This week’s articles shine a spotlight on ethical decision-making in specific industries.

Sweatshops: Economic analysis and exploitation as unfairness 
The economic and moral defence of sweatshops given by Powell and Zwolinski (J Bus Ethics 107:449–472, 2012) has been criticised in two recent papers. Coakley and Kates (J Bus Ethics 117:553–558, 2013) focus on putative weaknesses in the logic of Powell’s and Zwolinski’s argument. Preiss (Bus Ethics Quart 24(1):55–82, 2014) argues that, even granting the validity of their economic argument, Powell’s and Zwolinski’s defense is without force when viewed from a Kantian republican viewpoint.

We are concerned that sweatshop critics have misinterpreted the economic literature and overstated the conclusions that follow from their ethical premises. We show that the best understanding of the current economic literature supports Powell’s and Zwolinski’s conclusions about the negative effects of sweatshop wage regulation, and that it is unreasonable to reject economic analysis in moral argument against sweatshops even from a Kantian perspective.

Additionally, the authors defend the theory of exploitation as unfairness given by Wertheimer (Exploitation, 1996), and show how economic analysis can be applied to that theory to identify cases of sweatshop exploitation.

Gordon G. Sollars and Fred Englander. 2018. Sweatshops: Economic Analysis and Exploitation as Unfairness.
Journal of Business Ethics, 149(1), 15–29.


Fashion industry: Business model innovation, CSR, and values 
The objective of this paper is to examine the relationship between business model innovation, corporate sustainability, and the underlying organisational values. Moreover, the paper examines how the three dimensions correlate with corporate financial performance. It is concluded that companies with innovative business models are more likely to address corporate sustainability and that business model innovation and corporate sustainability alike are typically found in organisations rooted in values of flexibility and discretion. Business model innovation and corporate sustainability thus seem to have their origin in the fundamental principles guiding the organisation. In addition, the study also finds a positive relationship between the core organisational values and financial performance. The analysis of the paper is based on survey responses from 492 managers within the Swedish fashion industry.

Esben Rahbek Gjerdrum Pedersen, Wencke Gwozdz and Kerli Kant Hvass. 2018. Exploring the Relationship Between Business Model Innovation, Corporate Sustainability, and Organisational Values within the Fashion Industry.
Journal of Business Ethics, 149(2), 267–284.


Toy industry: “Why do all the girls have to buy pink stuff?” 
The gendered marketing of children’s toys is under considerable scrutiny, as reflected by numerous consumer-led campaigns and vigorous media debates. This article seeks to assist stakeholders to better understand the ethical and scientific assumptions that underlie the two opposing positions in this debate, and assess their relative strength.

There is apparent consensus in the underlying ethical foundations of the debate, with all commentators seeming to endorse the values of corporate social responsibility and gender equality. However, the debate splits over three critical points of empirical disagreement: whether gendered toy marketing influences children’s toy preferences or simply reflects boys’ and girls’ fundamentally different interests; whether the effects of gendered toy marketing are negative, neutral or beneficial; and whether a shift to gender-neutral marketing would be economically viable.

We assess the three points of disagreement against the available evidence and shared ethical principles underlying the debate, and conclude that current defences of gendered toy marketing fail.

Cordelia Fine and Emma Rush. 2018. “Why Does all the Girls have to Buy Pink Stuff?” The Ethics and Science of the Gendered Toy Marketing Debate. 
Journal of Business Ethics, 149(4), 769–784.


IPO firms: Organisational virtue and stakeholder interdependence 
Organisational virtue orientation (OVO), an organisational-level construct, refers to the integrated set of beliefs and values that support ethical character traits and virtuous behaviours. To advance the study of organisational virtue, the authors examine OVO in firms making their initial public offerings (IPOs), with respect to key external stakeholders that serve as financial intermediaries (i.e., venture capital firms and underwriting banks).

Drawing on stakeholder and resource dependence theories, the authors argue that mutual interdependencies occur between financial intermediaries and IPO firms such that venture capital firms’ ownership levels and underwriter reputation are positively associated with the selection of more virtuous IPO firms. We also argue for the moderating relationship of IPO firm age on these main relationships; since IPO firms have more history and information availability, less importance will be placed on OVO in the selection process.

In support of the hypotheses, the results of this study suggest the organisational virtue of IPO firms influences the selection decisions of financial intermediaries by reflecting positively on these key stakeholders to improve legitimacy and reputation.

Michael S. McLeod, Curt B. Moore, G. Tyge Payne, Jennifer C. Sexton and Robert E. Evert. 2018. Organizational Virtue and Stakeholder Interdependence: An Empirical Examination of Financial Intermediaries and IPO Firms.
Journal of Business Ethics, 149(4), 785–798.


Auditors: Sense of responsibility for detecting fraud  
The objective of this study is to evaluate auditors’ perceived responsibility for fraud detection. Auditors play a critical role in managing fraud risk within organisations. Although professional standards and guidance prescribe responsibility in the area, little is known about auditors’ sense of responsibility for fraud detection, the factors affecting perceived responsibility, and how responsibility affects auditor performance.

We use the triangle model of responsibility as a theoretical basis for examining responsibility and the effects of accountability, fraud type, and auditor type on auditors’ perceived fraud detection responsibility. We also test how perceived responsibility affects auditor brainstorming performance given the importance of brainstorming in audits. A sample of 878 auditors (241 external auditors and 637 internal auditors) participated in an experiment with accountability pressure and fraud type manipulated randomly between subjects.

As predicted, accountable auditors report higher detection responsibility than anonymous auditors. We also find a significant fraud type × auditor type interaction with external auditors perceiving the most detection responsibility for financial statement fraud, while internal auditors report similar detection responsibility for all fraud types.

Analysis of the triangle model’s formative links reveals that professional obligation and personal control are significantly related to responsibility, while task clarity is not. Finally, the results indicate that perceived responsibility positively affects the number of detection procedures brainstormed and partially mediates the significant accountability–brainstorming relation.

F. Todd DeZoort and Paul D. Harrison. 2018. Understanding Auditors’ Sense of Responsibility for Detecting Fraud Within Organizations.
Journal of Business Ethics, 149(4), 857–874.


Recruiters: Reactions to smokers in personnel selection 
Decades of tobacco control initiatives have turned public opinion against cigarette smoking. Smokers, once considered glamorous, are now stigmatized in domains including the workplace. Extant literature lacks scrutiny of smoker stigmatization and devaluation within the job selection process, and mechanisms that lead to such outcomes.

Using an experimental design, the authors empirically examine initial reactions to job applicants’ smoking behaviours within two samples (N = 122 Canadian business students, and N = 143 online U.S. respondents with hiring experience). We show that initial impressions are significantly worse when job applicants smoke versus do not in a store-based context. Moreover, this effect occurs indirectly through perceived likelihood of engaging in counterproductive work behaviours (and to some extent negative emotions experienced), and is conditional upon respondents’ own attitudes towards smoking (particularly within the U.S. sample).

These relationships—similar for customer service and inventory management jobs—are indicative of potential biases within the hiring process. Implications of these findings, and the moral dilemmas they raise around the treatment of smokers, are discussed from the ethical perspective of human resource management.

Nicolas Roulin and Namita Bhatnagar. 2018. Smoking as a Job Killer: Reactions to Smokers in Personnel Selection.
Journal of Business Ethics, 149(4), 959–972.


Food supply chain: Waste, power, and CSR  
By examining corporate social responsibility (CSR) and power within the context of the food supply chain, this paper illustrates how food retailers claim to address food waste while simultaneously setting standards that result in the large-scale rejection of edible food on cosmetic grounds.

Specifically, this paper considers the powerful role of food retailers and how they may be considered to be legitimately engaging in socially responsible behaviours to lower food waste, yet implement practices that ultimately contribute to higher levels of food waste elsewhere in the supply chain.

Through interviews with key actors in the Australian fresh fruit and vegetable supply chain, the authors highlight the existence of a legitimacy gap in corporate social responsibility whereby undesirable behaviours are pushed elsewhere in the supply chain. It is argued that the structural power held by Australia’s retail duopoly means that supermarkets are able to claim virtuous and responsible behaviours, despite counter claims from within the fresh food industry that the food supermarkets’ private quality standards mean that fresh food is wasted.

We argue that the supermarkets claim CSR kudos for reducing food waste at the expense of other supply chain actors who bear both the economic cost and the moral burden of waste, and that this is a consequence of supermarkets’ remarkable market power in Australia.

Bree Devin and Carol Richards. 2018. Food Waste, Power, and Corporate Social Responsibility in the Australian Food Supply Chain.
Journal of Business Ethics, 150(1), 199–210.


Socially Responsible Investment Funds: Cultural environment and performance 
Socially responsible (SR) mutual funds match financial and environmental, social, and governance criteria in their portfolio management strategies. Several studies have examined the behaviour of these funds in terms of return–risk, obtaining very different results.

The present study discusses previous results and shows how these funds often outperform their conventional counterparts. Rather than the SR (or non) character of a mutual fund, a relevant explanation for this behaviour is the cultural environment in which the fund operates.

Thus, the ethical framework or corporate social responsibility used by the fund and its management must be assessed by considering the cultural context of the fund. This notion is the main contribution of this paper.

Francisco José López-Arceiz, Ana José Bellostas-Pérezgrueso and José Mariano Moneva. 2018. Evaluation of the Cultural Environment’s Impact on the Performance of the Socially Responsible Investment Funds.
Journal of Business Ethics, 150(1), 259–278.