Leader Ethical Decision-Making in Organizations: Strategies for Sensemaking

Organizational leaders face environmental challenges and pressures that put them under ethical risk. Navigating this ethical risk is demanding given the dynamics of contemporary organizations. Traditional models of ethical decision-making (EDM) are an inadequate framework for understanding how leaders respond to ethical dilemmas under conditions of uncertainty and equivocality. Sensemaking models more accurately illustrate leader EDM and account for individual, social, and environmental constraints. Using the sensemaking approach as a foundation, previous EDM models are revised and extended to comprise a conceptual model of leader EDM. Moreover, the underlying factors in the model are highlighted—constraints and strategies. Four trainable, compensatory strategies (emotion regulation, self-reflection, forecasting, and information integration) are proposed and described that aid leaders in navigating ethical dilemmas in organizations. Empirical examinations demonstrate that tactical application of the strategies may aid leaders in making sense of complex and ambiguous ethical dilemmas and promote ethical behavior. Compensatory tactics such as these should be central to organizational ethics initiatives at the leader level.     

Transaction cost economics and the roles of national culture: a test of hypotheses based on Inglehart and Hofstede

Transaction cost economics (TCE) is probably the most widely accepted theory on how firms can gain competitive advantage through efficient organization of their economic transactions. However, by focusing on the competitive environment in which companies operate, it abstracts from the cultural context in which governance decisions are made. We study the cultural boundedness of TCE using two seminal cultural theories: the political science/sociology framework of Inglehart and the management science framework of Hofstede. We use these theories to develop (main-effect) hypotheses about the cultural contexts in which TCE has higher predictive power as well as (interaction) hypotheses regarding particular cultural contexts that may inherently be more inclined than others to adopt certain non-market governance modes if the market “fails.” Hypotheses are tested using a meta-analysis on data collected from 128 studies from 12 countries on 3 continents, representing governance decisions of 60,926 companies. We find that TCE is a universal theory across all cultural contexts. This being said, we find that in societies low on power distance and in societies characterized by a strong emphasis on secular-rational and self-expression values, companies are more strongly guided in their governance decisions by economic, transaction-cost considerations than companies in societies high on power distance and in countries that are characterized by traditional and survival values. Further, TCE’s power to predict the specific type of non-market governance employed by the firm is systematically moderated by the national culture in which the firm operates. The power of TCE for predicting hierarchical governance is higher in countries that rate high on secular-rational values and on uncertainty avoidance and low on long-term orientation, whereas TCE is more diagnostic for predicting relational governance in countries high on self-expression values and low on power distance and on uncertainty avoidance. In sum, our meta-analysis provides support for our thesis that to fully understand governance choices made by firms, we need to integrate TCE and cultural theory. While managers around the world are guided by economic considerations, the cultural context in which they operate exerts a substantial—and predictable—contingent effect on their governance choices.     

Evolutionary dynamics on infinite strategy spaces

Summary. The study of evolutionary dynamics was so far mainly restricted to finite strategy spaces. In this paper we show that this unsatisfying restriction is unnecessary. We specify a simple condition under which the continuous time replicator dynamics are well defined for the case of infinite strategy spaces. Furthermore, we provide new conditions for the stability of rest points and show that even strict equilibria may be unstable. Finally, we apply this general theory to a number of applications like the Nash demand game, the War of Attrition, linear-quadratic games, the harvest preemption game, and games with mixed strategies. Received: June 25, 1999; revised version: January 31, 2000     

The role of ethics and product personality in the intention to purchase organic food products: a structural equation modeling approach

The aim of the present study is to examine the role of ethical dimensions and product personality in the purchasing intention of organic food products. The Prospect method (Caprara et al. in Test Psicomet Metodol 7(3–4):113–128, 2000), which integrates the Five factors model of personality (cf. Digman in Annu Rev Psychol 41(1):417–440, 1990) and the Theory of planned behavior (Ajzen in Organ Behav Hum Decis Process, 50(2):179–211, 1991) extended to an ethical dimension, was employed, by using a Structural Equation Modeling approach. Results showed that moral norms—i.e., personal beliefs regarding what is right or wrong (Parker et al. in Br J Soc Psychol, 34(2):127–137, 1995)—can be considered the main motivator of purchasing intention, and they are, in turn, affected by subjective norms and product personality traits of Naturalness and Authenticity. Marketing implications for firms operating in the organic food industry are discussed, in their intent to shift from a “niche” market to a broader diffusion of these products.     

The Effects of Average Norm Model Regulation: The Case of Electricity Distribution in Sweden

Following the reform of energy sectors, some countries have used engineering norm models in incentive regulation of network utilities. In 2003, Sweden adopted this approach to regulation of electricity distribution networks. This paper examines whether the norm models represent the real networks and create incentives for performance improvement. We analyse data from 138 network concession holders between 2000 and 2007. The results show that norm models are not adequate representations of real networks. Also, utilities that perform better than their norm models tend to behave opportunistically. Finally, we find that private utilities respond more strongly to incentives.     

Buyer Power and Industry Structure

This paper investigates the exercise of market power by a large buyer who emerges via growth, merger, or group purchasing. It explores the efficiency and redistributive effects of such an event when a competitive fringe of small buyers remains in the market. Terms of trade, including those for small buyers, depend on structural conditions on the supply side of the market and the nature of interactions between the newly emerged dominant buyer and suppliers. Predicted aggregate welfare effects have implications for antitrust.     

Juxtaposition of architecture and mathematics for elementary school students

This paper discusses the Archimath programme, which was designed to develop awareness of the built environment in elementary school students, and to initiate an effort to improve it. Acknowledging the relationship between education and awareness of the environment, the programme was constructed for use with elementary school students selected from fourth to eighth grades, as an integrated mathematics and architecture programme. It includes topics from an introductory course for architecture majors and from the elementary mathematics curriculum. The programme was implemented in several pilot schools in Istanbul and was evaluated in accordance with activity sheets, pre- and post-perception tests, and the views and comments of the teachers who carried out the programme. It was revised and reorganized in accordance with this feedback and then implemented again on different groups of students in the selected schools. This paper discusses how the programme was conceived and developed.     

Money Does Not Grow on Trees: An Argument for Usury

Usury, charging a higher interest rate than thought by some to be “fair,” has had and still has, a bad press. Historically, it was heavily punished. It was then, and all too often is now, thought to be exploitative. Yet, as even the most economically unsophisticated must realize, both sides of these transactions must necessarily gain at least in the ex ante sense, otherwise one or the other would refuse to enter into the deal in the first place. The present paper is an attempt to justify the practice of charging interest on loans, at any rate agreeable to both borrowers and lenders.     

Advertising competition and industry channel structure

The introduction of independent retailers has long been recognized as a buffer that alleviates the price competition between channels. In this paper, we argue that this effect may be counter-balanced if the manufacturers compete along dimensions that differ from prices (such as advertising). We find that delegating to retailers may intensify other non-price competition between the manufacturers and therefore make the manufacturers worse off. Our analysis shows that the “retailer buffer” may be a two-edged sword and thus suggests that channel structure may critically depend on the specific dimensions along which the manufacturers compete with each other.