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5 months ago
Discuss the implications of the ethics experiments for ethical conduct and management in the nonmarket environment.
Business and Its Environment
Edition: 7th
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5 months ago
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The most consistent conclusion from the experiments is that people differ in their behavior, preferences, and moral conduct. They also differ in the importance of factors such as the characteristics of those affected by their decisions, the audience for their actions, the scrutiny they face, the social context of their situation, and how they take strategic considerations into account. The implications of the experiments are relevant for two types of situations. One is for firms and their managers when making decisions that involve moral concerns. The other is for anticipating nonmarket action that may be motivated by the (ethical) conduct of a firm. Management must guard against the view that because it has the decision authority, it can choose whichever actions it prefers based only on its own preferences.
Reciprocity has implications for dealing with direct stakeholders and for the implementation and maintenance of relational contracts.
Transparency can reduce social distance and make it easier to develop trust and reciprocity. Opacity can give a firm wiggle room with respect to its moral obligations. Transparency for employees can be provided by internal communication, but transparency with stakeholders outside the boundaries of the firm is a more delicate matter.
Effective ethics policies and codes of conduct require not only that employees abide by the policies and codes but also that they report any violations.
The experiments suggest that the presence of an audience can significantly affect behavior. The obvious implication is that firms may change their behavior when they are closely scrutinized, but this leaves the question of how strong the audience effects are. Another implication of the experimental evidence regarding audience effects is that firms that have the public and consumers as an audience may undertake activities that firms out of the view of the public and consumers may not undertake.
Legitimacy can also be important in interactions with stakeholders and others in a firm's nonmarket environment. The experiments point to the importance of having earned one's place.
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