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International Evidence on the Determinants of Organizational Ethical Vulnerability
Ullah, S. Ahmad, S. Kodwani, D.
Ullah, S.
Ahmad, S.
Kodwani, D.
Publication Date
2018
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© 2018 Wiley
This is the peer reviewed version of the following article: Ullah S, Ahmad S, Akbar S et al (2018) International Evidence on the Determinants of Organizational Ethical Vulnerability. British Journal of Management. 30(3): 668-691, which has been published in final form at https://doi.org/10.1111/1467-8551.12289. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.
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openAccess
Accepted for publication
15/01/2018
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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.
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Citation
Ullah S, Ahmad S, Akbar S et al (2018) International Evidence on the Determinants of Organizational Ethical Vulnerability. British Journal of Management. 30(3): 668-691.
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