: Jack in the Box as a Case Study

The complexity of crisis situations allows for corporate responses to create multiple interpretations for organizational stakeholders concerning crisis evidence, the organization's intentions, and the locus of responsibility. Hence, organizations have the ability to emphasize an interpretation where the organization is viewed most favorably. Using Jack in the Box as a case study, we apply stakeholder theory to ascertain the ethical implications of employing strategic ambiguity in organizational crisis communication. We conclude that the crisis response provided by Jack in the Box's leaders was ethically questionable in the areas of evidence, intent, and locus because the ambiguity they introduced privileged their financial stakeholders over others. Ultimately, this strategic use of ambiguity diminished the deliberative ability of Jack in the Box's publics.     

Excellence in Canada: Healthy Organizations – Achieve Results by Acting Responsibly

There is much public focus in North America today on issues of corporate governance and ethics due mainly to the malpractice of several high profile corporate leaders and the negative impact of this on their corporation's stakeholders, employees and communities. This has caused a crisis of trust in the public and lead to much discussion on ways to prevent such unethical behavior by adopting new approaches through legislation and the structure of corporations. This article is not about introducing a new approach to corporate ethics and governance as there is much change already taking place. The National Quality Institute (NQI) in Canada offers a demonstrated and proven way, through the application of the Excellence Frameworks, of providing for good corporate guidance and ethical leadership practices. Organizations, which adopt a strategic focus on Excellence, attain great results and become healthy organizations, as their leaders understand the dynamic relationship and the balance that exists between employees, customers, and stakeholders. These organizations build trust by acting responsibly. NQI works with many organizations in Canada that have a strategic leadership focus on organizational excellence utilizing the criteria in the NQI Canadian Excellence Frameworks for Quality and for Healthy Workplace. Organizations that take an integrated approach to Excellence also perform well in such areas as corporate social responsibility, employee health and customer satisfaction. This article has specific references to three organizations that have achieved Canada's prime recognition the Canada Awards for Excellence (CAE).     

Directors’ Roles in Corporate Social Responsibility: A Stakeholder Perspective

We propose that corporate directors are important in helping organizations deal with two major issues of stakeholders. First, directors can help manage the interests of organizational stakeholders, and second, they assist in protecting the interests of their organizations as stakeholders in society. Their contribution can be conceptualized as the directors’ roles in corporate social responsibility (DR-CSR). We identify two types of DR-CSR, organization-centered and society-centered roles. Based on a study of 120 corporate directors, we observe that the more concern that corporate directors have for stakeholders, the more likely that they will perceive the need to perform their DR-CSR effectively.     

Inverting the Pyramid of Values? Trends in Less-Developed Countries

The authors discuss the consistency of transnational companies in their home, as well as in less developed host countries, concerning ethics, values and social responsibility. Ethical behavior offers good reputation, credibility and tradition to the corporation. It leads to corporate social, environmental and economic responsibilities, cooperating to the desired sustainability. This paper analyzes the inversion of values that corporate governance systems have suffered. The meaning and implication of the corporate social responsibility is investigated and discussed. A “pyramid of values” is built upon individual ethical values at the basis. Over them, the organizational ethical values should indicate the limits of operations, so that the corporate social responsibility can be sustained, in the top. The authors comment that ethical values no longer lead the organization. Its communication with the stakeholders, specifically through reports, has been gradually replacing the code of ethics and corporate values. These reports have taken the basis of the pyramid leading the organizations to socially irresponsible and unethical behavior. They do not guarantee transparency or communicate the needs of the society. It appears that transnational companies do not behave the same way in their home country as they do in host countries, particularly in less developed regions like Latin America and Africa. Lack of communication and transparency may induce employees to unethical decisions and transform the reporting system into a marketing instrument. In order to guarantee compliance with the codes, transparency and ethical responsibility, communication within the organization is essential.     

Corporate social responsibility as a participative process

Corporate social responsibility is frequently defined primarily in terms of the social and environmental impact of systemic organisational activity. This misses the point. To be applicable, corporate responsibility should be understood as a process , through which individuals ' moral values and concerns are articulated. Moreover, there are important grounds for asserting that such a process should be participative, involving employees (and perhaps other stakeholders). It seems inconsistent not to respect such groups' right to an opinion, while at the same time purporting to be ethical and responsible; also, a better alignment of organisational policy and employees' values holds possibilities for enhanced motivation and work performance. Through such a participative process, matters of social responsibility may be identified in the expectations and moral claims of an organisation's stakeholders. Such claims constitute prima facie obligations to which those responsible for corporate policy should attend, and where such demands conflict then dialogue is required in order to establish an appropriate course of action.     

Corporate Social Responsibility Starts at University

The author addresses the question of how to use value-learning processes to integrate corporate social responsibility (CSR) in organizations as an interesting challenge in (higher) education. Two strategies have been proposed for the issue of CSR: a compliance strategy and a cultural change strategy (Karssing, 2001). This article focuses on the ethical and philosophical presuppositions of these different approaches. The incorporation of CSR in organizations cannot be accomplished by means of a compliance strategy only. Rather, it needs to be supplemented by a strategy aimed at stimulating a transformation process on the corporate culture level. The perspective of change through dialogue is proposed as a means of innovating the curriculum and the primary processes of student education. This organizational change perspective is demonstrated by describing how (ethical) reflective aspects are integrated in the curriculum of the Free University of Amsterdam. An additional case study on organizational value learning is presented to illustrate the thesis that CSR presupposes that university is an adequate context where life-long learning begins.     

Relationships among Perceived Organizational Core Values, Corporate Social Responsibility, Ethics, and Organizational Performance Outcomes: An Empirical Study of Information Technology Professionals

This study is an extension of our recent ethics research in direct marketing (2003) and information technology (2007). In this study, we investigated the relationships among core organizational values, organizational ethics, corporate social responsibility, and organizational performance outcome. Our analysis of online survey responses from a sample of IT professionals in the United States indicated that managers from organizations with organic core values reported a higher level of social responsibility relative to managers in organizations with mechanistic values; that managers in both mechanistic and organic organizations which were perceived as more socially responsible were also perceived as more ethical; and that perceived ethical attitudes and social responsibility were significantly associated with organizational performance outcome measures. Our article discusses research premises, conceptual framework, hypotheses, research methodology, data analysis, recommendations for further research, and conclusions.     

Dynamic Transparency,Prudential Justice,and Corporate Transformation: Becoming Socially Responsible in the Internet Age

This article brings together two concepts of ethical practice into a single construct that describes how modern corporations can responsibly meet the information needs of their stakeholder networks in a way that promotes both corporate self-interest and widespread distributive justice. Internet technology is providing corporations with transformative tools that permit and encourage the exercise of social responsibility through “dynamic transparency.” “Prudential justice” is a concept representing a set of values that can provide an ethical justification for corporate implementation of dynamic transparency. This article argues that by using dynamic transparency in accordance with the provisions of prudential justice, firms can avoid many crises and manipulative or deceptive information transfers, can fulfill their responsibilities regarding stakeholders’ informational rights, and can undergo an organizational culture transformation that allows them to move from pure corporate egoism to a beneficial mix of self-interest and corporate social responsibility.     

Ethical turnarounds and transformational leadership: A global imperative for corporate social responsibility

A company's social responsibility grounded in appropriate ethical values. Accountability for this foundation lies with the corporate leadership, which is responsible for establishing organizational values and culture. When a breach occurs in this leadership process, or when a transition‐economy organization is entering the global arena, an ethical turnaround is generally needed. We created this term to describe the leadership process needed to regain, or initially establish, corporate credibility and legitimacy in the eyes of stakeholders. These leadership requirements go beyond those needed in a strategic turnaround since they must help resuscitate an organization's cusses transformational leadership during ethical turnarounds in developed economies (focusing on Tyco) and in transition economies (focusing on Troika Dialog in Russia). We conclude with implications for business leaders in both economic settings. © 2008 Wiley Periodicals, Inc.     

Corporate Transparency: A Perspective from Thomas Aquinas’ Summa Theologiae

This article analyzes the issue of organizational transparency through the lens of Thomas Aquinas’ ethics. It provides moral justification for current claims about corporate transparency and sheds light on the ethical values and virtues affecting information disclosure decisions. Transparency is conceptualized as an informational mechanism necessary for performing the virtues of truthfulness, justice, and prudence. This article extends the organizational transparency and corporate social responsibility literatures by providing an alternative moral justification grounded in virtue-based theory, which extends our understanding of the information disclosure decisions made by management.     

Who cares about organizational purpose and corporate social responsibility,and how can organizations adapt? A hypermodern perspective

Organizations are becoming increasingly mindful of their purpose, clarifying their raison d’etre and fulfilling their economic, social, governance, ethical, and environmental responsibilities. One of the drivers for this behavior is stakeholders’ interest in purpose-driven organizations committed to creating positive value in society. However, less is known about these stakeholders: who they are, why they care, and how organizations can adapt in response. In this article, I use the theoretical framework of hypermodernity to propose that a specific type of stakeholders, identified as hypermodern individuals, may care about purpose-led, responsible organizations. This article highlights five characteristics of these individuals that may explain why they care, including their desire to contribute to a humane and caring world and their love for experiential consumption. Furthermore, I offer recommendations for managers on how to create actionable strategies to implement and communicate purpose and corporate social responsibility to this stakeholder group.     

The Effects of Person–Organization Ethical Fit on Employee Attraction and Retention: Towards a Testable Explanatory Model

An exploratory model is presented as a heuristic to indicate how individual perceptions of corporate reputation (before joining) and corporate ethical values (after joining) generate specific individual organizational senses of fit. The paper suggests that an ethical dimension of person-organization fit may go some way in explaining superior acquisition and retention of staff by those who are attracted to specific organizations by levels of corporate social performance consonant with their ethical expectations, or who remain with them by virtue of better personal ethical fits with extant organizational ethical values. Specifically, the model suggests that individual misfits that arise from ethical expectations that either exceed or fall short of perceived organizational ethical performances lead to problematic acquisition and retention behavioural outcomes.     

The Evolution of Business Groups’ Corporate Social Responsibility

Although establishing gender equality in board and managerial positions has recently become more important for organizations, companies with low levels of gender diversity seem to perceive an ethical dilemma regarding the ways, in which they attempt to attain it. One way that organizations try to move toward gender equality is through the use of their corporate websites to manage potential applicants’ impressions of their current levels of, and actions to improve, gender diversity. The dilemma is whether to truthfully communicate their low level of gender diversity, conceal it, or exaggerate it. On the one hand, organizations that are truthful may find it difficult to achieve equality because women are less attracted to companies that lack diversity. On the other hand, organizations that are untruthful risk their moral legitimacy. The present work investigates gender diversity-related communication on the corporate websites of 99 major German companies. Based on theoretical work on minority attraction, we apply an organizational impression management taxonomy to guide our in-depth content analysis. With this approach, we hope to advance the understanding of how the issue of gender diversity is presented on corporate websites, which is useful for both organizational decision makers as well as diversity researchers. We found that although gender diversity-related communications on corporate websites contain both assertive and defensive organizational impression management tactics, as well as a third type of tactic we refer to as “acknowledgement,” assertive tactics were used more frequently. We argue the existence of a paradox whereby organizations use assertive impression management tactics to maintain pragmatic legitimacy but compromise their moral legitimacy by doing so. Furthermore, we argue that moral legitimacy can be maintained or restored through the sincere use of defensive impression management tactics and acknowledgement.     

Corporate Social Performance, Stakeholder Orientation, and Organizational Moral Development

This article begins with an explanation of how moral development for organizations has parallels to Kohlberg's categorization of the levels of individual moral development. Then the levels of organizational moral development are integrated into the literature on corporate social performance by relating them to different stakeholder orientations. Finally, the authors propose a model of organizational moral development that emphasizes the role of top management in creating organizational processes that shape the organizational and institutional components of corporate social performance. This article represents one approach to linking the distinct streams of business ethics and business-and-society research into a more complete understanding of how managers and firms address complex ethical and social issues.     

Making sense of corporate social responsibility in international business: experiences from Shell

International business organizations are regularly addressed on their corporate social responsibility (CSR). As illustrated in this paper, it is not yet clear exactly what CSR means to organizations and how to deal with it. In this paper, the authors explore how a sensemaking approach helps to understand the business challenges of CSR within an organizational context. The theories of Karl Weick are applied to the experiences of CSR in Royal Dutch Shell. The authors argue that the key to CSR in international business organizations is to engage stakeholders and start a process of joint sensemaking. Three main competencies are crucial in this: the competency to engage stakeholders through listening and understanding; the creation of an organizational language so that CSR makes sense to members of the organization; and recognizing the momentum of taking action.     

Managing Brand in the New Stakeholder Environment

The corporate sustainability, and responsibility, movement has considerable implications for and impact on the discipline of brand management. It creates pressures to which the discipline must adjust, and new growth opportunities for it to enjoy.In Maio's view, "brand" permeates all aspects of the corporation and therefore the values of the brand can serve as an effective touchstone for all corporate behaviours: in the Boardroom, in financial markets, in negotiations with employees, in customer interactions, in dialogue with other stakeholders. Moreover, most corporations already have "plumbing" in place (the organizational substructures and processes to manage their brand), that can serve as effective conduits for nurturing values-driven behaviours and measuring them.     

Parrèsiastic Stakeholders: A Different Approach to Ethical Institutions

Are we really in need of (new) ethical institutions that regulate and control the ethical quality of corporate behavior? The various scandals (Enron, WorldOnline, Ahold) prove that ethical institutions, as well as deontological codes, public social commitments, social annual reports directly linked to financial overviews, are not enough to prevent fraud, corruption or bribery. Does the existence of those institutions partly provoke and legitimize the unbridled and immense power of organizational and CEO-(non-ethical) behavior and window-dressing? Do we need more separate ethical institutions? Is it possible to outsource the competence of an ethical corporate and personal moral responsibility to another, separate institution? Do people and corporations still feel the confrontation with moral dilemmas with the institutionalizing of a part of that responsibility to an anonymous body? And won't this ethical control lead to a further alienation of the micro level personal responsibility to the macro performance of the market and organizations? This article focuses on the counterpart of the institution: tomorrow's stakeholder. The stakeholder of tomorrow (the manager, the CEO, the consumer, the employee, the civil servant...) embodies the complexity of the multi-paradigmatic business ethics debate. Two aspects of tomorrow's stakeholders' presence will be discussed: their moral attitude and emancipative communication.     

The Role of Corporate Value Clusters in Ethics, Social Responsibility, and Performance: A Study of Financial Professionals and Implications for the Financial Meltdown

This article delves into a potential mindset that may be responsible for the recent financial meltdown. Research relating to this mindset from different perspectives is reviewed. The findings from this literature review are used to create a conceptual framework for the empirical, ethical, and corporate social responsibility study of financial professionals. Data were collected from a survey of the professional membership of a large national association of financial professionals. This article reports the results of the analysis of data relative to the relationships among the four constructs—financial professionals’ perceived organizational value clusters, ethics, corporate social responsibility, and corporate performance. The findings indicate that organizational core values significantly affect corporate ethics, social responsibility, and financial performance. We propose that organizations in the financial industry can move toward being more ethical and socially responsible by adopting organic core values (e.g., democratic, open, trusting, enterprising, creative, stimulating) and moving away from mechanistic values (e.g., structured, regulated, procedural, authoritarian, closed, callous). We also found the adaptation of organic core values does not require the organization to suffer a loss in financial performance.     

Fostering an ethical organization from the bottom up and the outside in

Despite the best efforts of corporate compliance officers, boards of governance, auditors, and regulators, corporate misconduct continues to plague our markets. In this thought-provoking installation of Accounting Matters, we argue that efforts to fight fraud and other forms of corporate misconduct have failed, in part, due to the systematic approach employed toward a problem that is irregular, complex, and extends well beyond the boundary of the firm. By drawing upon research from the field of behavioral ethics to suggest a new approach that does more than just stress formal control systems, we illustrate how executives may strengthen organizational ethics through informal practices that work from the ‘bottom up’ and the ‘outside in.’ Our review includes practical recommendations regarding how to create shared responsibility for ethical leadership, how to empower employees to achieve both economic and ethical ends, how to enlist the aid of key stakeholders in identifying problems before they grow and spread, and how to redesign compliance practices to address the complex nature of corporate misconduct.