This week we look at research into some of the ethical dilemmas faced by companies who are trying to ‘do the right thing’.

The ethics of engagement in an age of austerity 
The contribution in this paper is to highlight the ethical implications of workforce engagement strategies in an age of austerity.

Hard or instrumentalist approaches to workforce engagement create the potential for situations where engaged employees are expected to work ever longer and harder with negative outcomes for their well-being.  The study explores these issues in an investigation of the enactment of an engagement strategy within a UK Health charity, where managers and workers face paradoxical demands to raise service quality and cut costs.

The authors integrate insights from engagement, paradox, and ethic of care literatures, to explore these paradoxical demands—illustrating ways in which engagement experiences become infused with tensions when the workforce faces competing requirements to do ‘more with less’ resources.

The authors argue that those targeted by these paradoxical engagement strategies need to be supported and cared for, embedded in an ethic of care that provides explicit workplace resources for helping workers and managers cope with and work through corresponding tensions.  The study points to the critical importance of support from senior and frontline managers for open communications and dialogue practices.

 

Read this Open Access article online for free

 

Helen Francis & Anne Keegan. 2020. The Ethics of Engagement in an Age of Austerity: A Paradox Perspective. 
Journal of Business Ethics, 162(3), 593–607.

 

What is a fair level of profit for social enterprise?
Although microfinance organisations are generally considered as inherently ethical, recent events have challenged the legitimacy of the sector. High interest rates and the excessive profitability of some market leaders have raised the question of how to define a fair profit level for social enterprise.

In this article, the authors construct a fair profit framework based on four dimensions: profitability, social mission, pricing, and surplus distribution. The authors then apply this framework using an empirical sample of 496 microfinance institutions (MFIs).

Results indicate that satisfying all four criteria is a difficult, although not impossible, task. According to  this framework, 24 MFIs emerge as true double bottom line organisations. These MFIs are characterised by higher outreach to women, lower portfolio risk, and higher productivity in high-density environments such as South Asia.

The authors argue that excessive profits can be better understood relative to pricing, the outreach of the MFI, and organisational commitment to clients in the form of reduced interest rates.

Marek Hudon, Marc Labie & Patrick Reichert. 2020. What is a Fair Level of Profit for Social Enterprise? Insights from Microfinance. 
Journal of Business Ethics, 162(3), 627–644.

 

Employee volunteer programs and firm-level benefits and CEO incentives: Ethical dilemma of CSR activities
Ethical dilemmas arise when one must decide between conflicting ethical imperatives. One potential ethical dilemma is a manager’s decision of whether to engage in corporate social responsibility (CSR) activities.

This decision could pit the ethical imperative of honouring unwritten obligations to society against the ethical imperative of honouring contractual obligations to the firm. However, CSR activities might only be a minor ethical dilemma or none at all if they simultaneously benefit the firm and society.

To examine this the author tests the association between future-period employee productivity and current-period use of one type of CSR activity: employee volunteer programs. The author uses a unique sample of 1428 firm-years, hand-collected from sustainability reports of 373 firms.

The author finds:

  • evidence that the current-period use of an employee volunteer program has a positive association with future-period employee productivity (moderated by the firm’s current-period employee productivity).
  • this result in future periods up to 6 years after a firm uses an employee volunteer program.
  • a positive association between incentives that focus CEOs’ attention on long-term firm outcomes and more extensive employee volunteer programs (also moderated by current-period employee productivity).

Brian D. Knox. 2020. Employee Volunteer Programs are Associated with Firm-Level Benefits and CEO Incentives: Data on the Ethical Dilemma of Corporate Social Responsibility Activities. 
Journal of Business Ethics, 162(2), 449–472.