Ethics

Three Levels of Ethical Influences on Selling Behavior and Performance: Synergies and Tensions Abstract In general, the business ethics literature has treated the conceptual domains and outcomes of macro-level (industrial), meso-level (organizational), and micro-level (individual) ethical influence separately. However, this singular treatment ignores the synergies and tensions that can arise across these different types of ethical influence. Using sales as a research context, the current study argues that all three ethical frames of references are important in shaping employee behavior and performance and, as such, should be examined simultaneously. The findings show that industrial ethical climate and salesperson moral equity are positively associated with salesperson customer orientation. In addition, industrial and organizational ethical norms have a stronger joint effect on customer orientation than either ethical climate alone. More specifically, a more ethical organizational climate enhances the positive effects of the industrial ethical climate on customer orientation. Furthermore, whereas salesperson moral equity is significantly associated with salesperson customer orientation, strong moral equity beliefs in situations requiring adaptive selling result in weaker sales outcomes. This study concludes with a set of theoretical and actionable implications, as well as a discussion of future research avenues.

Going It Alone Won't Work! The Relational Imperative for Social Innovation in Social Enterprises Abstract Shifts in the philosophy of the "state" and a growing emphasis on the "Big Society" have placed an increasing onus on a newly emerging organizational form, social enterprises, to deliver innovative solutions to ease societal issues. However, the question of how social enterprises manage the process of social innovation remains largely unexplored. Based on insights from both in-depth interviews and a quantitative empirical study of social enterprises, this research examines the role of stakeholder relationships in supporting the process of social innovation within social enterprises. We find that social enterprises are adept at working with their stakeholders in the ideation stage of social innovation. In contrast, they often fail to harness knowledge and expertise from their partners during the social innovation implementation phase. Consequently, we propose a social innovation–stakeholder relationship matrix that provides social enterprises in particular with insight for developing stakeholder relationships to achieve their social innovation missions.

Actively Persuading Consumers to Enact Ethical Behaviors in Retailing: The Influence of Relational Benefits and Corporate Associates Abstract While consumer motivation to maintain a relationship with a retailer is a function of personal idiosyncratic characteristics, specific perceptions of retailers may play a role in influencing receptivity to relationship maintenance. This study integrates relationship marketing tactics and corporate associates into a model of consumer ethical purchasing behavior that improves the relationship between sellers and buyers. Results show social benefits, special treatment benefits, CSR, and service quality have direct and indirect impact on ethically questionable consumer behaviors in retailing. This study also modifies the consumer ethics scale of Muncy and Vitell (1992) for the East Asian market with good reliability and validity in order to measure ethically questionable consumption behaviors in retailing. Finally, some theoretical contribution and practical implications are discussed.

Who's Watching? Accountability in Different Audit Regimes and the Effects on Auditors' Professional Skepticism Abstract The European Commission has suggested that the use of joint audits should lead to improved auditor skepticism and—by extension—audit quality, through increased accountability. However, archival research does not find support for improved audit quality in a joint audit setting. To better understand the relationship between accountability in different review regimes and auditors' judgments, we examine the behavioral effect of implementing a joint audit relative to other review regimes based on a 1 × 3 experimental design. Forty-seven senior auditors and partners from a Big Four firm performed a going concern evaluation task under one of three review regimes: the joint audit, the internal review, and the no review regime. Notwithstanding the difference in the audiences to which auditors are accountable, there is no difference in the judgment process. In terms of their judgment outcome, however, auditors in the joint audit setting were the least skeptical in their judgment of the going concern assumption. Overall, we suggest that the joint audit may lead to unintended behavioral consequences.

Internally Reporting Risk in Financial Services: An Empirical Analysis Abstract The enduring failure of financial institutions to identify and deal with risk events continues to have serious repercussions, whether in the form of small but significant losses or major and potentially far-reaching scandals. Using a mixed-methods approach that combines an innovative version of the classic dictator game to inform prosocial tendencies with the survey-based Theory of Planned Behaviour, we examine the risk-escalation behaviour of individuals within a large financial institution. We discover evidence of purely selfish behaviour that explains the lack significance in pressure to adhere to the Subjective Norms of colleagues around intention to report risks. A finding that has potentially important implications for efforts to instil a high-error management climate and incentivise risk reporting within organisations where risk, if ignored or unchecked, could ultimately have consequences that extend far beyond the institutions themselves.

Can Social Norm Activation Improve Audit Quality? Evidence from an Experimental Audit Market Abstract We assert that audit quality can be improved to the extent that social norms for honesty and responsibility are activated in the auditor. To test this assertion, we use an experimental audit market setting found in the literature and manipulate factors expected to activate honesty and responsibility norms in the auditor. We find that auditor misreporting is reduced when the investor is another participant in the experiment rather than computer simulated, and thus, the interests of third-party investors are salient to the auditor. We also find that auditor misreporting is reduced when the auditor is required to sign-off on the audit report, but only when the investor is another participant in the experiment. Consistent with our underlying theory, we find that pre-experimental measures of sensitivity to honesty and responsibility norms help explain the effects of our manipulated variables. Finally, we find that these measures of social norm sensitivity are associated with the moral judgment that auditor misreporting is unethical. Our study helps explain previous anomalous findings in the literature and answers the call in Blay et al. (J Bus Ethics 2017. doi:10.1007/s10551-016-3286-4) for empirical researchers to use social norm theory to develop stronger tests of moral reasoning in the market for auditing services.

Achieving Top Performance While Building Collegiality in Sales: It All Starts with Ethics Abstract While previous literature provides evidence of the positive relationship between ethical climate and job satisfaction, the possible mechanisms of this relationship are still underexplored. This study aims to enhance scholars' and practitioners' understanding of the ethical climate–job satisfaction relationship by identifying and testing two of the possible mechanisms. More specifically, this study fills an existing research gap by examining social and interpersonal mechanisms, referred to in this study as workplace isolation of colleagues and salesperson's teamwork, of the ethical climate–job satisfaction relationship. This is vital for the selling profession because job satisfaction is known to drive higher levels of salespeople's performance. The arguments for such mechanisms are built on the foundations of social/psychological contract theory and ethical climate literature. Empirical testing using a large sample of salespeople shows higher levels of ethical climate to decrease workplace isolation and increase teamwork. Findings support hypothesized model where ethical climate positively relates to job satisfaction as partially mediated by workplace isolation and teamwork. Ethical climate is negatively related to workplace isolation and positively to teamwork. Further, findings indicate negative effect of workplace isolation on teamwork and sales performance. Job satisfaction is found to be key factor in driving performance of salespeople.

Perceived Ethical Leadership Affects Customer Purchasing Intentions Beyond Ethical Marketing in Advertising Due to Moral Identity Self-Congruence Concerns Abstract Ethical leadership has so far mainly been featured in the organizational behavior domain and, as such, treated as an intra-organizational phenomenon. The present study seeks to highlight the relevance of ethical leadership for extra-organizational phenomena by combining the organizational behavior perspective on ethical leadership with a classical marketing approach. In particular, we demonstrate that customers may use perceived ethical leadership cues as additional reference points when forming purchasing intentions. In two experimental studies (N = 601 and N = 336), we find that ethical leadership positively affects purchasing intentions because of customers' concerns for moral self-congruence. We show this by means of both mediation and moderation analyses. Interestingly, the effect of perceived ethical leadership on purchasing intentions holds over and above the ethical advertising claims (e.g., cause-related marketing) that are commonly used in marketing. We conclude by discussing the possible ramifications of ethical leadership beyond its effects on immediate employees.

How and When Retailers' Sustainability Efforts Translate into Positive Consumer Responses: The Interplay Between Personal and Social Factors Abstract This study aims to address how (through which mechanisms) and when (under which conditions) retailers' sustainability efforts translate into positive consumer responses. Hypotheses are developed and tested through a scenario-based experiment among 672 consumers. Retailers' assortment sustainability and distribution sustainability are manipulated. Retailers' sustainability efforts lead to positive consumer responses (e.g., improved store evaluations) via two underlying mechanisms: consumers' identification with the store (personal route) and store legitimacy (social route). The effects of sustainability efforts are strengthened if consumers have personal norms favoring shopping at environmentally friendly stores. Remarkably, when controlling for moderation by personal norms, social norms weaken the effects. The findings show that traditional marketing mix elements provide opportunities for retailers to improve their organizations' bottom line and positively affect consumer (and societal) well-being. This study helps retailers decide whether or not to invest in and communicate about sustainability. Past research has shown the clear potential for positive consumer responses to firms' sustainability efforts, but little is known about the underlying mechanisms and the conditions under which such responses take place. This study advances theory by examining personal and social factors as mediators and moderators of the retailers' sustainability efforts–consumer responses relationship.

The Role of the Distributor Network in the Persistence of Legal and Ethical Problems of Multi-level Marketing Companies Abstract Multi-level marketing companies (MLMs) such as Amway, Herbalife, or Tupperware differ from most other companies. They market their products and services by means of self-employed distributors who typically work from home, sell products to end consumers, and recruit, motivate, and educate new distributors to do the same. Although the industry's growth seems to illustrate the attractiveness of MLMs, the industry has been facing several legal and ethical problems. In this paper, we focus on these problems and argue that an extended MLM model may help us to understand why such problems continue to occur, despite the countermeasures that have been implemented. By explicating how problems relate to a specific but often overlooked characteristic of MLMs, i.e., the so-called distributor network, we provide an extended understanding of (a) MLMs' mode of operation, (b) the sources of their legal and ethical problems, and (c) the reason that currently implemented and suggested countermeasures may not suffice. Moreover, based on our extended understanding of MLMs and their problems, we propose additional countermeasures.