In response to recent calls to extend the underlying theories used in the literature (O’Fallon and Butterfield in J Bus Ethics 59(4):375–413, 2005; Craft in J Bus Ethics 117(2):221–259, 2013), we review the usefulness of social norm theory in empirical business ethics research. We begin by identifying the seeds of social norm theory in Adam Smith’s (in: Raphael and Macfie (eds) The Theory of Moral Sentiments, the Glasgow Edition, Oxford University Press, Oxford, 1759/1790) seminal work, The Theory of Moral Sentiments. Next, we introduce recent theory in social norm activation by Bicchieri (The grammar of society: The nature and dynamics of social norms, Cambridge University Press, New York, 2006) and compare the new theory to two theoretical frameworks found in the literature: Kohlberg’s (in: Goslin (ed) Handbook of socialization theory and research, Rand McNally, Chicago, IL, 1969; in: Lickona (ed) Moral development and behavior, Holt, Rinehart & Winston, New York, 1976) theory of moral development and Cialdini and Trost’s (in: Gilbert et al. (eds) The handbook of social psychology, Oxford University Press, Boston, 1998) taxonomy of social norms. We argue that the new theory provides useful insights by emphasizing the ability of situational cues and information to generate common expectations for social/moral norms. The theory is particularly useful for empirical research in business ethics because it gives both organizational and individual factors a role in motivating norm-based behavior. To demonstrate this usefulness, we present examples where the theory has been effectively applied in experimental accounting research to generate new insights. We conclude by citing specific examples where the theory may prove useful in empirical business ethics research.
This is a preview of subscription content, log in to check access.
Buy single article
Instant access to the full article PDF.
Price includes VAT for USA
Subscribe to journal
Immediate online access to all issues from 2019. Subscription will auto renew annually.
This is the net price. Taxes to be calculated in checkout.
This hesitancy is reflected in the recent attempt by Erhard et al. (2009, 2010) to incorporate integrity within the theory of the firm. While acknowledging the importance of integrity in markets and organizations, and encouraging researchers to incorporate this integrity into the theory of the firm, the authors espouse a positive model of integrity that strips the construct of any moral content. Their model of integrity is based on the erroneous premise that moral theory is purely normative in nature and therefore has little relevance to positive economic theory. Thus, their model offers no testable predictions for empirical researchers in empirical business ethics research or the other business-related disciplines of accounting, economics, and finance.
Adam Smith’s first appointment at the University of Glasgow was as Professor of Logic from 1751 to 1752.
Adam Smith criticized the moral philosophy of his day for reflecting a deficient understanding of “natural principles.” He viewed his account of moral sentiments as superior because it more fully reflected these natural principals (Smith 1759/1790, VII.I.1).
Smith defined sympathy in a neutral way, so his definition fits more closely with what we today would call “empathy.”
Although Bicchieri assumes that sensitivity to a given social norm varies across individuals and particular social norms, she considers an individual’s sensitivity to a particular norm to be a fairly stable disposition (Bicchieri 2006, p. 116).
Kohlberg developed his theory in response to the social upheaval of the 1960s and the rejection by many of traditional American society, “which had become too repressive at home and too imperialistic abroad” (Rest et al. 1999, p. 3).
For example, Beauchamp and Childress (1994) address moral dilemmas in biomedicine by starting from the moral consensus that has arisen within the medical community (i.e., the common morality that has evolved out of previous cases) and then examining the moral justifications for the specific case based on that consensus. That is, common moral principles that have arisen over time within the medical community function as the justification basis for action choices in specific cases. For Beauchamp and Childress, therefore, moral theory building within the medical profession is a dialectical process of both top-down and bottom-up moral judgments (Rest et al. 1999). We assert that moral theory building within the business professions is very similar.
This list represents only a subset of the experimental studies in the participative budgeting literature and is intended only to demonstrate the usefulness of Bicchieri’s model to empirical research. For a more comprehensive list of experimental studies in the participative budgeting literature, see Brown et al. (2009).
Abdel-Rahim, H., & Stevens, D. (2016). The behavioral effect of information system precision on honesty in managerial reporting: An experimental examination incorporating operating uncertainty. Georgia State University Working Paper.
Bailey, C., Scott, I., & Thoma, S. (2010). Revitalizing accounting ethics research in the neo-Kohlbergian framework: Putting the DIT into perspective. Behavioral Research in Accounting, 22(2), 1–26.
Bampton, R., & Cowton, C. (2013). Taking stock of accounting ethics scholarship: A review of the journal literature. Journal of Business Ethics, 114(3), 549–563.
Beauchamp, T., & Childress, J. (1994). Principles of biomedical ethics (4th ed.). New York: Oxford University Press.
Berry, C. (2003). Sociality and socialisation. In A. Broadie (Ed.), The Cambridge companion to the Scottish enlightenment (pp. 243–257). New York: Cambridge University Press.
Berry, C. (2006). Smith and science. In K. Haakonssen (Ed.), The Cambridge companion to Adam Smith (pp. 112–135). New York: Cambridge University Press.
Bicchieri, C. (2006). The grammar of society: The nature and dynamics of social norms. New York: Cambridge University Press.
Bobek, D., Hageman, A., & Kelliher, C. (2013). Analyzing the role of social norms in tax compliance behavior. Journal of Business Ethics, 115(3), 451–468.
Bobek, D., Roberts, R., & Sweeney, J. (2007). The social norms of tax compliance: Evidence from Australia, Singapore, and the United States. Journal of Business Ethics, 74(1), 49–64.
Brown, J., Evans, J., & Moser, D. (2009). Agency theory and participative budgeting experiments. Journal of Management Accounting Research, 21(1), 317–345.
Campbell, T. (1971). Adam Smith’s science of morals. London: Alan & Unwin.
Campbell, D. (1975). On the conflicts between biological and social evolution and between psychology and moral tradition. American Psychologist, 30(12), 1103–1126.
Cialdini, R., Kallgren, C., & Reno, R. (1990). A focus theory of normative conduct: A theoretical refinement and reevaluation of the role of norms in human behavior. Advances in Experimental Social Psychology, 24, 201–234.
Cialdini, R., & Trost, M. (1998). Social influence: Social norms, conformity, and compliance. In D. T. Gilbert, S. T. Fiske, & G. Lindzey (Eds.), The handbook of social psychology (Vol. 2, pp. 151–192). Boston: Oxford University Press.
Craft, J. (2013). A review of the empirical ethical decision-making literature: 2004–2011. Journal of Business Ethics, 117(2), 221–259.
Davidson, B., & Stevens, D. (2013). Can a code of ethics improve manager behavior and investor confidence? An experimental study. The Accounting Review, 88(1), 51–74.
Douthit, J., Schwartz, S., Stevens, D., & R. Young. (2016). The effect of endogenous contract selection on budgetary slack: An experimental examination of trust, distrust, and trustworthiness. Georgia State University Working Paper.
Douthit, J., & Stevens, D. (2015). The robustness of honesty concerns on budget proposals when the superior has rejection authority. The Accounting Review, 90(2), 467–493.
Erhard, W., Jensen, M., & Zaffron, S. (2009). Integrity: A positive model that incorporates the normative phenomena of morality, ethics and legality. Harvard Business School Negotiation, Organizations and Markets Working Paper No. 06-11.
Erhard, W., Jensen, M., & Zaffron, S. (2010). Integrity: A positive model that incorporates the normative phenomena of morality, ethics and legality-abridged. Harvard Business School Negotiation, Organizations and Markets Working Paper No. 10-061.
Evans, J., Hannan, L., Krishnan, R., & Moser, D. (2001). Honesty in managerial reporting. The Accounting Review, 76(4), 537–559.
Fisher, D., & Sweeney, J. (1998). The relationship between political attitudes and moral judgment: Examining the validity of the Defining Issues Test. Journal of Business Ethics, 17(8), 905–916.
Fleischacker, S. (1991). Philosophy in moral practice: Kant and Adam Smith. Kant-Studien, 82, 249–269.
Ford, R., & Richardson, W. (1994). Ethical decision making: A review of the empirical literature. Journal of Business Ethics, 13(3), 205–221.
Friedman, M. (1953). Essays in positive economics. Chicago: University of Chicago Press.
Friedman, D., & Sunder, S. (1994). Experimental methods: A primer for economists. New York: Cambridge University Press.
Griswold, C. (1999). Adam Smith and the virtues of enlightenment. New York: Cambridge University Press.
Haidt, J. (2001). The emotional dog and its rational tail: A social intuitionist approach to moral judgment. Psychological Review, 108(4), 814–834.
Hannan, R., Rankin, F., & Towry, K. (2006). The effect of information systems on honesty in managerial reporting: A behavioral perspective. Contemporary Accounting Research/Recherche Comptable Contemporaine, 23(4), 885–918.
Hobson, J., Mellon, M., & Stevens, D. (2011). Determinants of moral judgments regarding budgetary slack: An experimental examination of pay scheme and personal values. Behavioral Research in Accounting, 23(1), 87–107.
Jackson, D. (1994). Jackson personality inventory-revised manual. Port Huron, MI: Sigma Assessment Systems.
Jensen, M. (2001). Corporate budgeting is broken—Let’s fix it. Harvard Business Review, 70(November), 94–101.
Jensen, M., & Meckling, W. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360.
Jones, T. (1991). Ethical decision making by individuals in organizations: An issue-contingent model. Academy of Management Review, 16(2), 366–395.
Kohlberg, L. (1969). Stage and sequence: The cognitive-developmental approach to socialization. In D. Goslin (Ed.), Handbook of socialization theory and research (pp. 347–480). Chicago, IL: Rand McNally.
Kohlberg, L. (1976). Moral states and moralization: The cognitive developmental approach. In T. Lickona (Ed.), Moral development and behavior (pp. 31–53). New York: Holt, Rinehart & Winston.
Loe, T., Ferrell, L., & Mansfield, P. (2000). A review of empirical studies assessing ethical decision making in business. Journal of Business Ethics, 25(3), 185–204.
Lord, A., & DeZoort, F. (2001). The impact of commitment and moral reasoning on auditors’ responses to social influence pressure. Accounting, Organizations and Society, 26(3), 215–235.
Modgil, S., & Modgil, C. (1986). Lawrence Kohlberg: Consensus and controversy. Philadelphia: Falmer Press.
O’Fallon, M., & Butterfield, K. (2005). A review of the empirical ethical decision-making literature. Journal of Business Ethics, 59(4), 375–413.
Pepitone, A. (1976). Toward a normative and comparative biocultural social psychology. Journal of Personality and Social Psychology, 34, 641–653.
Ponemon, L. (1993). Can ethics be taught in accounting? Journal of Accounting Education, 11(2), 185–209.
Randall, D., & Gibson, A. (1990). Methodology in business ethics research: A review and critical assessment. Journal of Business Ethics, 9(6), 457–471.
Rankin, F., Schwartz, S., & Young, R. (2008). The effect of honesty and superior authority on budget proposals. The Accounting Review, 83(4), 1083–1099.
Raphael, D. (2007). The impartial spectator: Adam Smith’s moral philosophy. New York: Oxford University Press.
Raphael, D., & Macfie, A. (1982). Introduction. In D. D. Raphael & A. L. Macfie (Eds.), The Theory of Moral Sentiments (6th ed., pp. 1–52). Indianapolis, IN: Liberty Fund Inc.
Reeder, J. (1997). Introduction. In J. Reeder (Ed.), On moral sentiments: Contemporary responses to Adam Smith (pp. vii–xxi). Bristol: Thoemmes Press.
Rest, J. (1979). Development in judging moral issues. Minneapolis, MN: University of Minnesota Press.
Rest, J. (1986a). Moral development: Advances in research and theory. New York: Praeger.
Rest, J. (1986b). Moral research methodology. In S. Modgil & C. Modgil (Eds.), Lawrence Kohlberg: Consensus and controversy (pp. 455–469). Philadelphia: Falmer Press.
Rest, J., Narvaez, D., Bebeau, M., & Thoma, S. (1999). Postconventional moral thinking: A Neo-Kohlbergian approach. Minneapolis, MN: Center for the Study of Ethical Development, Lawrence Erlbaum Associates.
Schatzberg, J., Sevcik, G., Shapiro, B., Thorne, L., & Wallace, R. (2005). A reexamination of behavior in experimental audit markets: The effects of moral reasoning and economic incentives on auditor reporting and fees. Contemporary Accounting Research, 22(1), 229–264.
Smith, A. (1759; 6th ed., 1790). The Theory of Moral Sentiments, the Glasgow Edition (D. D. Raphael & A. L. Macfie, Eds.). Oxford: Oxford University Press, 1976.
Smith, V. (2008). Rationality in economics: Constructivist and ecological forms. New York: Cambridge University Press.
Stevens, D. (2002). The effects of reputation and ethics on budgetary slack. Journal of Management Accounting Research, 14, 153–171.
Stevens, D. (2011). Rediscovering Adam Smith: How The Theory of Moral Sentiments can explain emerging evidence in experimental economics. Adam Smith Working Papers Series 2011:04, University of Glasgow.
Stevens, D., & Thevaranjan, A. (2010). A moral solution to the moral hazard problem. Accounting, Organizations and Society, 35(1), 125–139.
Sunder, S. (2005). Minding our manners: Accounting as social norms. The British Accounting Review, 37(4), 367–387.
Sweeney, J., & Roberts, R. (1997). Cognitive moral development and auditor independence. Accounting, Organizations and Society, 22(3/4), 337–352.
This paper has benefitted from the helpful comments of Kendall Bowlin, David Bryan, David Cooper, Mark Isaac, Terry Mason, Josette Pelzer, Kenny Reynolds, James Wilhelm, and workshop participants at the FSU Experimental Economics Research Group, the FSU Accounting Research Colloquium, the USF School of Accountancy Workshop, the 2012 AAA Annual meeting, the 2012 AAA Auditing Midyear Meeting, and the 2013 AAA Annual Ethics Research Symposium. The paper has also benefitted from discussions with Christopher Berry at the Adam Smith Research Foundation, University of Glasgow. Finally, we thank the editor and two anonymous reviewers for their exceptionally helpful comments.
About this article
Cite this article
Blay, A.D., Gooden, E.S., Mellon, M.J. et al. The Usefulness of Social Norm Theory in Empirical Business Ethics Research: A Review and Suggestions for Future Research. J Bus Ethics 152, 191–206 (2018). https://doi.org/10.1007/s10551-016-3286-4
- Empirical business ethics research
- Social norm theory
- Moral theory
- Economic theory
- Adam Smith