Can companies recover from poorly perceived ethical decisions? Discover with this week’s research articles.
Can sinful firms benefit from advertising their CSR efforts?
This study investigates corporate social responsibility (CSR) of sinful firms, which refer to ones that are operating in controversial industries, including the production and distribution of alcohol, tobacco, gambling, adult entertainment, firearm, military, and nuclear power.
The authors attempt to answer two questions in this study: (1) Do these sinful firms actively advertise their CSR engagements compared to non-sinful firms? And (2) do their advertising efforts really yield increased financial performance?
Positing that advertising not only can make sinful firms’ good deeds visible, but also can highlight the contradiction between these firms’ stigma and their prosocial activities, authors Hannah Oh and her team claim that sinful firms are likely to advertise their CSR engagement to overcome their stigmatised firm image, but these advertising activities will make the firms’ performance vulnerable by inducing scepticism from stakeholders.
Using KLD database in conjunction with COMPUSTAT and Center for Research in Security Prices from 1991 to 2010, where 337 firms are involved in the controversial sinful industries, namely tobacco, alcohol, gaming, firearms, military, and nuclear power, Oh et al. examine the effect of advertising spending of sinful firms’ CSR engagement on performance vulnerability, which is instantiated with idiosyncratic risk. The empirical results indicate that sinful firms increase their advertising expenditure when they engage in CSR programs, but these efforts for advertising CSR tend to increase idiosyncratic risk. This finding indicates that even though sinful firms can benefit from engaging in socially responsible initiatives, advertising their CSR efforts may backfire.
Hannah Oh, John Bae and Sang-Joon Kim. 2017. Can Sinful Firms Benefit from Advertising Their CSR Efforts? Adverse Effect of Advertising Sinful Firms’ CSR Engagements on Firm Performance.
Journal of Business Ethics, 143(4), 643–663.
Reconceptualising CSR in the media industry as relational accountability
In this paper, the authors reconceptualise CSR in the media industries by combining empirical data with theoretical perspectives emerging from the communication studies and business ethics literature.
They develop a new conception of what corporate responsibility in media organisations may mean in real terms by bringing Bardoel and d’Haenens’ (European Journal of Communication 19 165–194 2004) discussion of the different dimensions of media accountability into conversation with the empirical results from three international focus group studies, conducted in France, the USA and South Africa.
To enable a critical perspective on the findings, the authors perform a philosophical analysis of its implications for professional, public, market, and political accountability in the media, drawing on the insights of Paul Virilio. The researchers come to the conclusion that though some serious challenges to media accountability exist, the battle for responsible media industries is not lost. In fact, the speed characterising the contemporary media environment may hold some promise for fostering the kind of relational accountability that could underpin a new understanding of CSR in the media.
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Mollie Painter-Morland and Ghislain Deslandes. 2017. Reconceptualizing CSR in the Media Industry as Relational Accountability.
Journal of Business Ethics, 143(4), 665–679.
The abandoned stakeholders: Pharmaceutical companies and research participants
Most discussions concerned with advancing the just and ethical treatment of research participants in developing countries have revolved around the moral principle of autonomy and the legal doctrine of informed consent (O’Neill 2002).
However, if emerging ethical concerns are to be addressed effectively, the discussion needs to expand into the domain of business ethics where arguments addressing issues such as fair/appropriate compensation, entitlement, and corporate obligations to stakeholders are commonplace.
The argument presented in this paper will conclude that emerging ethical considerations regarding the treatment of research participants in developing countries have evolved well beyond the scope of the principle of informed consent and that in order to resolve these concerns more appropriately and effectively, the new default or status quo should be to consider research participants as stakeholders of the sponsoring pharmaceutical company, even after the clinical trial is completed.
This conclusion is significant because although it is fair to assume that, at some point in the timeline, most stakeholder theorists already do consider research participants stakeholders of the pharmaceutical company sponsoring the trial, the completion date of the clinical trial usually signifies and marks the termination of their stakeholder status and thus any consideration of what is owed further to the research participant.
Chang, Pepe Lee. 2017. The Abandoned Stakeholders: Pharmaceutical Companies and Research Participants.
Journal of Business Ethics, 143(4), 721–731.
What should a manager like me do in a situation like this?
In this research, the authors argue that managers have various strategies for handling complex ethical problems and that these strategies are formed according to the logic of appropriateness.
First, the authors show through a qualitative empirical study the different strategies that are used for handling ethical problems. Five types of strategies are identified in this study: mediating, principled, isolation, teaching and bystanding.
Secondly, they investigate the types of ethical approaches which managers reveal when handling ethical problems.
Thirdly, the authors discuss which strategies seem to contribute to the overall ethicality of organisations.
To conclude, they suggest that the decisions and actions of managers like the middle managers in this study are influenced by their interpretation of what is appropriate behaviour in the particular situation.
Minna-Maaria Hiekkataipale and Anna-Maija Lämsä. 2017. What Should a Manager Like Me Do in a Situation Like This? Strategies for Handling Ethical Problems from the Viewpoint of the Logic of Appropriateness.
Journal of Business Ethics, 145(3), 457–479.
Perceptions of high integrity can persist after deception
Scholars have assumed that trust is fragile: difficult to build and easily broken. The authors demonstrate, however, that in some cases trust is surprisingly robust—even when harmful deception is revealed, some individuals maintain high levels of trust in the deceiver.
This paper describes how implicit theories moderate the harmful effects of revealed deception on a key component of trust: perceptions of integrity. In a negotiation context, the authors show that people who hold incremental theories (beliefs that negotiating abilities are malleable) reduce perceptions of their counterpart’s integrity after they learn that they were deceived, whereas people who hold entity theories (beliefs that negotiators’ characteristics and abilities are fixed) maintain their first impressions after learning that they were deceived.
Implicit theories influenced how targets interpreted evidence of deception. Individuals with incremental theories encoded revealed deception as an ethical violation; individuals with entity theories did not. These findings highlight the importance of implicit beliefs in understanding how trust changes over time.
Michael P. Haselhuhn, Maurice E. Schweitzer, Laura J. Kray and Jessica A. Kennedy. 2017. Perceptions of High Integrity Can Persist After Deception: How Implicit Beliefs Moderate Trust Erosion.
Journal of Business Ethics, 145(1), 215–225.
The effect of online protests and firm responses on shareholder and consumer evaluation
Protests that target firms’ socially irresponsible behaviour are increasingly organised via digital media. This study uses two methods to investigate the effects that online protests and mitigating firm responses have on shareholders’ and consumers’ evaluation.
The first method is a financial analysis that includes an event study which measures the effect of online protests on the target firm’s share price, as well as an investigation of the boundary effects of protest characteristics.
The second method is an online experiment that assesses the effect of an online protest campaign on consumers’ perception and purchase intention, as well as any mitigating effects that a firm’s response may have.
Contrary to recent studies suggesting that participation in online protests is only token support without any substantive effects, the results show that online protests do hurt. Firms can expect to suffer financial, reputational, and sales damage when an online protest campaign mobilizes consumers successfully.
The authors also show that online protests are more likely to take firms by surprise than offline protests. Firms can exacerbate or reduce the damage by their response. The researchers find that although firms may repair the damage to consumers’ purchase intentions, the negative effects on a brand’s image are harder to rectify. The results have valuable implications for protest organisers and managers faced with the task of responding.
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Tijs van den Broek, David Langley and Tobias Hornig. 2017. The Effect of Online Protests and Firm Responses on Shareholder and Consumer Evaluation.
Journal of Business Ethics, 146(2), 279–294.
Whistleblowing: A critical review and research agenda
Whistleblowing is a controversial yet socially significant topic of interest due to its impact on employees, organisations, and society at large. The purpose of this paper is to integrate knowledge of whistleblowing with theoretical advancements in the broader domain of business ethics to propose a novel approach to research and practice engaged in this complex phenomenon.
The paper offers a conceptual framework, i.e., the wheel of whistleblowing, that is developed to portray the different features of whistleblowing by applying the whistleblower’s perspective. The framework is based on five “W” questions: Who, What, hoW, Why, and to Whom? The answers to the proposed questions clarify the main aspects of whistleblowing, provide insights into existing studies of the subject, and identify relevant gaps in the literature which, in turn, offer opportunities for future research.
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Barbara Culiberg and Katarina Katja Mihelič. 2017. The Evolution of Whistleblowing Studies: A Critical Review and Research Agenda.
Journal of Business Ethics, 146(4), 787–803.