Abstract
The purpose of this paper is to explore the impact of macro-level factors such as governance, business education, control of corruption, political, and legal environments on ethical behavior of firms (EBF). We argued that these factors such as governance, business education, control of corruption, political, and legal environments are relevant for the ethical behavior of firms (EBF), because very often, these external factors interfere with the business activities of companies, which not infrequently are put in the situation of adopting less ethical business practices (such as bribery to public authorities) to protect their businesses. The analysis is based on a large sample of 122 countries over 9 years (2006–2014) and 20 possible independent variables and 2 structural factors: stage of development and legal origin. The results suggest that for developed countries, the most influential factors in the EBF are the diversion of public funds, favoritism in government officials' decisions, corruption control, and availability of research and training services. For less advanced economies, the results suggest that intellectual property protection is the most influential factor affecting EBF. Overall, the diversion of public funds is the major factor in the ethical behavior of business managers. The study could have significant implications for policy makers, business managers and scholars, while providing further directions for improving the ethical behavior of businesses in various countries around the world. Furthermore, this paper reinforces the belief that governance, business education, and political and legal environments are real factors that influence managers' perceptions of business ethics.
Similar content being viewed by others
Data availability
The datasets generated during and/or analyzed during the current study are available from the corresponding author on reasonable request.
References
Agyemang OS, Fantini G, Frimpong J (2015) Does country-level governance enhance ethical behaviour of firms? An African perspective. Int J Law Manag 57(6):582–599
Armstrong RW (1996) The relationship between culture and perception of ethical problems in international marketing. J Bus Ethics 15:1199–1208
Baïada-Hirèche L, Garmilis G (2016) Accounting professionals’ ethical judgment and the institutional disciplinary context: a French–US comparison. J Bus Ethics 139(4):639–659
Barnett T, Bass K, Brown G (1994) Ethical ideology and ethical judgment regarding ethical issues in business. J Bus Ethics 13:469–480
Bommer M, Gratto C, Gravander J, Tuttle M (1987) A behavioral model of ethical and unethical decision making. J Bus Ethics 6:265–280
Boţa-Avram C, Groşanu A, Răchişan PR (2021) Investigating country-level determinant factors on ethical behavior of firms: evidence from CEE countries. J East-West Business 27(2):184–205
Brady FN, Wheeler GE (1996) An empirical study of ethical predispositions. J Bus Ethics 15(9):927–940
Carcello JV (2009) Governance and the common good. J Bus Ethics 89(1):11–18
Chan AWH, Cheung HY (2012) Cultural dimensions, ethical sensitivity, and corporate governance. J Bus Ethics 110:45–59
Chen AYS, Sawyers RB, Williams PF (1997) Reinforcing ethical decision making through corporate culture. J Bus Ethics 16:855–865
Cleek MA, Leonard SL (1998) Can corporate codes of ethics influence behavior. J Bus Ethics 17:619–630
Cruz CA, Shafer WE, Strawser JR (2000) A multidimensional analysis of tax practitioners’ ethical judgments. J Bus Ethics 24(3):223–244
Ekici A, Onsel S (2013) How ethical behavior of firms is influenced by the legal and political environments: a Bayesian casual map analysis based on stages of development. J Bus Ethics 115:271–290
Ekici A, Onsel Ekici S (2016) A Bayesian network analysis of ethical behavior. J Macromark 36(1):96–115
Fattah M (2011) Professional ethics and public administration in the United States. Int J Public Adm 34(1–2):65–72
Felo AJ (2011) Corporate governance and business ethics. In: Alexander B (ed) Corporate governance and business ethics. Springer, Dordrecht, pp 281–296
Ferrell OC, Gresham LG (1985) A contingency model for understanding ethical decision making in marketing. J Mark 49(3):87–96
Fleming S, McNamee M (2005) The ethics of corporate governance in public sector organizations. Public Manag Rev 7(1):135–144
Ford RC, Richardson WD (1994) Ethical decision making: a review of the empirical literature. J Bus Ethics 13:205–221
Hausman JA (1978) Specification tests in econometrics. Econometrica 46:1251–1271
Horrigan JO (1987) The ethics of the New Finance. J Bus Ethics 6(2):97–110
Huber, P.J. (1967). The behavior of maximum likelihood estimates under nonstandard conditions. In Vol. 1 of Proceedings of the Fifth Berkeley Symposium on Mathematical Statistics and Probability, 221–233. Berkeley: University of California Press.
Hunt SD, Vitell SM (1986) A general theory of marketing ethics. J Macromark 6(Spring):5–15
Hunt SD, Vitell SM (1993) The general theory of marketing ethics: A retrospective and revision. In: Smith NC, Quelch JA (eds) Ethics in marketing. Irwin, Homewood, IL, pp 775–784
Hunt SD, Vitell SM (2006) The general theory of marketing ethics: a revision and three questions. J Macromark 26(2):143–153
Jackson T (2001) Cultural values and management ethics: a 10-nation study. Human Relations 54(10):1267–1302
Jensen MC, Meckling WH (1976) Theory of the firm: managerial behavior, agency costs and ownership structure. J Financ Econ 3:305–360
Jing R, Graham JL (2008) Values versus regulations: How culture plays its role. J Bus Ethics 80:791–806
Jones TM (1991) Ethical decision making by individuals in organizations: an issue-contingent model. Acad Manag Rev 16(2):366–395
Kaptein M, Schwartz MS (2008) The effectiveness of business codes: a critical examination of existing studies and the development of an integrated research model. J Bus Ethics 77(2):111–127
Karaibrahimoglu YZ, Cangarli BG (2016) Do auditing and reporting standards affect firms’ ethical behaviours? The moderating role of national culture. J Bus Ethics 139:55–75
Kaufmann D, Kraay A, Zoido-Lobaton P (1999) Aggregating Governance Indicators. World Bank Policy, Research Working Paper No.2195. The World Bank.
Khan MM (2003) State of Governance in Bangladesh. The round Table: the Commonwealth Journal of International Affairs 92(370):391–405
Kumar K, Thibodeaux MS (1998) Differences in value systems of Anglo-American and Far Eastern students: effect of American business education. J Bus Ethics 17(3):253–262
La Porta R, Lopez F, Shleifer A, Vishny RW (1997) Legal determinants of external finance. J Finance 52:1131–1150
La Porta R, Lopez-de-Silanes F, Shleifer A, Vishny R (1998) Law and finance. J Polit Econ 106(6):1113–1155
La Porta R, Lopez F, Shleifer A, Vishny RW (1999) The quality of government. J Law Econ Organ 15:222–279
La Porta R, Lopez F, Shleifer A, Vishny RW (2000) Investor protection and corporate governance. J Financ Econ 58:3–28
La Porta R, Lopez F, Shleifer A (2008) The economic consequences of legal origins. J Econ Literature 4(2):285–332
Lategan, L., & Hooper, P. (2009). Ethics, governance, research and enterprise. Perspectives: Policy and Practice in Higher Education, 13(2), 56–60.
Lere JC, Gaumnitz BR (2003) The impact of codes of ethics on decision making: some insights from information economics. J Bus Ethics 48:365–379
Lewis PV (1985) Defining Business Ethics: Like Nailing Jello to a Wall. J Bus Ethics 4(5):377–383
Loe TW, Ferrell L, Mansfield P (2000) A review of empirical studies assessing ethical decision making in business. J Bus Ethics 25:185–204
Lu LC, Rose GM, Blodgett JG (1999) The effects of cultural dimensions on ethical decision making in marketing: an exploratory study. J Bus Ethics 18:91–105
Murphy P (2005) Developing, communicating and promoting corporate ethics statements: a longitudinal analysis. J Bus Ethics 62:183–189
Pashev VK (2011) Corruption and accession. Public Manag Rev 13(3):409–432
Reynolds T, Flores A (1989) Foreign law: current sources of basic legislation in jurisdictions of the world. Rothman and Co., Littleton
Richman JD (1984) Merger decision making: an ethical analysis and recommendation. Calif Manage Rev 27(Fall):177–184
Business Roundtable (1988). Corporate Ethics: A Prime Business Asset.
Sala-i-Martín X, Artadi EV (2004) The global competitiveness index. the global competitiveness report 2004–2005. Hampshire: Palgrave Macmillan.
Schwab K, Sala-i-Martín X, Eide EB, Blanke J (2015) Global competitiveness report 2014–2015. Geneva: world economic forum. http://www3.weforum.org
Schwartz MS (2012) The state of business ethics in Israel: a light unto the Nations? J Bus Ethics 105(4):429–446
Schwartz MS, Weber J (2006) A business ethics national index (BENI): measuring business ethics activity around the world. Bus Soc 45(3):382–405
Shaub MK, Finn DW, Munter P (1993) The effects of auditors’ ethical orientation on commitment and ethical sensitivity. Behav Res Account 5:145–169
Simms RR (1992) The challenge of ethical behavior in organizations. J Bus Ethics 11(7):505–513
Singh JB (2006) A comparison of the contents of the codes of ethics of Canada’s largest corporations in 1992 and 2003. J Bus Ethics 64(1):17–29
Singh JB, Svensson G, Wood G, Callaghan M (2011) A longitudinal and cross-cultural study of the contents of codes of ethics of Australian, Canadian and Swedish corporations. Business Ethics 2(1):103–119
Srnka KJ (2004) Culture’s role in marketers’ ethical decision making: a integrated theoretical framework. Acad Mark Sci Rev 2004(1):1–32
Stead WE, Worrell DL, Stead JG (1990) An integrative model for understanding and managing ethical behavior in business organizations. J Bus Ethics 9:233–242
Strubler, D., Park, S-H., Argawal, A., & Cayo, K. (2012). Development of a macro-model of cross-cultural ethics. Journal of Legal, Ethical and Regulatory Issues, 15(2), 25–34.erborg, J.R. (1981). Interaction psychology and research on human behavior in organizations. Academy of Management Review, 6(4), 569–576.
Thomas CW (2004) An inventory of support materials for teaching ethics in the post-Enron era. Issues Account Educ 19(1):27–52
Trevino LK (1986) Ethical decision making in organizations: a person-situation interactionist model. Acad Manag Rev 11(3):601–617
Valentine S, Fleischman G (2008) Professional ethical standards, corporate social responsibility and the perceived role of ethics and social responsibility. J Bus Ethics 82(3):657–666
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 SC, Festervand TA (1987) Business ethics: conflicts, practices and beliefs of industrial executives. J Bus Ethics 6:111–122
Vitell SJ, Singhapakdi A, Thomas J (2001) Consumer ethics: an application and empirical testing of the Hunt-Vitell theory of ethics. J Consum Mark 18(2):153–178
Weaver GR, Treviño LK, Cochran PL (1999) Corporate ethics practices in the Mid-1990’s: an empirical study of the Fortune 1000. J Bus Ethics 18(3):283–294
White HL Jr (1980) A heteroskedasticity-consistent covariance matrix estimator and a direct test for heteroskedasticity. Econometrica 48:817–838
White HL Jr (1982) Maximum likelihood estimation of misspecified models. Econometrica 50:1–25
World Bank (2016). Worldwide Governance Indicators (WGI) project 1996–2016. http://info.worldbank.org.
Acknowledgements
We sincerely thank the anonymous reviewers and the editor who dedicated their time and expertise to a detailed evaluation of our manuscript.
Funding
No funding was provided for this study.
Author information
Authors and Affiliations
Corresponding author
Ethics declarations
Conflict of interest
The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.
Ethical approval
This article does not contain any studies with human participants or animals performed by any of the authors.
Rights and permissions
About this article
Cite this article
Bota-Avram, C., Vesselinov, R., Răchişan, P.R. et al. Determinant factors on ethical behavior of firms: evidence from a cross-country survey. SN Bus Econ 2, 107 (2022). https://doi.org/10.1007/s43546-022-00288-1
Received:
Accepted:
Published:
DOI: https://doi.org/10.1007/s43546-022-00288-1