Our research tidbits this week considers the impact of culture-based influences on ethical decision making.
The effects of spirituality and moral intensity on ethical business decisions
The authors present a cross-sectional study of ethical decision-making correlated with spirituality and utilising moral intensity as a moderator for workers in the South-eastern United States (N = 117).
This study presents spirituality as an individual variable and moral intensity as a situational variable along with ethical decision-making to examine the interaction of these factors in moral dilemmas. Utilising previously validated instruments for ethical decision-making and individual spirituality, the authors find that workers with relatively high measured spirituality made less ethical decisions compared to workers with relatively lower measures of spirituality.
Further, the authors find that the introduction of high moral intensity as a situational variable does not moderate the observed correlation between spirituality and ethical decision-making. This research supports the conceptual nature of the Interactionist Theory by presenting in a single study both individual and situational variables in ethical decision-making.
Stephen E. Anderson & Jodine M. Burchell. 2021. The Effects of Spirituality and Moral Intensity on Ethical Business Decisions: A Cross-Sectional Study.
Ethical decision-making in Sri Lankan organisations
Ethical decision-making (EDM) theories in behavioural ethics management have been developed through the social sciences, psychology, social psychology, and cognitive neurosciences. These theories are either cognitive, non-cognitive or an integration of both. Other scholars have recommended redefining what ethical means through moral philosophy and theology.
Buddhism is a religion, a philosophy, a psychology, an ethical system and an art of living. The divine states (i.e. loving-kindness, compassion, sympathetic joy, and equanimity) in Buddhism are virtues that could be developed by anyone regardless of their religion or non-religion through Buddhist meditation. They are so called because they enable individuals to develop ‘God-like qualities’. The theoretical insights of the divine states indicate how to eliminate negative emotions, such as anger, fear, delusion and envy, by cultivating love and compassion towards both the self and others. Accordingly, this paper contributes to EDM by redefining what ethical means through the meanings managers who practise Buddhist meditation assign to divine states in their lived experience of EDM in organisations in Sri Lanka.
The sample consisted of 17 Buddhists, 1 Hindu, 1 Muslim and 1 no-religion. Data were collected using semi-structured in-depth interviews and was analysed with IPA. The findings indicated that how the managers made meaning of an ethical decision was influenced by their loving-kindness, compassion, sympathetic joy and equanimity. The findings also indicated that the managers justified the reasons for their decisions subsequently through the benefits to themselves as well as their employees. Accordingly, this study supports the view that EDM is an integrated approach.
Thushini S. Jayawardena-Willis, Edwina Pio & Peter McGhee. 2021. The Divine States (brahmaviharas) in Managerial Ethical Decision-Making in Organisations in Sri Lanka: An Interpretative Phenomenological Analysis
What influences an asset owner to sign the Principles for Responsible Investment?
From a simple idea to unite asset owners in their quest for responsible investment (RI) at its launch in April 2006, the United Nations supported Principles for Responsible Investment (PRI) have grown in just one decade into an initiative with more than 1500 fee-paying signatories.
Jointly, the PRI’s signatories hold assets worth more than $80 trillion, making it one of the more prevalent not-for-profit organisations worldwide. Furthermore, the PRI’s ambitious mission to transform the financial system at large into a more sustainable one makes it a worthwhile subject of inquiry from an institutional perspective. The authors undertake an empirical investigation of the adoption of the PRI by asset owners during five crucial years of the association’s emergence: 2007–2011.
Following a tripartite view of institutional theory proposed by Scott (Institutions and organisations. Foundations for organisational science, A Sage Publication Series, London, 1995), the authors explore if regulative, normative, and cultural–cognitive factors influence an asset owner’s decision to subscribe to the PRI. Applying both parametric and non-parametric survival analysis, the authors find that asset owners are indeed significantly affected by normative, cultural–cognitive, and regulative aspects. In particular, (i) public service employee and labour union pension funds (ii) from social backgrounds more culturally aligned with values represented by the RI movement (iii) with historically more voluntary legislation on environmental, social, and governance (ESG) issues are most likely to sign the PRI.
In contrast, institutional environments with a higher number of pre-existing mandatory ESG regulation decrease the likelihood of signing the PRI. The results indicate that normative and cultural–cognitive factors were crucial contributors to the PRI’s growth. With respect to the regulative environments, the results imply that some asset owners may use the PRI as a collective industry initiative to substitute for mandatory legislation. Conversely, a high level of historical mandatory legislation may constrain organisational resources that could otherwise be dedicated to voluntary initiatives such as PRI. The findings are robust to relevant controls and econometric concerns.
Read this Open Access article online for free.
Andreas G. F. Hoepner, Arleta A. A. Majoch & Xiao Y. Zhou. 2021. Does an Asset Owner’s Institutional Setting Influence Its Decision to Sign the Principles for Responsible Investment?
Challenges to accountants professional independence in China due to guanxi
This study examines the tensions between the western concept of professional independence and accountants’ commitment to significant others under the care perspective of guanxi. The principle of professional independence is founded on arm’s-length transactions to avoid undue influence on professional and ethical judgement.
However, in the relational society of China, social interactions based on Confucianism elicit a duty of care and concern towards significant others in important relationships. For a professional accountant, the commitment to persons with whom they have guanxi is potentially at odds with their commitment to professional independence. Data collected from interviews with Chinese accounting professionals, accounting academics and expatriate accountants working in China provide insight on how Chinese accounting professionals discharge their obligations under guanxi.
Notions of guanxi and the rules of exchange identified in Hwang’s (Knowledge and action: A social psychological interpretation of Chinese cultural traditions, Sin-Li, Taipei, 1995) model of “Confucian ethics for ordinary people” provide the lens to explain the ethical dilemmas facing Chinese accountants.
The findings suggest that accounting professionals prioritise the interests of their superiors and clients over the users of financial reports. Despite accountants’ moral obligation to protect the public interest, personal and professional obligations in China struggle to extend beyond client or employer interests mostly because of the absence of a formal relationship or connection with the public. This contrasts sharply with the notion of professional independence practised in western societies, where accounting professionals must be independent of their clients and superiors and commit to a duty to protect the public interest. The outcome of this study demonstrates the impediments to transplanting western concepts to different cultures.
Gina Xu & Steven Dellaportas. 2021. Challenges to Professional Independence in a Relational Society: Accountants in China.
Firm ownership and corporate illegality in China
This study explores whether or not a firm’s ownership status, as state-owned enterprise (SOE) or private-owned enterprise (POE), will influence its likelihood of engaging in illegality in China.
The authors build arguments on the institution-based view, positing that firms rationally pursue their interests in the distinct institutional context of China. Compared to SOEs, POEs have limited access to institutional resources, the lack of which threatens their development or even survival, forcing them to “break rules” to overcome institutional barriers. The authors thus suggest that POEs demonstrate a higher propensity to engage in illegal actions than SOEs do. However, if POEs could gain access to more institutional resources, their motivation to engage in illegal actions is likely to decrease.
Following this logic, the authors suggest that political connections and market development will mitigate the likelihood that POEs will engage in illegal actions. The authors find support for their predictions using evidence from Chinese listed manufacturers. This research contributes to the literature by revealing the institutional aspects of corporate illegality in transitional economies.
Yongqiang Gao & Haibin Yang. 2021. Does Ownership Matter? Firm Ownership and Corporate Illegality in China.