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