Articles this week look at how companies face up to wrongdoings – mistakes or otherwise.

Employee wrongdoing: Managers’ responses
A growing body of literature has examined managers’ use of restorative practices in the workplace. However, little is currently known about why managers use restorative practices as opposed to alternative (e.g., punishment) responses.

The authors employed a qualitative interview technique to develop an inductive model of managers’ restorative versus punitive response in the context of employee wrongdoing. The findings reveal a set of key motivating and moderating influences on the manager’s decision to respond to wrongdoing in a restorative versus punitive manner.

The findings also suggest that managers’ personal needs and perceived duties in the aftermath of employee wrongdoing are generally more consistent with restorative responses than punishment responses, which helps explain managers’ use of restorative workplace practices.

Nathan Robert Neale, Kenneth D. Butterfield, Jerry Goodstein & Thomas M. Tripp. 2020. Managers’ Restorative Versus Punitive Responses to Employee Wrongdoing: A Qualitative Investigation.
Journal of Business Ethics, 161(3),  603–625.

 

C-suite financial executives and fraud
This study explores how financial executives retrospectively account for their crossing the line into financial statement fraud while acting within or reacting to a financialised corporate environment. The authors conduct the investigation through face-to-face interviews with 13 former C-suite financial executives who were involved in and indicted for major cases of accounting fraud.

Five different themes of accounts emerged from the narratives, characterising executives’ fraud immersion as a meaning-making process by which the particulars of the proximal social context (the influence of social actors and contextual characteristics) and individual motivations collectively moulded executives’ vocabularies of fraud immersion.

The executives’ narratives portray their fraud entanglement as typically occurring in small, incremental steps. Their accounts expand our understanding of the influence of socialisation on executive-level financial fraud beyond the individualised focus of the fraud triangle model.

Ikseon Suh, John T. Sweeney, Kristina Linke & Joseph M. Wall. 2020. Boiling the Frog Slowly: The Immersion of C-Suite Financial Executives into Fraud.
Journal of Business Ethics, 162(3),  645–673.

 

Prosocial compensation following a service failure
Prosocial compensation (PC) is a corporate social responsibility (CSR) practice that involves donating money to a charitable cause on behalf of customers as a means to compensate them for their loss after a service failure. In order to determine the effectiveness of PC, the authors carried out three experiments while also comparing its effectiveness within private and public settings.

Experiment 1 focused on the signalling effects of communicating the promise to offer PC to potential customers in the event of service failure. Results show that, in both private and public settings, PC has positive effects on corporate image, credibility, and word-of-mouth intent. More significantly, PC improved one’s CSR image, whereas more tangible compensation, such as a gift voucher, did not.

Experiments 2A and 2B focused on the effects of offering PC after a service failure on perceptions of justice. Results show that PC contributes to perceived distributive justice, procedural justice, and post-recovery satisfaction in both private and public settings.

This study showed that PC could be a relevant new CSR practice for organisations wanting to enhance theirs CSR image while contributing to fulfilling their ethical and philanthropic CSR responsibilities. The authors discuss the implications of the findings and offer several avenues for follow-up research on this initial study on PC.

 

Read this Open Access article online for free

 

Jean-Pierre Thomassen, Marijke C. Leliveld, Kees Ahaus and Steven Van de Walle. 2020. Prosocial Compensation Following a Service Failure: Fulfilling an Organization’s Ethical and Philanthropic Responsibilities.
Journal of Business Ethics, 162(1), 123–147.

 

Speaking truth to power
The current study examines the micro-linguistic details of Twitter responses to the whistleblower-initiated publication of the Panama Papers. The leaked documents contained the micro-details of tax avoidance, tax evasion, and wealth accumulation schemes used by business elites, politicians, and government bureaucrats.

The public release of the documents on April 4, 2016 resulted in a groundswell of Twitter and other social media activity throughout the world, including 161,036 Spanish-language tweets in the subsequent 5-month period. The findings illustrate that the responses were polyvocal, consisting a collection of overlapping speech genres with varied thematic topics and linguistic styles, as well as differing degrees of calls for action and varying amounts of illocutionary force.

The analysis also illustrates that, while the illocutionary force of tweets is somewhat associated with the adoption of a prosaic and vernacular ethical stance as well as with demands for action, these types of voicing behaviours were not present in the majority of the tweets.

These results suggest that, while social media platforms are a popular site for collective forms of voicing activities, it is less certain that these collective stakeholder voices necessarily result in forceful accountability demands that spill out of the communication medium and thus serve as an impulse for positive social change.

Dean Neu, Gregory Saxton, Jeffery Everett and Abu Rahaman Shiraz. 2020. Speaking Truth to Power: Twitter Reactions to the Panama Papers.
Journal of Business Ethics, 162(2), 473–485.

 

Cheating in business
Although the managerial practice of cheating spans complex and heterogeneous situations (from deception and trickery to fraud and swindling), most business ethics scholars consider that the very idea of cheating is indefensible on moral grounds, and quickly dismiss it as wrongdoing.

This paper proposes to fine-tune this conventional moral assessment by arguing that some forms of cheating can be justified—or at least excused. To do so, it starts with a value-free definition of cheating that covers a wide diversity of situations: “breaking the rules while deliberately leading or allowing others to think they have been respected.” While using this definition at the metaethical level, the paper contends that the moral assessment of cheating depends on the obligation to comply with the rules.

There are rules which do not entail moral obligations, and there are special circumstances where other more important obligations override the obligation to comply with the rules. Furthermore, the paper argues that respecting the penalty rules also influences the moral assessment of cheating on the rules.

The key interest of this endeavour lies in contributing to building a more solid theoretical framework for the study of cheating in management, which may replace our common prejudices and basic intuitions on this matter.

Marian Eabrasu. 2020. Cheating in Business: A Metaethical Perspective.
Journal of Business Ethics, 162(3),  519–532.

 

Denial of corruption
This study explores the rationality behind firms’ decision to admit or deny their involvement in bribery when responding to confidential surveys conducted by international agencies (such as the World Bank). Specifically, the authors posit that firms’ reluctance to provide accurate information about their engagement in bribery is at least to some extent contingent on certain situational factors. In other words, the authors claim that this behaviour is context dependent.

The paper uses the notions provided by the theory of planned behaviour to understand the way in which the corruption of the legal environment, the intensity of market competition, and identification risk influence firms’ decision to lie about their involvement in bribery. To test these notions, the authors use databases from the fifth wave of the EBRD-World Bank Business Environment and Enterprise Performance Survey, country-level data from the Kauffman Foundation and macroeconomic (i.e., country-level) information from the World Bank database.

The authors run ordinary least squares with geographic region-clustered standard errors on data from 30 countries and 6122 individual firms during the period 2012–2013. Consistent with expectations, the results indicate that firms operating within more corrupt legal environments, facing more competition, and bearing a higher risk of being identified are less likely to deny their involvement in bribery.

The authors conclude that not all firms have the same incentives to lie about their participation in bribery, and therefore, identifying the drivers of this heterogeneity may help policymakers better assess the reliability of bribery information collected through confidential surveys.

Susana Gago-Rodríguez, Gilberto Márquez-Illescas & Manuel Núñez-Nickel. 2020. Denial of Corruption: Voluntary Disclosure of Bribery Information.
Journal of Business Ethics, 162(3),  609–626.