Does location have an influence on ethical practices? Read this week’s articles to find out.
Location matters: Geographical proximity to financial centres and CSR disclosure
This study investigates the impact of location on corporate social responsibility (CSR) disclosure in the context of emerging economies. The authors test their hypotheses using a sample of firms from nine emerging markets, including Brazil, China, India, Indonesia, Korea, Malaysia, Pakistan, Russia and Turkey, over the period 2010–2015.
The authors find strong and robust evidence indicating that firms located closer to financial centres exhibit more CSR disclosure as compared to their remote counterparts. Moreover, this effect is more pronounced for family owned and cross-listed firms. Lastly, the negative effect of distance on CSR disclosure is stronger in countries with higher income inequality.
These results are robust to alternative estimation methods, reduced sample, and alternative proxy for their variable, location.
Farah Zamir and Abubakr Saeed. 2018. Location matters: Impact of geographical proximity to financial centres on corporate social responsibility (CSR) disclosure in emerging economies.
Asia Pacific Journal of Management. First online 7 December 2018 at https://link.springer.com/article/10.1007/s10490-018-9619-3
The local roots of CSR
The authors provide new evidence that the prosocial attitudes of local residents play a significant role in determining a firm’s corporate social responsibility (CSR) engagement. The authors show that firms are more likely to engage in CSR initiatives when they are headquartered in areas with large senior citizen populations and where a large fraction of the population makes charitable donations.
In contrast, the authors find that firms are less likely to engage in CSR initiatives when they are headquartered in areas with large religiously affiliated groups. After establishing the local demographic roots of CSR demand, the authors then examine the relationship between the firm’s CSR activities and its market valuation.
The results suggest that CSR initiatives create value when they are properly aligned with local residents’ prosocial attitudes. Overall, this study stresses the role of local residents’ CSR preferences in mediating the relationship between CSR and market valuations.
Najah Attig and Paul Brockman. 2017. The Local Roots of Corporate Social Responsibility.
Journal of Business Ethics, 142(3), 479–496.
Firm geographic location and voluntary disclosure
This study aims to shed light on the effect of a firm’s geographic location on its voluntary disclosure policy. It hypothesises that a firm’s geographic distance from metropolitan areas increases the cost of oversight of managerial actions, which creates incentives for remotely located firms to make more voluntary disclosures in their annual reports that improve information available to investors and hence mitigate agency conflicts.
Based on a sample of 260 French listed firms spanning the period 2007–2010, the authors find support for the authors’ hypothesis that as a firm’s distance from the Paris region increases, its level of voluntary disclosure in annual reports increases as well. This is consistent with the notion that remote firms are likely to pre-commit to higher voluntary disclosure so as to reduce oversight costs arising from geographic remoteness and mitigate agency conflicts.
The results are robust to alternative measures of voluntary disclosure, to several geographic location proxies, and to alternative estimation techniques. Collectively, they confirm the positive effect of distance on the extent of voluntary disclosure.
Imen Derouiche, Kaouther Jaafar and AhmedZemzem. 2016. Firm geographic location and voluntary disclosure.
Journal of Multinational Financial Management, 37-38, 29-47.
Financial reports and social capital
Author, Anand Jha, examines social capital’s impact on financial reports. Based on the social capital literature, the author predicts that the quality of the financial reports is higher when a firm is headquartered in a region with high social capital.
Consistent with this prediction, the study finds that the firms that are headquartered in this type of region in the USA have a lower probability of committing fraud by misrepresenting financial information. Further, the author finds that the firms in regions with high social capital have lower levels of discretionary accruals and much more readable annual reports.
Anand Jha. 2019. Financial Reports and Social Capital.
Journal of Business Ethics, 155(2), 567–596.
Influence of transparency on employees’ ethical judgments in Russia
After the USSR collapsed, the Russian economy underwent serious changes from being plan-based to a market economy. These changes, together with political instability, created a business environment where no attention was paid to ethics. Russian managers have little experience operating in a market economy, which created many misunderstandings with foreign partners, especially regarding ethical issues of doing business.
This study examined the factors influencing the ethical judgments of Russian employees to understand how they perceive ethical issues and make ethical or unethical decisions at work. The Ferrell and Gresham (J Mark 49:87–96, 1985) framework was employed in this study to understand the process of making ethical decision by an individual.
Transparency was proposed as a moderator of the relationship between opportunity factors and employees’ ethical judgments. Findings of this study show that Russian employees tend to be more tolerant towards ethically questionable behaviours at a workplace. Moreover, the results also demonstrate that transparency moderates the influence of opportunity to behave unethically on ethical judgments.
Wen-yeh Huang. 2018. Influence of Transparency on Employees’ Ethical Judgments: A Case of Russia.
Journal of Business Ethics, 152(4), 1177–1189.
Host country sourcing of multinational enterprises and CSR
Through corporate social responsibility (CSR) activities, a firm can develop the capability for managing and benefiting from stakeholder relationships. This study refers to such a capability as stakeholder influence capacity (SIC). In a host country, locally sourcing parts and/or materials can generate economic value and improve social welfare.
Moreover, local sourcing provides opportunities for a foreign firm to apply and advance SIC while closely interacting with host-country stakeholders. Accordingly, the authors expect that a firm, having gained SIC through CSR activities in its home country, will be more likely to source parts and/or materials in the host country. The authors also expect that the relationship between SIC (gained from CSR in the home country) and host-country sourcing is conditional upon a foreign firm’s intangible resources and liabilities of foreignness.
The empirical analysis, using Korean datasets, supports the positive relationship between CSR and local sourcing. The authors find that this positive relationship is more pronounced either when the firm is committed to technology development or when its home and host countries are geographically or culturally distant.
Jae C. Jung & Khan-Pyo Lee. 2018. Host Country Sourcing of Multinational Enterprises: A Corporate Social Responsibility Perspective.
Journal of Business Ethics, 152(3), 683–701.
An orchestrated negotiated exchange: Trading home-based telework for intensified work
In this paper, the authors explore a popular flexible work arrangement (FWA), home-based telework, in the Indian IT industry. The authors show how IT managers used the dominant meanings of telework to portray telework as an employee benefit that outweighed the attendant cost—intensified work.
While using their discretion to grant telework, the managers drew on this portrayal to orchestrate a negotiated exchange with their subordinates. Consequently, the employees consented to accomplish the intensified work at home in exchange of telework despite their opposition to the intensified work in the office. Thus, whereas the extant studies consider work intensification as an unanticipated outcome of using FWAs, the authors show how firms may use FWAs strategically to get office-based intensified work accomplished at home.
While the dominant argument is that employees reciprocate the opportunity to telework with intensified work, the authors show a discursively orchestrated negotiation that favours management. A corrective policy measure is to frame telework as an employee right.
Dharma Raju Bathini and George Mathew Kandathil. 2019. An Orchestrated Negotiated Exchange: Trading Home-Based Telework for Intensified Work.
Journal of Business Ethics, 154(2), 411–423.
Generational shifts in managerial values and emerging unified business culture in Europe
In a globalizing world, cross-national differences in values and business culture and understanding these differences become increasingly central to a range of organisational issues and ethical questions. However, various concerns have been raised about extant empirical research on cross-national dissimilarities in the cultural values of managers (what the authors refer to as managerial values) and the development of a unified business culture.
This paper seeks to address three such concerns with the literature on convergence versus divergence of cultural values. It develops an empirical approach to the study of changing business cultures that revolves around birth cohorts and intergenerational values shifts and aims to advance empirical knowledge of the dynamics of cross-national differences in the cultural values of managers.
The authors use time-series data covering 68,708 managers and are able to consider a sample of 32 countries that represent more than half of the cultural clusters recognised in the literature. Results reveal diverse shifts in managerial values across birth cohorts with cross-national dissimilarities waning for some basic cultural dimensions (“convergence”), remaining stable for other dimensions (“cultural stability”), and becoming more pronounced for other dimensions still (“divarication”).
Moving beyond the standard convergence/divergence taxonomy, the authors conclude that a full-fledged convergence–stability–divarication perspective provides the best basis for thinking about the subtle ways in which business cultures are changing.
Read this Open Access article for free online
André van Hoorn. 2019. Generational Shifts in Managerial Values and the Coming of a Unified Business Culture: A Cross-National Analysis Using European Social Survey Data.
Journal of Business Ethics, 155(2), 547–566.