Towards an ethical dimension of decision making in organizations

There is a growing need to increase our understanding of ethical decision making in U.S. based organizations. The authors examine the complexity of creating uniform ethical standards even when the meaning of ethical behavior is being debated. The nature of these controversies are considered, and three important dimensions for ethical decision making are discussed: leaders with integrity and a strong sense of social responsibility, organization cultures that foster dialogue and dissent, and organizations that are willing to reflect on and learn from their actions. Leaders with integrity demonstrate consistency between vision and action that promotes trust, regularly concern themselves with developing moral standards, and are proactive agents of change in an increasingly complex world. Organizational cultures that support dialogue suspend judgments and increase their capacity to think together towards new levels of understanding. Ethical concepts evolve in these organizational cultures, and actions are informed and responsible. Organizations that reflect on their actions engage in double loop learning so that the time taken to reflect on the past and present leads to a more judicious and ethical future. In essence, the authors point to organizational guidelines for ethical decision making that lead to an increase in members' capacity to think and act ethically. Jonathan Z. Gottlieb is a consultant to organizations and a Ph.D. Candidate in Organizational Psychology. His interests include organization redesign, leadership and team development, ethics, and role definition for organization development practitioners. Jyotsna Sanzgiri is Dean of Organizational Psychology Programs at the California School of Professional Psychology — Alameda. She received her Ph.D. in business Administration and her M.B.A. Her interests include organizational theory and core values across cultures, and the historical underpinnings of organization development and behavior.     

The Three Faces of Labor: Sustainability and the Next Wave of Automation

This article develops a model of three faces of labor from Figart, Mutari, and Power’s three faces of wages. This is integrated with sustainability models to locate the process of human and social capital formation and explore issues arising from technological change. The latest wave of automation, involving robotics and artificial intelligence, is expected to be an even greater challenge for worker well-being than globalization and immigration. The model supports a new narrative around labor that incorporates the caring economy as well as a framework for thinking about labor issues and long-term well-being.     

Reducing reporting risk: Designating foreign currency forward contracts as cash flow hedges

We present an example that compares the effects on earnings of designating a foreign currency forward contract as either a cash-flow or fair-value hedge of a foreign currency denominated receivable. Entities engaging in exchange transactions not denominated in their functional currency frequently enter into foreign currency forward contracts in order to mitigate their foreign exchange rate risk exposure. The aggregate effect on earnings of the transaction gain or loss on the foreign currency receivable and the gain or loss on the forward contract is known on the date the forward contract is initiated. The effect on each period’s earnings during the term of a forward contract designated as a cash-flow hedge is also known on the date the contract is initiated; whereas the effect on each periods’ earnings from a fair-value hedge cannot be determined until the respective balance sheet dates. Therefore, designating forward contracts as cash-flow hedges may suppress volatility in reported earnings compared to designating forward contracts as fair-value hedges. In addition, the reporting risk (the amount of uncertainty surrounding the pending measure of an item to be reported in the financial statements) is lower when a forward contract is designated as a cash-flow hedge relative to designating it as a fair-value hedge. This suggests foreign currency forward contracts designated as cash-flow hedges are more consistent with the purpose of hedge accounting: to mitigate the effects on earnings of applying different measurement criteria for the hedge and the hedged item.     

Business Groups: An Integrated Model to Focus Future Research

abstract    Business groups are the primary form of managing large business organizations outside North America. This paper provides a systematic and integrative framework for understanding business groups. We argue that existing theoretical perspectives of business groups pay attention to four critical external contexts, each of which draws from a specific theoretical perspective: market conditions (transaction cost theory), social relationships (relational perspective), political factors (political economy perspective), and external monitoring mechanisms (agency theory). Business groups adapt to these external forces by deploying various internal mechanisms along two key dimensions: one focuses on the distinctive roles of the group affiliates (horizontal connectedness) and the other focuses on coupling and order between the parent firm and its affiliates (vertical linkages). Based on these two dimensions, a typology of business group forms is developed: network (N-form), club (C-form), holding (H-form), and multidivisional (M-form). Utilizing this model we provide research questions which facilitate an improved future research agenda.     

Betwixt and Between: The Dilemma of Employee References

Concerns have arisen over employers' collection and sharing of information about employees, especially employment references. As a result of the dramatic growth in the number of lawsuits brought by employees, many employers have seriously curtailed the information they release concerning current and former employees. However, even the refusal to release information carries a legal risk. Employers who do not obtain information concerning applicants can be liable for negligent hiring, and those who knowingly withhold negative information regarding their former employees may be liable for negligent referral. This paper explores these expanding liabilities and suggests strategies to allow employers to manage the risk of communicating employee references.     

Outward foreign direct investment by emerging market firms: A resource dependence logic

This study examines and extends the resource dependence logic of diversification for a better understanding of outward foreign direct investment (OFDI) activities by emerging market firms. We contend that the diversification logic is bounded by state ownership, an important but less considered component of interdependence. Our empirical results, based on panel data analysis of Chinese listed firms, suggest that the level of interdependence between Chinese and foreign firms in China in multiple forms, including symbiotic, competitive, and partner interdependencies, is positively associated with the level of the Chinese firms' OFDI activities. However, Chinese firms with higher levels of state ownership are less susceptible to the pressures imposed by foreign firms to invest abroad. Copyright © 2013 John Wiley & Sons, Ltd.     

Asymmetric information in late 19th century cooperative insurance societies

Between 1880 and 1930, cooperative insurance was the main source of illness, accident, and death insurance in the United States, Canada, and England. This paper tests for asymmetric information in cooperative insurance societies and examines how their pricing policies affected the profile of members. We find strong evidence that, unlike their modern substitutes, cooperative societies were able to overcome the asymmetry of information. Furthermore, as a consequence of non-actuarial pricing, our results suggest that workers deferred their membership until they were about 40 years old.     

Managerial Intentions and Wage Determination in the Canadian Petroleum Industry

Scant attention has been given to the impact of managerial objectives on wage policies. This study demonstrates that in the Canadian petroleum industry, which has minimal wage dispersion, managerial objectives—in particular, a tendency toward imitative behavior and a strategy of union avoidance—do affect wage determination.