Our research tidbits this week looks at the conditions which may give rise to irresponsible behaviour of organisations and what can be done to mitigate.
Paths of corporate irresponsibility
In this qualitative meta-analysis, the author analyses corporate irresponsibility as an emergent organisational process. Organisations enacting irresponsible practices rely not only on a particular form of a process path, but on how this process path evolves within the organisation.
To achieve a better understanding of this process path, the author conducted a qualitative meta-analysis drawn from 20 published cases of irresponsible organisations. The author explores how and under which conditions irresponsible behaviour of organisations arises, develops, and changes over time. The process path of corporate irresponsibility relies on the interaction of multiple levels of analysis and its temporal occurrence, resulting in either path dependency or path creation. Based on the empirical findings of the evolving phenomena, this study focuses on three phases of corporate irresponsibility: institutionalisation, problematisation, and adaptation.
The process of corporate irresponsibility can take two distinct paths, the reactive (organisations becoming locked-in in the path of corporate irresponsibility), and the proactive (organisations radically changing and breaking their path of corporate irresponsibility).
This study contributes to the corporate irresponsibility literature by offering new insights into, first, a processual and more interactional approach to corporate irresponsibility that accounts for interdependencies on the different levels of each phase, and second, the self-reinforcing mechanisms and explanatory patterns of corporate irresponsibility leading to path dependency or path creation.
Jill A. Küberling-Jost. 2021. Paths of Corporate Irresponsibility: A Dynamic Process.
To blow or not to blow the whistle?
Whistleblowers who need to decide whether or not they should report wrongdoing usually experience several anxieties and pressures before making a final decision. As whistleblowers continue to attract the attention of a wide range of stakeholders, more research is necessary to understand the effects of the perceived seriousness of threats (PST) and perceived seriousness of wrongdoing (PSW), as well as the effect of the rationalisation process on the intention to blow the whistle.
The authors make the original proposal that the rationalisation process can affect how PST and PSW trigger whistleblowing intentions. The authors tested their model using employees of tax offices operating in an emerging economy.
The authors suggest several research findings, which can be summarised as follows: (i) PST reduces individuals’ intention to blow the whistle. That is, the greater the threat perceived by whistleblowers, the higher the likelihood they will choose to remain silent; (ii) the authors find evidence of a positive relationship between PSW and whistleblowing intention, whereby PSW increases individuals’ intention to blow the whistle. That is, the more serious the wrongdoing perceived by potential whistleblowers, the more likely they are to choose to blow the whistle; and (iii) the authors find evidence of the important role of rationalisation in moderating the relationships between PST, PSW, and whistleblowing intention.
The implications of these findings for business ethics scholars, managers, and end-users interested in whistleblowing are also presented.
Hengky Latan, Charbel Jose Chiappetta Jabbour & Ana Beatriz Lopes de Sousa Jabbour. 2021. To Blow or Not to Blow the Whistle: The Role of Rationalization in the Perceived Seriousness of Threats and Wrongdoing.
Managing conflict of interests in professional accounting firms
This paper synthesises the research related to managing conflict of interests in professional accounting firms. The main purpose is to provide information about the current state of knowledge on this topic and to highlight the areas requiring further research.
The extant research has been reviewed by developing a framework through the integration of Risk Management Framework by ISO 31000:2009 and the International Code of Ethics for Professional Accountants. Specifically, literature has been classified across the establishment of context, assessment, treatment, control and monitoring of conflict of interests. The literature reveals that there is a lack of understanding about how the conflict of interests operates at the level of an individual accounting professional.
Addressing this gap will help to develop behavioural interventions for strengthening the professionals’ independence in fact and, thereby, facilitating the management of conflict of interests. The key message this synthesised research provides for professional accounting firms and the regulators is that, for effective management of conflict of interests, behavioural interventions should be informed by the professionals’ unconscious (automatic) as well as their conscious (controlled) cognitive processes.
This study is the first one to view the conflict of interests in a professional accounting environment through the lens of behavioural risk management. Moreover, the framework adopted for reviewing the extant literature provides a comprehensive view of the issues surrounding the ineffective management of the conflict of interests.
Maria Ishaque. 2021. Managing Conflict of Interests in Professional Accounting Firms: A Research Synthesis.
Practice sense, empathy games, and dilemmas in tax enforcement
Tax administrators are empowered by the state to secure compliance with tax obligations. Enforcing compliance on the ground is complex, and street-level administrators often engage in the “art of the possible,” leading to dilemmas in the field.
This paper examines tax administrators’ practices with regard to Jamaican property tax defaulters with outstanding tax liabilities in excess of 3 years. Drawing on interviews with tax administrators and other key agents, the authors find that tax administrators reposition themselves from objective enforcers to empathising officials engaging in schemes of action, doing what they can do rather than what they should do. This is a practical-sense approach to securing compliance.
The authors identify two forms of empathy, assimilated and cynical, and conclude that administrators’ empathetic identification with defaulters does not necessarily arise solely from concern for social cohesion, or inter-subjective compassion, but also sometimes from self-interest.
Read this Open Access article online for free.
Carlene Beth Wynter & Lynne Oats. 2021. Knock, Knock: The Taxman’s at Your Door! Practice Sense, Empathy Games, and Dilemmas in Tax Enforcement.
Moral responsibility for systemic financial risk
This paper argues that some of the major theories in current business ethics fail to provide an adequate account of moral responsibility for the creation of systemic financial risk.
Using the trading of credit default swaps (CDS) during the 2008 financial crisis as a case study, the author formulates three challenges that these theories must address: the problem of risk imposition, the problem of unstructured collective harm and the problem of limited knowledge. These challenges will be used to work out key shortcomings of stakeholder approaches and Integrative Social Contracts Theory.
The author argues that pluralist connection models used in political theory can help to overcome these shortcomings. Adopting an approach based on these models shows that financial institutions incur obligations in five main areas: managing their own risk profile; remedying some of the harms caused by financial crises; supporting the development of better epistemic methods; curbing the transmission and amplification of initial losses; and instigating structural reforms
Jakob Moggia. 2021. Moral Responsibility for Systemic Financial Risk.