Making the Shift: Moving from "Ethics Pays" to an Inter-Systems Model of Business

For several decades, business has operated according to the tenets of neoclassical economic theory, where the primary obligation of corporations is to maximize profit for shareholders. However, the larger social mandate for business has changed, represented by the rise of language such as "sustainable development", "corporate social responsibility" (CSR) and "stakeholder groups." Nevertheless, the theoretical shift implied by the use of such language has not occurred. Issues of sustainable development and CSR continue to be justified in the terms of neoclassical economic theory through the rationalization of "doing well by doing good".Within this economic paradigm, CSR cannot move beyond enlightened self-interest (acting in socially responsible ways in order to further one's own ends) because all behavior must be justified economically. This implies that corporate socially responsible behavior will simply cease when it becomes uneconomic, regardless of the impact on interrelated systems which in turn will re-impact the business realm.Faced with bitter realities arising from complex interactions among social, political, cultural, eco-nomic and natural environments, we may better comprehend and negotiate these problems by moving out of a neoclassical economic justification of the stakeholder model of the corporation to an inter-systems model, shifting from a narrow comprehension of a single economic independent system analyzed apart from its larger context to a fuller understanding of business as one of a number of interrelated systems.Operational differences between the old and new mandates are described, and two ways to practically shift towards the new mandate are identified as a modified version of scenario planning and the introduction of the voice of the critic.     

Performance-vested stock options and interest alignment

This paper investigates the effects of performance-vested stock options (PVSOs) in aligning management interests and shareholder wealth. Using 4238 executive-level observations for 1383 executive directors from the largest 244 UK non-financial firms over the 1999–2004 period, we find that the use of PVSO schemes in executive compensation contracts is associated with greater interest alignment. The evidence also shows that PVSOs outperform traditional stock options (TSOs) in providing incentives. Moreover, the results suggest that difficult vesting targets negatively affect managers' choice of effort, resulting in the divergence of managers' and shareholders' interests.     

The Degree of Ad–Brand Incongruity and the Distinction Between Schema-Driven and Stimulus-Driven Attitudes

Drawing on schema theory and advertising rhetoric, this article contributes to research on incongruent communication with three studies exploring consumer responses across different degrees of ad–brand incongruity. Study 1 reveals an inverted U-shaped pattern, indicating the superiority of moderate incongruity on ad processing time, recall, and attitude toward the ad (A_ad) and the brand (A_b). Studies 2A and 2B replicate this pattern and further demonstrate that the affect already stored in the brand schema drives brand attitude formation for congruent and extremely incongruent ads, whereas both schema- and stimulus-based affect determine brand attitude for moderately incongruent ads. Study 2B also shows that participants are able to resolve ad–brand incongruity and comprehend the ad unless discrepancies are extreme. Finally, it is revealed that comprehension of more cognitively challenging ads mediates the effect of incongruity on both A_ad and A_b.