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How Ethical Behavior of Firms is Influenced by the Legal and Political Environments: A Bayesian Causal Map Analysis Based on Stages of Development

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  • Ahmet Ekici
  • Sule Onsel

Abstract

Even though potential impacts of political and legal environments of business on ethical behavior of firms (EBOF) have been conceptually recognized, not much evidence (i.e., empirical work) has been produced to clarify their role. In this paper, using Bayesian causal maps (BCMs) methodology, relationships between legal and political environments of business and EBOF are investigated. The unique design of our study allows us to analyze these relationships based on the stages of development in 92 countries around the world. The EBOF models structured through BCMs are used to explain how EBOF in a given country group are shaped by how managers perceive political, legislative, and protective environments of business in these countries. The results suggest that irregular payments and bribes are the most influential factors affecting managers’ perceptions of business ethics in relatively more advanced economies, whereas intellectual property protection is the most influential factor affecting managers’ perceptions of business ethics in less-advanced economies. The results also suggest that regardless of where the business is conducted in the world, judicial independence is the driving force behind managers’ perceptions of business ethics. In addition, the results of this study provide further support for scholars who argue that business ethics is likely to vary among countries based on their socio-economic factors. In addition to its managerial implications, the study provides directions for policy makers to improve the ethical conduct of businesses in their respective countries. Copyright Springer Science+Business Media B.V. 2013

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  • Ahmet Ekici & Sule Onsel, 2013. "How Ethical Behavior of Firms is Influenced by the Legal and Political Environments: A Bayesian Causal Map Analysis Based on Stages of Development," Journal of Business Ethics, Springer, vol. 115(2), pages 271-290, June.
    • Handle: RePEc:kap:jbuset:v:115:y:2013:i:2:p:271-290
    DOI: 10.1007/s10551-012-1393-4
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    4. Yasemin Zengin Karaibrahimoglu & Burcu Guneri Cangarli, 2016. "Do Auditing and Reporting Standards Affect Firms’ Ethical Behaviours? The Moderating Role of National Culture," Journal of Business Ethics, Springer, vol. 139(1), pages 55-75, November.
    5. Hartwell, Christopher A. & Devinney, Timothy, 2021. "Populism, political risk, and pandemics: The challenges of political leadership for business in a post-COVID world," Journal of World Business, Elsevier, vol. 56(4).
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    7. Benkraiem, Ramzi & Uyar, Ali & Kilic, Merve & Schneider, Friedrich, 2021. "Ethical behavior, auditing strength, and tax evasion: A worldwide perspective," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 43(C).
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    9. Cristina Bota-Avram & Roumen Vesselinov & Paula Ramona Răchişan & Adrian Groşanu, 2022. "Determinant factors on ethical behavior of firms: evidence from a cross-country survey," SN Business & Economics, Springer, vol. 2(8), pages 1-25, August.
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    11. Ekici, Ahmet & Önsel Ekici, Şule, 2021. "Understanding and managing complexity through Bayesian network approach: The case of bribery in business transactions," Journal of Business Research, Elsevier, vol. 129(C), pages 757-773.
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    13. Cemil Kuzey & Ali Uyar & Amal Hamrouni & Merve Kilic & Rim Boussaada, 2021. "The link between institutional quality, ethical behaviors of firms, and market regulations on stock market developments," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(4), pages 998-1021, June.
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    15. Paulina Roszkowska & Domènec Melé, 2021. "Organizational Factors in the Individual Ethical Behaviour. The Notion of the “Organizational Moral Structure”," Humanistic Management Journal, Springer, vol. 6(2), pages 187-209, July.

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