Conflict of Interest and the Talmud

A core value of Judaism is leading an ethical life. The Talmud, an authoritative source on Jewish law and tradition, has a number of discussions that deal with honesty in business and decision-making. One motive that can cause individuals to be unscrupulous is the presence of a conflict of interest. This paper will define, discuss, and review five Talmudic concepts relevant to conflict of interest. They are (1) Nogea B’Davar (being an interested party), (2) V’hiyitem N’keyim (behaving to ensure that one is above suspicion) (3) Lifnei Iver (placing a stumbling block before the blind), (4) Shokhad (accepting a bribe), and (5) Geneivat Da’at (deception and undeserved goodwill). Case examples will be used to apply these Talmudic principles to contemporary business practice. This will include discussion of these Talmudic concepts as it applies to specific contemporary business examples relevant to the boardroom, accounting firms, investment banking, politics, and government. It may be impossible to eliminate all conflicts of interest. However, knowledge and awareness of these Talmudic principles can help individuals in business settings better address the ethical issues that they confront. Joshua Fogel, PhD, is an Assistant Professor in the Business Program of the Department of Economics at Brooklyn College. He is the Business Program’s behavioral scientist. He has an interest in the interface of religion and business ethics and can be contacted at joshua.fogel@gmail.com. Hershey H. Friedman, PhD, is a Professor in the Business Program of the Department of Economics at Brooklyn College. He has interest in business ethics and also the interface of religion and entrepreneurship. He currently is funded with a grant by the Kauffman Foundation to study religion and entrepreneurship.     

Modernism, Christianity, and Business Ethics: A Worldview Perspective

Despite growing interest in examining the role of religion in business ethics, there is little consensus concerning the basis or standards of “good” or ethical behavior and the reasons behind them. This limits our ability to enhance ethical behavior in the workplace. We address this issue by examining worldviews as it relates to ethics research and practice. Our worldview forms the context within which we organize and build our understanding of reality. Given that much of our academic work as well as business practice operate from a modern worldview, we examine how modernism shapes our beliefs and approaches to ethics in business and academia. We identify important limitations of modernism in addressing moral issues and religion. We then introduce the Christian worldview as an alternative approach to examining ethical issues in business     

Financial knowledge among Iranian investors

This research is the first to describe financial knowledge in the Islamic Republic of Iran. Data were collected from a convenience sample of investors in the Tehran Stock Exchange. The data were used to examine objective and subjective knowledge as well as overconfidence in one's financial knowledge. The results indicated that compared with other populations, Iranians did not perform well on either basic or advanced financial knowledge questions, especially when the questions dealt with interest rates. This is likely related to the Islamic law ban on usury‐based investing. Regression analysis indicated that demographic charactristics related to basic financial knowledge were income, labour force status and being a student. Demographic characteristics related to advanced financial knowledge were education, labour force status and age. Higher income and education reduced the odds of being overconfident about one's financial knowledge, while being a student and male increased the odds. The article concludes with recommendations about future research as well as building a national financial education strategy.     

The Islamic Work Ethic and the Emergence of Turkish SME Owner-Managers

The aim of this study is to explore the influence of religious beliefs on the work-related attitudes of Turkish SME (small and medium-sized enterprise) owner-managers. In this research, the emergence of pious or devout business people is considered as a phenomenon, and special attention is paid to religious transformation and secularism in Turkey. Both concepts, religion and secularism, are considered within the Turkish context. For the research, in-depth interviews were conducted with 32 Turkish business people from religious and secular backgrounds, respectively. The study investigates the so-called “Islamic work ethic” values and Islamic business principles from a critical perspective and argues that they do not seem to be as significant factors as predicted in the emergence of pious or devout business people in Turkey.     

Cross-cultural Comparisons of Managerial Perceptions on Profit

The study investigated the effects of three cultural variables – country of employment, race/ethnicity and religion – on managerial views of profit and 15 other business priorities. In total, 203 responses were obtained (120 randomly and 83 by quota) from executives and managers belonging to either of two race/ethnic groups (Caucasian and Chinese) and three religious denominations (Christian, Buddhist and Malay Muslim) located in three different countries (Australia, Singapore and Malaysia). Findings indicated that these three different cultural variables affected (to varying degrees) the attitudes of managers towards profit and other related business concerns. Managers working in Malaysia, the Malay Muslims and Caucasians in particular, had the highest regard for profit whilst those employed in Australia were found, on the whole, to be the most (socially) considerate toward their employees, customers and environment. This study pointed to the need for cultural ethics as a complementary function in business. After majoring in Psychology and Sociology in the Bachelor of Arts (Multidisciplinary) Program at Victoria University, I went on to do my Master of Arts in Applied Social Research at Monash University. With these given areas of specializations and with the support of a scholarship from Victoria University, I was able to complete my doctoral studies in business ethics and foreign labour employment in 2006.     

Moral theory and defective tobacco advertising and warnings (the business ethics of Cipollone v. Liggett Group)

Traditional moral theories help corporate decision-makers understand what position consumers, like Rose Cipollone, in Cipollone vs Liggett Group, will take against cigarette manufacturers who fail to warn of the dangers of smoking, conceal data about addiction and other dangers, from the public, as well as continue to neutralize the warnings on cigarettes by deceptive advertisements. John F. Quinn teaches philosophy and management at the University of Dayton. He did his doctoral studies at the University of Washington in philosophy and his legal doctorate at the University of Dayton. Recently new to business ethics, after years of teaching medieval philosophy and aesthetics, he brings a knowledge of business law and management to his work in business ethics. His book with J.M.B. Crawford on The Christian Foundations of Criminal Responsibility, an integration of medieval moral theology and the common law tradition of criminal responsibility, will soon be published by Mellon Press. He also practices law in Ohio in select corporate issues.     

An analysis of business ethics in the cultural contexts of different religions

The aim of our research is to analyze how different religions influence business ethics. We develop an index of practices in the field of business ethics, made up of 19 items containing practices related to workers, consumers, products, human rights, management of ethical conflicts, and crime prevention. Also, we consider a wide range of religion affiliations. To undertake this research, we use a panel data sample composed of 11,956 firm‐year observations from 18 countries. Drawing on stakeholder theory, we posit some hypotheses based on the religions considered. The results obtained show that a higher percentage of religious adherents in the country where a company does business usually involve the implementation of more ethical practices in the corporate field. These findings are obtained for Christian, Islamic, Jewish, and Hindu religions. In contrast, this does not stand for Buddhist and folk religions. Also, countries where there is no predominant religion do not show a confluence between religion and ethical corporate practices.     

Corporate Ethical Identity as a Determinant of Firm Performance: A Test of the Mediating Role of Stakeholder Satisfaction

In this article, we empirically assess the impact of corporate ethical identity (CEI) on a firm’s financial performance. Drawing on formulations of normative and instrumental stakeholder theory, we argue that firms with a strong ethical identity achieve a greater degree of stakeholder satisfaction (SS), which, in turn, positively influences a firm’s financial performance. We analyze two dimensions of the CEI of firms: corporate revealed ethics and corporate applied ethics. Our results indicate that revealed ethics has informational worth and enhances shareholder value, whereas applied ethics has a positive impact through the improvement of SS. However, revealed ethics by itself (i.e. decoupled from ethical initiatives) is not sufficient to boost economic performance. Pascual Berrone is a PhD candidate of the Business Administration and Quantitative Methods Ph.D. program at the Universidad Carlos III de Madrid. His current research interests focus on business ethics, stakeholder theory, and various aspects of the interface between corporate governance mechanisms and corporate social responsibility. His interests also include ethical, environmental and social issues and their impact on firms' overall performance. Dr. Jordi Surroca is an Assistant Professor of Management at the Department of Business Administration at the Universidad Carlos III de Madrid. He holds a PhD in Business Administration and a Licentiate Degree in Business and Economics from Universitat Autònoma de Barcelona. His research interests center on stakeholder management, firm strategy, innovation, and corporate governance. Dr. Josep A. Tribó is Associate Professor of Finance in the Department of Business Administration at the Universidad Carlos III de Madrid. He has a PhD in Economic Analysis from the Universitat Autònoma de Barcelona and a Licenciate Degree in Theoretical Physics by Universitat de Barcelona. His research interests are Corporate Finance and the financing of R&D. His work has been published in journals such as Applied Economics, International Journal of Production Economics.     

For or Against Corporate Identity? Personification and the Problem of Moral Agency

This article explores the concept of corporate identity from a moral perspective. In it we argue that the reification and personification involved in attributing an identity to an organization has moral repercussions. Through a discussion of ‘intentionality’ we suggest that it is philosophically problematic to treat an abstraction of the corporation as possessing identity or acting as a conscious moral agent. The article moves to consider practical and ethical issues in the areas of organizational commitment, of health and safety, and corporate social responsibility, and finds that the notion of identity can be abused, although it will no doubt continue to be used as it does have some practical utility. In conclusion, we argue that despite being meaningless from a philosophical stance, the concept of corporate identity need not be discarded, however, it is far from benign and intense moral scrutiny is necessary wherever it is applied. Ian Ashman PhD is a senior lecturer in the HRM division of the Lancashire business School, University of Central Lancashire. He has recently authored a number of papers on business ethics, leadership and research methods, all of which draw upon his interest in philosophies of existential phenomenology. He is an executive member of European Business Ethics Network U.K. Professor Diana Winstanley PhD, FCIPD was Director of Postgraduate Programmes at Kingston Business School, Kingston University. She wrote over 50 articles and five books, including her latest, ‚Personal Effectiveness: A Guide to Action’ (2005, CIPD) and Ethical Issues in Contemporary Human Resource Development (2000, Macmillan). She was a trained humanistic counsellor and an executive member of European Business Ethics Network U.K. Her research interests were in the areas of workplace learning, development, diversity and business ethics. Sadly, Diana Winstanley, died last summer.     

Religion and ratio analysis: Towards an Islamic corporate liquidity measure

This paper contributes to the emerging literature on the effect of religion on corporate decision making and financial reporting. Financial statement analytical tools could violate several commands of Islamic law. Specifically, traditional liquidity ratios imply undervaluation, uncertainty, and interest bearing aspects that are strictly prohibited in Islamic law. We propose an Islamic-compliant measure of corporate liquidity. In order to validate our proposed ratio as a measure of corporate liquidity, we incorporate it in the traditional corporate bankruptcy prediction models. Our measure significantly improves the accuracy of the corporate bankruptcy prediction models of Altman (1968) Z-score and Ohlson (1980).     

An Analysis of the Effect of Culture and Religion on Perceived Corruption in a Global Context

This study examines the role of both religion and culture [as measured by the cultural clusters of countries in the GLOBE study of House et al. (Culture, Leadership, and Organizations: The GLOBE Study of 62 Societies, 2004)] on the levels of perceived corruption. Covering the period from 2000 to 2010, the study uses three different measures of perceived corruption: (1) the World Bank’s Control of Corruption measure, (2) Transparency International’s Corruption Perceptions Index, and (3) Heritage Foundation’s Freedom from Corruption Index. A system of three simultaneous equations is used, with the jointly endogenous variables being (a) perceived corruption, (b) perceived government legitimacy, and (c) perceived government effectiveness. The results show that both cultural and religious differences are incrementally related to perceived corruption, even after controlling for other economic and political factors. Specifically, relative to the Protestant Christian religion, the non-Protestant Christian religion, the Islamic religion, and Other Religion/No Religion are positively associated with higher corruption (or negatively with anti-corruption), but the Buddhist and Hindu religions appear to be not significantly different from the Protestant Christian religion. On the cultural side, compared to the Anglo-Saxon cultural tradition, the other European clusters are incrementally positively associated with higher corruption, but this tendency is offset by more effective political governance, thus leading in the case of the German and Nordic cultures to levels of corruption not statistically different from the Anglo cluster. All the non-European cultural clusters are associated with significantly higher corruption tendencies, but the overall effect is mitigated partially by either greater perceived political legitimacy (Latin-American, Middle-Eastern, Caribbean, and Pacific Islander), or greater political effectiveness (Confucian and South-East Asian).     

Conflicts of Interest? The Ethics of Usury

Social attitudes toward usury (here defined using the archaic meaning as the taking of interest on loans) have changed dramatically over the centuries. From antiquity until the Protestant Reformation, usury was regarded as an inherently evil activity. Today, with few exceptions, usury is met with moral indifference. Modern objections to usury are limited to protest against "excessive" interest rates rather than interest per se. With this change in focus, the very meaning of the term "usury" has also changed. Many early pronouncements against the taking of interest emphasized the plight of the poor, but ironically, the poor actually pay the highest rates of interest in the modern American economy. Despite the universality of usury, some socio-economic subcultures still manage to avoid the taking or giving of interest. Orthodox branches of both Judaism and Islam have maintained bans on usury throughout the centuries and up to the present time. This is especially interesting in the case of Judaism, given the popular cultural image of the Jew as usurer. Jewish free loan systems may actually offer a model for modern loan programs that can be designed to aid poor borrowers, who are frequently shut out of mainstream financial services.     

The Role of Business Ethics,Personality, Work Values and Gender in Vocational Interests from Adolescents

The present study investigates how business ethics are related to vocational interest. Special attention has been paid to the relationship between business ethics and the interest in ‘enterprising’ and ‘social’ oriented professions. The results show that business ethics is only significantly correlated in a negative way, to enterprising vocational preferences. Moreover, the negative contribution of business ethics to the preference for entrepreneurial and managerial professions remains after controlling for personality and work values. Some work values also predict the entrepreneurial interest: Earnings, Influence, Competition, Innovation and Creativity. The personality traits Extraversion (positive) and Agreeableness (negative) have predictive validity, but this effect disappears after controlling for work values. In the ‘Discussion’ section, we pay attention to possible consequences of the negative relationship between business ethics and Entrepreneurial interest for Corporate Social Responsibility (CSR). We argue that efforts concerning realistic job previews will only be meaningful if they are completed with efforts to make people more sensitive for ethics in two other domains, namely education and business.     

The structure of Islamic economics: A comparative perspective on markets,ethics and economics

A comparative examination of mainstream economic doctrines and their recent developments is undertaken with a view to find out how ethics has been treated in these. The principal focus here is to identify the new paradigm that can treat ethics endogenously in preference formation, the market and the economic order. The quest for this paradigm leads us to an examination of Islamic economics. Islamic economics is presented in terms of its epistemological roots. Thereby, a general systems view of interactions, integration and creative evolution among economic and social possibilities is shown to lead to the paradigm of Islamic political economy. Some Islamic financial and economic instruments are examined to bring out the pervasive causality of the principle of universal complementarity across diversity in a general systems perspective of Islamic political economy as premised on its epistemological roots.     

Whistleblowing and employee loyalty

Discussions of whistleblowing and employee loyalty usually assume either that the concept of loyalty is irrelevant to the issue or, more commonly, that whistleblowing involves a moral choice in which the loyalty that an employee owes an employer comes to be pitted against the employee's responsibility to serve public interest. I argue that both these views are mistaken and propose a third view which sees whistleblowing as entirely compatible with employee loyalty.Robert A. Larmer, B.A., M.A., Ph.D., is Associate Professor of Philosophy at the University of New Brunswick. His responsibilities include courses in philosophy of religion and ethics. He is the author of various articles in philosophy of religion and ofWater Into Wine: An Investigation of the Concept of Miracle.     

Exploring the Ethical Identity of Islamic Banks via Communication in Annual Reports

Islamic Banks (IBs) are considered as having ethical identity, since the foundation of their business philosophy is closely tied to religion. In this article, we explore whether any discrepancy exists between the communicated (based on information disclosed in the annual reports) and ideal (disclosure of information deemed vital based on the Islamic ethical business framework) ethical identities and we measure this by what we have termed the Ethical Identity Index (EII). Our longitudinal survey results over a 3-year period indicate the overall mean EII of only one IB out of seven surveyed to be above average. The remaining six IBs suffer from disparity between the communicated and ideal ethical identities. We further found the largest incongruence to be related to four dimensions: commitments to society; disclosure of corporate vision and mission; contribution to and management of zakah, charity and benevolent loans; and information regarding top management. The results have important implications for communication management if IBs are to enhance their image and reputation in society as well as to remain competitive. Roszaini Haniffa is a Senior Lecturer and Head of Accounting and Finance at the Bradford University School of Management. She holds a PhD from Exeter University and has published papers in Abacus, Journal of Accounting and Public Policy, Journal of Business Finance and Accounting and other journals. Her research interests focus on social responsibility reporting, corporate governance, international accounting and the Islamic perspective of accounting. Ros has reviewed papers and is a member on the editorial board of several journals. Mohammad Hudaib is a Lecturer in Accounting at the Bradford University School of Management and holds a PhD from Essex University. He has previously taught at Exeter University and prior to his teaching career, was an auditor in Saudi Arabia. He has published papers on auditing and corporate governance in Journal of Business Finance and Accounting. His current research interests include auditing, Islamic perspective of accounting, accounting theory and ethics.     

The development of consumer protection in Saudi Arabia

The development of consumer protection in Saudi Arabia is of interest for a number of reasons. First, Saudi Arabia presents a unique combination of size, stage of development of the economy and wealth, coupled with strictness of Islamic observance. Second, consumer protection in the Saudi context has received very little attention from researchers. Despite the richness of Islamic teachings on the conduct of business and trade, very little has been written on consumer protection in Islamic societies other than discussions of financial markets and consumer credit and monopoly. This article briefly explores the background to the emergence of consumer protection in Saudi Arabia. Consumer credit and financial markets are excluded from the discussion. Islamic (Shari’ah) law is analysed as a basis for the regulation of consumer affairs; this system of law is then compared in its major outcomes for consumers with legal systems in advanced Western economies. The development of secular commercial law during recent times in Saudi Arabia is also considered as a parallel development to those in Shari’ah. Both strands of development are then set in the context of Saudi Arabia's 5‐year development plans and the changing position of consumer policy issues is tracked through successive plans. The institutional location of consumer policy within the Saudi government system is discussed before finally considering the changing nature of the Saudi consumer and the possible future for consumer protection in the country.     

Clearing Up the Egoist Difficulty with Loyalty

This paper seeks to analyze and to motivate a trend toward virtue ethics and away from deontology in the business ethics account of organizational loyalty. Prevailing authors appeal to “transcendent” values (deontology), skepticism (there is no loyalty), or Aristotelianism (loyalty is seeking mutual self-interest). I argue that the “Aristotelian” view clears up the “egoist” difficulty with loyalty. Briefly, critics feel we must “transcend,” “replace,” “overcome” and most especially sacrifice self-interest on the altar of ethics and loyalty. I argue that few things can be more ethical than loyalty to shared values. When a company and I both pursue the same value X, there becomes no difference between my seeking my best interest and my seeking the best interest of the company (and vice versa). Hence, the way out of the egoist difficulty with loyalty is seeing a company’s interests as my own (Aristotle’s third stage of friendship).     

Christian Ethics and Spirituality in Leading Business Organizations: Editorial Introduction

Christian ethics applied to economics and business has a long tradition. This dates back at least to the thirteenth century, with noteworthy developments in the four following centuries and again in the last century. Christian faith and reason intertwine to bring about principles, criteria, and guidelines for action and a set of virtues with relevance for economic activity. Christian spirituality, with 2000 years of history, has been embedded in Christianity from its beginning, but the application to modern business activity is relatively recent. This article introduces a special issue which, we hope, will make its own small contribution to the developments of both Christian ethics and spirituality in the leading business organizations. After a short historical overview and a consideration of the current situation of Christian ethics and spirituality in business, we introduce the papers selected for this issue.