Institutional Impediments To Voluntary Ethics Measurement Systems: An International Perspective

Abstract

<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="font-size: 10pt;"><span style="font-family: Times New Roman;">Despite numerous appeals in the business ethics literature for a multiple-stakeholder perspective to corporate governance, in practice the widespread adoption of voluntary ethics measurement systems that consider multiple stakeholders remains elusive.<span style="mso-spacerun: yes;">  </span>In this paper, we employ an institutional economics framework to examine the legal environment in several English-speaking countries in order to determine potential constraints that might cause managers to avoid the adoption of such systems.<span style="mso-spacerun: yes;">  </span>Our findings indicate that in British Commonwealth countries (1) the courts tend to view stockholders as the primary corporate constituency group and (2) there is a lack of documentary privilege.<span style="mso-spacerun: yes;">  </span>Therefore, any internally generated metrics on ethics and corporate social responsibility matters could potentially be either trivialized or used against the corporation in court proceedings.<span style="mso-spacerun: yes;">  </span>Before adopting a voluntary ethics measurement system, managers should be aware of these and other potential institutional constraints that may impede such efforts.</span></span></p>