Skip to main content
Log in

Ethics and the Networked Business

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

Abstract

Pushing through a logical continuum of closed- to open-system views of organizations necessarily changes the conceptualization of a firm from a strongly bounded entity to a configuration of networks and sub-networks, which exists and operates in a larger systemic network configuration. We unfold a classification of management processes corresponding to views of the firm along the closed/open-systems continuum. We examine ethical issues that are likely to devolve from these classes of management processes, and we suggest typical means by which managers will attempt to control their firms’ exposure to such issues. The final class of management processes examined focuses on the achievement of outcomes that are mutually satisfactory in the set of networks and sub-networks that constitute the focal firm, and that support the sustainability of the whole system. The article contributes to organizational theory, business ethics, and computer and information ethics by providing a comprehensive analysis of the impact of managerial views of the firm and of networks – virtual, social, informational – on managerial processes and on our understanding of how business ethics issues are linked to perceptions of what a firm is, does, and can do.

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.

Similar content being viewed by others

References

  • Alba, R.D.: 1981, ‘From Small Groups to Social Networks: Mathematical Approaches to the Study of Group Structure’, The American Behavioral Scientist, 24(5), 681-694.

    Article  Google Scholar 

  • Alchian, A.A., and H. Demsetz: 1972, ‘Production, Information Costs, and Economic Organization’, American Economic Review 62, 777–795.

    Google Scholar 

  • Anderson, R.C, with R. White: 2009, Confessions of a Radical Industrialist: Profits, People, PurposeDoing Business by Respecting the Earth (St. Martin’s Press, New York).

    Google Scholar 

  • Angeles, R.: 2005, RFID Technologies, Supply-Chain Applications and Implementation Issues’, Information System Management 22, 51-65.

    Article  Google Scholar 

  • Argyris, C.: 1976, Increasing Leadership Effectiveness (Wiley-Interscience, New York).

    Google Scholar 

  • Barabási, A.L.: 2002, Linked: How Everything Is Connected to Everything Else (Plume, New York).

    Google Scholar 

  • Barnard, C.: 1938, Functions of the Executive (Harvard University Press, Cambridge, MA).

    Google Scholar 

  • Bernardes, E.S.: 2010, ‘The Effect of Supply Management on Aspects of Social Capital and the Impact on Performance: A Social Network Perspective’, Journal of Supply Chain Management, 46(1), 45-56.

    Article  Google Scholar 

  • Burt, R.S. (2000). The Network Structure of Social Capital. In B.M. Staw, R.I. Sutton, and R.L. Sutton (eds.), Research in Organizational Behavior, Vol. 22. Elsevier Science Inc., Amsterdam, pp. 345-423.

    Google Scholar 

  • Churchman, C.W.: 1968, The Systems Approach (Delacorte Press, New York).

    Google Scholar 

  • Clarkson, M.B.E.: 1995, ‘A Stakeholder Framework for Analyzing and Evaluating Corporate Social Performance’, Academy of Management Review 20(1), 92-117.

    Article  Google Scholar 

  • Cyert, R.M., and J.G. March: 1963, A Behavioral Theory of the Firm (Englewood Cliffs, NJ, Prentice-Hall, Inc.).

    Google Scholar 

  • Demsetz, H.: 1983, ‘The Structure of Ownership and the Theory of the Firm’, Journal of Law and Economics 26, 375–390.

    Article  Google Scholar 

  • Dervitsiotis, K.N.: 2005, ‘Creating Conditions to Nourish Sustainable Organizational Excellence’, Total Quality Management 16(8-9), 925-943.

    Google Scholar 

  • Dillard, J.F., and K. Yuthas: 2001, ‘A Responsibility Ethic for Audit Expert Systems’, Journal of Business Ethics 30, 337-359.

    Article  Google Scholar 

  • Dushnitsky, G., and J.M. Shaver: 2009, ‘Limitations to Interorganizational Knowledge Acquisition: The Paradox of Corporate Venture Capital’, Strategic Management Journal, 30(10), 1045-1064.

    Article  Google Scholar 

  • Ess, C.: 2008, ‘Luciano Floridi’s Philosophy of Information and Information Ethics: Critical Reflections and the State of the Art’, Ethics and Information Technology 10(2-3), 89-96.

    Article  Google Scholar 

  • Etzioni, A.: 1990, Modern Organizations (Sage, Thousand Oaks, CA).

    Google Scholar 

  • Fama, E.F.: 1980, ‘Agency Problems and the Theory of the Firm’, Journal of Political Economy 88, 288–307.

    Article  Google Scholar 

  • Fama, E.F., and M.C. Jensen: 1983, ‘Agency Problems and Residual Claims’, Journal of Law and Economics 26, 327–349.

    Article  Google Scholar 

  • Fayol, H.: 1930, Industrialism and General Administration (Pitman & Sons, Ltd., London).

    Google Scholar 

  • Floridi, L.: 1995, ‘The Internet: Which Future for Organised Knowledge- Frankestein or Pygmalion?’ International Journal of Human-Computer Studies 43, 261-274.

    Article  Google Scholar 

  • Floridi, L. 2010, The Philosophy of Information (Oxford University Press, UK).

    Google Scholar 

  • Frederick, W.C.: 1995, Values, Nature, and Culture in the American Corporation (Oxford University Press, UK).

    Google Scholar 

  • Freeman, R.E.: 1984, Strategic Management: A Stakeholder Approach (Pitman, Boston).

    Google Scholar 

  • Frooman, J.: 1999, ‘Stakeholder Influence Strategies’, Academy of Management Review 24(2), 191-205.

    Article  Google Scholar 

  • Geletkanycz, M.A., B.K. Boyd, and S.F. Finkelstein: 2001, ‘The Strategic Value of CEO External Directorate Networks: Implications for CEO Compensation’, Strategic Management Journal, 22(9), 889-898.

    Article  Google Scholar 

  • Goldsmith, E.: 1993, The Way: An Ecological World-View (Shambhala Publications, Boston, MA).

    Google Scholar 

  • Gordon, K. and M. Miyake: 2001, ‘Business Approaches to Combating Bribery: A Study of Codes of Conduct’, Journal of Business Ethics, 34, 161-173.

    Article  Google Scholar 

  • Granovetter, M.: 1973, ‘The Strength of Weak Ties’, American Journal of Sociology 78, 1360-1380.

    Article  Google Scholar 

  • Granovetter, M.: 1983, “The Strength of Weak Ties: A Network Theory Revisited’, Sociological Theory, 1, 201-233.

    Article  Google Scholar 

  • Granovetter, M.: 1985, ‘Economic Action and Social Structure: The Problem of Embeddedness’, American Journal of Sociology, 91, 481-510.

    Article  Google Scholar 

  • Gray, B.: 1989, Collaborating: Finding Common Ground for Multiparty Problems (Jossey-Bass, San Francisco).

    Google Scholar 

  • Gray, B., and D.J. Wood: 1991, ‘Collaborative Alliances: Moving from Practice to Theory’, Journal of Applied Behavioral Science, 27(1), 3-22.

    Article  Google Scholar 

  • Häcki, R. and J. Lighton: 2001, ‘The Future of the Networked Company’, McKinsey Quarterly 3, 26-39.

    Google Scholar 

  • Herzberg, F.I., B. Mausner, and B.B. Snyderman: 1959, The Motivation to Work, 2nd ed. (John Wiley and Sons, New York).

    Google Scholar 

  • Hunter, F.: 1953, Community Power Structure: A Study of Decision Makers (University of North Carolina Press, Chapel Hill, NC).

    Google Scholar 

  • Jensen, M. and W.C. Meckling: 1976, ‘Theory of the Firm: Managerial Behaviour, Agency Costs and Ownership Structure’, Journal of Financial Economics 3, 305-360.

    Article  Google Scholar 

  • Johnson, D.: 2000, Computer Ethics (Prentice Hall, Englewood Cliffs, NJ).

    Google Scholar 

  • Leana, C.R., and H.J. Van Buren III: 1999, ‘Organizational Social Capital and Employment Practices’, Academy of Management Review, 24, 538-555.

    Article  Google Scholar 

  • Levine, D.I.: 1992, ‘Piece Rates, Output Restriction, and Conformism’, Journal of Economic Psychology, 13(3), 473-489.

    Article  Google Scholar 

  • Logsdon, J.M.: 1991, ‘Interests and Interdependence in the Formation of Social Problem-Solving Collaborations’, Journal of Applied Behavioral Science 27(1), 23-37.

    Article  Google Scholar 

  • Logsdon, J.M., and D.J. Wood: 2005, ‘Global Business Citizenship and Voluntary Codes of Ethical Conduct’, Journal of Business Ethics, 59, 55-80.

    Article  Google Scholar 

  • Maak, T.: 2007, ‘Responsible Leadership, Stakeholder Engagement, and the Emergence of Social Capital’, Journal of Business Ethics, 74, 329-343.

    Article  Google Scholar 

  • Mahoney, J.T., A.M. McGahan, and C.N. Pitelis: 2009, ‘The Interdependence of Private and Public Interests’, Organization Science, 20(6), 1034-1054.

    Article  Google Scholar 

  • March, J.G., and H.A. Simon: 1958, Organizations (Wiley, New York).

    Google Scholar 

  • Maslow, A.H.: 1954, Motivation and Personality (Harper, New York).

    Google Scholar 

  • Mayo, E.: 1949, Hawthorne and the Western Electric Company, The Social Problems of an Industrial Civilisation (Routledge, London).

    Google Scholar 

  • McGregor, D.: 1960, The Human Side of Enterprise (McGraw-Hill, New York).

    Google Scholar 

  • Merton, R. K.: 1948/1968, Social Theory and Social Structure (Free Press, New York).

  • Miller, D.L., and S. Thomas: 2005, ‘The Impact of Relative Position and Relational Closeness on the Reporting of Unethical Acts’, Journal of Business Ethics, 61, 315-328.

    Article  Google Scholar 

  • Mitchell, R.K., B.R. Agle, and D.J. Wood: 1997, ‘Toward a Theory of Stakeholder Identification and Salience: Defining the Principle of Who and What Really Counts’, Academy of Management Review 22(4), 853-886.

    Article  Google Scholar 

  • Mitnick, B. M.: 1975, ‘The Theory of Agency: The Policing “Paradox” and Regulatory Behavior’, Public Choice, 24, 27-42.

    Article  Google Scholar 

  • Mitroff, I.I., with S.A. Mohrman and G. Little: 1987, Business Not as Usual (Jossey-Bass, San Francisco, CA).

    Google Scholar 

  • Moreno, J.L.: 1934, Who Shall Survive?: Foundations of Sociometry, Group Psychotherapy, and Sociodrama (Nervous and Mental Disease Publishing Co., New York, NY).

    Google Scholar 

  • Nathan, M.L., and I.I. Mitroff: 1991, ‘The Use of Negotiated Order Theory as a Tool for the Analysis and Development of an Interorganizational Field’, Journal of Applied Behavioral Science, 27(2), 163-180.

    Article  Google Scholar 

  • Nielsen, R.P.: 2003, ‘Corruption Networks and Implications for Ethical Corruption Reform’, Journal of Business Ethics 42, 125-149.

    Article  Google Scholar 

  • Oliver, C.: 1990, ‘Determinants of Interorganizational Relationships: Integration and Future Directions’, Academy of Management Review, 15(2), 241-265.

    Article  Google Scholar 

  • Palmer, D., R. Friedland, and J.V. Singh: 1986, “The Ties that Bind: Organizational and Class Bases of Stability in a Corporate Interlock Network.” American Sociological Review, 51, 781-796.

    Article  Google Scholar 

  • Pennings, J.H.: 1980, Interlocking Directorates (Jossey-Bass, San Francisco, CA).

    Google Scholar 

  • Pfeffer, J. and G. R. Salancik: 1978, The External Control of Organizations: A Resource Dependence Perspective (Harper and Row, New York).

    Google Scholar 

  • Post, J.E., L.E. Preston, and S. Sachs: 2002, Redefining the Corporation: Stakeholder Management and Organizational Wealth (Stanford University Press, Stanford, CA).

    Google Scholar 

  • Reagans, R., and E.W. Zuckerman: 2001, ‘Networks, Diversity, and Productivity: The Social Capital of Corporate R&D Teams,’ Organization Science, 12, 502-517.

    Article  Google Scholar 

  • Rogers, E.M.: 2003, Diffusion of Innovations, 5th edition (Free Press, New York, NY).

    Google Scholar 

  • Rowley, T.J.: 1997, ‘Moving beyond Dyadic Ties: A Network Theory of Stakeholder Influences’, Academy of Management Review 22(4), 887-906.

    Article  Google Scholar 

  • Santana, A., and D.J. Wood, 2009, ‘Information vs. Knowledge: Transparency and Social Responsibility Issues for Wikipedia,’ Ethics and Information Technology 2(1), pp. 133-144.

    Article  Google Scholar 

  • Scott, W.R.: 2003, Organizations: Rational, Natural, and Open Systems, 5th ed (Prentice Hall, Englewood Cliffs, NJ).

    Google Scholar 

  • Shigetomi, S., and K. Makino: 2009, Protest and Social Movements in the Developing World (Edward Elgar Publishing, Inc., Northampton, MA).

    Google Scholar 

  • Soh, P-H: 2010, ‘Network Patterns and Competitive Advantage before the Emergence of a Dominant Design’, Strategic Management Journal, 31(4), 438-461.

    Article  Google Scholar 

  • Stone, A.: 1982, Regulation and Its Alternatives (Congressional Quarterly Press, Washington, DC).

    Google Scholar 

  • Taylor, F.W.: 1911, The Principles of Scientific Management (Harper Bros., New York).

    Google Scholar 

  • Thompson, G.F.: 2003a, Between Hierarchies & Markets, The Logic and the Limits of Network Forms of Organization (Oxford University Press, UK).

    Google Scholar 

  • Thompson, J.D.: 1967, Organizations in Action: Social Science Bases of Administrative Theory (McGraw-Hill, New York).

    Google Scholar 

  • Thompson, J. D.: 2003, Organizations in Action: Social Science Bases of Administrative Theory, with a new preface by M. N. Zald and a new introduction by W. R. Scott (Transaction Publishers, New Brunswick, NJ).

  • Turilli, M., and L. Floridi: 2009, ‘The Ethics of Information Transparency’, Ethics and Information Technology 11(2), 105-122.

    Article  Google Scholar 

  • Uzzi, B.: 1996, ‘The Sources and Consequences of Embeddedness for the Economic Performance of Organizations: The Network Effect’, American Sociological Review, 61, 674-698.

    Article  Google Scholar 

  • Vaccaro, A., and P. Madsen: 2009, “Corporate Transparency: The New ICT-Driven Ethics”, Ethics and Information Technology 11(2), 113-122.

    Article  Google Scholar 

  • Vroom, V.H.: 1964, Work and Motivation (Wiley, New York).

    Google Scholar 

  • Wasserman, S. and K. Faust: 1994, Social Network Analysis: Methods and Applications (Cambridge University Press, Cambridge, UK).

    Google Scholar 

  • Weber, M.: 1947, Theory of Social and Economic Organization (The Free Press, Chicago, IL).

    Google Scholar 

  • Welcomer, S.A.: 2002, ‘Firm-Stakeholder Networks Organizational Response to External Influence and Organizational Philosophy’, Business & Society, 41(2), 251-257.

    Article  Google Scholar 

  • Wicks, A.C., D.R. Gilbert, and R.E. Freeman: 1994, ‘A Feminist Reinterpretation of the Stakeholder Concept’, Business Ethics Quarterly 4 (4), 475-497.

    Article  Google Scholar 

  • Williamson, O.E.: 1975, Markets and Hierarchies, Analysis and Antitrust Implications: A Study in the Economics of Internal Organization (Free Press, New York).

    Google Scholar 

  • Williamson, O.E.: 1979, ‘Transaction-Cost Economics: The Governance of Contractual Relations’, The Journal of Law and Economics 22(2), 233-261.

    Article  Google Scholar 

  • Williamson, O.E.: 1985, The Economic Institutions of Capitalism (The Free Press, New York).

    Google Scholar 

  • Wood, D. J.: 1992, ‘“Dams or Democracy?” Stakeholders and Social Issues in the Hungarian-Czechoslovakian Hydroelectric Controversy’, International Association for Business and Society Proceedings, 139–148.

  • Wood, D.J., and B. Gray, 1991: ‘Toward a Comprehensive Theory of Collaboration’, Journal of Applied Behavioral Science, 27(2), 139-162.

    Article  Google Scholar 

  • Youngblood, D.: 2007, June 13, ‘For this ‘Virtual’ Firm, Every Day is Flex Time’, Star Tribune (Minneapolis).

  • Yunus, M.: 2007, Creating a World Without Poverty: Social Business and the Future of Capitalism, (PublicAffairs, New York).

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Donna J. Wood.

Additional information

The authors contributed equally to this article.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Santana, A., Vaccaro, A. & Wood, D.J. Ethics and the Networked Business. J Bus Ethics 90 (Suppl 4), 661–681 (2009). https://doi.org/10.1007/s10551-010-0599-6

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10551-010-0599-6

Keywords

Navigation