Skip to main content
Log in

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

  • Published:
Journal of Business Ethics Aims and scope Submit manuscript

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.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3
Fig. 4
Fig. 5
Fig. 6
Fig. 7
Fig. 8
Fig. 9
Fig. 10
Fig. 11
Fig. 12
Fig. 13
Fig. 14
Fig. 15
Fig. 16

Similar content being viewed by others

Abbreviations

WEF:

World Economic Forum

BCM:

Bayesian causal map

EOS:

Executive Opinion Survey

GCI:

Global Competitiveness Index

EBOF:

Ethical behavior of firms

IPP:

Intellectual property protection

IPAB:

Irregular payments and bribes

JI:

Judicial independence

FDGO:

Favoritism in decisions of government officials

TGP:

Transparency of government policymaking

SARS:

Strength of auditing and reporting standards

ECB:

Efficacy of corporate boards

SIP:

Strength of investor protection

IPR:

Intellectual property rights

References

  • Akaah, I. P. (1989). Differences in research ethics judgments between male and female marketing professionals. Journal of Business Ethics, 8, 375–381.

    Article  Google Scholar 

  • Aktas, E., Ulengin, F., & Onsel, S. (2005). A decision support system to improve the efficiency of resource allocation in health care management. Socio-Economic Planning Sciences, 41(2), 130–146.

    Article  Google Scholar 

  • Argandona, A. (2003). Private-to-private corruption. Journal of Business Ethics, 47, 253–267.

    Article  Google Scholar 

  • Argandona, A. (2005). Corruption and companies: The use of facilitating payments. Journal of Business Ethics, 60, 251–264.

    Article  Google Scholar 

  • Barnett, T., Bass, K., & Brown, G. (1994). Ethical ideology and ethical judgment regarding ethical issues in business. Journal of Business Ethics, 13, 469–480.

    Article  Google Scholar 

  • Batten, J., Hettihewa, S., & Mellor, R. (1999). Factors affecting ethical management: Comparing a developed and developing economy. Journal of Business Ethics, 19(1), 51–59.

    Article  Google Scholar 

  • Blundo, G., & Olivier de Sardan, J. P. (2006). Everyday corruption and the state. Citizens and public officials in Africa. London: Zed Books.

  • Bommer, M., Gratto, C., Gravander, J., & Tuttle, M. (1987). A behavioral model of ethical and unethical decision making. Journal of Business Ethics, 6, 265–280.

    Article  Google Scholar 

  • Britz, J. J., & Lipinski, T. A. (2001). Indigenous knowledge: A moral reflection on current legal concepts of intellectual property. Libri, 51, 234–246.

    Google Scholar 

  • Burns, J. O., & Kiecker, P. (1995). Tax practitioner ethics: An empirical investigation of organizational consequences. Journal of the American Taxation Association, 17(2), 20–49.

    Google Scholar 

  • Chabal, P., & Daloz, J-P. (1999). Africa works: Disorder as political instrument. Indiana University Press.

  • Cleek, M. A., & Leonard, S. L. (1998). Can corporate codes of ethics influence behavior. Journal of Business Ethics, 17, 619–630.

    Google Scholar 

  • Donoho, C. L., Polonsky, M. J., Herche, J., & Swenson, M. J. (1999). A cross cultural examination of the general theory of marketing ethics: Does it apply to the next generation of marketing managers? In S. Smith (Ed.), Proceedings of the Seventh Cross Cultural Research Conference, Cancun, Mexico.

  • Dornoff, R. J., & Tankersley, C. B. (1975). Do retailers practice social responsibility? Journal of Retailing, 51(4), 33–42.

    Google Scholar 

  • Eden, C., & Ackermann, F. (1998). Making strategy. London: Sage Publications.

    Google Scholar 

  • Fenton, N., & Neil, M. (2000). Making decisions: Using Bayesian nets and MCDA. Knowledge-Based Systems, 14(7), 307–325.

    Article  Google Scholar 

  • Ferrell, O. C., & Gresham, L. G. (1985). A contingency framework for understanding ethical decision making in marketing. Journal of Marketing, 49(Summer), 87–96.

    Article  Google Scholar 

  • Fleming, P., & Zyglidopoulos, S. C. (2008). The escalation of deception in organizations. Journal of Business Ethics, 81, 837–850.

    Article  Google Scholar 

  • Ford, R. C., & Richardson, W. D. (1994). Ethical decision making: A review of the empirical literature. Journal of Business Ethics, 13, 205–221.

    Article  Google Scholar 

  • Giacalone, R. A., & Jurkiewicz, C. L. (2003). Right from wrong: The influence of spirituality on percetions of unethical business activities. Journal of Business Ethics, 46, 85–97.

    Article  Google Scholar 

  • Gopinath, C. (2007). Recognizing and justifying private corruption. Journal of Business Ethics, 82, 747–754.

    Article  Google Scholar 

  • Hegarty, W. H., & Sims, H. P, Jr. (1978). Some determinants of unethical decision behavior: An experiment. Journal of Applied Psychology, 63(4), 451–457.

    Article  Google Scholar 

  • Hunt, S. D., & Vasquez-Parraga, A. (1993). Organizational consequences, marketing ethics and salesforce supervision. Journal of Marketing Research, 30(February), 78–90.

    Article  Google Scholar 

  • Hunt, S. D., & Vitell, S. M. (1986). A general theory of marketing ethics. Journal of Macromarketing, 6(Spring), 5–15.

    Article  Google Scholar 

  • Hunt, S. D., & Vitell, S. M. (1993). The general theory of marketing ethics: A retrospective and revision. In N. C. Smith & J. A. Quelch (Eds.), Ethics in marketing (pp. 775–784). Homewood, IL: Irwin.

    Google Scholar 

  • Hunt, S. D., & Vitell, S. M. (2006). The general theory of marketing ethics: A revision and three questions. Journal of Macromarketing, 26(2), 143–153.

    Article  Google Scholar 

  • Jensen, F. (2002). Bayesian networks and decision graphs. New York: Springer.

    Google Scholar 

  • Jing, R., & Graham, J. L. (2008). Values versus regulations: How culture plays its role. Journal of Business Ethics, 80, 791–806.

    Article  Google Scholar 

  • Jones, T. M. (1991). Ethical decision making by individuals in organizations: An issue-contingent model. Academy of Management Review, 16(2), 366–395.

    Google Scholar 

  • Kameri-Mbote, P. (2005). Towards greater access to justice in environmental disputes in Kenya: Opportunities for intervention. International Environmental Law Research Center.

  • Kemmerer, B., & Shenoy, P. (2007). Bayesian causal maps as decision aids in venture capital decision making: Methods and applications. http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.16.7947.

  • Lam, K-C., & Shi, G. (2008). Factors affecting ethical attitudes in mainland China and Hong Kong. Journal of Business Ethics, 77, 463–479.

    Google Scholar 

  • Lere, J. C., & Gaumnitz, B. R. (2003). The impact of codes of ethics on decision making: Some insights from information economics. Journal of Business Ethics, 48, 365–379.

    Article  Google Scholar 

  • Loe, T. W., Ferrell, L., & Mansfield, P. (2000). A review of empirical studies assessing ethical decision making in business. Journal of Business Ethics, 25, 185–204.

    Article  Google Scholar 

  • Luo, Y. (2004). An organizational perspective of corruption. Management and Organization Review, 1(1), 119–154.

    Article  Google Scholar 

  • Mayo, M. A., & Marks, L. J. (1990). An empirical investigation of a general theory of marketing ethics. Journal of the Academy of Marketing Science, 18(Spring), 163–172.

    Article  Google Scholar 

  • McCabe, A. C., Ingram, R., & Dato-on, M. C. (2006). The business of ethics and gender. Journal of Business Ethics, 64, 101–116.

    Article  Google Scholar 

  • McKinney, J. A., & Moore, C. W. (2008). International bribery: Does a written code of ethics make a difference in perceptions of business professionals. Journal of Business Ethics, 79, 103–111.

    Article  Google Scholar 

  • Menguc, B. (1998). Organizational consequences, marketing ethics, and salesforce supervision: Further empirical evidence. Journal of Business Ethics, 17(4), 333–352.

    Article  Google Scholar 

  • Mishra, S., Kemmerer, B., & Shenoy P. (2001). Managing venture capital investment decisions: A knowledge-based approach. Working Paper, School of Business, University of Kansas.

  • Mitchell, T. R., Daniels, D., Hopper, H., George-Falvy, J., & Ferris, G. R. (1996). Perceived correlates of illegal behavior in organizations. Journal of Business Ethics, 15, 439–455.

    Article  Google Scholar 

  • Nadkarni, S., & Shenoy, P. (2001). A Bayesian network approach to making inferences in causal maps. European Journal of Operational Research, 128, 479–498.

    Article  Google Scholar 

  • Nadkarni, S., & Shenoy, P. (2004). A causal mapping approach to constructing Bayesian networks. Decision Support Systems, 38(2), 259–281.

    Article  Google Scholar 

  • Nicholson, A., Twardy, C. R., Korb, K. B., & Hope, L. R. (2008). Decision support for clinical cardiovascular risk assessment. In O. Pourret, P. Naim, & B. Marcot (Eds.), Bayesian networks: A practical guide to applications bayesian networks (pp. 33–52). Cornwall: Wiley.

    Google Scholar 

  • Nill, A., & Schibrowsky, J. A. (2007). Research on marketing ethics: A systematic review of literature. Journal of Macromarketing, 27(3), 256–273.

    Article  Google Scholar 

  • O’Fallan, M. J., & Butterfield, K. D. (2005). A review of the empirical ethical decision-making literature: 1996–2003. Journal of Business Ethics, 59, 375–413.

    Article  Google Scholar 

  • Onsel-Sahin, S., Ülengin, F., & Ülengin, B. (2006). A Bayesian causal map for a dynamic inflation analysis: The case of Turkey. European Journal of Operational Research, 175(2), 1268–1284.

    Article  Google Scholar 

  • Oz, E. (2001). Organizational commintment and ethical behavior: An empirical study of information system professionals. Journal of Business Ethics, 34(2), 137–142.

    Article  Google Scholar 

  • Pitta, D. A., Fung, H. G., & Isberg, S. (1999). Ethical issues across cultures managing the differing perspectives of China and the USA. Journal of Consumer Marketing, 16(3), 240–256.

    Article  Google Scholar 

  • Prasad, J. N., & Rao C. P. (1982). Foreign payoffs and international business ethics: Revisited. Southern Marketing Association Proceedings (pp. 260–264).

  • Roberston, D. C. (2009). Corporate social responsibility and different stages of economic development: Singapore Turkey, and Ethiopia. Journal of Business Ethics, 88, 617–633.

    Article  Google Scholar 

  • Roberston, D. C., & Rymon, T. (2001). Purchasing agents deceptive behavior: A randomized response technique study. Business Ethics Quarterly, 11(3), 585–599.

    Google Scholar 

  • Sala-i-Martin, X., Bilbao-Osorio, B., Blanke, J., Hanouz, M. D., Geiger, T. (2011). The Global Competitiveness Index 2011–2012: Setting the foundations for strong productivity. Global Competitiveness Report, 2011–2012.

  • Sala-i-Martin, X., Blanke, J., Hanouz, M. D., Geiger, T., & Mia, I. (2010). The Global Competitiveness Index 2010–2011: Looking beyond the global economic crisis. Global Competitiveness Report, 2010–2011.

  • Sikoyo, G. M., Nyukuri, E., & Wakhungu, J. W. (2006). Intellectual property protection in Africa. African Centre for Technology Studies (ACTS), Ecopolicy Series; 16.

  • Sims, R. L., & Gegez, A. E. (2004). Attitudes towards business ethics: A five nation comparative study. Journal of Business Ethics, 50, 253–265.

    Article  Google Scholar 

  • Singhapakdi, A., & Vitell, S. J. (1990). Marketing ethics: Factors influencing perceptions of ethical problems and alternatives. Journal of Macromarketing, 10(Spring), 4–18.

    Article  Google Scholar 

  • Singhapakdi, A., & Vitell, S. J. (1991). Research note: Selected factors influencing marketers. Deontological Norms’, Journal of the Academy of Marketing Science, 19(Winter), 37–42.

    Article  Google Scholar 

  • Soutar, G., McNeil, M. M., & Molster, C. (1994). The impact of the work environment on ethical decision making: Some australian evidence. Journal of Business Ethics, 13, 327–339.

    Article  Google Scholar 

  • Srnka, K. J. (2004). Culture’s role in marketers’ ethical decision making: A integrated theoretical framework. Academy of Marketing Science Review, 2004(1), 1–32.

    Google Scholar 

  • Stajkovic, A. D., & Luthans, F. (1997). Business ethics across cultures: A social coginitive model. Journal of World Business, 32(1), 17–34.

    Article  Google Scholar 

  • Stead, W. E., Worrell, D. L., & Stead, J. G. (1990). An integrative model for understanding and managing ethical behavior in business organizations. Journal of Business Ethics, 9, 233–242.

    Article  Google Scholar 

  • Tranparency International. (2010). Corruption perceptions index. www.transparency.org.

  • Trevino, L. K. (1986). Ethical decision making in organizations: A person-situation interactionist model. Academy of Management Review, 11(3), 601–617.

    Google Scholar 

  • Tsalikis, J., & Fritzsche, D. J. (1989). Business ethics: A literature review with a focus on marketing ethics. Journal of Business Ethics, 8, 695–743.

    Article  Google Scholar 

  • Ülengin, F., Kabak, O., Onsel, S., Ulengin, B., & Aktaş, E. (2010). A problem-structuring model for analyzing transportation–environment relations. European Journal of Operational Research, 200(3), 844–859.

    Article  Google Scholar 

  • Velasquez, M. (2010). Corruption and bribery. In G. G. Brenkert & T. L. Beauchamp (Eds.), The Oxford handbook of business ethics. New York: Oxford University Press.

  • Vitell, S. J. (1986). Marketing ethics: Conceptual and empirical foundations of a positive theory of decision making in marketing situations having ethical content. Unpublished dissertation, Texas Tech University.

  • Vitell, S. J., Singhapakdi, A., & Thomas, J. (2001). Consumer ethics: An application and empirical testing of the Hunt–Vitell theory of ethics. Journal of Consumer Marketing, 18(2), 153–178.

    Article  Google Scholar 

  • Winter, S. J., Stylianou, A. C., & Giacalone, R. A. (2004). Individual differences in the acceptability of unethical information technology practices: The case of Machiavellianism and ethical ideology. Journal of Business Ethics, 54, 279–301.

    Article  Google Scholar 

  • Wyld, D. C., & Jones, C. A. (1997). The importance of context: The ethical work climate construct and models of ethical decision making—an agenda for research. Journal of Business Ethics, 16, 465–472.

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Ahmet Ekici.

Appendix

Appendix

The list of 20 variables (concepts) comprising the “Institutions Pillar” of the GCI

1.01 Property rights

1.02 intellectual property protection

1.03 Diversion of public funds

1.04 Public trust of politicians

1.05 Irregular payments and bribes

1.06 Judicial independence

1.07 Favoritism in decisions of government officials

1.08 Wastefulness of government spending

1.09 Burden of government regulation

1.10 Efficiency of legal framework in settling disputes

1.11 Efficiency of legal framework in challenging regulations

1.12 Transparency of government policymaking

1.13 Business costs of terrorism

1.14 Business costs of crime and violence

1.15 Organized crime

1.16 Reliability of police services

1.17 Strength of auditing and reporting standards

1.18 Efficacy of corporate boards

1.19 Protection of minority shareholders’ interests

1.20 Strength of investor protection

Rights and permissions

Reprints and permissions

About this article

Cite this article

Ekici, A., Onsel, S. How Ethical Behavior of Firms is Influenced by the Legal and Political Environments: A Bayesian Causal Map Analysis Based on Stages of Development. J Bus Ethics 115, 271–290 (2013). https://doi.org/10.1007/s10551-012-1393-4

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10551-012-1393-4

Keywords

Navigation