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Punishing Vices or Rewarding Virtues? The Motivations for and Benefits of Ethical Ratings for Private Italian Companies

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Abstract

In A Treatise on Virtues and Rewards, Dragonetti (1769) advances a theory of action based on rewards for virtues. The idea of rewards, especially of awards, relies on the hypothesis that intrinsic motivations drive the actions of good or virtuous citizens. We apply this theory to virtuous entrepreneurs who voluntarily adopt ethical principles as promoted by a recent Italian law. These firms receive an ethical rating (ER) by the Italian Competition Authority (ICA) and can access a set of economic and non-economic benefits (i.e. rewards). We survey a sample of 152 private companies with an ER and examine their views on the economic and social motivations and benefits as well as the perceived usefulness of the ER for improving ethical behaviour. An exploratory factor analysis detects four categories of motivation (economic, competitive, social, and responsiveness) and two categories of benefits (economic and competitive), which we use in regression models to test Dragonetti’s theory. Overall, respondents see the ER as an effective tool, except in terms of improving economic performance. We also find that entrepreneurs with lower economic and higher responsiveness motivations attain higher ERs. However, in the respondents’ opinions, the ER is (still) not producing any concrete benefits since we find no relationship between the ER and economic or competitive rewards. These findings have implications for the ICA as well as for private companies.

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Notes

  1. Following Bruni et al. (2020), we use the term ‘reward’ as a generic word to indicate both ‘incentives’ and ‘prizes/awards’.

  2. Our sample of Italian companies is consistent with previous research in the fields of CSR and business ethics, which is often based on nation-specific scenarios (e.g. Lugli et al. 2009). We focus on companies with websites (this information can be inferred from AIDA with a filter) because this allowed us to extract their email addresses. Moreover, companies with websites place greater focus on issues of image, visibility, and transparency, which should result in greater willingness to complete the questionnaire. Finally, websites can be efficiently used to communicate intangible resources (such as an ER) to inform the corporate‐growth reputation of SMEs (Abeysekera 2019). It was possible to retrieve 1141 email addresses from 1151 websites relating to 1110 companies (some websites reported more than one email address), while for the remaining 41 companies only a phone contact was available.

  3. Surveys typically suffer from low response rates. To be representative of the population, this study targeted a response rate above 10%, a threshold commonly considered critical for the investigation’s validity. Thus, phone contacts were stopped when we reached 455 respondents because this number represented more than 10% of the sample. To avoid introducing elements of distortion in selecting the companies to be contacted, we proceeded on a random basis using the number generator provided by Google® between 1 and 1110, skipping to the next random number if we obtained a number corresponding to one of the 41 companies that had already completed the questionnaire.

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Authors and Affiliations

  1. Department of Law, University of Catania, Via Gallo, 24, 95124, Catania, Italy

    Fabio La Rosa

  2. Economics and Management Department, University of Pisa, Via C. Ridolfi, 10, 56124, Pisa, Italy

    Francesca Bernini

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  1. Fabio La Rosa
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  2. Francesca Bernini
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Correspondence to Fabio La Rosa.

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La Rosa, F., Bernini, F. Punishing Vices or Rewarding Virtues? The Motivations for and Benefits of Ethical Ratings for Private Italian Companies. J Bus Ethics 176, 467–485 (2022). https://doi.org/10.1007/s10551-020-04699-8

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