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International evidence on the determinants of organizational ethical vulnerability

Ullah, Subhan; Ahmad, Sardar; Akbar, Saeed; Kodwani, Devendra

Authors

Subhan Ullah

Sardar Ahmad

Saeed Akbar

Devendra Kodwani



Abstract

This paper proposes a model to explain what makes organisations ethically vulnerable. Drawing upon legitimacy, institutional, agency and individual moral reasoning theories we consider three sets of explanatory factors and examine their association with organisational ethical vulnerability. The three sets comprise external institutional context, internal corporate governance mechanisms and organisational ethical infrastructure. We combine these three sets of factors and develop an analytical framework for classifying ethical issues and propose a new model of organisational ethical vulnerability. We test our model on a sample of 253 firms that were involved in ethical misconduct and compare them with a matched sample of the same number of firms from 28 different countries. The results suggest that weak regulatory environment and internal corporate governance combined with profitability warnings or losses in the preceding year increase organisational ethical vulnerability. We find counterintuitive evidence suggesting that firms’ involvement in bribery and corruption prevention training programmes is positively associated with the likelihood of ethical vulnerability. By synthesising insights about individual and corporate behaviour from multiple theories, this study extends existing analytical literature on business ethics. Our findings have implications for firms’ external regulatory settings, corporate governance mechanisms and organisational ethical infrastructure.

Citation

Ullah, S., Ahmad, S., Akbar, S., & Kodwani, D. (2019). International evidence on the determinants of organizational ethical vulnerability. British Journal of Management, 30(3), 668-691. https://doi.org/10.1111/1467-8551.12289

Journal Article Type Article
Acceptance Date Jan 15, 2018
Online Publication Date Feb 28, 2018
Publication Date Jul 12, 2019
Deposit Date Sep 18, 2018
Publicly Available Date Feb 29, 2020
Journal British Journal of Management
Print ISSN 1045-3172
Electronic ISSN 1467-8551
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 30
Issue 3
Pages 668-691
DOI https://doi.org/10.1111/1467-8551.12289
Keywords Management of Technology and Innovation; Strategy and Management; General Business, Management and Accounting
Public URL https://hull-repository.worktribe.com/output/717038
Publisher URL https://onlinelibrary.wiley.com/doi/abs/10.1111/1467-8551.12289
Related Public URLs https://livrepository.liverpool.ac.uk/3016460/

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