Keywords: Transparency Trust Reciprocity Repeated interaction Business alliances SOX This paper uses data from a controlled laboratory environment to study the impact of transparency (i.e., complete information versus incomplete information) and repeated interactions on the level of trust and trustworthiness (reciprocity) in an investment game setting. The key findings of the study are that transparency (complete information) significantly increases trusting behavior in one-shot interactions. This result persists in repeated interactions. Further, transparency appears important for trustworthiness in oneshot interactions. In addition, repeated interaction increases trust and reciprocity with or without transparency. These results suggest that transparency is important in building trust in business environments such as alliances and joint ventures which are loosely connected organizational forms that bring together otherwise independent firms. It also provides support for the Sarbanes-Oxley Act of 2002 (SOX) and similar legislation elsewhere which attempt to regain investors' trust in corporate management and financial markets by stipulating enhanced disclosures.

No abstract

Abstract:According to a widely credited model in the business ethics literature, ethical decisions are a function of two kinds of factors, personal (individual) and situational, and these factors interact with each other. According to a contrary view of decision making that is widely held in some areas of business research, individuals’ decisions about ethical issues (and subsequent actions) are purely a function of their self-interest.The laboratory experiment reported in this paper provides a test of the person-situation interactionist model, using the general theoretical and experimental framework used in the experimental economics literature. One individual and two situational factors relating to moral intensity were examined which may influence decisions to misrepresent information in the course of business activities.The individual and one situational variable were significantly related to participants’ actions. The interactions among individual and situation variables were not individually significant, although the model including interactions had a much higher level of statistical significance. Gender was significant, both directly and in interaction with moral development, suggesting that it may be worthy of further examination.

No abstract