Knobe,Side Effects,and the Morally Good Business

The International Federation of Accountants (IFAC) has recently issued a revised “Code of Ethics for Professional Accountants” (IFAC Code). As a requirement for membership in IFAC, a national accounting organization must either adopt the IFAC Code or adopt a code of conduct that is not “less stringent” than the IFAC Code. In this paper, we examine the extent to which 158 national accounting organizations have adopted the revised IFAC Code as their own. Our results indicate that 80 of our sample organizations have adopted the IFAC Code (sometimes with minor modifications), while the remaining 78 opted not to utilize the model IFAC Code. We then test the hypothesis that national accounting organizations in lower income economies would be less likely to adopt the IFAC Code than those in high income economies. Our results do not support the hypothesis. We argue that one potential reason for such a finding is that adopting the IFAC Code may be a cost effective means of adopting a code of ethics for organizations in lower income economies.     

The Impact of Cultural Differences on the Convergence of International Accounting Codes of Ethics

The International Federation of Accountants (IFAC) has issued a revised “Code of Ethics for Professional Accountants” (IFAC Code). The IFAC Code is intended to be a model code of ethics for national accounting organizations throughout the world. Prior research demonstrates that approximately 50% of IFAC member organizations have adopted the IFAC Code as their organizational code of conduct. There is therefore empirical evidence that international convergence of accounting ethical standards is occurring. We employ Hofstede’s (2008, http://www.geert-hofstede.com/hofstede_dimensions.php) cultural dimensions in an attempt to empirically explain accounting organizations’ decisions about whether to adopt the IFAC Code or to retain their organization-specific code. Our results indicate that accounting organizations in cultures with high levels of Individualism and Uncertainty Avoidance are less likely to adopt the model IFAC Code. Organizations in high Individualism and Uncertainty Avoidance societies are therefore less likely to surrender the setting of ethical standards to an outside, international organization.     

Global harmonisation of the professional behaviour of accountants

This paper reports findings from a study into national associations of accountants from the perspective of the model code of the International Federation of Accountants (IFAC), Code of Ethics for Professional Accountants . Using data collected from a survey document, the paper analyses the extent of the model code's influence in an international process of harmonisation of ethical rules for accountants. Obstacles to the adoption of the model code are examined, as is the impact that government supervision of codes has had on harmonisation efforts. Particular attention is paid to the relationship between professional independence and close family relationships and culture. Findings are also presented on other issues of code content, and the most appropriate body for interpreting national codes is identified. These items were included as matters of then current concern to the Ethics Committee of IFAC.     

A “New Approach” to Standards and Consumer Protection

As consumer use of information and communication technology (ICT) products grows, the importance of ICT standards in consumer markets also grows. While standards for manufactured products were once developed at the national level in formal standards bodies, standards for ICT products today are more likely to be developed by informal standards bodies that target global markets, creating new challenges for national consumer protection laws. As part of the process of creating a single market, the EU developed an innovative and successful form of “coregulation” known as the “New Approach” that coordinated the work of legislators and standards developers to reduce technical barriers to trade in the internal market. In order to protect consumer interests in markets for ICT products effectively, another “New Approach” is needed to coordinate the work of global ICT standard-developing organizations with the goals of national and regional consumer protection laws, but the institutional challenges facing such a strategy are daunting. The French DADVSI legislation represents progress in this direction; further progress may be possible by adopting “better regulation” strategies.

Ethical Attitudes of Accounting Practitioners: Are Rank and Ethical Attitudes Related?

We address a previous finding in the business ethics literature in which accounting professionals in higher rank levels, i.e., “manager” or “partner” of auditing firms, appear to have lower moral reasoning ability than their junior counterparts. Prior investigations have relied upon a similar methodology for estimating ethical beliefs, namely testing “moral reasoning ability” using either the Moral Judgment Interview or Defining Issues Test. In the present study, we use a multiple vignettes approach to test for the existence of the inverse rank-ethical beliefs effect. With only 2 of the 30 vignettes resulting in both managers and partners being more accepting of the ethically charged behaviors, the results presented here using this alternative methodology are generally not supportive of the inverse rank-ethical beliefs phenomenon. We also use a multivariate analysis in order to control for demographic characteristics. Our results suggest that the most robust predictor of ethical attitudes among accounting practitioners is age, not rank within a firm.     

The Explanatory Power of Monetary Policy Rules

Over the past 20 years, the use of monetary policy rules has become pervasive in analyzing and prescribing monetary policy. This paper traces the development of such rules and their use in the analysis, prediction, and stabilization of national economies. In particular, rules provide insight into eras in which monetary policy was not effective as well as when it was, such as the persistence of the ongoing “Great Moderation.” The paper stresses the “scientific” contributions of rules, including their insight into fluctuations of housing construction and exchange rates, as well as into the term structure of interest rates. JEL Classification E52, E58     

Nurturing the Whole Person: The Ethics of Workplace Spirituality in a Society of Organizations

In a world which can be increasingly described as a “society of organizations,” it is incumbent upon organizational researchers to account for the role of organizations in determining the well-being of societies and the individuals that comprise them. Workplace spirituality is a young area of inquiry with potentially strong relevance to the well-being of individuals, organizations, and societies. Previous literature has not examined ethical dilemmas related to workplace spirituality that organizations might expect based upon the co-existence of multiple ethical work climates, nor has previous literature accounted for the relevance of the cosmopolitan (external, societal) source of moral reasoning in the ethical treatment of workplace spirituality. The purpose of this paper is to address these gaps by articulating two such ethical dilemmas related to workplace spirituality: the “quiet desperation” dilemma and the instrumentality dilemma. Moreover, I propose two theoretical contexts that foster “both-and” rather than “either-or” thinking, thereby mitigating (moderating) the relationships between climate combinations and conflictual aspects of the ethical dilemmas. For the “quiet desperation” dilemma, I propose a person–organization fit perspective to emphasize diversity of individual preferences instead of a managerially prescribed uniformity of spirituality. For the instrumentality dilemma, I propose a multiparadigm approach to workplace spirituality research to avoid the privileging of one research interest over another (e.g., instrumentality, individual fulfillment, societal good). I conclude with suggestions for future research.     

“Just” Markets from the Perspective of Catholic Social Teaching

The “justice of markets” is intricately connected to the treatment of the poor and the disadvantaged in market economies. The increased interest of multinational corporations in low-income market segments affords, on one hand, the opportunity for a more inclusive capitalism, and on the other, the threat of greater exploitation of poor and disadvantaged consumers. This article traces the contributions of Catholic Social Teaching and its basic principles toward providing insight into what constitutes “justice” in such “marketing to the impoverished” situations.     

Tax Competition and Tax Revenues

It is often feared that tax competition might lead to a “race to the bottom” and that the consequence of a reduction in tax rates on capital income would be shrinking capital income tax revenues and difficulties for national governments to perform their usual tasks. The following paper analyses what happened to tax revenues in a number of OECD countries. It turns out that taxes on capital income contribute to the financing of public expenditure to a more or less unchanged extent; nor are there significant changes in the level and structure of total tax revenues.      

A Critical Analysis of the Accounting Industry’s Voluntary Code of Conduct

The public accounting industry’s voluntary code of conduct in the United States is the American Institute of CPA’s Code of Professional Conduct. Based on our analysis, we conclude that the accounting industry’s current code is limited in its ability to serve the public interest in three respects. Specifically, the code is input-based, requires no third-party attestation of compliance with the code, and contains no public reporting process of code compliance/noncompliance at the accounting firm level. We propose that the accounting profession should reorient its largely input-based Code of Professional Conduct to include output-based performance measurements. We also conclude that third-party attestation of compliance with the profession’s code would help to promote compliance. Finally, we maintain that the accounting industry should initiate a public reporting process at the individual accounting firm level. Such a requirement would add a degree of public accountability as to whether a firm complies or fails to comply with the industry’s voluntary code of conduct. John D. Neill, Ph.D., CPA, is a professor of accounting at Abilene Christian University and has previously published articles in numerous journals including the Journal of Business Ethics, Journal of Accounting Literature, Accounting Horizons, Advances in Accounting,theFinancial Analysts Journal,and theJournal of Accounting, Ethics, and Public Policy. O. Scott Stovall, Ph.D., is an assistant professor of accounting at Abilene Christian University and has published articles in the Journal of Business Ethics, Management Accounting Quarterly, and Cases from Management Accounting Practice. Darryl L. Jinkerson, Ph.D., is an assistant professor of management and chair of the Management Sciences Department at Abilene Christian University and was formerly the Director of Assessment and Measurement for Arthur Andersen.     

When Deontology and Utilitarianism Aren’t Enough: How Heidegger’s Notion of “Dwelling” Might Help Organisational Leaders Resolve Ethical Issues

This paper offers an alternative to deontological and utilitarian approaches to making ethical decisions and taking good actions by organisational leaders. It argues that the relational and context-dependent nature of leadership necessitates reference to an ethical approach which explicitly takes these aspects into account. Such an approach is offered in the re-conceptualisation of ethical action on the part of leaders as a process of “coming into right relation” vis-à-vis those affected by their decisions and actions. Heidegger’s notion of “dwelling” is explored as a means of “coming into right relation”. Three aspects of dwelling: “staying with”, “comportment” and “active engagement” are described and ways in which they might be practically enacted by leaders are suggested. The paper concludes by reflecting on the ways adopting a “dwelling” approach to resolving ethical issues implies a re-conceptualisation of leadership itself.     

Organizational Leadership, Ethics and the Challenges of Marketing Fair and Ethical Trade

This article critically evaluates current developments in marketing fair trade labelled products and “no sweat” manufactured goods, and argues that both the fair trade and ethical trade movements increasingly rely on strategies for bottom-up change, converting consumers “one cup at a time”. This individualistic approach, which we call “shopping for a better world”, must, we argue, be augmented by more collectivist approaches to affect transformative change. Specifically, we look at the concept of mission-driven organizations pursuing leadership roles in developing affinity relationships to promote fair and ethical trade and developing ethical spaces. Increasingly, a range of organizations are restructuring their operations, so that their mission is reflected in ethical practices throughout their operations, including product sourcing and product sales. First, ethical purchasing policies operated by non-profits and public agencies represent markets through which fair/ethical products reach end consumers. The efforts discussed to create ethical spaces through direct democracy and electoral mandate build on a broad-based affinity with the principles of fair and ethical trade. Second, we explore the potential for “mission-driven” non-profit organizations, such as zoos and aquaria for merging their mission of conservation education with their marketing activities through the operation of their shops and cafés. Interesting initiatives to link the conservation message to food choices is being undertaken by a number of zoos and aquaria, while there is scope for increased linkages in the giftware sold in their shops.     

An Adversarial Ethic for Business: or When Sun-Tzu Met the Stakeholder

In the economic literature on the firm, especially in the transaction–cost tradition, a sharp distinction is drawn between so-called “market transactions” and “administered transactions.” This distinction is of enormous importance for business ethics, since market transactions are governed by the competitive logic of the market, whereas administered transactions are subject to the cooperative norms that govern collective action in a bureaucracy. The widespread failure to distinguish between these two types of transactions, and thus to distinguish between adversarial and non-adversarial relations, has led many business ethicists to develop a “uniform” moral code. Yet in market transactions, the checks and balances built into the system of commercial exchange are such as to permit more instrumental forms of behavior. In administered transactions, by contrast, these checks and balances are absent, and thus the institutional context calls for much greater exercise of moral restraint. In this paper, I begin the task of developing an adversarial ethic for business. According to this view, the competitive environment licenses a greater range of “self-interested” behavior, but also imposes its own constraints on the strategies that firms may adopt in the pursuit of their interests. Joseph Heath is Associate Professor in the Department of Philosophy and the Centre for Ethics at the University of Toronto. He is the author of three books: Communicative Action and Rational Choice (MIT Press, 2001), The Efficient Society (Penguin, 2001), and with Andrew Potter. The Rebel Sell (HarperCollins, 2004). His research focuses on practical rationality, normative economics, and critical theory.     

Functional dependence and productive dependence of SMEs

This article analyzes the quality of business structure from a macroeconomic perspective in the regional context. In addition to “traditional” variables such as innovation, internationalization, or entrepreneurial collaboration, new variables have been introduced: functional dependence and productive dependence. Two different economic territories have been chosen within the Spanish economy: the province of Barcelona (high relative income per capita) and the province of Seville (low relative income per capita). We find it is possible to distinguish two types of firms: a) “product-maker” firms (mainly located in advanced areas) and b) “market-maker” firms (mainly located in less developed areas).      

Corporate Social Responsibility in Western Europe: An Institutional Mirror or Substitute?

In spite of extensive research on corporate social responsibility (CSR) and its link with economic and social performance, few studies have investigated the institutional determinants of CSR. This article draws upon neo-institutional theory and comparative institutional analysis to compare the influence of different institutional environments on CSR policies of European firms. On the basis of a dataset of European firms, we find that firms from the more liberal market economies of the Anglo-Saxon countries score higher on most dimensions of CSR than firms in the more coordinated market economies (CMEs) in Continental Europe. This result lends support to the view of voluntary CSR practices in liberal economies as being a substitute for institutionalized forms of stakeholder participation. Meanwhile, CSR tends not to mirror more institutionalized forms of stakeholder coordination. Instead, in CMEs, CSR often takes on more implicit forms. Our analysis also shows that national institutional and sectoral-level factors have an asymmetric effect – strongly influencing the likelihood of firms adopting ‘minimum standards’ of CSR, but having little influence on the adoption of ‘best practices’.     

Is Inequality Growing as American Workers Fall Behind?

This article looks at reasons why income inequality could rise and then explores whether, in fact, workers are losing out. It examines whether workers are falling behind relative to the wealthy and whether real wages have been falling or perhaps only manufacturing wages. It also examines whether there is a growing “wealth gap” and why it could be developing. Finally, it examines the hypothesis that relatively inexperienced or unskilled workers are falling behind. The paper concludes that there is a wealth gap, but that it is due to falling real interest rates not declining compensation. Other indicators of inequality may be growing as well, but it is not because compensation is falling short of rapid productivity growth or because workers are falling behind other income recipients.     

The Normative Impact of CPA Firms,Professional Organizations,and State Boards on Accounting Ethics Education

Accounting educators are in the midst of creating new opportunities for students to enhance their abilities to recognize ethical dilemmas, establish criteria by which to make ethical decisions, and establish support mechanisms and strategies to facilitate their ethical decision-making. CPA firms, professional organizations and state boards of accountancy are co-operating to increase requirements for ethics education for candidates taking the CPA exam. The current situation is confusing and sub-optimal regarding the use of precious learning time in college programs. A new dialogue between the three stakeholders, creative learning approaches, and additional resources can lead to a more consistent and optimal learning paradigm regarding the ethics education of accountants. Research evaluating the effectiveness of various approaches is needed to effectively apply limited resources in an area critical to the reputation capital of the accounting profession. Kevin holds a B.B.A. from Western Michigan University and a Ph.D. from Michigan State University, along with being a CPA. He has been at Notre Dame since 1978, and served as the first Arthur Young Faculty Fellow in Taxation from 1983 to 1985. From August 1985, to June 1986, Kevin worked as a faculty resident in the Arthur Andersen & Company practice office in Chicago. He was Assistant Department Chair from 1991 to 1995 and the University Ombudsperson for discriminatory harassment from 1999 to 2001. In 1997, he organized and chaired a national conference “What Works Well in Accounting Education” held at Notre Dame. He taught in the London Program for the fall, 1998 semester. Kevin was the Faculty Director of the Master of Nonprofit Administration Program from 2001 to 2005. He teaches accounting courses – primarily tax courses. Recently Kevin has developed new elective courses at the undergraduate and graduate levels on “Ethics in Accounting.” His publications include articles in The Accounting Review, TAXES - The Tax Magazine, The CPA Journal, The Review of Taxation of Individuals, Tax Ideas, Massachusetts CPA Review, The Journal of the American Taxation Association, New Accountant, the Journal of Accounting Education, Taxation for Accountants, and The Tax Adviser. He also was co-author of a Bureau of National Affairs tax management portfolio on Cash and Accrual Methods of Accounting and the book Programmed Guide to Tax Research. He is on the Editorial Review Board of Issues in Accounting Education. An article he authored on “The Normative Impact of CPA Firms, Professional Organizations and State Boards on Accounting Ethics Education” will be published in the Journal of Business Ethics in summer, 2006. In 1989, he and his wife, Kathy, were given the Grenville Clark Award by the University for “Voluntary activities serving to advance the causes of peace and human rights.” Kevin and his wife, Kathy, have eight children, four of whom are adopted special needs children. Kevin and Kathy have been leaders in Worldwide Marriage Encounter ministry for many years.     

The Global Economic Ethic Manifesto: Implementing a Moral Values Foundation in the Multinational Enterprise

The Global Economic Ethic Manifesto (“Manifesto”) is a moral framework/code of conduct which is both interactive and interdependent with the economic function of the main institutions of the economic system: markets, governments, civil society, and supranational organizations, which lays out a common fundamental vision of what is legitimate, just, and fair in economic activities. The Manifesto includes five universally accepted principles and values: the principle of humanity; the basic values of non-violence and respect for life; the basic values of justice and humanity; the basic values of honesty and tolerance; and the basic values of mutual esteem and partnership. We posit that the Manifesto provides an ethical foundation for explicitly assisting multinational enterprise's (“MNE”) executive management and boards of directors to meet the moral failures criticisms associated with the expansion of global capitalism, and similarly how the U.N. Global Compact (“Compact”) is focused on addressing complimentary market and institutional failures. In this article, we argue how the Compact and the Manifesto complement each other, explaining how the policies and guidelines of the Compact can now be implemented at the organizational/individual level through a comprehensive human resource management (HRM) plan supporting the ethical framework of the Manifesto. Finally, we have described how the Manifesto completes a comprehensive managerial framework (consisting of both the Compact and the Manifesto) for what we term an “MNE Moral Values-Based Corporate Governance Model.” Ultimately, further research is needed in understanding how much impact external and internal influences make on creating a sustainable ethical culture in MNEs.     

Fostering Responsible Communities: A Community Social Marketing Approach to Sustainable Living

Just as socially irresponsible organizational behavior leaves a punitive legacy on society, socially responsible organizations can foster curative change. This article examines whether small organizations can foster societal change toward more sustainable modes of living. We contend that consumption is deeply intertwined with social relations and norms, thus making individual behavioral change toward sustainability a matter of facilitating change in individual behavior, as well as in social norms and relations between organizations and consumers. We argue that it is in this facilitation process that small firms can play a major role, by adopting upstream and downstream approaches to diffuse behavioral change. By synthesizing four key strands of literature – small businesses and corporate social responsibility, ethical consumption, community social marketing, and the diffusion of innovation – and using the exemplar case of Modbury, the iconic “plastic bag-free” town, we demonstrate how responsible small firms can influence communities, and the individuals therein, to encourage environmentally sustainable practice to diffuse and support change in society.     

Together and Apart: Exploring Structure of the Corporate–NPO Relationship

Financially significant relationships between corporations and non-profit organizations (NPOs) have increased in recent years. NPOs offer access to interests and ideologies that are lacking within most for-profit organizations. These partnerships form a unique bridge between for-profit and non-profit goals and offer significant potential to produce innovative ways of “doing business by doing good.” Exploration of the structural implications of these relationships, however, has been limited. The potential for ideological imbalance in these relationships, particularly for the NPO, has been poorly described. We explore the structure of Corporate–NPO relationships from the NPO's perspective under high pressure conditions such as large relational investments or negative pressure from stakeholders. Using data collected from 20 NPOs in Australia, we identified the use by NPOs of both formal and informal governance mechanisms within their partnerships. These mechanisms acted to align and defend important goals of the NPO. They allowed the NPO and their corporate partners to be simultaneously “together and apart.” Our study offers important insight toward the study of cross-sector relationships and the role of governance mechanisms.