Unethical behavior in organizations: empirical findings that challenge CSR and egoism theory

• Author: Jeffrey Overall
• Date: 01 April 2016
• DOI: http://doi.org/10.1111/beer.12110
• Published date: 01 April 2016

Unethical behavior in

organizations: empirical

findings that challenge CSR

and egoism theory

Jeffrey Overall

School of Business, Nipissing University, Ontario, Canada P1B 8L7

In the egoism philosophical framework, it is contended that when organizations focus on their long-term

interests, they, without knowing it, advance the interests of society as a whole, which is perceived as ethical. In

this research, this premise is challenged using data collected from the social media outlets of 29 randomly

selected companies from the 2013 Fortune 500 list. Through qualitative comparative analysis, the exact

opposite was found. In fact, the organizations that focused on striving for their long-term success are

perceived as unethical. It was also found that socially responsible organizations are perceived as ethical

whereas those that misrepresent their positions and attempt to influence the decisions of others are perceived

as unethical. Implications for managers are discussed, and future directions are suggested.

Introduction

Adam Smith, the Scottish philosopher and father of

capitalism, contended that in a free-market capitalist

system the aggregate effect of all economic partici-

pants acting in their long-term self-interest would

benefit all society (Smith 1776; Knights & O’Leary

2006; Game & Gregoriou 2014; Kulkarni & Rama-

moorthy 2014; Bernacchio & Couch 2015) more

effectively than if individuals attempted to address

the needs of society directly (Klein 2003). In this

way, when individuals focus on addressing their

interests, they are addressing social needs indirectly.

It is contended that focusing on one’s self-interest

reinforces morality and promotes civility in society

(Rand 1964; Maitland 2002). In his discourse, Smith

was very clear that selfishness, a vice, should be

avoided, and that self-interest is prudence (James &

Rassekh 2000; Maitland 2002; Wells & Graafland

2012). This belief system underpins the egoism philo-

sophical framework whereby ethics is understood to

be a necessary guide to the well-being of greater soci-

ety in that focusing on one’s long-term self-interest

promotes honesty and justice (Woiceshyn 2011).

Indeed, the concern that businesspeople have for

society is rooted in prolonging their long-term suc-

cess (Bowen 1953) and, fundamentally, the egoism

perspective is based on not sacrificing one’s long-

term self-interests for others (Rand 1964).

On the contrary, the reverse is often believed in the

corporate social responsibility (CSR) discourse. In

this narrative, it is contended that when organiza-

tions focus on advancing social interests, they are

likely to become more profitable in the longrun

(Johnson 1971; Carroll 1991; Aguinis & Glavas

2012; Endrikat et al. 2014; Jamali et al. 2015; Meyer

2015; Revelli & Viviani 2015; Story & Neves 2015).

In their independent research, Aguinis & Glavas

(2012) and Endrikat et al. (2014) both demonstrated

that a positive relationship existed between CSR and

corporate financial performance, in general. Beyond

this, it has also been shown in the extant literature

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C2016 John Wiley & Sons Ltd, 9600 Garsington Road,

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doi: 10.1111/beer.12110

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Business Ethics: A European Review

Volume 25 Number 2 April 2016