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Determinant factors on ethical behavior of firms: evidence from a cross-country survey

Author

Listed:
  • Cristina Bota-Avram

    (Babeş-Bolyai University)

  • Roumen Vesselinov

    (University of Maryland at Baltimore)

  • Paula Ramona Răchişan

    (Babeş-Bolyai University)

  • Adrian Groşanu

    (Babeş-Bolyai University)

Abstract

The purpose of this paper is to explore the impact of macro-level factors such as governance, business education, control of corruption, political, and legal environments on ethical behavior of firms (EBF). We argued that these factors such as governance, business education, control of corruption, political, and legal environments are relevant for the ethical behavior of firms (EBF), because very often, these external factors interfere with the business activities of companies, which not infrequently are put in the situation of adopting less ethical business practices (such as bribery to public authorities) to protect their businesses. The analysis is based on a large sample of 122 countries over 9 years (2006–2014) and 20 possible independent variables and 2 structural factors: stage of development and legal origin. The results suggest that for developed countries, the most influential factors in the EBF are the diversion of public funds, favoritism in government officials' decisions, corruption control, and availability of research and training services. For less advanced economies, the results suggest that intellectual property protection is the most influential factor affecting EBF. Overall, the diversion of public funds is the major factor in the ethical behavior of business managers. The study could have significant implications for policy makers, business managers and scholars, while providing further directions for improving the ethical behavior of businesses in various countries around the world. Furthermore, this paper reinforces the belief that governance, business education, and political and legal environments are real factors that influence managers' perceptions of business ethics.

Suggested Citation

  • 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.
    • Handle: RePEc:spr:snbeco:v:2:y:2022:i:8:d:10.1007_s43546-022-00288-1
    DOI: 10.1007/s43546-022-00288-1
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