The Usefulness of Social Norm Theory in Empirical Business Ethics Research: A Review and Suggestions for Future Research

In response to recent calls to extend the underlying theories used in the literature (O’Fallon and Butterfield in J Bus Ethics 59(4):375–413, 2005; Craft in J Bus Ethics 117(2):221–259, 2013), we review the usefulness of social norm theory in empirical business ethics research. We begin by identifying the seeds of social norm theory in Adam Smith’s (in: Raphael and Macfie (eds) The Theory of Moral Sentiments, the Glasgow Edition, Oxford University Press, Oxford, 1759/1790) seminal work, The Theory of Moral Sentiments. Next, we introduce recent theory in social norm activation by Bicchieri (The grammar of society: The nature and dynamics of social norms, Cambridge University Press, New York, 2006) and compare the new theory to two theoretical frameworks found in the literature: Kohlberg’s (in: Goslin (ed) Handbook of socialization theory and research, Rand McNally, Chicago, IL, 1969; in: Lickona (ed) Moral development and behavior, Holt, Rinehart & Winston, New York, 1976) theory of moral development and Cialdini and Trost’s (in: Gilbert et al. (eds) The handbook of social psychology, Oxford University Press, Boston, 1998) taxonomy of social norms. We argue that the new theory provides useful insights by emphasizing the ability of situational cues and information to generate common expectations for social/moral norms. The theory is particularly useful for empirical research in business ethics because it gives both organizational and individual factors a role in motivating norm-based behavior. To demonstrate this usefulness, we present examples where the theory has been effectively applied in experimental accounting research to generate new insights. We conclude by citing specific examples where the theory may prove useful in empirical business ethics research.     

Do Investors See Value in Ethically Sound CEO Apologies? Investigating Stock Market Reaction to CEO Apologies

Since the late 1990s, the number of apologies being offered by CEOs of large companies has exploded (Lindner in Austin American-Statesman, 2007; Adams in USA Today, 2000). Communication and management scholars have analyzed whether and why some of these apologies are more effective or more ethical than others (Souder in Sci Eng Ethics 16:175–184, 2010; Benoit in Accounts, excuses, and apologies: a theory of image restoration strategies, 1995a; Benoit and Czerwinski in Bus Commun Q 60:38–57, 1997). Most of these analyses, however, have remained at the anecdotal level. Moreover, the practical, economic consequences of apologies have not been examined. Almost no rigorous or systematic empirical work exists that examines whether stakeholders (1) reward firms whose CEOs give apologies that are more, rather than less, ethical; and (2) punish firms whose corporate apologies are not ethically sound. This lacuna is surprising given that the whole purpose of an apology is to restore trust between the apologizer and the recipients of the apology. It is also surprising, given that stock market participants do appear, in at least some cases, to evaluate and respond to apologies by CEOs. When Johnson and Johnson was hit by the Tylenol poisonings, its stock price plummeted. One day after CEO James Burke’s apology—an apology widely praised for being ethically sound—approximately a half billion dollars of its previously lost stock value was restored (The financial effect of Burke’s 1982 apology was calculated using Eventus data for a window ?1, +1 days around the date of the actual apology.). It appears, then, that a good CEO apology may lead to an increased stock value ceteris paribus. But is the Johnson and Johnson case representative of how the market responds in general to CEO apologies?     

The Morality of Risk Modeling

This article applies the concept of prudence to develop the characteristics of responsible risk-modeling practices in the insurance industry. A critical evaluation of the risk-modeling process suggests that ethical judgments are emergent rather than static, vague rather than clear, particular rather than universal, and still defensible according to the discipline’s established theory, which will support a range of judgments. Thus, positive moral guides for responsible behavior are of limited practical value. Instead, by being prudent, modelers can improve their ability to deal with the ethical and technical complexity of the risk-modeling process. While the application of prudence to resolve ethical challenges in risk modeling, an issue of practical importance to managers, is a first in the literature, the practice of applying an ethical lens to issues of pragmatic importance for managers is well established in Maak and Pless (J Bus Ethics 66:99–115, 2006a; Responsible leadership, 2006b) among others.     

Internationalization of an academic invention through successive science-business networks: The case of TAVI

The aim of this paper is to explain how new technology ventures move, grow, and scale. Such ventures internationalize much faster than depicted by the traditional Uppsala model (Johanson and Vahlne, J Int Bus Stud 8:23–32, 1977; Johanson and Vahlne, Mark Rev 7(4), 1990; Johanson and Vahlne, J Int Entrep 1:83–101, 2003; Johanson and Vahlne, Manag Int Rev 46:165–178, 2006; Oviatt and McDougall, J Int Bus Stud 25:45–64, 1994). According to the Uppsala model, the main reason it takes time is that entrepreneurs need to build networks and learn. Many scholars have investigated how they may be able to learn faster and grow networks more effectively. While these explanations contribute to a better understanding of the process, they appear disturbingly insufficient. By means of an in-depth case study, we aim at identifying how learning and network-building constraints may be circumvented. We have investigated the internationalization process of an invention at a Danish university hospital that became a new technology within minimally invasive heart surgery. While the invention took place in the periphery of the international medical network, the venture circulated to the most competent international science-business networks to mobilize resources and competencies. We found that its ability to succeed resulted from its roots in international academic networks and its connecting to core nodes in these as well as in adequate business networks—including, in particular, Venture Capital firms that are in the business of developing and scaling such technology ventures. We also found that the innovation process evolved through phases that called for different resources and capabilities. It thereby offered opportunities for actors, networks, and companies that control such capabilities to move in to take control and pull the venture through the next phase. The process is less like a long distance run, and more like a relay race. This radically reduces the need to learn as the new venture expands and scales.     

Moral Vision: Iris Murdoch and Alasdair MacIntyre

This article explains Iris Murdoch’s notion of moral vision and its importance as a basic concept within applied ethics. It does so by exploring the influence of Iris Murdoch upon Alasdair MacIntyre whose ideas are frequently discussed by business ethicists. Arguably, the British philosopher Iris Murdoch (1919–1999) who wrote – amongst others – Metaphysics as a Guide to Morals (1992), along with her contemporaries, Philippa Foot and Elizabeth Anscombe, pioneered the resurgence of Aristotle’s virtue ethics. Furthermore, Iris Murdoch influenced Alasdair MacIntyre. Heather Widdows, in her biography of Iris Murdoch lists Alasdair MacIntyre amongst those ‘thinkers she inspired’ (Widdows, The moral vision of Iris Murdoch, Ashgate Publishing, Aldershot, 2005, p. 10). And in his writings MacIntyre does both examine Murdoch’s work and acknowledge that ‘Iris Murdoch has … put us all in her debt’ (MacIntyre, 1993, The New York Times on the Web, January 3, http://www.nytimes.com/books/98/12/20/specials/murdoch-metaphysics.html, p. 3). Murdoch was both an influential philosopher and a successful novelist. MacIntyre has stated that ‘Iris Murdoch’s novels are philosophy: but they are philosophy which casts doubt on all philosophy, including her own’ (London Review of Books, 3–16 June, 1982, p. 15). I therefore explore in this article the influence of Iris Murdoch’s literary work, where ‘true vision occasions right conduct’ upon Alasdair MacIntyre’s portrayal of us as ‘storytelling animals’ on a ‘narrative quest’.     

A Fair Trade-off? Paradoxes in the Governance of Fair-trade Social Enterprises

This paper explores how fair trade social enterprises (FTSEs) manage paradoxes in stakeholder-oriented governance models. We use narrative accounts from board members, at governance events and board documents to report an exploratory study of paradoxes in three FTSEs which are partly farmer-owned. Having synthesized the key social enterprise governance literature and framed it alongside the broader paradox theory, we used narratives to explore how tensions are articulated, how they can be applied within an adapted paradox framework, and how governance actors seek to mitigate paradoxes. The paper contributes to current debates in social enterprise scholarship concerning hybridity (Pache and Santos, Acad Manag Rev 35(3):455–476, 2010; in Institutional logics in action, Part B (Research in the sociology of organizations), 2012), hybrid organizing (Battilana and Lee, Acad Manag Ann 8(1):397–441, 2014) and operational tensions (Smith et al., Bus Eth Q 23(3):407–442, 2013) by illustrating empirically how the central social/enterprise paradox manifests in FTSEs governance arrangements. We build on the paradox categories proposed by Lüscher and Lewis (Acad Manag J 51(2):221–240, 2008) and adapted in Smith et al. (Bus Eth Q 23(3):407–442, 2013) by developing a recursive model of legitimacy-seeking governance processes, conceptualizing how boards seek to mitigate, but not necessarily resolve, paradoxes.     

Social Constructivism,Mental Models,and Problems of Obedience

There are important synergies for the next generation of ethical leaders based on the alignment of modified or adjusted mental models. This entails a synergistic application of moral imagination through collaborative input and critique, rather than “me too” obedience. In this article, we will analyze the Milgram results using frameworks relating to mental models (Werhane et al., Profitable partnerships for poverty alleviation, 2009), as well as work by Moberg on “ethics blind spots” (Organizational Studies 27(3):413–428, 2006), and by Bazerman and Chugh on “bounded awareness” (Harvard Business Review, 2006; Mind &; Society 6:1–18, 2007) Using these constructs to examine the Milgram experiment, we will argue that the ways in which the experiments are framed, the presence of an authority figure, the appeal to the authority of science, and the situation in which the naïve participant finds herself or himself, all create a bounded awareness, a narrow blind spot that encourages a climate for obedience, brackets out the opportunity to ask the moral question: “Am I hurting another fellow human being?” and may preclude the subject from utilizing moral imagination to opt out of the experiment. We will conclude that these forms of almost blind obedience to authority are correctable, but with difficulty. We will argue that linking the modification of mental models to an unbinding of awareness represents an important synergistic relationship and one that can build effectively on the lessons learned from our experience with moral imagination.     

Entrepreneurial Error Does Not Equal Market Failure

Barnett and Block (2015) claim that Bagus and Howden (2012b) support indirectly the concept of market failure. In this paper, we show that maturity mismatching in an unhampered market may imply entrepreneurial error but cannot be considered a market failure. We demonstrate why fractional-reserve banking leads to business cycles even if there is no central bank and why maturity mismatching does not per se lead to clusters of errors in a free market. Finally, in contrast to the examples provided by Barnett and Block, we assure that maturity mismatching does not imply the creation of two incompatible contracts due to the fungible nature of money.     

Editorial Essay: Mapping the Ethical in Neuroscientific Research

The unmanaged organization (Gabriel in Organ Stud 16:477–501, 1995) is moving from coffee corners to social networks. This means not only a change of media, but also a transformation in how organizations exert control over workers and how workers resist the commodification of emotions (Fineman, in: Fineman, Emotion in organizations, Sage, London, 2000; Lindebaum in J Manag Inq 21:262–277, 2012). After analyzing instances of the online publication of images and texts that escape organizational control, we identified three main ambiguities helpful in framing future studies about organizational control and resistance: ambiguity between private and public spheres, ambiguity between spontaneous and performed manifestations, and ambiguity between the distribution and control of power. Our main contribution is to understanding the Internet, particularly social networks, as a medium for employee resistance through distance (Collinson, in: Jermier et al., Resistance and power in organizations, Routledge, London, 1994), and in using the three aforementioned ambiguities to help analyze this phenomenon.     

The Relation Between Policies Concerning Corporate Social Responsibility (CSR) and Philosophical Moral Theories – An Empirical Investigation

This article examines the relation between policies concerning Corporate Social Responsibility (CSR) and philosophical moral theories. The objective is to determine which moral theories form the basis for CSR policies. Are they based on ethical egoism, libertarianism, utilitarianism or some kind of common-sense morality? In order to address this issue, I conducted an empirical investigation examining the relation between moral theories and CSR policies, in companies engaged in CSR. Based on the empirical data I collected, I start by suggesting some normative arguments used by the respondents. Secondly, I suggest that these moral arguments implicitly rely on some specific moral principles, which I characterise. Thirdly, on the basis of these moral principles, I suggest the moral theories upon which the CSR policies are built. Previous empirical studies examining the relation between philosophical moral theories and the ethical content of business activities have mainly concentrated on the ethical decision-making of managers. Some of the most prominent investigations in that regard propose that managers mainly act in accordance with utilitarian moral theory (Fritzsche, D. J. and H. Becker: 1984, Academy of Management Journal 27(1), 166–175; Premeaux, S. and W. Mony: 1993, Journal of Business Ethics 12, 349–357; Premeaux, S.: 2004, Journal of Business Ethics 52, 269–278). I conclude that CSR policies are not based on utilitarian thinking, but instead, on some kind of common-sense morality. The ethical foundation of companies engaged in CSR, thus, does not mirror the ethical foundation of managers.     

Brand-anchored discrete choice experiment (BDCE) vs. direct attribute rating (DAR): An empirical comparison of predictive validity

The image of a brand provides a key driver of brand equity. To build and control a strong brand image though, brand managers require a valid procedure to measure it. This article empirically compares the predictive validity of two measurement techniques to assess brand image: First, a brand-anchored discrete choice experiment (BDCE) which is based on a brand-anchored conjoint approach where brands serve as the levels for any attribute and which was originally introduced as ranting-based approach by Louviere and Johnson Journal of Retailing, 66, 359–382 (1990) and further extended to a BDCE by Eckert et al. International Journal of Research in Marketing, 29, 256–264 (2012). Second, a direct attribute rating (DAR) approach which is commonly used for commercial applications of brand image measurement. An empirical study using a representative sample of the German beer market shows that BDCE shows significantly higher levels of predictive validity (i.e., higher correlations with the actual market shares of the brands under investigation) than the widely used DAR method.     

Appointing Women to Boards: Is There a Cultural Bias?

Companies that are serious about corporate governance and business ethics are turning their attention to gender diversity at the most senior levels of business (Institute of Business Ethics, Business Ethics Briefing 21:1, 2011). Board gender diversity has been the subject of several studies carried out by international organizations such as Catalyst (Increasing gender diversity on boards: Current index of formal approaches, 2012), the World Economic Forum (Hausmann et al., The global gender gap report, 2010), and the European Board Diversity Analysis (Is it getting easier to find women on European boards? 2010). They all lead to reports confirming the overall relatively low proportion of women on boards and the slow pace at which more women are being appointed. Furthermore, the proportion of women on corporate boards varies much across countries. Based on institutional theory, this study hypothesizes and tests whether this variation can be attributed to differences in cultural settings across countries. Our analysis of the representation of women on boards for 32 countries during 2010 reveals that two cultural characteristics are indeed associated with the observed differences. We use the cultural dimensions proposed by Hofstede (Culture’s consequences: International differences in work-related values, 1980) to measure this construct. Results show that countries which have the greatest tolerance for inequalities in the distribution of power and those that tend to value the role of men generally exhibit lower representations of women on boards.     

International Marketing Ethics: A Literature Review and Research Agenda

Globalization has changed the nature of business in the twenty-first century (Doh et al. in Bus Ethics Q 20(3):481–502, 2010). With the increased internationalization of multinational corporations, the need to address international marketing ethics arises (Carrigan et al. in Int Market Rev 22(5):481–493, 2005). Given the diversity of environments and cultures, ethical issues are numerous and complicated (Iyer in J Bus Ethics 31(1):3–24, 2001). The understanding of international marketing ethics is critical to academics as well as practitioners. This paper is a literature review (1960s through 2013) of the study of ethics in international marketing. In order to develop a comprehensive review of articles, we review topics such as ethical problems, moral philosophies, and culture and ethics. We also discuss the methodological procedures that are used in international marketing ethics. Researchers and practitioners alike can use this research on international marketing ethics to discuss the phenomena and subsequently lead to future work research.     

Virtue Ethics and the Practice–Institution Schema: An Ethical Case of Excellent Business Practices

This paper aims to contribute to a greater understanding of the theory of virtue ethics and its applications in the business arena. In contrast to other prominent approaches to ethics, virtue ethics provides a useful perspective in making sense of various business ethics issues with an emphasis on the moral character of the individuals and its transformational influences in driving ethical business conduct. Building on Geoff Moore’s (Bus Ethics Q 12(1):19–32, 2002; Bus Ethics Q 15(2):237–255, 2005; Bus Ethics Q 18(4):483–511, 2008) treatment of Alasdair MacIntyre’s practice–institution schema, the paper discusses how individuals, as moral agents, can serve to promote virtuous business conduct and help foster a moral and ethical climate in the organization and in society at large. Using interview data from a broader study of the New Zealand wine industry as explanatory examples, the paper argues that while many companies’ sustainable practices are still largely market based, such excellent business practices are often driven by individuals’ moral and ethical pursuits.     

Whistleblowing and Information Ethics: Facilitation,Entropy, and Ecopoiesis

The economic and moral defense of sweatshops given by Powell and Zwolinski (J Bus Ethics 107:449–472, 2012) has been criticized in two recent papers. Coakley and Kates (J Bus Ethics 117:553–558, 2013) focus on putative weaknesses in the logic of Powell’s and Zwolinski’s argument. Preiss (Bus Ethics Quart 24(1):55–82, 2014) argues that, even granting the validity of their economic argument, Powell’s and Zwolinski’s defense is without force when viewed from a Kantian republican viewpoint. We are concerned that sweatshop critics have misinterpreted the economic literature and overstated the conclusions that follow from their ethical premises. We show that the best understanding of the current economic literature supports Powell’s and Zwolinski’s conclusions about the negative effects of sweatshop wage regulation, and that it is unreasonable to reject economic analysis in moral argument against sweatshops even from a Kantian perspective. Additionally, we defend the theory of exploitation as unfairness given by Wertheimer (Exploitation, 1996), and show how economic analysis can be applied to that theory to identify cases of sweatshop exploitation.     

Action Research As an Ethics Praxis Method

Action research is combined research and practical action where the researcher joins with and acts with practitioners to help improve practice and theory building. Action research can be a form of Aristotelian critical, ethical praxis that developmentally changes the action researcher and the external world. Bernstein’s (Praxis and action, 1971) and Eikeland’s (The ways of Aristotle, 2008) interpretations of Aristotelian ethics praxis are considered. The Argyris et al. (Action science: concepts, methods, and skills for research and intervention, 1985) “action-science” and the van de Ven (Engaged scholarship: A guide for organizational and research knowledge, 2007) “engaged scholarship” forms of action research with their differently nuanced interpretations of Aristotelian philosophy as foundations for action research are considered and compared as examples of action research as an ethics praxis method with respect to (1) a key similarity with respect to joining of critical ethics and actionable knowledge; (2) another key similarity with respect to action research practice that can developmentally change the action researcher and the external world; and (3) a key difference with respect to academic literature versus practitioner-based theory building is also considered (Nielsen J Bus Ethics 93:401–406, 2010a). Examples in the cases of the political economist and action researcher, Hirschmann’s “Exit,Voice, Loyalty” approach and Greenleaf’s “Servant Leadership” approach to action research as forms of Aristotelian critical, ethical praxis are analyzed.     

Strengthening “Giving Voice to Values” in Business Schools by Reconsidering the “Invisible Hand” Metaphor

The main contention of this paper is that our ability to embed a consideration of values into business school curricula is hampered by certain normative parameters that our students have when entering the classroom. If we don’t understand the processes of valuation that underpin our students’ reasoning, our ethics teaching will inevitably miss its mark. In this paper, we analyze one of the most prevalent metaphors that underpin moral arguments about business, and reveal the beliefs and assumptions that underpin it. By revisiting the content of Adam Smith’s “invisible hand” metaphor, we show that the moral content of the metaphor has been significantly misconstrued through its subsequent reception in economic theory. The “Giving Voice to Values” (GVV) pedagogy aims to enable students to act on their tacit values and address the rationalizations that they may encounter for not acting on these values (Gentile in Giving voice to values. How to speak your mind when you know what’s right, Yale University Press, Yale, 2010a; Discussions about ethics in the accounting classroom: student assumptions and faculty paradigms, Darden Business Publishing,2010b. http://store.darden.virginia.edu/Syllabus%20Copy/Discussions-about-Ethics-in-Accounting_S.pdf; Educating for values-driven leadership across the curriculum: giving voice to values, Business Expert Press, New York, 2013). We believe our analysis can strengthen the employment of GVV in three ways: (1) understanding tacit blockages to moral action, i.e., how students’ belief in the moral efficacy of the invisible hand could undermine their own sense of moral duty; (2) addressing common rationalizations that may emerge from different assumptions about morally appropriate courses of action in the workplace; and (3) resolving values conflicts on how to act.     

Public Professional Accountability: A Conditional Approach

In the past decades, profession(al)s have increasingly been called to account. Several authors have reported that this increased public professional accountability, in the form of showing that professional conduct meets predefined standards or rules, has had severe negative consequences for professionals, their clients and society, and call for ‘intelligent’ forms of accountability; forms of accountability that may inform a wider public about professional conduct but do not harm it. In this paper, we propose a form of ‘intelligent’ public professional accountability. Taking Freidson’s (Professionalism. The third logic, Polity Press, Cambridge, 2001) notion of institutional ethics as a point of departure, we develop a form of accountability that seeks to account for the conditions required for professional conduct. The paper first discusses the current ‘dilemma of professional accountability,’ describes ‘ideal-type professional conduct’ and goes into the conditions it requires. Next, it shows what accounting for these conditions entails and that this form of accountability fits the criteria for intelligent accountability, as set by O’Neill (in: Morris and Vines (eds.) Capital failure: rebuilding trust in financial services, Oxford University Press, Oxford, 2014).     

Green Leather for Ethical Consumers in China and Korea: Facilitating Ethical Consumption with Value–Belief–Attitude Logic

Using an innovative fabrication technique, eco-friendly faux leather (EFFL) has been newly developed as a green leather alternative for the Chinese and Korean markets. Value–belief–attitude logic drawn from the heuristic-systemic model (Zuckmand and Chaiken in Psychol Mark 15(7):621–642, 1998) and value–belief–norm theory (Stern et al. in Environ Behav 27(6):723–743, 1995) is proposed to explicate the consumer acceptance attitudes toward the EFFL product. The findings from the multi-group structural equation modeling analysis of online data (n = 600) support the relevancy of VBA logic in which utilitarian and hedonic value motivate pro-environmental belief, and the EFFL product attributes significantly mediate belief and positive attitude toward the EFFL product. The discrepancies across two countries and two age cohorts are noteworthy when pro-environmental belief and product-related information lead to different consumer VBA processes in specific market segments. This study presents insights which provide novel opportunities for managerial implementations and theoretical advancements in eco-friendly related subjects and issues.     

Brand love: development and validation of a practical scale

Batra et al. (Journal of Marketing 76, 1–16, 2012) created a new conceptualization of brand love but did not develop a pragmatically useful measure for studies where questionnaire length is a constraint. The current research develops a more parsimonious brand love scale, with three nested versions of 26, 13, and 6 items, respectively. This research also validates the scales, and in so doing conducts several important validity tests not considered by Batra et al. The 26-item scale is able to predict consumer loyalty, word of mouth, and resistance to negative information, with an R ² of .90, after correcting for measurement error.