The Methods Used to Implement an Ethical Code of Conduct and Employee Attitudes

In the process of implementing an ethical code of conduct, a business organization uses formal methods. Of these, training, courses and means of enforcement are common and are also suitable for self-regulation. The USA is encouraging business corporations to self regulate with the Federal Sentencing Guidelines (FSG). The Guidelines prescribe similar formal methods and specify that, unless such methods are used, the process of implementation will be considered ineffective, and the business will therefore not be considered to have complied with the guidelines. Business organizations invest enormous funds on formal methods. However, recent events indicate that these are not, by themselves, yielding the desired results. Our study, based on a sample of 812 employees and conducted in an Israeli subsidiary of a leading multinational High-Tech corporation headquartered in the US, indicates that, of the methods used in the process of implementation, one of the informal methods (namely, the social norms of the organization) is perceived by employees to have the most influence on their conduct. This result, when examined against employee tenure, remains relatively stable over the years, and stands in contradistinction to the formalistic approach embedded in the FSG. We indirectly measure the effectiveness of the percieved most influential implementation process methods by analyzing their impact on employee attitudes (namely, personal ethical commitment and employees' commitment to organizational values). Our results indicate that the informal methods (manager sets an example or social norms of the organization) are likely to yield greater commitment with respect to both employee attitudes than the formal method (training and courses on the subject of ethics). The personal control method (my own personal values) differs significantly from all the other methods in that it yields the highest degree of personal ethical commitment and the lowest degree of employees' commitment to organizational values.     

Karoushi: Stress-death and the meaning of work

The present article is concerned with some of the human factors involved when overtime and overwork become part of the regular and accepted pattern of work, with sometimes tragic results. While the economic miracle of Japan can be much admired, it has not been without human cost. Only recently, national and global attention is being focused on a new and deadly phenomenon in Japan:Karoushi, which the Japanese define as death from overwork, and which I choose to re-define as stress-death related to feelings of helplessness.It is my tentative hypothesis thatkaroushi is not directly caused by overwork, as popularly assumed. Rather, I believe that overwork is only one factor, and that stress-death is actually caused by the cumulative, long-range effects of working in a situation where one feels trapped and powerless to effect any change for the better, which in turn leads to attitudes of hopelessness — attitudes which are exacerbated, rather than ameliorated, by environmental and managerial factors.Dr. Walter Tubbs received his Ph.D. in Neuropsychology and Philosophy after doing work at Stanford and Drew Universities. After involvement in brain research at Stanford, he practiced stress-management counseling and biofeedback training at Loma Linda University, and taught for 13 years at the University of Redlands in California. He has been in Japan for 11 years as a Senior Researcher.     

Teaching Business Ethics with Computer-based Multimedia? A Cautionary Analysis

Still shots, videos, music, and movie clips can be helpful in bringing some excitement to the study of business ethics. For several years, Professor McAdams has been using The Great Gatsby as a text for discussing American commercial values. That discussion serves as an introduction to a larger examination of contemporary business ethics. Recently, Professor Duclos and her students converted that socratic exploration of Gatsby's contemporary relevance to a PC-based, multimedia show employing the efficient and manageable PowerPoint software presentation package. Computer-based multimedia added flavor to the presentation, but developing this lengthy lesson required hundreds of hours, substantial hardware/software and a high tolerance for frustration.     

Towards an Integrative Model of Small Firm Internationalisation

Firm internationalisation has long been regarded as an incremental process, wherein firms gravitate towards psychologically close markets and increase commitment to international markets in a gradual, step-wise, manner through a series of evolutionary stages. However, much of the recent literature provides clear evidence of rapid and dedicated internationalisation by born global firms. Typically, these are smaller entrepreneurial firms that internationalise from inception, or start to shortly thereafter. Their main source of competitive advantage is often related to a more sophisticated knowledge base. In addition, the authors have found evidence of firms supporting this born global pattern of behaviour but also evidence of firms that suddenly internationalise after a long period of focusing on the domestic market. These born-again globals appear to be influenced by critical events that provide them with additional human or financial resources, such as changes in ownership/management, being taken over by another company with international networks, or themselves acquiring such a firm. Based upon the extant literature and our own research, we propose an integrative model that recognises the existence of different internationalisation pathways. We then explore differences in behaviour due to the firm's internationalisation trajectory and discuss the strategic and public policy implications.     

Common knowledge of the second kind

Although most of us know that human beings cannot and should not be replaced by computers, we have great difficulties saying why this is so. This paradox is largely the result of institutionalizing several fundamental misconceptions as to the nature of both trustworthy objective and moral knowledge. Unless we transcend this paradox, we run the increasing risks of becoming very good at counting without being able to say what is worth counting and why. The degree to which this is occurring is the degree to which the computer revolution is already over — and the degree to which we human beings have lost.I think that Aristotle was profoundly right in holding that ethics is concerned with how to live and with human happiness, and also profoundly right in holding that this sort of knowledge (practical knowledge) is different from theoretical knowledge. A view of knowledge that acknowledges that the sphere of knowledge is wider than the sphere of science seems to me to be a cultural necessity if we are to arrive at a sane and human view of ourselves or of science. (Hilary Putnam, Meaning and the Moral Sciences, 1981) David A. Bella is Professor of Civil Engineering at the College of Engineering at Oregon State University. He received his B.S. in Civil Engineering from Virginia Military Institute (1961), his M.S. and his Ph.D. in Environmental Engineering from New York University. His primary research interest is in the philosophy and sociology of technology, technological impact assessment, and moral philosophy. His most important publications are Engineering and Erosion of Trust and Organizations and Systemic Distortion of Information, Journal of Professional Issues in Engineering (1987), and Strategic Defense: Catastrophic Loss of Control, Journal of Peace Research (1989). Jonathan B. King is Associate Professor of Management at the College of Business at Oregon State University. He received his B.A. in philosophy from Antioch College (1965) and his M.B.A. in Finance (1975) and Ph.D. in Business, Government and Society (1980) from the University of Washington. His primary research interests are in the areas of moral philosophy, the philosophy of science, and critical thinking. His most important publications are The Three Face of Thinking, Journal of Higher Education (1986), Prisoner's Paradoxes, Journal of Business Ethics (1988), and Confronting Chaos, Journal of Business Ethics (1989).     

Effects of price uncertainty on consumer purchase budget and price thresholds

This article examines how uncertainty about prices affects: (1) the budget consumers allocate for purchasing a product and (2) consumer price thresholds (i.e., the prices that are considered too high or a good deal). In an experimental setting, the purchase budget as well as the absolute values of both thresholds for uncertain subjects were higher than those for certain subjects. Moreover, a relatively large decline from the budget was needed before a price was considered a good deal, whereas a relatively small increase from the budget was sufficient for a price to be considered too high. Price uncertainty widened the difference between the upper (i.e., too high) price threshold and the budget, making uncertain subjects more tolerant to prices exceeding the budget than certain subjects. However, price uncertainty did not have a significant effect on the difference between the budget and the lower (i.e., good deal) price threshold.We wish to thank the editor and anonymous reviewers for their helpful comments on an earlier draft. We also thank Professors S. P. Raj and Amiya Basu for their comments and suggestions at various stages of the study.     

Small firm mutual funds: Additional evidence on the small firm effect

Returns generated with small firm mutual fund data are used to examine the extent to which identification of a small firm effect is due to the difficulty in measuring the direct and indirect transaction costs involved in investing in the common shares of small capitalization stocks. Little if any evidence of the excess risk-adjusted returns is obtained for either of the period 1978–1983, when the small firm effect was observed, or the period 1984–1989, when it was not. The small firm effect may therefore be attributed to (1) higher direct transaction costs including bid-ask spread and broker fees and (2) higher indirect transaction costs including portfolio management expenses and market impact costs.The authors thank an anonymous referee for helpful comments on an earlier version of this paper, and Brett Salazar for valuable assistance in data collection. Errors remain our own.     

A response to “On Measuring Ethical Judgments”

This article discusses the major criticisms posed in On Measuring Ethical Judgments concerning our ethics scale development work. We agree that the authors of the criticism do engage in what they accurately refer to as armchair theorizing. We point out the errors in their comments.Dr. R. Eric Reidenbach is Professor of Marketing at The University of Southern Mississippi. He is the coauthor of two books on business ethics and writes extensively on the subject of the measurement of ethical decision making.Dr. Donald P, Robin is Professor of Marketing and Professor of Business Ethics at The University of Southern Mississippi. He is coauthor of two books on business ethics, as well as numerous articles. Dr. Robin is also a frequent lecturer on the subject of business and marketing ethics.     

Learning to solve the right problems: The case of nuclear power in America

Three general types of problems entail different strategies. Continuing to seek solutions to tame problems when we face messes, let alone wicked problems, is potentially catastrophic hence fundamentally irresponsible. In our turbulent times, it is therefore becoming a strategic necessity to learn how to solve the right problems.

But then, you may agree that it becomes morally objectionable for the planner to treat a wicked problem as though it were a tame one, or to tame a wicked problem prematurely, or to refuse to recognize the inherent wickedness of social problems. Rittel and Webber (1973).

Jonathan King is Associate Professor of Management at the College of Business at Oregon State University. His primary research interests are in the areas of moral philosophy and modern technology. His most important publications are Confronting Chaos and Common Knowledge of the Second Kind,Journal of Business Ethics (1989).     

Paternalism in the marketplace: Should a salesman be his buyer's keeper?

The marketplace has become increasingly sophisticated. Products and services are more complex resulting in greater customer reliance on salespersons for guidance. The salesperson's role presumes superior knowledge with respect to the buyer because he is consulted as an expert on the quality and uses of his product. Thus, it is important that a tacit professional ethic for sales be established to protect customers from possible exploitation. The purpose of this article is to propose a realistic professional ethic for sales — limited paternalism. Limited paternalism implies that a salesman should be his buyer's keeper in the sense that he should serve the interests of his customers by identifying their needs, while disclosing all relevant information about products or services in order to facilitate mutual exchange to mutual advantage.James M. Ebejer, after studying psychology and philosophy as an undergraduate, received his M.B.A. from Oakland University in 1986. Mr. Ebejer has recently begun a sales career in the ROLM Systems Marketing Division of IBM.Michael Morden received his Ph.D. from Columbia University and is serving as a Visiting Assistant Professor at Oakland University where his courses include Medical Ethics and Business Ethics.     

Ethical aspects of “Japanese leadership style”

This article describes three characteristics of the Japanese Leadership Style (JLS): self-realization, appreciation of diverse abilities, and trust in others, which have both positive and negative ethical implications. In addition to illustrating how JLS allows Japanese corporations to avoid some of the ethical problems plaguing U.S. corporations, the authors will explain how these characteristics engender the loyalty and initiative of Japanese employees which promote incremental innovation and competitive advantages. Implicit in this discussion is the premise that both the American and Japanese business communities, by analyzing their own ethical issues and leadership styles, can learn from each other.Iwao Taka is a Visiting Research Fellow in the Department of Legal Studies at The Wharton School. He is an Assistant Professor in the International School of Economics and Business Administration, Reitaku University in Japan. His publications include Business Ethics: A Japanese View, Intuitive Decision-Making and Creative Destruction, and Japanese Entrepreneurship after World War II.Wanda D. Foglia, Esquire, is a Teaching Fellow in the Department of Legal Studies at The Wharton School where she is pursuing a Ph.D. in Criminology. A former Assistant District Attorney, her research focuses on approaches for promoting the individual's commitment to ethical and law-abiding behavior. She has recently coordinated a Project to Integrate Ethics Into the Wharton Undergraduate Curriculum.     

Ethical banking: The case of the Co-operative bank

The aim of this paper is to present a significant current British case of the application of an ethical approach to banking practice — it relates to issues of stakeholder dialogue, corporate strategy, and marketing.The Co-operative bank traces its organisational origins to the 1870s, and its founding principle to the beginnings of the co-operative movement in the 1830s.In today's fiercely competitive and rapidly changing financial services market, dominated by four major players, the bank has only a 2% share and its advertising spend and marketing profile have been low.Against this background, the bank searched for a positioning statement which would counter its low profile; express where it wanted to be; and give direction to its necessarily limited marketing and communications budget.What slowly evolved was an ethical banking strategy which built on the bank's differences from the others, and which benefited from an opportunity which was being ignored by them. The key concept was a commitment to the responsible sourcing and distribution of funds. A quantitative research project was undertaken with 30 000 customers which revealed major support for the overall strategy, and which was used to prioritise the practical issues of greatest concern. The outcome was an ethical banking policy which communicated what we are and what we stand for and strict guidelines on who we will, or will not do business with.Professor Brian Harvey is The Co-operative Bank Professor of Corporate Responsibility at Manchester Business School, University of Manchester and Honorary Secretary of the European Business Ethics Network. His books have been published by Prentice Hall, Macmillan & Kluwer, of whose series Issues in Business Ethics he is joint Editor.     

Integrating Religious Principles and Human Resource Management Activities

Many ethical problems faced by organizations concern human resource management. This paper shows how some religious principles can be integrated into a human resource management course. First, it presents a discussion of employee responsibilities and rights in Judaism, Christianity, and Islam. Next, it suggests how various principles can be applied to human resource management activities. Do to others as you would have them do to you is applied to equal opportunity. Thou shall not commit sexual impropriety (or in positive terms, respect and love) is the basis for no sexual harassment. Thou shall not steal (or in positive terms, deal fairly) is related to fair pay in exchange for excellent employee performance. Thou shall not lie (or in positive terms, be truthful) is needed for due process in employee disputes. Thou shall not kill (or in positive terms, respect life) is applied to employee safety and health, plus health care benefits. A list of potential readings is included for instructors to consider for their own courses.     

Ethics in organizations: A framework for theory and research

In a climate of increasing interest and activity within the field of business ethics, as yet there exists no coherent conceptual framework for organizational theory and research. From a review of current thinking and previous writings a framework of concepts is suggested to help set an agenda for empirical research. The elements of this are, first, a taxonomy of ethical domains: the foci of organizations' and their agents' ethical concerns and conduct. Second, it is considered how ethical functioning might be analysed in terms of causal relationships between expressive forms, voluntary action and instituted forms. Third is discussed ethical process, the means by which ethical awareness is aroused. Fourth and last, the paper examines how normative evaluations might apply to the ethical condition of organizations and their agents, meaning change or stability in reputation and integrity. At each stage of the argument possible objectives for research are developed.Professor Nigel Nicholson is Chairman of the Organisational Behaviour Group and Director of the Centre for Organisational Research at London Business School. Previously, he led investigations into Individual and Organisational Change at Sheffield University's Social & Applied Psychology Unit, and has also held visiting appointments at American, Canadian and German universities. He has published 8 books and over 65 articles on a wide range of topics, and been honoured with an award from the Academy of Management for his contribution to theory.     

The Effects of Monetary Magnitude and Level of Aggregation on the Temporal Framing of Price

Existing research has shown that the pennies-a-day strategy of reframing a large aggregate expense as a small daily expense helps to reduce the perceived cost of a transaction (Nagle and Holden, 1995; Price, 1995; Gourville, 1998, 1999). This paper builds on this research and explores the robustness of the phenomenon across two dimensions – (1) the level of temporal aggregation and (2) the dollar magnitude of the transaction. First, we show that the effectiveness of a pennies-a-day strategy is not limited to per-day framing. Rather, we find a more general phenomenon in which a less aggregate expense is preferred to a more aggregate expense, such that if a per-day framing is preferred to a per-year framing, than a per-month framing also will be preferred to a per-year framing. Second, we show that this effectiveness reverses with the magnitude of the underlying expense, such that while a framing of $1 per day is preferred to one of $365 per year, a framing of $4200 per year is preferred to one of $11.50 per day.     

What is business in America?

This paper, presented at the Conference on Value Issues in Business at Millsaps College, is divided into three parts. The first sketches the logic of the evolution of U.S. business and suggests reasons for its remarkable success. The second assesses the power of U.S. business in modern society, both from an economic and political perspective. The third attempts to formulate the underlying philosophy of U.S. business using ideals such as the work ethic, entrepreneurism, democracy, and equality. Some of these ideals, the paper suggests, are irreconcilable. Thomas J. Donaldson is Associate Professor of Philosophy at Loyola University of Chicago. His publications in the area of business ethics include numerous articles and two books, Ethical Issues in Business co-edited with Patricia Werhane, and Corporations and Morality.     

An Exercise in Moral Philosophy: Seeking to Understand “nobody”

The late Hannah Arendt proposed that many, perhaps most monstrous deeds are not committed by moral monsters but by individuals who do not think. However, understanding the significance of activity of thinking as such requires a moral philosophy that transcends rational actor assumptions and instrumental reason centering, instead, on the conditions of self-knowledge. The ubiquitous and often lethal phenomenon of information distortions provides a vehicle for expanding our understandings of individual moral response-abilities in our modern times.     

Umpire and batsman: Is it cricket to be both?

The paper is a response to Richard De George's essay, Theological Ethics and Business Ethics. It defends the possibility of theologically oriented approaches to business ethics by pointing out certain deficiencies in business ethics narrowly based on the premisses of analytic moral philosophy. In particular it argues, in a manner consistent with Alasdair MacIntyre's After Virtue (1981), that such a program of business ethics is insufficiently critical of its own roots in the social fiction of bureaucratic rationality. After showing how this ideology governs De George's negative judgments on theological approaches to business ethics, the author outlines a program of critical reflection that would draw from the intellectual traditions of both theology and philosophy in order to facilitate a dialogue in business ethics that no longer is captive in the Iron Cage of bureaucratic rationality. Dennis P. McCann is an Associate Professor of Religious Studies at De Paul University. He has served on the faculties of Reed College and Lewis and Clark College. He is the author of Christian Realism and Liberation Theology (1981) and a co-author of Polity and Praxis: A Program for American Practical Theology (1985).     

The Relationship of Communication, Ethical Work Climate, and Trust to Commitment and Innovation

Recently, Hosmer (1994a) proposed a model linking right, just, and fair treatment of extended stakeholders with trust and innovation in organizations. The current study tests this model by using Victor and Cullen's (1988) ethical work climate instrument to measure the perceptions of the right, just, and fair treatment of employee stakeholders.In addition, this study extends Hosmer's model to include the effect of right, just, and fair treatment on employee communication, also believed to be an underlying dynamic of trust.More specifically, the current study used a survey of 111 managers to test (1) whether right, just, and fair treatment influences trust, both directly as well as indirectly via communication, and (2) whether trust influences perceptions of commitment and innovation. Strong support for the study's hypotheses and Hosmer's (1994a) model was found. Such findings support those who argue that moral management may be good management.     

Board-management relations in small firms: The paradox of simultaneous independence and interdependence

The author introduces constructs based on neo-classical and socio-economic assumptions, and argues that board-management relations should be characterized by both independence and interdependence. Interdependence is especially important in small firms. The article presents a model of directorates from research about directorates based on agency theory assumptions. This model is supplemented with constructs from the theory of contractual relations. Whilst traditional literature tends to focus upon independence from an agency theory perspective, this article argues that it is necessary to use more than one dimension of attributes regarding the board-management relations in order to understand the board's contribution to company performance, and that trust and solidarity is especially important in small firms. Board-management relations described by simultaneous independence and interdependence are proposed to give the highest contribution to company performance. The theoretical propositions are exemplified and supported by results of a field survey of directorates in small firms.