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Business Ethics in North America: Trends & Challenges

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Business Ethics in North America: Trends & Challenges
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           1 3                                          1 3 Your article is protected by copyright andall rights are held exclusively by SpringerScience+Business Media B.V.. This e-offprintis for personal use only and shall not be self-archived in electronic repositories. If youwish to self-archive your work, please use theaccepted author’s version for posting to yourown website or your institution’s repository.You may further deposit the accepted author’sversion on a funder’s repository at a funder’srequest, provided it is not made publiclyavailable until 12 months after publication.  Business Ethics in North America: Trends and Challenges Joseph A. Petrick  • Wesley Cragg  • Martha San ˜ udo Published online: 13 March 2012   Springer Science+Business Media B.V. 2012 Abstract  Using 15 years of data (1995–2009) from liter-ature reviews, survey questionnaires, personal interviews,and desktop research, the authors examine North American(Canada,Mexico,andtheUnitedStatesofAmerica)regionaltrendsinbusinessethicsresearch,teachingandtraining.Thepatterns indicate that business ethics continues to flourish inNorth America with high levels of productivity in bothquantity and quality of teaching, training and research pub-lication outputs. Topics/themes that have been coveredduring the time period are treated with an acknowledgementof the concomitant marginal impact on improving ethicalbusiness behavior and contexts—as recurring domestic andglobalscandalsattest.MajorNorthAmericanbusinessethicschallenges/issues to be addressedinthe future are identified. Keywords  Business ethics    North America    Regionaltrends in business ethics research    Teaching and training   Future North American business ethics challenges Introduction and Contextual Background This report on business ethics in North America includesdata from Canada, Mexico, and the United States of America. It has been the most productive global region forbusiness ethics research, teaching and training for the past15 years (1995–2009). Its dominance is a function of manyfactors including but not limited to the following condi-tions: the USA’s early and sustained institutional andinstructional interest in business ethics, the quantity andquality of faculty business ethics instructional expertiseand publications, an array of traditional and high qualityregional book and journal publication outlets, facultyresearch publication pressures from host institutions, peerpressure to advance business ethics research and teachingfrom professional association memberships/networks,emergence of business ethics centers/institutes along withchairs of business ethics in schools and faculties of man-agement and business administration, the institutionaliza-tion of organizational ethics, legal, social, and politicalinfrastructures that reinforce many business ethics norms, asteady stream of business scandals to stimulate multiplestakeholder interest, a free media that fully expose businessscandals, the Association to Advance Collegiate Schools of Business (AACSB) international accreditation that recom-mends some degree of business ethics emphasis in businesseducation, the emergence of the Ethics and ComplianceOfficer Association (ECOA) and the Corporate Responsi-bility Officer Association (CROA), the United Nations’Principles for Responsible Management Education(PRME), and public demand that business educators domore to sensitize future managers to their personal ethicalresponsibilities, those of the business entities for whichthey work and the ethical responsibilities of the widerbusiness community.By way of contextual background of business ethics inNorth America, in 2002, Hood and Logsdon (2002)undertook a comparison of Mexico, Canada, and the Uni-ted States of America that examined the impact of business J. A. Petrick ( & )Department of Management & International Business,Institute for Business Integrity, Raj Soin College of Business,Wright State University, Dayton, OH, USAe-mail: joseph.petrick@wright.eduW. CraggDepartment of Philosophy, Schulich School of Business,York University, Toronto, CanadaM. San˜udoInstituto Tecnolo´gico y de Estudios Superiores de Monterrey(ITESM), Monterrey, Mexico  1 3 J Bus Ethics (2011) 104:51–62DOI 10.1007/s10551-012-1262-1  ethics in each country from different national culturalperspectives. They hypothesized first that, because Mexi-can culture had much higher power distance, masculinity,and intuitive problem solving approaches, Mexican firmswould be less likely than USA or Canadian firms to haveformal ethics codes. Second, they hypothesized that Mex-ican firms were more likely to bribe public officials thanUSA or Canadian firms because of high uncertaintyavoidance, high power distance, high collectivism, and thebelief that humans are both good and evil. Finally, theyhypothesized that Mexican firms would be more likely totreat lower-level employees well than USA or Canadianfirms because of high collectivism, high uncertaintyavoidance, high power distance (paternalism), and a morecasual attitude toward work. In addition, they noted thatboth Canada and Mexico had stronger socialist or socialwelfare traditions and both were ideologically to thepolitical left of the USA Furthermore, they cited researchwhich indicated that Mexicans tend to have an overarchinginterpersonal orientation that includes respect and obedi-ence, perceiving criticism as denoting a lack of respect, andbeing allocentric by paying more attention to the needs of others than their own. In contrast, Americans and Cana-dians tended to value task achievement, competition andwere more individualistic giving a higher priority to theirown values, goals, and viewpoints. Husted and Serrano(2002) studied the corporate governance practices of thelargest ninety companies in Mexico and found that since allMexican companies were family-owned, appointing boarddirectors was largely a family matter. In contrast to theoutsider corporate governance model of the USA (non-family and non-kin-based with prioritized investor inter-ests), the Mexican model was a family-centered modelcharacterized by the following features: (1) concentratedequity ownership; (2) de facto subordination of investorinterests to managerial interests; (3) weak emphasis onminority interest protection in securities law and regula-tion; and (4) relatively weak requirements for transparentdisclosure. These features have presented Mexican busi-ness with clear ethical challenges, but responsive congruentchanges have been and are being made because of whatHusted and Serrano (2002) call the ‘‘mimetic isomorphismwithin Mexico, where business people are responding togovernance movements in the United States, Japan, and theEuropean Union.’’ Ryan (2005) reported that by 2005 allthree corporate governance systems in North America hadbecome embroiled in fundamental transformations. Most of Mexico’s corporations were being run by a small group of controlling shareholders operating in an economic systemrife with corruption. Recent political reforms designed tochallenge this state of affairs together with a desire to tapglobal equity markets had heightened interest in improvingcorporate governance structures. Corporations in the USAfaced a dispersed ownership base that tended toward inat-tentiveness. Infamous scandals, for example, Enron, hadrocked the global investing community and the US gov-ernment and had led to passage of the Sarbanes–Oxley Actwhich in turn had generated backlash against what somein the corporate section regarded as an overreaction. Asin the USA, corporate scandals in Canada had led toreinvigorated scrutiny of corporate governance standards,principles and practices governing board composition, andinterlocking membership. New corporate governanceguidelines were debated and endorsed and the authority of the Ontario Securities Commission was strengthened. Ryanconcludes that, although the Mexican, USA and Canadianapproaches to corporate governance varied in terms of ownership dispersion, level of corruption, and legislativeintervention, in the years leading to 2005, all three coun-tries shared a common interest in strengthening corporategovernance and regulatory reform. We note, however, thatover this same time period from 1995 to 2009, the interestof European, Asian and other regional faculties, institutionsand professional associations has been growing along withquality business ethics research, teaching and training, withthe result that North American dominance in the field hasslowly been decreasing over that 15 year time span (Chanet al. 2009). Our study has led us to the conclusion that thechallenge for business ethics in North America now is todesign more normatively robust economic and businessmodels and more practical and effective ways to improveorganizational and practitioner moral performance with thegoal of fulfilling obligations to market stakeholders whilebuilding international legitimacy and justified levels of trust on the part of non-market stakeholders. Selective Review of Literature Before 1995, the major bibliographies of North Americanbusiness ethics teaching and research were compiled byMcMahon (1975) and Jones and Bennett (1986), respec- tively. They provided useful information regarding main-stream business ethics teaching and training in academiccontexts and published business ethics journal articles inthe 1970s and 1980s. In what follows, we offer a synopsisof research undertaken since 1995. It is relevant to note thatMexico is often not included in classifications linked toNorth America, even though a proximate geographicallocation puts the country in this region. Since Mexico is aSpanish speaking nation with a Roman Catholic culture,the classification of Latin America is often used to distanceMexico from its northern geographical and economicneighbors. However, when in 1994 Mexico entered theNorth American Free Trade Agreement (NAFTA) withCanada and the US, the country experienced strong 52 J. A. Petrick et al.  1 3  pressures and adjusted to many northern business practiceseven though Mexico’s national cultural differencesremained intact (Husted et al. 1996). We will refer to thenational cultural differences between Mexico and itsnorthern partners when appropriate.CowtonandDunfee(1995)reportedonatelephonesurveyofbusinessschoolfacultyinNorthAmerica(largelyfromtheUS) concerning the international dimensions of businessethics education. What they discovered was that the interna-tionaldimensionsofbusinessethicsreceivedlimitedattentionin business school curricula with over half of the faculty sur-veyed indicating that less than 10% of their ethics teachingfocused on global issues. Teaching objectives varied widelywith some faculty emphasizing a relativistic approach ori-ented around a diversity of perspectives while others stresseduniversal ethical values. The respondents in this study iden-tified a great need to develop teaching materials less domi-nated by US corporations, examples and content.Dunfee and Werhane (1997) reported that although manychallengesremained,businessethicswasflourishinginNorthAmerica. Prominent organizations gave annual business eth-icsawards,ethicsofficersandcorporateombudspersonsweremorecommonandmoreinfluential,andnewideaswerebeingtested in practice. On the academic side, two major journalsspecializing in business ethics had become well-established,othermajorjournalswereincludingarticlesonbusinessethicsmore frequently and new organizations emphasizing ethicswere coming into existence. Within business schools, thenumber of endowed chairs was growing and the ethics cur-riculum was expanding. The authors also noted that Canadawas emerging as a major player in business ethics educationand research while business ethics in Mexico was justbeginningtoemergeasafocusofinterestinboththebusinessand academic communities.Arruda (1997) noted that business ethics in Mexico wasfacilitated both by the religious tradition of Roman Cath-olic social doctrine and the cultural tradition of respect forthe family. However, economic and political corruptioncombined with illegal drug trafficking created a businessenvironment predominantly tinged with fear and reticencetoward ethical conduct, although isolated academic andnon-academic efforts were being undertaken with a view toenhancing ethical business practice through education,publication, and professional activities.DeGeorge (2005) provided a detailed history of theformation and leadership of the Society for Business Ethicsand its key role in providing a forum for North Americanbusiness ethics research and shared teaching resources.This Society and its institutional affiliations with theAmerican Philosophical Association and the Academy of Management have continued to provide important anddistinctive contributions to North American business ethicsresearch and teaching.In a 2007 article, Jones Christensen et al. report on howdeans and directors of the top 50 global MBA programs (asrated by the  Financial Times  in their 2006 Global MBArankings) responded to questions about the inclusion andcoverage of the topics of ethics, corporate social respon-sibility, and sustainability at their respective institutions.This study investigated each of the three topics separatelyand revealed that:(1) a majority of the schools required that one or more of these topics be covered in their MBA curriculum andone-third of the schools required the coverage of allthree topics as part of the MBA curriculum;(2) there was a trend toward the inclusion of sustainabil-ity-related courses;(3) there was a higher percentage of student interest inthese topics (as measured by the presence of a NetImpact club) in the top 10 schools; and(4) several schools were teaching these topics usingexperiential learning and immersion techniques.The study noted a fivefold increase in the number of stand-alone ethics courses since 1988, and included addi-tional findings with regard to institutional support of cen-ters or special programs, integration of these three themesinto the curriculum, teaching techniques, and notablepractices in relation to all three topics. Of the top 50business schools listed, 21 business schools were based inthe US, 4 in Canada, and none in Mexico.A study by Ma (2009) provides a general overview of business ethics research over 10 years (1997–2006) anddiscusses potential future research directions in businessethics based on his findings. Using citation and co-citationanalysis, this study examines the citation data of journalarticles, books, and other publications tracking businessethics research collected in the Social Sciences CitationIndex (SSCI). The results show that major research themesin business ethics had shifted over the previous decadefrom research on ethical decision-making and on the rela-tionship between corporate social responsibility and cor-porate performance to research on stakeholder theory inbusiness ethics and on the relationship between consumerbehavior and corporate social responsibility. The results of this study have helped map the invisible network of knowledge production in business ethics research andprovide insights into future business ethics research needsand direction. This study relates directly to the first, third,seventh, eighth, ninth, and tenth challenges for NorthAmerican business ethics research, teaching, and trainingcontexts identified later in this article.A Hartman and Werhane (2009) report examines a mod-ularapproachtobusinessethicsinstructionandintegrationinlight of the fact that the AACSB does not require the inclu-sion of a specific kind of ethics course as part of a business Business Ethics in North America 53  1 3
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