Social Trust and Corporate Misconduct: Evidence from China

We study whether greater social trust is associated with a lower incidence of corporate misconduct. Both social norm and network theory suggest that social trust can affect managerial behavior and reduce the likelihood of misconduct behavior. Consistent with this prediction, we find that social trust is negatively associated with corporate misconduct behavior. Moreover, we show that, when media coverage is higher, the negative relation between social trust and corporate misconduct behavior is more pronounced. Further analyses suggest that social trust can help mitigate both disclosure-related and nondisclosure-related misconduct.     

Family Ownership and Corporate Misconduct in U.S. Small Firms

This study adds to the theory of family business management by exploring the effects of family ownership on the corporate misconduct of small firms in the United States. The empirical findings indicate that small family-owned firms are less likely to commit misconduct than small non-family-owned firms. We interpret this finding as family firms aiming to achieve the trans-generational succession of moral capital. Further investigation shows a nonlinear family-ownership–misconduct relationship. A negative relationship between them only appears in mature firms. We further show that for relatively mature firms, only family firms with older owners are less likely to commit corporate misconduct.     

Moral Reasoning in Computer-Based Task Environments: Exploring the Interplay between Cognitive and Technological Factors on Individuals’ Propensity to Break Rules

This study examines the relationship between cognitive moral development (CMD), productivity features of information technology (IT) and unethical behavior or misconduct. Using an experimental design that randomly assigns subjects to one of four unique technology conditions, we assess the relationship between a subjects?? predominant level of CMD and ethical misconduct on IT-oriented work tasks. Our results show that both higher levels of CMD and increased levels of IT productivity features at one??s disposal have a significant role to play in explaining observed behavior in our sample. We find that CMD as measured by the Defining Issues Test??s P-score is negatively related to task misconduct. Conversely, IT productivity features such as copy-and-paste are positively related to task misconduct. In addition, the CMD??misconduct relationship is significantly diminished by the introduction of IT productivity features. Lastly, a series of hazard analyses are conducted to explore the boundaries of our principal findings. These results demonstrate the significant role of technology in enabling negative behavior and the relative inability of subjects?? use of principled moral reasoning to overcome it. Implications of these findings for academics and business managers are offered, as well as recommendations for mitigating misconduct in both academic and workplace environments.     

A netnographical approach to typologizing customer engagement and corporate misconduct

Customer engagement has important implications for the organization. The study developed a typology to understand customer engagement and its relationship with corporate misconduct. Customer engagement is categorized into co-developing, augmenting, influencing, and mobilizing behaviors, which are typologized into organizational and peer engagement, with co-developing and augmenting behaviors classified as organizational engagement, and the remaining two as peer engagement. In view of a focus on negative engagement in the case of corporate misconduct in previous research, this study deployed a netnographical approach to exploring positive and neutral engagement within the organization and with peers. The findings indicate that corporate misconduct not only elicits a negative response but may also elicit positive or indifferent engagement behaviors. This study contributes to customer engagement and corporate misconduct research by delving into underexplored aspects of consumer behavior.     

Accountability and responsibility in research

Fraud and misconduct in scientific research appears to be increasing since 1980 when several cases were disclosed. Earlier instances were handled awkwardly, but the scientific community has since mobilized and issued guidelines about responding to allegations of misconduct and about the responsible conduct of research. Scientists, editors and the institutions of science are slowly learning how to cope with this problem.Patricia Woolf studies communication among scientists and has taught sociology of science. Her recent work has focused on research on misconduct, conflict of interest and the professionalization of medical editing.     

Brand misconduct: Consequences on consumer-brand relationships

This paper investigates the effects of brand misconduct on a consumer-brand relationship. Brand misconduct describes a brand's behavior that disappoints consumers' expectations of the brand, for example the alleged use of child labor in soccer ball factories contracted by Adidas, Nike and Puma. Based on relationship and congruency theory, this paper develops a model to explain consumer-brand relationship and its impact on consumers' repurchase intentions. According to this model, functional congruence, actual and ideal self-congruence, partner quality and brand relationship quality represent factors determining repurchase intention. An empirical investigation with regard to jeans brands serves to test the postulated relationships in two distinct situations: before and after brand misconduct. On the one hand, the findings provide a deep insight into the consequences of brand misconduct. On the other hand, the results enable practitioners to develop sustainable brand strategies and create lasting brand preferences.     

Corporate recidivism in emerging economies

Prior research on corporate misconduct pays extensive attention to single misconduct behaviors. However, little research has addressed recidivism – the repeated behaviors of corporate misconduct. Based on institutional theory and using the context of emerging economies where recidivism plays a considerable role, we propose the path dependency of corporate recidivism and suggest that three influential factors exist: internal preconditioning, inter‐organizational imitation, and the prevailing external evaluation. Our event history analysis of 1,036 listed companies in China over the period 2001–2008 statistically confirms our hypotheses. We conclude the paper by outlining the implications for both theory and practice.     

What’s in it for Me? An Examination of Accounting Students’ Likelihood to Report Faculty Misconduct

Since there are so few controls over detecting and preventing faculty misconduct, one of the most common ways in which it is discovered is through student reports (in other words, whistleblowing). Given the importance of student reports in bringing to light faculty’s ethical lapses, this paper seeks to understand what factors influence students’ likelihood to report faculty misconduct. We develop an empirical model that integrates the decision process of the Prosocial Organizational Behavior (POB) Model with insights from the emotional perspective on whistleblowing. Specifically, we use an experimental survey to examine how students’ perceived unfairness of the faculty misconduct, feelings of anger, and the students’ self-interest in the situation in conjunction with situational “cues for inaction” lead to the intention to blow the whistle. Overall, the results from our structural model partially support our theoretical model. Interestingly, these findings demonstrate that, in the case of faculty member misconduct, anger and perceptions of unfairness play a greater role than the more rational cost-benefit process of the POB model. These results could aid in development of ethics education for students and could also inform the development of university policies that encourage students to come forward when faced with faculty misconduct.     

Framing and Organizational Misconduct: A Symbolic Interactionist Study

This study expands theoretical understanding of organizational misconduct through qualitative analysis of widespread deceptive sales practices at a large U.S. life insurance company. Adopting a symbolic interactionist perspective, this research describes how a set of taken-for-granted interpretive frames located in the organization’s culture created a worldview through which deceptive sales practices were seen as normal, acceptable, routine operating procedure. The findings from this study extend and modify the dominant theoretical ‘pressure/opportunity’ model of organizational misconduct by proposing that the process engine driving misconduct is not amorally rational organization members, but rather is organizational members acting on socially constructed views of the organization that normalize misconduct. Tammy L. MacLean is an assistant professor of management at Suffolk University in Boston, Massachusetts. She teaches in the areas of organizational behavior and managing diversity. Her research interests include how the process of decoupling organizational policies and programs from core organizational functions affects organizational behavior. Her research has been published in academic journals such as Academy of Management Review, Academy of Management Learning & Education, Journal of Management Inquiry, and Business & Society. She received a Ph.D. in Organization Studies in 2001 from Boston College.     

Individual and Organizational Antecedents of Misconduct in Organizations

A heterogeneous survey sample of for-profit, non-profit and government employees revealed that organizational factors but not personal characteristics were significant antecedents of misconduct and job satisfaction. Formal organizational compliance practices and ethical climate were independent predictors of misconduct, and compliance practices also moderated the relationship between ethical climate and misconduct, as well as between pressure to compromise ethical standards and misconduct. Misconduct was not predicted by level of moral reasoning, age, sex, ethnicity, job status, or size and type of organization. Demographic variables predicted job satisfaction and organizational variables added significant incremental variance. Results suggest the importance of promoting a moral organization through the words and actions of senior managers and supervisors, independent of formal mechanisms such as codes of conduct.

Whistle-Blowing Among Young Employees: A Life-Course Perspective

The 2003 National Business Ethics Survey, conducted by the Ethics Resource Center, found that respondents who were both young and had short organizational tenure were substantially less likely than other respondents to report misconduct that they observed in the workplace to an authority. We propose that the life-course model of deviance can help account for this attenuation of acquiescence in misbehavior. As employees learn to perceive informal prosocial control during their socialization into the workforce, we hypothesize that they will become more willing to blow the whistle on misconduct. Analysis of the 2003 NBES (n = 1,417, with a subset of 314 who observed misconduct) reveals that young and short-tenured employees do perceive less informal prosocial control, and that informal prosocial control does boost whistle-blowing; however, tests for mediation of the relationship between youth and short-tenure and whistle-blowing by informal social control were largely negative, suggesting that other explanations are still needed.     

In Support of Public or Private Interests? An Examination of Sanctions Imposed Under the AICPA Code of Professional Conduct

The American Institute of Certified Public Accountants (AICPA) monitors the misconduct of its members using the AICPA Code of Professional Conduct (CPC). To accomplish this task, the AICPA relies on various stakeholders to report known violations of its CPC. We examine the full population of sanctions imposed by the AICPA on its members under its CPC from 2008–2013 to identify recent trends in the misconduct of accounting professionals. While we find that multiple stakeholders identify and report violations, we also find that the most common types of violations remain consistent with those reported in the 1990s. Further, we develop a taxonomy based on prior accounting literature to determine whether the AICPA CPC is being enforced to defend the public interest and/or the private interests of the accounting profession. In contrast to prior studies, our results suggest that as the accounting profession emerges from a recession and period of intense public scrutiny, the AICPA CPC is largely being enforced to defend the public interest. This public interest focus was most pronounced during the recessionary years of 2008–2010, as evident from misconduct reported by parties such as the Internal Revenue Service, Securities and Exchange Commission, Public Company Accounting Oversight Board, and state boards of accountancy. Although key stakeholders have recently focused on reporting misconduct that threatens the public interest, we believe there are still areas in need of improvement, especially around the level of detail provided in the AICPA’s sanction records. We propose some possible solutions to improve public transparency.     

Beyond silence or compliance: The complexities of reporting a friend for misconduct

Why do employees fail to report a friend's misconduct, and if they do not report, how else do they cope with this ethical dilemma? Through two field studies, we offer a more nuanced understanding of the range of alternative responses between the extremes of silence (ignoring misconduct) and compliance (reporting), and we illuminate the underlying reasons for these choices. Our results reveal that most employees are inclined to attempt to resolve a friend‐reporting situation themselves, and further, that many employees hesitate to report a friend's misconduct for ethical reasons. Specifically, we show how an ethic of care expressed through empathy for the transgressor may play an important and previously unexamined role in friend‐reporting decisions, drawing attention to the consideration of empathy as a key emotion that can reduce compliance with reporting programmes. In addition to these important contributions to the literature, practitioners should also find this study useful, as it suggests new approaches to help employees better align their choices with the compliance goals of the organisation without sacrificing their valued friendships.     

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.     

The Federal Sentencing Guidelines for Organizations: A Framework for Ethical Compliance

After years of debate over the importance of ethical conduct in organizations, the federal government has decided to institutionalize ethics as a buffer to prevent legal violations in organizations. The key requirements of the Federal Sentencing Guidelines (FSG) are outlined, and suggested actions managers should adopt to improve ethical compliance are presented. An effective compliance program is more a process and commitment than a specific blueprint for conduct. The organization has the responsibility to create an organizational climate to reduce misconduct. The adoption of a FSG compliance program has the potential to substantially lessen organizational penalties if there is due diligence to prevent misconduct. Federal courts determine the effectiveness of an FSG program after a violation occurs.     

Stigma and Settling Up: An Integrated Approach to the Consequences of Organizational Misconduct for Organizational Elites

In this article, I address the question of the apportionment of the consequences of organizational misconduct to individual members of the organizational elite. I argue that this process can be best understood by marrying the behavioral aspects of stigma theory to the economic mechanisms of ex post settling up. Viewed in conjunction with stigmatization, ex post settling up following organizational misconduct can be seen as the result of attempts to avoid stigma by association. Efforts at stigma avoidance on the parts of various stakeholders produce the diminished social interaction associated with ex post settling up: departure from the focal firm, and loss of seats on other boards. This also suggests that the process of stigmatization, and hence ex post settling up, can be influenced by characteristics of social interaction unrelated to the misconduct itself. Jo-Ellen Pozner’s research addresses the social processes that differentiate what is legitimate from what is illegitimate in organizational practice, and how changing definitions of legitimacy affect organizations and individuals.     

Ethical choices in the design and administration of executive compensation programs

Within the past few years, executives have come under increased scrutiny and criticism for the levels of compensation they receive. At the same time, corporate practices surrounding the design and review of executive compensation programs have received increased attention. While some recent executive misconduct has involved violations of the law, many academics and other corporate critics view the issues involving executive compensation more from an ethical than a legal perspective. Several dimensions of the executive compensation decision process offer significant opportunities for ethical choices. This article identifies the major components of executive compensation and highlights decision points in the design and administration of each component where ethical issues may arise. Proposals to reduce the potential for ethical misconduct are also offered.     

Managerial Aspirations and Suspect Leaders: The Effect of Relative Performance and Leader Succession on Organizational Misconduct

Journal of Business Ethics - Explanations of organizational misconduct frequently point to declining firm performance and/or the actions of unethical or suspect leaders. Evidence that...     

Character-Infused Ethical Decision Making

Journal of Business Ethics - Despite a growing body of research by management scholars to understand and explain failures in ethical decision making (EDM), misconduct prevails. Scholars have...     

How prevalent is academic misconduct in management research?

We survey 1215 management researchers, including editors, researchers, and reviewers, about their views and experiences with four types of academic misconduct: plagiarism, self-plagiarism, coercive citations, and questionable reviewing practices. Management researchers hold strict views on plagiarism, though editors report on frequent instances encountered. We find that many management researchers consider self-plagiarism acceptable. There is also a high percentage of editors who report on authors being coerced to add citations of reviewers or journals to their submission. Similarly prevalent is so-called “honorary authorship,” where colleagues and supervisors who did not take part in the work are added as co-authors. Lastly, nearly half of the editors who responded report having witnessed conflicts of interest in peer reviewing. We conclude that the current system of peer reviewing is in need of change, and we discuss possible ramifications to overcome the persistence of academic misconduct.