The sociology of knowledge: Toward an existential view of business ethics

Business ethics is the study of ethics as it applies to a particular sphere of human activity. As such, business ethics presupposes a difference between an individual's experience within a business organization and his or her experience outside the organization. But how do we examine this difference? How do we discuss an individual's experience of “everyday reality”? What processes create and sustain this reality, and how does one's version of “reality” affect what is, and what is not, ethical? This paper outlines an approach to these questions based on theory from the sociology of knowledge, an approach which makes some progress towards making business ethics more existential. The sociology of knowledge, and particularly the social constructionist perspective, is concerned with how an institution creates “knowledge” and how this “knowledge” affects the cognitive processes of the individuals who make up the institution. The dialectic nature of the interdependent processes which shape both the individual and the organization are important in understanding how business ethics, as one kind of social knowledge, are enacted. Examining these processes leads to several interesting hypotheses about the nature of both the study and practice of business ethics. XXX“Only individuals have a sense of responsibility.” — Friedrich Nietzsche     

Ethics in Entrepreneurial Finance: Exploring Problems in Venture Partner Entry and Exit

This research advances our understanding of the manifestation of tensions and ethical issues in entrepreneurial finance. In doing so, we offer an overview of ethics in entrepreneurship and finance, delineating the curious paucity of research at their intersection. Using twelve vignettes, we put forward the asymmetries between entrepreneurs and investors and discuss a set of ethical problems that arise among key actors centring on the dynamics of venture partner entry and exit, applying the multiple-lens ethical perspective to analyse these issues. This analysis culminates in the introduction of a general classification scheme for ethical problems across venture partners. Our analysis highlights the moral dimension inherent in the entry and exit of venture partners and the importance of considering moral judgement, as well as intention in future analysis of any decision-making. Our study also points to the moral responsibility in finance, especially to the mutual moral responsibilities of investors and entrepreneurs. By integrating ethics into finance, this research also demonstrates that in the case of venture partner exit, an ethical approach and decent governance go beyond compliance to the law. We conclude with implications for practitioners, specifically with some proposals for a solution to the problem of blocked and forced exit. Together, we make several contributions to the literature by integrating ethics, finance and entrepreneurship, and we call for future research to stimulate a growing body of research within this presently overlooked area.     

The Applicability of a Contingent Factors Model to Accounting Ethics Research

This paper discusses the relevancy of a contingent factors model posited by Jones for conducting accounting ethics research. Using a sample of 37 experienced Australian auditing managers and partners of all of the ‘Big Four’ multinational accounting firms, we find that the contextual model developed by Jones can help guide accounting ethics research by isolating the contingent factors that affect ethical decision making. Moreover, we examine how the factors differ across different accounting settings. Implications for accounting ethics research and accounting practice are then discussed.Jeffrey R. Cohen, PhD is an Associate Professor at the Carroll School of management at Boston College. His research focuses primarily on behavioral ethics issues as well as investigating governance from a behavioral perspective.Nonna Martinov Bennie is a Senior Lecturer at Sydney University. Her research focuses on ethical issues in auditing as well as issues surrounding materiality judgments.     

Auditors' ability to discern the presence of ethical problems

Recently, society and the accounting profession have become increasingly concerned with ethics. Accounting researchers have responded by attempting to investigate and analyze the ethical behavior of accountants. While the current state of ethical behavior among practitioners is important, the ability of accountants to detect ethical problems that may not be obvious should also be studied and understood. This study addresses three questions: (1) are auditors alert to ethical issues; (2) if so, how important do they perceive them to be; and (3) what factors affect their sensitivity threshold and their perceptions of the importance of the issues? Most of the prior research in accounting ethics presents subjects with scenarios that contain an obvious ethical issue, and subjects realize that they are participating in an ethics study. In the present study, the ethical problems are integrated into general accounting situations in order to discover the sensitivity of accounting professionals to them. This study defines ethical sensitivity as the ability to interpret a given situation and to realize that a moral problem exists. CPAs responded to an experimental instrument comprised of three auditing scenarios taken from the 1989 Trueblood cases, adapted to deal with different ethical problems — tax evasion by a client, auditor independence, and a client's ethical problem which does not directly affect the audit. The accounting and/or auditing problems presented in the three cases were also different with the information relating to the possible ethical problem embedded in the situation. Multiway contingency tables were used to analyze the data. Factors useful in predicting whether a subject will mention an ethical issue include the nature of the ethical issue, the issue's severity, and the subject's age. Employment position, expertise (measured by two proxies), prior exposure to a similar ethical issue and education level (undergraduate versus graduate) were not significant. The ethical issue itself was also a significant factor in determining the absolute importance given to the ethical issue.     

Western Financial Agents and Islamic Ethics

This paper investigates Western professional bankers’ perceptions of Islamic finance. Exploiting data from an original survey, we carry out a principal component analysis (PCA) to characterize the main dimensions on which financial agents diverge. The PCA extracts five dimensions—accounting for 61 % of the variance in the agents’ answers—that we interpret with the help of a pilot field survey. In addition to confirm the increased association of Islamic financial values with ethical practices in the West, our results allow us to understand how the observed growth of the industry has been conceptualized by conventional agents. The five dimensions identified shed light on the multitude of constructs that have informed the diffusion of Islamic financial ideas to international markets. This supports the fact that Islamic finance cannot be seen as a single movement but is characterized by opposing and concurrent logics in global markets.     

Ethics and the Ivory Tower: The Case of Academic Departments of Finance

This study reports the results from a survey of 1,000 finance faculty members within schools of business across the U.S. concerning their knowledge of ethical transgressions as well as their attitudes towards ethics training in the curriculum. Ethical breaches appear most frequently with the unauthorized duplication of licensed software and the misuse of university resources for private consulting activity. Yet knowledge of ethical misconduct is highly segmented, with significant differences in reporting frequency between groups based upon citizenship, academic rank and school size. Contrary to the implications of Hawley (1991), we find there is a widely held belief by finance educators that business ethics has a legitimate role in business curriculums and should be included in finance course work. Further, our respondents strongly reject the notions that ethical practices are inconsistent with the principle of shareholder wealth maximization or that finance is more susceptible to ethical transgressions than other functional areas of business. We conclude that finance faculty are able to serve as legitimate ethical mentors for students and by implication may positively influence future corporate ethical behavior.     

Neuromarketing: Ethical Implications of its Use and Potential Misuse

Neuromarketing is an emerging field in which academic and industry research scientists employ neuroscience techniques to study marketing practices and consumer behavior. The use of neuroscience techniques, it is argued, facilitates a more direct understanding of how brain states and other physiological mechanisms are related to consumer behavior and decision making. Herein, we will articulate common ethical concerns with neuromarketing as currently practiced, focusing on the potential risks to consumers and the ethical decisions faced by companies. We argue that the most frequently raised concerns—threats to consumer autonomy, privacy, and control—do not rise to meaningful ethical issues given the current capabilities and implementation of neuromarketing research. But, we identify how potentially serious ethical issues may emerge from neuromarketing research practices in industry, which are largely proprietary and opaque. We identify steps that can mitigate associated ethical risks and thus reduce the threats to consumers. We conclude that neuromarketing has clear potential for positive impact on society and consumers, a fact rarely considered in the discussion on the ethics of neuromarketing.     

The regulation of virtue: Cross-currents in professional ethics

This paper argues that more attention should be paid to the civic functions of ethical discourse about the professions and to the moral virtues inherent in their practice and traditions. The ability of professional ethics to articulate civic ideals and virtues is discussed in relation to three issues. First, should professional ethics aim to enlighten ethical understanding or to motivate ethical conduct? Second, how should professional ethics define the professional's moral responsibilities in the face of ethical dilemmas — should the professional attempt to resolve the dilemma ethically or to change the social conditions that create the dilemma in the first place? The third issue discussed in the paper is whether professional ethics should be based on the model of regulation and rational self-interest or on the model of virtue and a fundamental personal commitment to the ideal of a certain form of life? In order for work in professional ethics to attain intellectual credibility among a non-philosophical audience, it must develop a coherent and convincing position on each of these issues.     

Managing organizational ethics: How ethics becomes pervasive within organizations

This study analyzes real experiences of culture management to better understand how ethics permeates organizations. In addition to reviewing the literature, we used an action-research methodology and conducted semistructured interviews in Spain and in the U.S. to approach the complexity and challenges of fostering a culture in which ethical considerations are a regular part of business discussions and decision making. The consistency of findings suggests patterns of organizational conditions, cultural elements, and opportunities that influence the management of organizational cultures centered on core ethical values. The ethical competencies of leaders and of the workforce also emerged as key factors. We identify three conditions—a sense of responsibility to society, conditions for ethical deliberation, and respect for moral autonomy—coupled with a diverse set of cultural elements that cause ethics to take root in culture when the opportunity arises. Leaders can use this knowledge of the mechanisms by which organizational factors influence ethical pervasiveness to better manage organizational ethics.     

Does Job Function Influence Ethical Reasoning? An Adapted Wason Task Application

A review of extent business ethics research uncovered well over 200 published articles that investigated the role of job functions within a business organization as an explanatory factor of ethical or unethical behavior. While an important body of work, ethical breaches are often found to cut across job functions and involve multiple disciplines embedded in a business organization. This research seeks to explore a cross-functional explanation for ethical reasoning by using an instrument new to business ethics research, the Wason selection task, but well-grounded and validated in cognitive research and evolutionary psychology, to assess an individual’s ability to detect rule-based social contract violations. A sample of 276 full-time business practitioners, enrolled in part-time M.B.A. programs, from the accounting, finance, information technology, marketing, supply chain, and human resource management job functions were compared on their ability to detect rule violators across a series of production scenarios in the Wason selection task. Rates of cheater detection were calculated to determine if substantive differences existed across job functions. This was followed by a series of pair-wise comparisons of percentages of cheater detection across the job functions using z-tests for assessing statistical significance. The data analysis showed differences in cheater detection, with most of the variance due to the marketing job function group. Insights from this study for scholars, educators, and practitioners in the business ethics field are discussed.     

Teaching Global Ethical Standards: A Case and Strategy for Broadening the Accounting Ethics Curriculum

This paper advocates inclusion of a wider set of ethical theories into the accounting canon. We find that the mainstream accounting curriculum does not adequately engage with non-Western ethical theories or contemporary Western ethical thought, as evidenced by the ethics content of core accounting texts and the International Federation of Accountants’ ethics publications. We suggest adopting a ‘thematic’ approach to teaching ethics as an integrated part of accounting curricula. This approach addresses two competing principles implicit in International Education Standard 4: (i) that all accountants need to be educated to meet global ethical standards, and (ii) that teaching ethics should accommodate ethical traditions and practices that could vary between nations and cultures. The thematic approach we propose requires less additional space within existing accounting curricula and less additional preparation by accounting educators than the alternative approach of teaching substantive ethical theories from a sufficiently diverse range of cultures and traditions. The paper also provides exemplars of this thematic approach to teaching ethics in accounting.     

Exporting an Inherently Harmful Product: The Marketing of Virginia Slims Cigarettes in the United States,Japan, and Korea

In recent years, and in close connection with a number of well-known financial malpractice cases, public debate on business ethics has intensified worldwide, and particularly in ethics-unfriendly environments, such as Spain, with many recent fraud and corruption scandals. In the context of growing consensus on the need of balancing social prosperity and business profits, concern is increasing for introducing business (and particularly accounting) ethics in higher education curricula. The purpose is to improve ethical behaviour of future business people, and of accounting professionals in particular. In this study, from a sample of 551 business students at a Spanish university, the importance of accounting ethics is investigated. The aim of this paper is twofold. First, we attempt to examine students’ overall perceptions of business ethics in unfriendly environments and, specifically, their views on the importance and goals of accounting ethics education. Second, we intend to investigate whether potential differences in such perceptions depend on previous business ethics courses taken, gender, and age of students. Our results show that those students who have previously taken an ethics course are especially prone to considering that accounting education should include ethical considerations, and show greater interest in further introducing this subject in their curricula. These facts should encourage universities offering business degrees in ethics-unfriendly environments to extend the implementation of ethics courses in their curricula. Besides, significant differences in students’ perceptions on the importance of accounting ethics are found depending on their gender and age. In line with previous research findings, female and older students show more ethical inclinations than, respectively, male and younger students. Thus, ethics-unfriendly environments can be treated as contexts where general trends on students’ ethical attitudes are also clearly visible. This fact, together with the evidenced impact of ethics courses on students’ ethical inclinations, places ethics-unfriendly environments as crucial research settings for further inquiring into the nuances that help explain students’ attitudes towards accounting ethics and the role of ethics courses in business degree curricula.     

The Role of Individual Variables,Organizational Variables and Moral Intensity Dimensions in Libyan Management Accountants’ Ethical Decision Making

This study investigates the association of a broad set of variables with the ethical decision making of management accountants in Libya. Adopting a cross-sectional methodology, a questionnaire including four different ethical scenarios was used to gather data from 229 participants. For each scenario, ethical decision making was examined in terms of the recognition, judgment and intention stages of Rest’s model. A significant relationship was found between ethical recognition and ethical judgment and also between ethical judgment and ethical intention, but ethical recognition did not significantly predict ethical intention—thus providing support for Rest’s model. Organizational variables, age and educational level yielded few significant results. The lack of significance for codes of ethics might reflect their relative lack of development in Libya, in which case Libyan companies should pay attention to their content and how they are supported, especially in the light of the under-development of the accounting profession in Libya. Few significant results were also found for gender, but where they were found, males showed more ethical characteristics than females. This unusual result reinforces the dangers of gender stereotyping in business. Personal moral philosophy and moral intensity dimensions were generally found to be significant predictors of the three stages of ethical decision making studied. One implication of this is to give more attention to ethics in accounting education, making the connections between accounting practice and (in Libya) Islam. Overall, this study not only adds to the available empirical evidence on factors affecting ethical decision making, notably examining three stages of Rest’s model, but also offers rare insights into the ethical views of practising management accountants and provides a benchmark for future studies of ethical decision making in Muslim majority countries and other parts of the developing world.     

Ethics in accounting: Values education without indoctrination

The integration of ethics into accounting curricula is a critical challenge facing accounting educators. The ethical subject matter to be covered and the role of the professor in ethical debates in the classroom are important unresolved issues. In this paper, we explore teaching basic values as an integral part of ethics education. Concern about indoctrination of students is addressed and the consistency of values education with the goals of ethics education is examined. A role for ethics researchers in identifying and clarifying the basic values that define our profession is recommended, and suggestions for implementing values education in accounting ethics are provided.H. Fenwick Huss is Associate Professor of Accounting at Georgia State University. His recent research focuses on ethical and regulatory issues in financial reporting. He has presented papers and served as a panel member in sessions on ethics at regional American Accounting Association conferences.Denise M. Patterson is a doctoral candidate at Georgia State University. Her research interests are in the areas of auditing and the impact of ethics on the role of the auditor. Denise has audit experience with an international accounting firm.     

Accountant ethics: A brief examination of neglected sociological dimensions

Traditional treatments of accountant ethics make implicit assumptions inconsistent with a sociological perspective. This paper identifies the ways in which accountant ethics have been approached both in literature pertaining to practice and the classroom. The boundaries of the topic, when its definitions are left tacit, systematically preclude many important features of ethics. Included in these are sociological treatments of the accounting profession as a group, extra-personal aspects of decision making, the stratification of accounting practice, and a sense of ethical action. The paper concludes with an illustration of how institutional theory has the potential to create a systematic sociological interpretation of accountant ethics.Timothy J. Fogarty is an assistant professor at the Weatherhead School of Management, Case Western Reserve University. His research interests include accounting professionalism, public accounting organizations and accounting education. He has published articles in the accounting, sociology, management, legal and education literatures.     

Does Job Function Influence Ethical Reasoning? An Adapted Wason Task Application

A review of extent business ethics research uncovered well over 200 published articles that investigated the role of job functions within a business organization as an explanatory factor of ethical or unethical behavior. While an important body of work, ethical breaches are often found to cut across job functions and involve multiple disciplines embedded in a business organization. This research seeks to explore a cross-functional explanation for ethical reasoning by using an instrument new to business ethics research, the Wason selection task, but well-grounded and validated in cognitive research and evolutionary psychology, to assess an individual’s ability to detect rule-based social contract violations. A sample of 276 full-time business practitioners, enrolled in part-time M.B.A. programs, from the accounting, finance, information technology, marketing, supply chain, and human resource management job functions were compared on their ability to detect rule violators across a series of production scenarios in the Wason selection task. Rates of cheater detection were calculated to determine if substantive differences existed across job functions. This was followed by a series of pair-wise comparisons of percentages of cheater detection across the job functions using z-tests for assessing statistical significance. The data analysis showed differences in cheater detection, with most of the variance due to the marketing job function group. Insights from this study for scholars, educators, and practitioners in the business ethics field are discussed.     

Aesthetics as a Foundation for Business Activity

This paper identifies the ultimate justification for business activity as an aesthetic justification. Aesthetics, loosely defined as the appreciation of beauty, subsumes both ethics and economics within an holistic justificatory mechanism for business decisions. Five essential qualities of aesthetic judgment are identified: disinterest, subjectivity, inclusivity, contemplativity, and internality. The quality of aesthetic judgment, exercised by the individual through the organization, will determine the extent to which business activity enhances quality of life. John Dobson is Professor of Finance at California Polytechnic State University. His primary area of interest is financial ethics, in particular how the theory of ethics relates to financial side of business activity. He has published articles on ethics and finance in various academic journals, and has published two books, both of which investigate the synthesis of finance and ethics. His current research focuses on the connections between psychology, finance theory, and moral philosophy.     

Teaching Finance Ethics

This article seeks to promote the study of ethics in the finance curriculum by providing an organizing framework of ethical issues in finance, a discussion of theoretical approaches to these issues, a listing of the main ethical problems in finance, and suggestions about resources and materials.     

Two sides of the same personality coin: An opportunity to refocus (un)ethical analysis

Prior ethics studies highlight the importance of understanding positive or negative leader personality characteristics to improve organizational outcomes. However, few studies combine both positive and negative leader personality characteristics, to unpack and guide ethics theorizations. This lack of methodological balance restricts how we perceive leader ethics, our understandings of organizational experiences, and therefore, our awareness of governance approaches. This study challenges the dominant ethics scholarly orthodoxy—which focuses on positive or negative leader characteristics—by combining self-determination theory and the Dark Triad perspective, to explore the plurality of ethical dimensions within organizational leadership. A case example is provided to highlight the need for this methodological awareness and four avenues of engagement are discussed to improve future organizational governance and ethics scholarship.     

Influencing Ethical Development: Exposing Students to the AICPA Code of Conduct

Although the AICPA Code of Professional Conduct emphasizes the importance of education in ethics, very little is known about how and when the Code and the topic of ethics can be presented to enhance the effectiveness of ethics-oriented education. The purpose of this research was to provide preliminary evidence about the ethical development of students prior to, and immediately following, such courses. We found that: (1) accounting students, after taking an auditing course which emphasized the AICPA Code, reasoned at higher levels than students who had not taken the course; (2) there were no differences in moral reasoning levels when accounting and non-accounting majors were compared prior to an auditing course; and (3) there was a significant relationship between the Seniors' levels of ethical development and the choice of an ethical versus unethical action. It was concluded that an auditing course emphasizing the 'spirit' of the Code can have a positive impact on the ethical behaviour of some of the future members of the accounting profession.