How Ethical Behavior of Firms is Influenced by the Legal and Political Environments: A Bayesian Causal Map Analysis Based on Stages of Development

Abstract

Even though potential impacts of political and legal environments of business on ethical behavior of firms (EBOF) have been conceptually recognized, not much evidence (i.e., empirical work) has been produced to clarify their role. In this paper, using Bayesian causal maps (BCMs) methodology, relationships between legal and political environments of business and EBOF are investigated. The unique design of our study allows us to analyze these relationships based on the stages of development in 92 countries around the world. The EBOF models structured through BCMs are used to explain how EBOF in a given country group are shaped by how managers perceive political, legislative, and protective environments of business in these countries. The results suggest that irregular payments and bribes are the most influential factors affecting managers' perceptions of business ethics in relatively more advanced economies, whereas intellectual property protection is the most influential factor affecting managers' perceptions of business ethics in less-advanced economies. The results also suggest that regardless of where the business is conducted in the world, judicial independence is the driving force behind managers' perceptions of business ethics. In addition, the results of this study provide further support for scholars who argue that business ethics is likely to vary among countries based on their socio-economic factors. In addition to its managerial implications, the study provides directions for policy makers to improve the ethical conduct of businesses in their respective countries. © 2012 Springer Science+Business Media B.V

Do Auditing and Reporting Standards Affect Firms’ Ethical Behaviours? The Moderating Role of National Culture

“…Participants were asked to indicate their response to this question on a seven-point Likert scale (1 = among the worst in the world; 7 = among the best in the world). Although the survey measured EBF with a single item, it has been found reliable in previous research (Ekici and Onsel 2013;Mehanna and Yazbeck 2009).…”

“…Therefore, it is considered as one of the major responsibilities of organizations, and it is an important part of ethical business behaviour (Webley 1999). Both in theory and practice, it is presumed that strengthening auditing and reporting standards enhance the EBF (e.g., Ekici and Onsel 2013).…”

“…Previous research shows that in addition to company-specific (micro) factors, such as personal and organizational values, EBF are also strongly affected by country-specific (macro) factors, including social, cultural, legal, political and institutional environments (Bartels 1967;Ekici and Onsel 2013;Vitell et al 1993).…”

“…In contrast, only a limited number of studies focus on the association of the new standards with other issues such as EBF. To the best of our knowledge, Ekici and Onsel (2013) is the only recent study focusing on the ways in which EBF are influenced by political and legal institutions, including the SARS. However, this study did not identify the moderating impact of national culture in the legal regulations and the ethical behaviour relationship.…”

Does Gender Equality Lead to Better-Performing Economies A Bayesian Causal Map Approach

“…BCMs use both qualitative and quantitative data which makes them more efficient when compared to other methods. The qualitative part of the method comes from the expert knowledge that constitues the structure and quantitative part comes from the probabilities identified and revised using hard data (Ekici and Önsel 2013).…”