Wisdom Paradigms for the Enhancement of Ethical and Profitable Business Practices

Many organizations continually search for new business models and ways to conduct business ethically, yet profitably. Kirk Cheyfitz (2003) proclaims that organizations should not waste time trying to create new business models because the rules of commerce never change. Instead of searching for new business models, organizations can improve business practices by looking at different paradigms or mental models for seeing how to build practices that lead to long-term success. The employment elements of wisdom as paradigms for developing sound structures and practices that will encourage management behaviors that are ethical and lead to profitability. First, a theory of wisdom is developed. Then, the elements of wisdom are applied to the design of a general business structure and to refocusing some basic business practices.     

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.     

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.     

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.     

Firm size,small business presence and sales of innovative products: A micro-econometric analysis

In our generalized TOBIT analysis we identify a number of variables which have an impact on a firm's innovation output. Among others we find that larger firms generally have a higher probability of selling some innovative products, although this probability increases less than proportionately with firm size. Given that a firm has some sales of innovative products, the share of such products in a firm's total sales tends to be higher in smaller firms. Moreover, a strong small business presence in a sector seems to enhance imitative innovation but has no influence on true innovations, whereas market concentration has no influence on innovation output in whatever definition. We also find evidence of regional knowledge spill-overs. Furthermore, our results are consistent with Schmookler's hypothesis that the growth of demand enhances innovation. The outcomes about the impact of R&D collaboration and technology transfer on innovation remain ambiguous.     

Real Wages,Business Cycles and New Production Patterns

In contrast with most conventional business cycle models, empirical data show no clear correlation between real wage movements and output and employment. This paper presents a model, largely based on concepts presented by Joseph Schumpeter,in which economic growth and the business cycle are triggered by endogenous real shocks to technology. It suggests that the speed and magnitude by which technological shocks spread throughout the economy determine whether the resulting changes in real wages will be pro-or counter-cyclical.     

Ethical climate and the link between success and ethical behavior: An empirical investigation of a non-profit organization

This study examines the ethical climate and ethical practices of successful managers (n=206 managers) of a large non-profit organization. The influence of different dimensions of ethical climate on perceived ethical practices of successful managers were also investigated. Results show that a majority of the respondents perceive successful managers as ethical. Compared to previous research, managers in our sample were less optimistic about the relationship between success and ethical behavior. Those who believed that their organization had a caring climate perceived a strong positive link between success and ethical behavior. Those who believed that their organization had an instrumental climate perceived a strong negative link between success and ethical behavior. Satish Deshpande is an Associate Professor of Management at Haworth College of Business, Western Michigan University, Kalamazoo, Michigan, USA. He teaches human resource management courses. His current research interests include business ethics, managerial decision-making, and applied psychology in human resource issues. His publications include articles in the Academy of Management Journal, Compensation and Benefits Review, Human Relations, Journal of Small Business Management, and Organizational Behavior and Human Decision Processes.     

An assessment of ethics instruction in accounting education

Business school faculty have begun to increase ethics instruction, but very little has been done to assess the effectiveness of this instruction. Curricula-wide studies present conflicting results of the effect of ethics integration into the business curricula. Several studies suggest that courses like business ethics and business and society might have an effect on the ethical awareness or ethical reasoning of business students. A belief of many individuals interested in business ethics is that students must be exposed to ethical awareness and ethical reasoning in business ethics and business and society-type courses and this should be supplemented by discussions of these topics in various business courses such as Accounting, Finance, Marketing, and others.This study reports the results of integrating a unit of business ethics into eleven accounting classes at two universities. An approach for measuring the effect of ethics integration into accounting and other business courses is suggested, and an assessment is made of the impact of ethics integration on students in accounting classes. Results indicate that the principles on which students rely when making moral decisions were affected by ethics integration. After ethics integration, students relied more heavily on the disclosure rule, the golden rule, and the professional ethic.Kenneth M. Hiltebeitel, Ph.D., CPA is an Associate Professor of Accountancy at Villanova University. He has included a unit on business ethics in his Auditing and Advanced Accounting classes for the past two years.Scott K. Jones, Ph.D. is an Assistant Professor of Accounting at the University of Delaware. He has included a unit on business ethics in his Cost Accounting classes for the past two years.     

‘I am we’ consciousness and dialog as organizational ethics method

There is a practical five-step method of ethics dialog developed by John Woolman, an 18th c. businessman and ethical activist, that was used by Robert K. Greenleaf, a 20th c. A.T.&T. Corporate Vice-President, that includes: (a) friendly, emotive affect; (b) discussion of mutual commonalities; (c) discussion of issue entanglements; (d) discussion of potential experimental solutions; and, (e) trial and feedback discussion. This method of dialog appears to proceed with a type of consciousness considered by John Woolman and Bernard Lonergan as one where the I is conscious that I and Others are part of a more foundational, larger and prior We. This type of dialog is different than Socratic dialog. The corresponding type of consciousness is different than the more derivative, e.g., two allies being united in their response to a common goal. It is also different than Buber's I and Thou appreciative consciounsess of the interestingness, value, diversity, and uniqueness of others. Woolman dialog as seen in four cases appears to be a concrete method that has some value both as an end in itself and as instrumental means that can: be issue effective, help build ethical organization/community culture, and help facilitate peaceful, evolutionary change and development. Limitations of the method are also considered. The method may also be a several hundred year anticipation of experiment based pragmatist philosophy that is anthropologically sensitive to cultural entanglements.

John Donne (17th c.)

Richard P. Nielsen is a professor in the Department of Organizational Studies, School of Management, Boston College. Related articles of his include: Dialogic Leadership As Organizational Ethics Action (Praxis) Method, Journal of Business Ethics(October 1990); Negotiating As An Ethics Action (Praxis) Strategy, Journal of Business Ethics(May 1989); Changing Unethical Organizational Behavior, Academy of Management Executive(May 1989); Arendt's Action Philosophy and the Manager as Eichmann, Richard III, Faust, or Institution Citizen, California Management Review(Spring 1984); and Cooperative Strategy, Strategic Management Journal(September–October 1988).     

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).     

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.     

Ethical Decision Making: Are Men and Women Treated Differently?

This exploratory study finds that ethical choices made by decision makers are influenced by a social factor, the gender of other individuals affected by the decisions. In contrast to Schminke's (1997) study this investigation focuses on ethical decision making and finds that both men and women are more often charitable to women participants in most situations, although this effect appears to be greater for men. This study contributes to extant literature on ethical decision making by identifying participant gender (gender) as a critical influence on ethical choices. Respondent sex (sex) effects are also found in some situations. In response to Robertson's (1993) call, several methodological improvements on past studies are made, and behavioral intentions as indicants of future ethical behaviors, rather than ethical attitudes, are employed. Managerial implications are drawn and suggestions for future research are made.     

Ethical dilemmas for accountants: A United Kingdom perspective

The paper provides an introduction to some of the professional ethical dilemmas facing an accountant in the United Kingdom. The first part deals with those dilemmas which accountants would normally accept are covered by the term ethics. These include the problems associated with adequately fulfilling a duty to shareholders and conflicts of interest (including whistleblowing) by the accountant acting as independent auditor or as an employee. The second part deals with wider aspects of ethical dilemmas stemming from reconciling the implicit understanding that the accountant is being objective with the fact that accounting rules make it very difficult to sustain that objectivity.Andrew Likierman, Professor of Accounting at the London Business School graduated from Oxford in Philosophy, Politics and Economics, is a qualified accountant and has worked in both the private and public sectors. He started the first regular UK MBA ethics course but more usually publishes in the field of financial control.     

Humanitarian versus organizational morality — A survey of attitudes concerning business ethics among managing directors

This paper presents the results of an empirical study of attitudes towards ethical questions in business life among managing directors. They study covers more than 240 Swedish firms of all sizes, from different lines of business, and it is based on a solid theoretical framework. It should be seen as a part of the author's effort to develop a model explaining ethical organizational behaviour. Among the most important conclusions of the study is the concept of corporate moral view. It seems possible to distinguish between the humanitarian morality versus the organizational morality, depending on who's interests the decision maker prefers to take in a moral dilemma.Ulrica Nylén is a Doctoral Candidate in Organizational Theory with a special interest in ethical values and their impact on organizational behavior. She is a member of staff at the Umeå Business School, Sweden, were she is the teaching the subject of Management.     

Justice: The root of american business ideology and ethics

Although there are many conceptions of Justice, these different perceptions can provide many interesting insights into a business person's ethical standards as well as that person's decision-making processes. Using the Bishops' Pastoral Letter on the U.S. Economy as the basis for asking questions about justice, twenty-four business executives were interviewed about their conception of justice. An analysis of these interviews reveals that this group of businesspeople operated under very different conceptions of Justice at the Macroenvironmental and Microenvironmental levels. This result has some interesting implications not only for those scholars concerned with business ethics but for everyone who has a stake in business education.Men are called good, chiefly on account of their Justice. Cicero, 56 B.C. Ideology is applied philosophy. Lodge, 1986 Richard McGowan, S. J. is an Assistant Professor of Operations and Strategic Management at Boston College. His research focus involves examining both the rationale behind business and public policy decisions as well as determining the effectiveness of these policy measures. Some of his recent publications include Deciphering the Japanese Import Quota, Policy Studies Journal (1988) and Public Policy Measures and Cigarette Sales: An ARIMA Intervention Analysis Study JAI Social Issues Management Volume (1989).     

Management development and business ethics: A view from the U.K.

This article is written in the context of current British interest in management training and development, in which an emphasis on competency is viewed critically, as technically oriented, with little attention paid to ethics and moral values. It is suggested that a concern for ethics in management development can be expressed in terms of four requisite management attributes or qualities: theoretical knowledge and understanding; affective qualities; personal and interpersonal skills; and self-knowledge. Following Kohlberg's work on moral development, the cultivation of these attributes is viewed as a life-span process involving three broadly defined forms of management development practice, each appropriate to different circumstances and stages in a learner's career. It is concluded that the conventional teaching of theory, learning from experience and counselling/mentoring, are equally important in the contribution which management development can make to the resolution of ethical dilemmas in business practice.Patrick Maclagan is a lecturer in organisational behaviour and managerial ethics at the School of Management, University of Hull, U.K., where he is also on the Steering Committee of the Social Values Research Centre, His current research concerns the relationship between management development and ethics in organisations.     

A Team-Taught Course in Business Ethics & its Synthesizing Capstone Assignment

This article describes a course in Business Ethics, team-taught by a professor of philosophy and a professor of business administration. Written by the philosopher, it focuses on the philosophical materials of the course. It details the use of primary sources, but with a very practical aim: the extraction of a Moral Decision-Procedure, a step-by-step way of applying abstract philosophy to ethical issues in business. Three philosophical assignments are described, leading to the capstone assignment, which is designed to integrate the philosophical material of the course with the practice of business. The capstone assignment has the format of business problem analysis. Ethical issues are raised, and addressed, in language appropriate to business. However, in a series of footnotes keyed to those discussions, the ethical issues are examined more fully, with heavy reliance upon primary sources in philosophy.     

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.     

What is business ethics? A reply to peter drucker

In his What is Business Ethics? Peter Drucker accuses business ethics of singling out business unfairly for special ethical treatment, of subordinating ethical to political concerns, and of being, not ethics at all, but ethical chic. We contend that Drucker's denunciation of business ethics rests upon a fundamental misunderstanding of the field. This article is a response to his charges and an effort to clarify the nature, scope and purpose of business ethics.     

Egoistic and ethical orientations of university students toward work-related decisions

An onslaught of ethically questionable actions by top government, business, and religious leaders during the 1980s has brought the issue of ethics in decision making to the forefront of public consciousness. This study examines the ethical orientation of university students in four decision-making situations. The dependent variable — ethical orientation toward work-related decisions — is measured through student responses to questions following four work-related vignettes. Possible responses to each vignette are structured to permit categorization of respondents into two broad orientations: egoistic and ethical. Independent variables are academic major, ethics in business orientation, gender, and religiosity. Generally, students tended to choose an ethical orientation over an egoistic orientation in each vignette. Business majors were generally no less likely to choose an ethical orientation toward work-related decisions than nonbusiness majors. Respondents characterized by moral unity (belief in the consistency between general ethical principles and work-related ethical standards) were more likely to have an ethical orientation toward work-related decisions than those subscribing to the amoral theory of business. Females showed a consistent tendency to be more ethically oriented toward work-related decisions than males. Finally, respondents high on religiosity tended to be more ethically oriented. Jon M. Shepard is Head of the Department of Management at Virginia Polytechnic Institute and State University. His most recent publications include Gender Differences in Proclivity for Unethical Behavior (Journal of Business Ethics). His current research interests include ethics in business, corporate ethical climates, and the accountability of institutions in modern society.Linda Hartenian is a P/HRM doctoral candidate in the Department of Management at the University of Kentucky. Her research interests include the performance appraisal process, the impact of decentralized computing systems on organizational communication, and research methodology.This research was supported by a grant from the Graduate School, University of Kentucky. We wish to thank Richard Wokutch for his thoughtful suggestions for this paper.