ethics

Is Political Ideology a Compliance and Ethics Risk?

Cross posted with permission from ES Collaborator Jeffrey Kaplan's Conflict of Interest blog

In a post  last week on the Harvard Law School Forum on Corporate Governance and Financial Regulation, Danling Jiang, Associate Professor of Finance at Florida State University, summarizes a recent article she authored with Irena Hutton, Associate Professor of Finance at Florida State University; and Alok Kumar, Professor of Finance at the University of Miami: “Political Values, Culture, and Corporate Litigation,” which was published in the latest issue of Management Science and which “examine[s] whether the political culture of a firm defines its ethical and legal boundaries as observed by the propensity for corporate misconduct.”

In a post  last week on the Harvard Law School Forum on Corporate Governance and Financial Regulation, Danling Jiang, Associate Professor of Finance at Florida State University said of recent research, “Using one of the largest samples of litigation data to date, [they] show that firms with Republican culture are more likely to be the subject of civil rights, labor, and environmental litigation than Democratic firms, consistent with the Democratic ideology that emphasizes equal rights, labor rights, and environmental protection. However, firms with Democratic culture are more likely to be the subject of litigation related to securities fraud and intellectual property rights violations than Republican firms whose Party ideology stresses self-reliance, property rights, market discipline, and limited government regulation.”

This is interesting – if not necessarily surprising – stuff, and particularly so in an election year. But does it bear on the work of C&E professionals? And does it have anything to do with conflicts of interest?

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David Mayer Writes For Fast Company

David Mayer, associate professor of management and organizations at the University of Michigan's Stephen M. Ross School of Business has recently signed on as a monthly contributor to Fast Company, writing about business ethics and leadership.

From their website: Fast Company "is the world's leading progressive business media brand, with a unique editorial focus on innovation in technology, ethical economics, leadership, and design."

We invite you to read David Mayer's recent essays by clicking on this link to his Fast Company author profile.

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Ethical Systems Lands 8 of the Top 100 Most Influential in Business Ethics

Each year, Ethisphere recognizes 100 individuals that have made a material impact in the world of business ethics through their annual 100 Most Influential People in Business Ethics list.

Ethical Systems collaborators have long been featured on this prestigious list. This year, however, is the first we have had 8 of our distinguished leaders included at one time. 

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Featured Collaborator for January: Robert Frank

Interview with Robert Frank, the H. J. Louis Professor of Management and Professor of Economics at Cornell University's Johnson Graduate School of Management, author and New York Times columnist

What are your main areas of research?

When I was recently asked to offer a short course based on my work, I chose “Rivalry and Cooperation” as my title, since these two themes have dominated my research for more than three decades.

My focus on rivalry springs from the fact that humans evolved under extremely competitive conditions in which local rank was often the best predictor of who would survive and prosper. When there wasn’t enough food to go around, for example, the lowest-ranked individuals were most likely to starve, and in early polygynous societies, high-ranking males were most likely to claim multiple wives. So rivalry—competition for relative position—has always been a central feature of human interaction. This strand of my work has explored the consequences of concerns about relative position for a range of important outcomes, including the kinds of things we buy, the kinds of jobs we prefer, the behaviors we choose to regulate, and the tax systems we adopt.

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Your Permanent Record: Blacklist for ethics gaining steam

Bad ethics should not be forgotten in the new year- or any other- as bankers and regulators discussed creating an ethical blacklist for individuals working at regulated financial institutions, at the NY Federal Reserve‘s recent culture conference.

This signals new enthusiasm for a provocative proposal originally suggested in 2014 by Bill Dudley, President of the NY Fed: When an employee leaves a company, the organization would have a mandate to report information relating to his/her misconduct to a central database. Concerning hiring decisions, all firms would have a reciprocal duty to check the database against their potential hire list. The goal is to stem the tide of bad apples that bounce from firm-to-firm, negatively influencing stability, profits and planning.

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Ethical Systems Year End Letter from Jon Haidt

Dear Friends, 

Ethical Systems reflects on a year marked by tragedy and triumph, major ethics news and new research. We began 2015 by receiving IRS recognition of our organization as a 501c3 non-profit, and filing our first 990 report. Finally, we can begin raising money to fund our operations. What started as an informal collaborative network of researchers has blossomed into an official organization uniting researchers and business leaders who want to change the business world by “making ethics easy.”

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Earthquakes and Shaky Ethics: The Perils of Construction Corruption

A study in Nature shows that our planet has a lot to teach us about business ethics. While we know that ethics pays, what is also now clear is that the absence of ethics can kill.

Nicholas Ambraseys of the Department of Civil and Environmental Engineering, Imperial College London and Roger Bilham from the Cooperative Institute for Research in Environmental Sciences and the Department of Geological Sciences at the University of Colorado, Boulder compared deaths from earthquakes and found that “83% of all deaths from building collapse in earthquakes over the past 30 years occurred in countries that are anomalously corrupt.” This is all the more staggering when you consider that the researchers removed any contributing factors, such as poor building materials, from their analysis.

The construction industry is an industry both highly valued and highly susceptible to corruption. Governments, regulators, businesses and workers all have a vested interest in reducing and eliminating bribery and other practices that put people at risk. Without a systemic approach to reducing corruption and improving ethics, it won’t just be buildings that crumble; trust, stability and the long-term viability of a governmental body also risk imminent collapse.

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Ethics and the City: Regional programs for success

Ethical systems design is rooted in a systems-approach. We at Ethical Systems generally look at these at 3 levels: 1) personal ethics; 2) organizational ethics; and 3) the national culture and legal/regulatory environment. It is the interplay between these levels that creates a self-sustaining ethical culture.

Within the context of the third level, there is an emerging trend, where ethics and culture are being used to promote regional economic development. Ethics is taking center stage in two cities- Boston and Omaha- and galvanizing people to come together to engage in discussion and identify solutions.

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Biases and Decision Making

From the things we say to the actions we take each day, our world- and that of business- is comprised of thousands of decisions, both big and small. How we come to make those decisions is the result of intuition and analysis and, in most cases, influenced by biases that we may or may not be aware of. 

We know about blind spots in decision making, mostly because of the work of ES collaborators Max Bazerman and Ann Tenbrunsel. A recent graph published in Business Insider: Australia, and included below, depicts additional biases that all would be wise to learn and attempt to obviate when analyzing ideas and programs.

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Professionalism and Ethics: A missed connection?

What does professionalism mean to you? Often, people who identify as a professional think of themselves not only as knowledgeable in their discipline, but also rational, objective and serving a higher purpose (e.g., the client’s needs). These are laudable goals, but new research shows that these characteristics could actually lead to people making self-interested, and ultimately unethical or damaging, decisions.  

In a paper on Professionalism and Moral Behavior, Maryam Kouchaki of the Kellogg School of Management at Northwestern University, tests the hypothesis that an emphasis on one's professional identity has a greater likelihood of an individual engaging in unethical behavior. This is an important inquiry in light of ethical failures in companies where lawyers and accountants often act as “gatekeepers” on ethics and compliance issues vis a vis corporate practices. Based on evidence from her lab studies and employee surveys, Kouchaki concludes that priming professionalism may actually lead to increased misbehavior.

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