Ethical Relationships In Retailing: Some Cautionary Tales

Horror stories attached to some recent retailing events concerning Hoover, Ratners and others raise questions about a company's ethical concern, whether it be part of its marketing strategy or 'thrust upon it'. If ethics is to have a place in retail strategy that place is better focused around performance at an operational level rather than at the level of promotion or publicity. The author is Professor of Retailing at Nottingham Business School, Nottingham Trent University, Nottingham NG1 4BU, U.K. e‐mail: smm3whysapt@ntu.ac.uk     

Ethical Standards for Stockbrokers: Fiduciary or Suitability?

What are the ethical obligations of the sellers of financial products to their customers? Stockbrokers in the U.S. have a legal and ethical requirement to recommend only “suitable” investments to their customers. This is a fairly weak standard. Currently, there are proposals to raise the standard to a fiduciary one in which the recommendations would have to be in the best interests of the clients. Brokers sell solutions to financial problems. Similar to an auto mechanic or a doctor, the product often consists of both the professional advice and its implementation. There are numerous conflicts of interest between brokerage firms and their customers in that the products that pay the highest commissions may not be the best ones for the customers. The societal perspective adds complications, however. Society depends on modern financial markets to raise capital for productive enterprises and to spread risk. Issuers of financial products need distribution channels for their products just like the producers of any other products. Commissions create powerful incentives for the distribution channels, but at the same time produce conflicts of interest—a type of ethical pollution. Just as our society tolerates some pollution as a byproduct of other useful activities, it may be useful to tolerate some of these financial conflicts of interest. The nature of the relationship should govern the ethical standard. Those selling advice, regardless of how they label themselves, should adhere to a best-interest fiduciary standard. More limited relationships should be limited to the mandate involved in the relationship.     

Can business ethics enhance corporate governance? Evidence from a survey of UK insurance executives

This paper seeks to explore the implementation of corporate ethical culture and policies as an adjunct to formal forms of corporate governance. The insurance industry utilises a variety of external governance structures, but is almost unique in that stock companies (which are exposed to an external market for corporate control) and mutual companies (which are owned by a subset of their customers) are in active competition. A questionnaire survey of senior executives in U.K. insurance companies was undertaken to explore the implementation of ethical policies and codes, to investigate ethical attitudes, and to analyze the extent to which these policies and attitudes varied among companies. The results suggest that ethical policies have a higher profile and ethical attitudes and behaviour are more positive in mutual as opposed to stock insurance companies. These findings support the contention that a strong corporate ethical culture may be utilised to enhance formal corporate governance instruments. Stephen Diacon and Christine Ennew both work in the School of Management and Finance at the University of Nottingham, United Kingdom. Dr. Diacon is Senior Lecturer in Insurance Studies and Director of the University of Nottingham Insurance Centre. Dr. Ennew is Reader in Marketing and Associate Editor of International Journal of Bank Marketing.     

FOCUS: Can Accountants Distinguish their Assets from their Morals?

Can the use of focus groups be helpful to get to the roots of ethical issues in the accounting profession? The activities of one such group at Cranfield throws considerable light on the pressures to which individual accountants can be subjected. Professor Vyakarnam has recently been appointed to the Chair of Enterprise at Nottingham Trent University. Sri Srikanthan is Senior Lecturer in the Finance and Accounting Department at Cranfield University School of Management, where Sharon Fitzsimons is Research Officer in the Economics Group.     

Leadership, Ethics and Responsibility to the Other

Of recent time, there has been a proliferation of concerns with ethical leadership within corporate business not least because of the numerous scandals at Enron, Worldcom, Parmalat, and two major Irish banks – Allied Irish Bank (AIB) and National Irish Bank (NIB). These have not only threatened the position of many senior corporate managers but also the financial survival of some of the companies over which they preside. Some authors have attributed these scandals to the pre-eminence of a focus on increasing shareholder value in Western business schools and/or to their failure to inculcate ethical standards. In this paper, we challenge these accounts and the aetiological view of knowledge from which they derive but are grateful for the consensus that they convey regarding the importance of business ethics. The paper focuses on different approaches to ethical leadership concluding with a view that some hybrid of MacIntyre’s virtue ethics and Levinas’s ethics of responsibility may serve as an inspiration for both educators and practitioners. Dr. David Knights is a Professor of Organisational Analysis in the School of Economic and Management Studies at Keele University. He previously held chairs in Manchester, Nottingham and Exeter Universities. He is a founding and continuing editor of the journal Gender, Work and Organisation and his most recent books include: Management Lives, Sage, 1999 (with H. Willmott) and Organization and Innovation, McGraw-Hill, 2003 (with D. McCabe). Majella O’Leary is a Lecturer in Management at the University of Exeter. Her research interests include corporate scandals, ethical leadership, disaster sensemaking, and organizational storytelling. Majella’s most recent publications have appeared in Human Relations and European Journal of Business Ethics.     

Taking the pulse: Ethics and the British Cooperative Bank

Policy statements on ethical issues abound. If all organisations which produce mission statements, codes of practice or ethical codes were, therefore, ethical in conduct and performance, business ethics would be non-problematic. However, the effectiveness of corporate codes of ethics is dependent, inter alia, on the day-to-day behaviour of managers.Interest in the impact of ethical codes and mission statements on managerial behaviour has grown in recent years. The assumption underlying this paper is that one way of enriching our understanding of the ethical behaviour of managers is to focus on actual behaviour in real organisations.This paper reports the findings of a research project aimed at discovering the extent to which the British Cooperative Bank's Ethical Policy influences the behaviour of those managers at the Bank who are responsible for achieving the Bank's objectives in acquiring new business in the corporate market.It seeks to explore the impact of the Bank's Ethical Policy on the day-to-day behaviour of a significant group of the Bank's managers.Alan Kitson obtained his first degree in Politics and his doctorate in the political theories of Hegel and Marx from the University of Nottingham. He is Head of Bolton Business School at the Bolton Institute, England and teaches business ethics to undergraduate and MBA students.     

Business Ethics in the Curriculum: Integrating Ethics through Work Experience

In this paper we seek to make the case for a teaching and learning strategy that integrates business ethics in the curriculum, whilst not precluding a disciplines based approach to this subject. We do this in the context of specific work experience modules at undergraduate level which are offered by Middlesex University Business School, part of a modern university based in North West London. We firstly outline our educative values and then the modules that form the basis of our research. We then identify and elaborate what we believe are the five dimensions which distinguish an integrated approach based on work experience from a disciplines-based approach, namely: process and content, internal and external, facilitation and teaching, covert and overt, and living wisdom and established wisdom. The last dimension draws on the practical relevance of the Aristotelian notion of phronesis inherent in our approach. We go on to provide two case examples of our practice to illustrate our perspective and in support of our conclusions. These are that reflection integrated into the Business Studies curriculum, using the ASKE typology of learning [Frame, 2001, Proceedings of the 9th Annual Teaching and Learning Conference (Nottingham: Nottingham Business School, Nottingham Trent University), p. 80], in respect of personal and group process in a work experience context, provides a useful heuristic for the development of moral sensibility and ethical practice.     

Business Ethics in the Curriculum: Integrating Ethics through Work Experience

In this paper we seek to make the case for a teaching and learning strategy that integrates business ethics in the curriculum, whilst not precluding a disciplines based approach to this subject. We do this in the context of specific work experience modules at undergraduate level which are offered by Middlesex University Business School, part of a modern university based in North West London. We firstly outline our educative values and then the modules that form the basis of our research. We then identify and elaborate what we believe are the five dimensions which distinguish an integrated approach based on work experience from a disciplines-based approach, namely: process and content, internal and external, facilitation and teaching, covert and overt, and living wisdom and established wisdom. The last dimension draws on the practical relevance of the Aristotelian notion of phronesis inherent in our approach. We go on to provide two case examples of our practice to illustrate our perspective and in support of our conclusions. These are that reflection integrated into the Business Studies curriculum, using the ASKE typology of learning [Frame, 2001, Proceedings of the 9th Annual Teaching and Learning Conference (Nottingham: Nottingham Business School, Nottingham Trent University), p. 80], in respect of personal and group process in a work experience context, provides a useful heuristic for the development of moral sensibility and ethical practice.This article is in part based on a paper that was originally presented at the 2003 Teaching Business Ethics Conference, Institute of Business Ethics and European Business Ethics Network-UK, London and we are grateful for the constructive comments that we received then.     

Ethical Commitment,Financial Performance,and Valuation: An Empirical Investigation of Korean Companies

A variety of stakeholders including investors, corporate managers, customers, suppliers, employees, researchers, and government policy makers have long been interested in the relationship between the financial performance of a corporation and its commitment to business ethics. As a subject of research, the relations between business ethics and corporate valuation has yet to be thoroughly quantified and investigated. This article is an effort to amend this inadequacy by demonstrating a statistically significant association between ethical commitment and corporate valuation measures. Consistent with anecdotal evidence, we have found a significant association between the ethical commitment of Korean companies and their valuation on the Korean stock market. However, the result reveals that the association between ethical commitment and financial performance is not significantly supported. Tae Hee Choi received Ph.D. from the Ohio State University, Ohio, USA. Presently working as Assistant Professor in accounting at the KDI School of Public Policy and Management. Research interests are business ethics, capital market, financial accounting, managerial accounting, and valuation. Jinchul Jung received Ph.D. from Kent State University, Ohio, USA. Presently working as Assistant Professor of Business Administration Department in the College of Business at Chosun University. Research interests are business ethics, family-supportive program, and organizational commitment.     

The impact of the work environment on ethical decision making: Some Australian evidence

Business ethics has emerged in recent years as a field of significant scholarly endeavour. Particularly well documented is the existence of ethical conflict at work and the reported inseparability of business decisions and moral consequences. However, to date, the majority of studies have been conducted in the American business context.This paper examines the concept of ethical conflict as experienced by employees in the Australian context. According to a sample of Western Australian managers, ethical conflicts at work do occur — with relative frequency. Of considerable concern is the high incidence of cases where the demands of superiors are deemed to be the cause of this conflict. This finding is particularly disturbing as superiors are also the primary influence on employee ethical decision making. It would see that the ethics role models are also the instigators of unethical behaviour.This research has confirmed in the Western Australian context that the values of top management do have significant impact on the ethical choices made by employees. The management of organisational culture, therefore, is a key to raising ethical standards in business. The institutionalisation of ethics by such formal means as codes of ethics is a necessary, but insufficient, condition of ensuring ethical behaviour in organisations. Management of the informal climate is pivotal to the achievement of ethical organisational behaviour.Geoffrey Soutar is Professor of Management at Curtin University of Technology. He has particular interests in marketing and, in recent times, in the marketing of services. He has published widely across a number of management areas and has acted as consultant for both private and public sector organisations as well as for a number of unions.Margaret McNeil is a Lecturer in the School of Management at Curtin University of Technology. Her research interests include corporate innovation and financial services marketing. Consultancy has been in the areas of financial services, professional services and non-profit organisations.Caron Molster is a Research Assistant in the School of Management at Curtin University of Technology. She has a research interest in the area of ethics, having completed her thesis on this topic.     

企业市场行为的伦理判断与伦理提升

企业市场行为是企业产品的市场实现过程,这一过程实现的不仅是企业产品的经济价值,同时也是产品伦理价值的附加和实现过程。企业伦理价值的市场附加过程包括从市场决策、伦理判断到市场评价、反馈调整的过程,这一过程影响于市场决策的伦理因素,通过市场行为的伦理判断和市场评价的提升等过程,最终完成企业伦理价值在市场行为中的产品附加过程。     

Values and the Perceived Importance of Ethics and Social Responsibility: The U.S. versus China

This study examines the effects of nationality (U.S. vs. China) and personal values on managers’ responses to the Perceived Role of Ethics and Social Responsibility (PRESOR) scale. Evidence that China’s transition to a socialist market economy has led to widespread business corruption, led us to hypothesize that People’s Republic of China (PRC) managers would believe less strongly in the importance of ethical and socially responsible business conduct. We also hypothesized that after controlling for national differences, managers’ personal values (more specifically, self-transcendence values) would have a significant impact on PRESOR responses. The hypotheses were tested using a sample of practicing managers enrolled in part-time MBA programs in the two countries. The results indicate that nationality did not have a consistent impact on PRESOR responses. After controlling for national differences, self-transcendence values had a significant positive impact on two of the three PRESOR dimensions. Conservation values such as conformity and tradition also had a significant association with certain dimensions of the PRESOR scale. William E. Shafer is an associate professor in the Department of Accountancy at Lingnan University in Hong Kong. His primary research interests are professionalism and ethics in accounting and corporate social and environmental accountability. His publications have appeared in a variety of academic and professional journals, including Auditing: A Journal of Practice & Theory; Accounting Horizons; Accounting, Auditing & Accountability Journal; Business Ethics Quarterly; Journal of Business Ethics; Journal of Accountancy; and The CPA Journal. Kyoko Fukukawa is a lecturer in marketing at Bradford University School of Management and holds a Ph.D. from the University of Nottingham, UK. Her research interests include ethical decision-making in consumption and business practices; corporate social responsibility (CSR) of MNCs concerning their policies and strategic communication; and CSR and corporate branding. Her publications appear in the Journal of Business Ethics, Journal of Corporate Citizenship and others. Grace M. Lee is an assistant professor is the Department of Accountancy at Lingnan University in Hong Kong. Her primary research interests are corporate financial disclosure and corporate social responsibility disclosure in the Greater China Region. She has published in the Journal of International Financial Management and Accounting and the Journal of Information Systems.     

Performance of Ethical Mutual Funds in Spain: Sacrifice or Premium?

There is currently much debate in the economic literature about whether ethical investment involves a financial sacrifice or premium. One of the most common methods of testing this compares the financial performance of ethical investment funds with that of other funds not considered “socially responsible” or ethical. The majority of these research studies evaluate the performance of the ethical funds according to classic measures, whereby different financial markets, in different countries and for different periods of time serve as reference for evaluation. The ultimate conclusion of all of these studies is that there are no significant differences between the performance results of one type of funds and the other. In Spain, ethical investment funds are still an incipient sector of investment. To date, the Spanish market has not been included in any type of analysis of these characteristics. Therefore the main objective of this article is to compare the financial performance of ethical investment funds to that of other funds in the Spanish retail market. We propose the aggregate type of analysis as the Spanish ethical investment funds have experienced a weaker development in comparison to those of other developed countries. In the first step we suggest the financial performance to be compared by style analysis since the asset distribution of the Spanish Social Return Investment (SRI) funds differs from the European trend. In particular, we use the multifactor regression model with style benchmarks. We found that their financial performance is in all cases superior or similar to that achieved by the rest of the funds. In the second step, to achieve a more robust and homogeneous comparison, we used the bootstrap method, comparing ethical and non-ethical fund subsamples by homogeneous groups. No significant differences between these two types of funds have been found. Thus, if we assume the positive o neutral effect of ethical investment on investor utility in the retail Spanish market the financial and social performance (FSP) of ethical funds will be, in aggregate, superior to the FSP achieved by conventional funds. In conclusion, the financial performance of ethical mutual funds in Spain is no sacrifice.     

The Influence of Nationality and Gender on Ethical Sensitivity: An Application of the Issue-Contingent Model

When a member of an organization has to make a decision or act in a way that may benefit some stakeholders at the expense of others, ethical dilemmas may arise. This paper examines ethical sensitivity regarding the duties to clients and owners (principals), employees (agents), and responsibilities to society (third parties). Within this framework, ethical perceptions of male and female managers are compared between the U.S. and Turkey – two countries that differ on power distance as well as the individualism/collectivism dimensions. Our results show that ethical sensitivity varies depending upon whether the interests of principals, agents, or third parties are affected by a given ethical dilemma. We also find that, contingent upon the principal-agent–society relationships, the nationality and gender of the decision-maker influences ethical sensitivity. Can Simga-Mugan is a Professor of Accountancy at Department of Business Administration of Middle East Technical University, Ankara, Turkey. She received her Ph.D. in accountancy from University of Illinois-Urbana-Champaign. Her current research interests are ethics, international financial reporting issues, manipulation in the stock market and effect of news on the stock market. Bonita A. Daly, Ph.D., is an Assistant Professor of Accounting in the School of Business, University of Southern Maine in Portland, Maine. She teaches auditing and financial accounting to both undergraduate and graduate students. Dr. Daly also teaches business ethics in continuing education programs for practicing accountants. Her research on the accounting profession has appeared in Critical Prespectives on Accounting, Accounting, Organizations, and Society, and the St. Johns Law Review, among others. Dilek Onkal is a Professor of Decision Sciences and is currently the Acting Dean of the Faculty of Business Administration at Bilkent University, Turkey. She received a Ph.D. in Decision Sciences from the University of Minnesota, and is doing research on ethics judgements, risk perception, risk communication, and judgmental forecasting. Lerzan Kavut is an Associate Professor at Faculty of Business Administration of Istanbul University. She has received her B.A. and Ph.D. from Istanbul University. Her current research interest is in the area of behavioral auditing.     

An Exploration of Opportunities for the Growth of the Fair Trade Market: Three Cases of Craft Organisations

Businesses that maintain ethical standards have an advantage in the marketplace based on the increasing interest of consumers in products that have a social and ethical component. Fair trade organisations that adopt environmental, social and ethical principles in trading are in a good position to make the most of this growing interest in the market. However, it is unclear whether fair trade organisations are taking full advantage of emerging market opportunities for ethically traded products. This research explores this issue by describing the business strategies of three fair trade organisations that import and sell craft goods into Western countries and evaluates them in the context of this growing market. The research findings indicate that in order to remain in business, fair trade craft organisations have had to adopt better business practices in recent years, improving quality, customer service and product offerings to customers. However, growth appears to be limited, as distribution remains focused on a small, niche market. This paper explores the distribution strategies of two fair trade commodity organisations that are successfully reaching a wider customer base, demonstrating that fair trade products have a unique selling advantage in the mainstream marketplace. In conclusion, fair trade craft organisations are not exploiting this market opportunity to the degree they should and will need to explore wider distribution and alternative business strategies to expand their market share.Debora Randall completed her Masters of Management at Massey University, in Auckland, New Zealand. She is currently using her interests in business and community development to work towards practical economic solutions to poverty. She is living in Vancouver, Canada where she is working on a number of community economic development initiatives.     

Financial derivative instruments and social ethics

Recent finance literature attributes the development of derivative instruments (interest rate futures, stock index futures) to (1) technological advances, and (2) improved mathematical models for predicting option prices. This paper explores the role of social ethics in the acceptance of financial derivatives. The relationship between utilitarian ethical principles and the demise of turn-of-the-century bucket shops is contrasted with modern tolerance of financial derivatives based upon libertarian ethical precepts. Our conclusion is that a change in social ethics also facilitated the growth in trading in modern financial derivatives.J. Patrick Raines is an Associate Professor of Economics and holds the F. Carlyle Tiller Chair in Business at the University of Richmond in Richmond, Virginia.Charles G. Leathers is a Professor of Economics in the Department of Economics, Finance and Business Law at the University of Alabama in Tuscaloosa, Alabama.     

Using role play to integrate ethics into the business curriculum a financial management example

Calls for increasing integration of ethical considerations into business education are well documented. Business graduates are perceived to be ethically naive at best, and at worst, constrained in their moral development by the lack of ethical content in their courses. The pedagogic concern is to find effective methods of incorporating ethics into the fabric of business education. The purpose of this paper is to suggest and illustrate role play as an appropriate method for integrating ethical concerns.Dr. Kate Brown is a senior lecturer in the Department of Finance and Quantitative Analysis at the University of Otago in Dunedin, New Zealand. She teaches financial management and a course in entrepreneurship and venture capital. Her research interests include corporate finance, regulatory economics, and issues in the teaching of finance.     

Shareholder preferences concerning corporate ethical performance

This study surveyed investors to determine the extent to which they preferred ethical behavior to profits and their interest in having information about corporate ethical behavior reported in the corporate annual report. First, investors were asked to determine what penalties should be assessed against employees who engage in profitable, but unethical, behavior. Second, investors were asked about their interest in using the annual report to disclose the ethical performance of the corporation and company officials. Finally, investors were asked if they felt that ethics reports should be audited.The survey results indicate that many shareholders (42%) do not expect a high level of ethical behavior from corporate employees or officers. There is a significant amount of interest in disclosure of ethical issues (72%) and unwillingness to trust management to provide unbiased reports of ethical behavior. If such reports are included with the financial statements, 32 percent of the investors surveyed would prefer to have them audited to provide independent verification.Marc J. Epstein is currently a Visiting Professor at the Graduate School of Business Administration at Harvard University Ruth Ann McEwen, Associate Professor, and Roxanne M. Spindle, Assistant Professor, are members of the Accounting Department at Virginia Commonwealth University.     

The Nature and Management of Ethical Corporate Identity: A Commentary on Corporate Identity,Corporate Social Responsibility and Ethics

In this paper we open up the topic of ethical corporate identity: what we believe to be a new, as well as highly salient, field of inquiry for scholarship in ethics and corporate social responsibility. Taking as our starting point Balmer’s (in Balmer and Greyser, 2002) AC²ID test model of corporate identity – a pragmatic tool of identity management – we explore the specificities of an ethical form of corporate identity. We draw key insights from conceptualizations of corporate social responsibility and stakeholder theory. We argue ethical identity potentially takes us beyond the personification of the corporation. Instead, ethical identity is seen to be formed relationally, between parties, within a community of business and social exchange. Extending the AC²ID test model, we suggest the management of ethical identity requires a more socially, dialogically embedded kind of corporate practice and greater levels of critical reflexivity. John M. T. Balmer is Professor of Corporate Brand/Identity Management at Bradford University School of Management. His research focuses on a range of corporate-level marketing issues and has a particular interest in the management of corporate brands and identities. His work has been published in leading journals such as California Management Review and Long Range Planning. With Stephen Greyser he co-authored Revealing the Corporation (Routledge, 2003). Kyoko Fukukawa is a lecturer in marketing at Bradford University School of Management and holds a Ph.D. from University of Nottingham, UK. Her research interests include ethical decision-making in consumption and business practices; corporate social responsibility (CSR) of MNCs concerning their policies and strategic communication; and CSR and corporate branding. Her publications appear in Journal of Business Ethics, Journal of Corporate Citizenship and others. Edmund R. Gray is Professor and Chair in the Department of Management at Loyola Marymount University. He is author or co-author of five textbooks and numerous scholarly articles. He holds a Ph.D. from UCLA. His research interests centre around issues of corporate identity, corporate social responsibility and environmental sustainability. Currently, he is conducting research on entrepreneurial firms with environmental/social goals that are an integral part of their mission.     

An Analysis of Corporate Social Responsibility at Credit Line: A Narrative Approach

This article presents the results of an inductive, interpretive case study. We have adopted a narrative approach to the analysis of organizational processes in order to explore how individuals in a financial institution dealt with relatively novel issues of corporate social responsibility (CSR). The narratives that we reconstruct, which we label ‚idealism and altruism’, ‚economics and expedience’ and ‚ignorance and cynicism’ illustrate how people in the specific organizational context of a bank (‚Credit Line’¹) sought to cope with an attempt at narrative imposition. In particular, our work exemplifies how people in organizations draw on shared discursive resources in order to make sense of themselves and their organizations. We illustrate how many people within the bank found it hard to integrate the normative case for CSR with their version of a narrative identity which had, and continued to be, centred on economic imperatives for new initiatives. Our article demonstrates both the value of the analysis of shared narratives, and represents an attempt to deal adequately with the polyphony of organizational voices, in case studies of CSR. Michael Humphreys graduated with a B.Sc from Leeds University and took MBA and Ph.D. degrees at the University of Nottingham. He is currently an Associate Professor and Reader in organization studies an Nottingham University Business school. His research interests include ethnographic and narrative approaches to organizational identity in both public and private sector organizations. He has published work in a range of journals including: The Journal of Management Studies, Organization Studies, Organization, British Journal of Management, The Journal of Applied Behavioral Science, The Journal of Organizational Change Management and Qualitative Inquiry. Andrew D. Brown took his MA at Christ Church, Oxford, and his M.Sc and Ph.D. degrees at the University of Sheffield. He held faculty positions at Manchester Business School, the University of Nottingham and the University of Cambridge, before taking up a Chair in Organization Studies at the University of Bath. His principal research interests are centred on issues of sensemaking, narrative and identity. He has published work in a range of scholarly journals, including Academy of Management Review, Journal of Management Studies, and Organization Studies.