Research Handbook on Organisational Integrity (Research Handbooks in Business and Management series) 1803927925, 9781803927923

Table of contents :
Front Matter
Copyright
Contents
Contributors
1. Introduction to Research Handbook on Organisational Integrity
PART I Positions of organisational integrity
2. Managing for organisational integrity
3. Contemporary research into organisational integrity
4. Concepts closely related to organisational integrity
5. Integrity, integrity violations and integritism
PART II Perspectives on organisational integrity
6. A nature perspective on organisational integrity
7. An evolutionary perspective on individual integrity in organisations
8. A spiritual perspective on organisational integrity
9. A criminological perspective on organisational integrity
10. A positive behavioural ethics perspective on organisational integrity
11. An intersubjective perspective on organisational integrity
12. A practical reasoning perspective on corporate integrity
13. A discursive justification perspective on organisational integrity
14. A virtue ethics perspective on organisational integrity
15. A contractual perspective on organisational integrity
16. A regulatory perspective on organisational integrity
17. An institutional perspective on organisational integrity
18. A corporate governance perspective on organisational integrity
19. A critical perspective on organisational integrity
PART III Dimensions of organisational integrity
20. Organisational integrity as social coherence
21. Organisational integrity as congruence
22. Organisational integrity as wholeness
23. Organisational integrity as a virtue
24. Organisational integrity as an epistemic virtue
PART IV Characteristics of organisational integrity
25. Organisational integrity and responsibility
26. Organisational integrity and accountability
27. Organisational integrity and voice
28. Organisational integrity and inclusion
29. Organisational integrity and transparency
30. Organisational integrity and hypocrisy
31. Organisational integrity, citizenship, and legitimacy
32. Organisational integrity, trust, dissociative identity, and HR
33. Organisational integrity and success
PART V Management of organisational integrity
34. Integrity management systems
35. The weak point analysis as a method for measuring and improving organisational integrity
36. Organisational integrity, culture, and performance
37. Operationalising integrity within supply chains
Index

Citation preview

RESEARCH HANDBOOK ON ORGANISATIONAL INTEGRITY

Research Handbook on Organisational Integrity Edited by

Muel Kaptein Professor of Business Ethics and Organisational Integrity, Erasmus University Rotterdam, the Netherlands

Cheltenham, UK • Northampton, MA, USA

© The Editor and Contributing Authors Severally 2024

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing Limited The Lypiatts 15 Lansdown Road Cheltenham Glos GL50 2JA UK Edward Elgar Publishing, Inc. William Pratt House 9 Dewey Court Northampton Massachusetts 01060 USA A catalogue record for this book is available from the British Library Library of Congress Control Number: 2023951252 This book is available electronically in the Business subject collection http://dx.doi.org/10.4337/9781803927930

ISBN 978 1 80392 792 3 (cased) ISBN 978 1 80392 793 0 (eBook)

EEP BoX

Contents

List of contributorsviii 1

Introduction to Research Handbook on Organisational Integrity1 Muel Kaptein

PART I

POSITIONS OF ORGANISATIONAL INTEGRITY

2

Managing for organisational integrity Lynn Sharp Paine

3

Contemporary research into organisational integrity Carole L. Jurkiewicz

24

4

Concepts closely related to organisational integrity Duane Windsor

36

5

Integrity, integrity violations and integritism Leo Huberts

54

PART II

8

PERSPECTIVES ON ORGANISATIONAL INTEGRITY

6

A nature perspective on organisational integrity Craig Dunn

70

7

An evolutionary perspective on individual integrity in organisations Marc Orlitzky

83

8

A spiritual perspective on organisational integrity Tracy H. Porter, Kelly Gillerlain, and Nicholas Messina

97

9

A criminological perspective on organisational integrity Nina Tobsch, Benjamin van Rooij, and Marieke Kluin

111

10

A positive behavioural ethics perspective on organisational integrity Linda Klebe Treviño, Niki A. den Nieuwenboer, and Jennifer Kish-Gephart

129

11

An intersubjective perspective on organisational integrity Wim Vandekerckhove

162

12

A practical reasoning perspective on corporate integrity Thomas Donaldson

175

13

A discursive justification perspective on organisational integrity Dirk Ulrich Gilbert, Michael Behnam, and Maximilian J. L. Schormair

190

v

vi  Research handbook on organisational integrity 14

A virtue ethics perspective on organisational integrity Ignacio Ferrero, Maria Clara Ames, and Mauricio C. Serafim

210

15

A contractual perspective on organisational integrity Ben Wempe and Johan Wempe

226

16

A regulatory perspective on organisational integrity Martin de Bree and Annemiek Stoopendaal

243

17

An institutional perspective on organisational integrity Timo Fiorito and Michel Ehrenhard

257

18

A corporate governance perspective on organisational integrity Peter Verhezen

280

19

A critical perspective on organisational integrity Marcel Becker and Edgar Karssing

301

PART III DIMENSIONS OF ORGANISATIONAL INTEGRITY 20

Organisational integrity as social coherence Marvin T. Brown

319

21

Organisational integrity as congruence Anthony D. Molina

335

22

Organisational integrity as wholeness Thomas Maak and Nicola M. Pless

352

23

Organisational integrity as a virtue Miguel Alzola

363

24

Organisational integrity as an epistemic virtue Marco Meyer

377

PART IV CHARACTERISTICS OF ORGANISATIONAL INTEGRITY 25

Organisational integrity and responsibility Mihaela Constantinescu

394

26

Organisational integrity and accountability Natasha V. Christie

415

27

Organisational integrity and voice Brett Beasley with Mary Gentile

430

28

Organisational integrity and inclusion Geoffrey A. Silvera, Jonathan M. Fisk, and Courtney N. Haun

448

29

Organisational integrity and transparency Colin Higgins and Samuel Tang

470

Contents  vii 30

Organisational integrity and hypocrisy Gökhan Kılıçoğlu and Derya Kılıçoğlu

485

31

Organisational integrity, citizenship, and legitimacy Jacob Dahl Rendtorff

497

32

Organisational integrity, trust, dissociative identity, and HR Roger C. Mayer and Paul W. Mulvey

511

33

Organisational integrity and success Madeleine J. Fuerst and Christoph Luetge

525

PART V

MANAGEMENT OF ORGANISATIONAL INTEGRITY

34

Integrity management systems Jeroen Maesschalck, Alain Hoekstra and André van Montfort

542

35

The weak point analysis as a method for measuring and improving organisational integrity Carsten Stark and Yannik Morbach

36

Organisational integrity, culture, and performance Abidoun Owoloja and Louise Manning

577

37

Operationalising integrity within supply chains Louise Manning

591

558

Index610

Contributors

Miguel Alzola is Grose Family Professor and Associate Professor of Business Ethics at Fordham University in New York City, USA. Miguel’s research interests lie at the intersection of moral psychology, organisational behaviour, and moral philosophy. He champions the character approach to business and has published on the psychology of virtue, the reconciliation of empirical and normative research in business ethics, corporate reputation, the responsibilities of business in wartime, human resource management, and corporate political activities. His work has been published in leading business ethics journals and has received numerous awards and research grants. Maria Clara Ames is Associate Researcher at AdmEthics – Ethics, Virtues, and Moral Dilemmas in Administration at the State University of Santa Catarina, Florianópolis, Brazil, where she concluded her PhD in Administration. She is additionally doing a Master’s in Governance and Culture of Organizations at the University of Navarra, Spain. She has published articles in journals such as Business Ethics: The Environment and Responsibility, Public Organization Review, and Journal of Contemporary Administration. Her main research interests are on virtue ethics, ethics and artificial intelligence, and anthropological foundations for administration. Brett Beasley is Term Assistant Teaching Professor at the University of Notre Dame, IN, USA and the Writer and Editorial Program Manager for Notre Dame Research. His research focuses on strategies for communicating ethics and values. He is the co-author of O’Hara’s Heirs: Business Education at Notre Dame and his other writings have appeared in a wide variety of scholarly and popular publications. He holds degrees from Calvin University, Loyola University Chicago and the University of Notre Dame. Marcel Becker is Associate Professor of Ethics at Radboud University, Nijmegen, the Netherlands. He specializes in virtue ethics and works in different fields of applied ethics. As a philosopher, he considers it as his main task to ‘shuttle’ between societal problems and centuries-old wisdom. He has written books on the ethics of public administration, digital ethics, and judicial ethics. He also offers reflections on these fields to students at Radboud University, as well as in wider public arenas. Michael Behnam is Dean of the Quinlan School of Business at Loyola University Chicago, IL, USA and Professor of Strategy and International Business. Previously he was Professor and Dean of Graduate Programs and Academic Affairs at the Sawyer Business School, Suffolk University in Boston, MA, USA. His work has been published in leading journals such as Academy of Management Journal, Journal of Business Ethics, Business Ethics Quarterly, Business Strategy and the Environment, Business & Society, and Journal of Management Inquiry. Martin de Bree is Postdoctoral Researcher at Rotterdam School of Management, Erasmus University Rotterdam, the Netherlands. His main research focus is on the effectiveness of regulation and law systems and the interface between public and private parties with regard viii

Contributors  ix to law and regulation from an organisational studies perspective. His publications cover innovative law-making and regulation, meta-regulation, system-based regulation, self-regulation, compliance management, and public and corporate governance. Marvin T. Brown created the ongoing blog ‘Climate of Justice Project.org’ after retiring from the philosophy department, the University of San Francisco, CA, USA in 2020. Like his latest book, A Climate of Justice: An Ethical Foundation for Environmentalism, the blog tries to promote a social climate of mutual recognition and reciprocity to handle our climate crisis. While his earlier work concentrated on the ethical relationship between organisations and society, he currently focuses more on the relationships between social worlds and the planet. Natasha V. Christie is Associate Professor of Political Science and Public Administration at the University of North Florida, Jacksonville, FL, USA. Before joining the university, she worked as a court analyst for the circuit court, which serves as the inspiration for much of her academic work in the field of public administration. She has published on topics such as accountability in the public sector, teaching programme evaluation, felon disenfranchisement policies, and the meaning behind how we talk about criminal justice policies. Mihaela Constantinescu is Lecturer at the Faculty of Philosophy, University of Bucharest, Bucharest, Romania and Executive Director of the Research Centre in Applied Ethics (CCEA). Her research includes virtue ethics, business ethics, human–robot interaction, and artificial intelligence ethics, with a focus on the normative interplay between the concepts of moral responsibility and moral agency in relation to individuals, organisations, and artificial intelligence systems. Before moving to academia, she worked as a communications consultant in the private, governmental, and non-governmental organisation fields. Thomas Donaldson is Mark Winkelman Professor at the Wharton School of the University of Pennsylvania, Philadelphia, PA, USA. His interests include ethics, corporate governance, and corporate responsibility. His books include The Ethics of International Business, Corporations and Morality, and Ties That Bind (with T. Dunfee). His articles have appeared in the Academy of Management Review, Ethics, Harvard Business Review, Business Ethics Quarterly, and Economics and Philosophy. He served as Associate Editor of the Academy of Management Review and the Business Ethics Quarterly. Craig Dunn holds an endowed Professorship of Business and Sustainability at Western Washington University, Bellingham, WA, USA and is Associate Professor Emeritus of San Diego State University, CA, USA. He holds a PhD in Business Policy with a minor in Philosophy. His research interests include managerial ethics, corporate social responsibility, and the meaning of work. Craig is active in the International Association for Business and Society, serving on the Board of Directors as well as being a Past President. Michel Ehrenhard is Associate Professor of Strategic Entrepreneurship in the Hightech Business and Entrepreneurship Department of the University of Twente, Enschede, the Netherlands. He studies entrepreneurial strategies for responsible organising aided by technology as a change enabler or market opportunity. Some examples are mission drift caused by algorithmic decision-making, opportunity recognition for sustainable nanotechnology, and impact measurement of a rural services platform. His work has appeared in journals such as Organization Science, Journal of Business Venturing, and Social Science & Medicine.

x  Research handbook on organisational integrity Ignacio Ferrero is Professor of Business Ethics at the University of Navarra, Pamplona, Spain. He has been Visiting Scholar at Bentley University, at Harvard University, and at the University of Notre Dame. He has published several books on business ethics and articles in academic journals such as Business Ethics Quarterly, Journal of Business Ethics, Business Ethics: A European Review, and Business and Society Review. He is co-founder of the research group on virtue ethics in business and management, with a worldwide network of collaborators. Timo Fiorito is Postdoctoral Researcher in the Department of Organization Sciences at the Vrije Universiteit Amsterdam, the Netherlands. His research deals with corporate responsibility and misconduct, organisational institutionalism, governance, values, and related institutional processes. In his current research he focuses on partnerships between law enforcement agencies and financial firms established to detect and address financial crimes. His work has been published in Research in the Sociology of Organizations, Journal of Change Management, and Journal of Public Affairs. Jonathan M. Fisk is Associate Professor in the Department of Political Science at Auburn University, AL, USA, as well as the internship coordinator for the Master of Public Administration programme. He also serves as Chairperson for the American Society for Public Administration’s Section on Environmental and Natural Resource Administration and is on the graduate education committee for the International City and County Management Association. His publications have covered energy policy, environmental policy, water policy, and diversity, equity, and inclusion. Madeleine J. Fuerst is PhD Researcher at the Chair of Business Ethics at the Technical University of Munich, Germany. Her PhD focuses on the conceptualisation and measurement of the organisational integrity construct, on which she has published in leading journals, including Business Ethics, the Environment & Responsibility and Business and Society Review. She holds a Master’s degree from Ludwig Maximilian University of Munich. She is also Director at a management consultancy where she advises international companies in business and cultural transformation. Mary Gentile is the creator of Giving Voice to Values, a pioneering curriculum for values-driven leadership shared in over 1,450 sites globally and featured in Financial Times, Harvard Business Review, Stanford Social Innovation Review, and McKinsey Quarterly. She is a consultant, speaker, and author, and was the Richard M. Waitzer Bicentennial Professor of Ethics at UVA Darden, Charlottesville, VA, USA (2016–22), faculty at Babson College (2009–2015) and writer/manager/faculty at Harvard Business School (1985–95). She holds a BA from The College of William and Mary, Williamsburg, VA, USA and PhD from the State University of New York at Buffalo, NY, USA. Dirk Ulrich Gilbert is Professor of Business Ethics and Management at the University of Hamburg, Germany. He received his PhD from the University of Frankfurt, Germany and held positions at the University of New South Wales, Sydney, Australia and the University of Nuremberg, Germany. His most recent research focuses on international accountability standards, labour rights in global supply chains, political corporate social responsibility, and responsible management education. He has published in internationally acclaimed journals

Contributors  xi such as Business Ethics Quarterly, Business & Society, Journal of Management Inquiry, Management International Review, and Journal of Business Ethics. Kelly Gillerlain has been Full Professor of business, marketing, and management at Tidewater Community College, Norfolk, VA, USA since 2005 and Full Adjunct Professor at University of Maryland Global Campus, Adelphi, MD, USA since 2016. She has held administrative positions as an academic dean, a dean of student life and conduct, and a campus dean overseeing a campus of approximately 8,000 students. She has co-authored marketing and social media marketing courses using Open Education Resources. Courtney N. Haun is Assistant Professor and Director of the Healthcare Administration Undergraduate Program in the Department of Healthcare Administration and Informatics at the School of Public Health at Samford University, Homewood, AL, USA. As a healthcare scholar, Haun’s research is focused on the influence of multifaceted factors (e.g., diversity, equity, and inclusion; patient experience; punctuating events) on organisational and care quality outcomes. She also serves as Samford University’s Inaugural Diversity Faculty Fellow. Colin Higgins is Professor of Management in the Deakin Business School, Deakin University, Melbourne, Australia. His research studies how business organisations respond to and shape the broader sustainability agenda through their reporting activity. He has published in leading accounting, management, and sustainability-related journals. He was the 2022 Division Chair of the Social Issues in Management Division of the Academy of Management, a fellow of the International Association for Business & Society, and Co-Editor-in-Chief of Business & Society. Alain Hoekstra has more than twenty years of experience as an integrity management expert. He studied Public Administration at Erasmus University Rotterdam, the Netherlands and has worked in different positions for the Dutch Ministry of the Interior and Kingdom Relations (currently as a senior policy advisor for the Dutch Whistleblowers Authority). His PhD focused on integrity management at the Rotterdam School of Management and he has published numerous articles on this topic. He is also active in several committees and working groups to advise national and international institutions. Leo Huberts is Emeritus Professor of Public Administration at the Department of Political Science and Public Administration of the Vrije Universiteit Amsterdam, the Netherlands. His main areas of research concern systems of governance and power and the quality, integrity, and ethics of governance. He is author or editor of more than 20 books and many articles on the influence on governmental policy, power theory and measurement, police administration and integrity, public corruption and fraud, and integrity management. Carole L. Jurkiewicz is Ethics and Public Integrity Faculty Affiliate at the University of Colorado – Colorado Springs, CO, USA and the owner of Jurkiewicz & Associates. She spent 34 years as a tenured professor and chair at top universities in the USA. She has published over 190 books, articles, and chapters. She has received numerous awards for scholarship, teaching, and leadership in the profession. In 2020 she received the international Lifetime Achievement Award for Ethics and Integrity. Muel Kaptein is Professor of Business Ethics and Organisational Integrity at the RSM Erasmus University, Rotterdam, the Netherlands. His books include Ethics Management

xii  Research handbook on organisational integrity (1998) and The Balanced Company: A Theory of Corporate Integrity (2002). His articles have appeared in Academy of Management Review, Journal of Management, Journal of Organizational Behavior, and Human Relations. He has published over twenty-five articles in Journal of Business Ethics. He served as Section Editor of the Journal of Business Ethics (2002–18). He is also Equity Partner at KPMG Integrity & Compliance. Edgar Karssing is Professor of Philosophy, Professional Ethics and Integrity Management at Nyenrode Business Universiteit, Breukelen, the Netherlands. He has a background in philosophy and economics. Edgar has been doing research on integrity in professional practice since 1995. He obtained his PhD from Erasmus University Rotterdam, the Netherlands. Derya Kılıçoğlu is Associate Professor at Eskişehir Osmangazi University, Turkey. She has been a visiting researcher at the University of Cambridge, UK and Manchester Metropolitan University, UK. Her research interests include organisational change, leadership in education, organisational behaviours, and educational policy. Her articles have been published in journals such as Oxford Review of Education, Studies in Philosophy and Education, and Educational Management, Administration & Leadership. Gökhan Kılıçoğlu is Associate Professor at Eskişehir Osmangazi University, Turkey. He has been a visiting researcher at the University of Cambridge, UK and Manchester Metropolitan University, UK. He has had several papers published in Oxford Review of Education, Studies in Philosophy and Education, and Educational Management, Administration & Leadership. His research interests are organisational hypocrisy, educational policy, leadership in educational organisations, and the sociology of education. Jennifer Kish-Gephart is Associate Professor of Organization Studies at the Isenberg School of Management at the University of Massachusetts in Amherst, MA, USA. Broadly, her research interests include behavioural business ethics, diversity, and inequality. Her research has been published in top-tier management outlets, including the Academy of Management Journal, Academy of Management Review, Journal of Applied Psychology, Journal of Management, and Research in Organizational Behavior. She serves on the editorial boards of the Academy of Management Journal, Business Ethics Quarterly, and Journal of Management. Marieke Kluin is Assistant Professor of Criminology at the Faculty of Law, Leiden University, the Netherlands. She is involved in teaching and coordination of various courses at the undergraduate and graduate level. Her interdisciplinary research focuses on white-collar crime, environmental crime, compliance, and regulatory enforcement. At present, she is involved in projects which focus on corporate crime by using a life-course criminology perspective, public perceptions of (environmental) crime, toxic corporate culture, and multinationals in court. Christoph Luetge is Full Professor of Business Ethics at the Technical University of Munich, Germany and the Director of the TUM Institute for Ethics in Artificial Intelligence. He is Distinguished Visiting Professor at Tokyo University, Japan and has held further visiting positions at Harvard and others. Having taken his PhD in 1999 and his habilitation in 2005, he was awarded a Heisenberg Fellowship by the German Research Foundation in 2007. His books have been published by Oxford University Press, Palgrave Macmillan, Edward Elgar, and others.

Contributors  xiii Thomas Maak is the inaugural Professorial Chair in Ethics at the University of Queensland Business School, Brisbane, Australia. Prior to joining the University of Queensland, he served as Director of the Centre for Workplace Leadership and Professor of Leadership at the University of Melbourne, Australia. He held appointments at ESADE, INSEAD, Wharton, and the University of St Gallen, Switzerland. His work focuses on responsible and values-based leadership at the individual, group, and organisational level, linking ethical theory, political philosophy, relational thinking, and stakeholder theory. Jeroen Maesschalck is Professor at the Institute of Criminology at KU Leuven, Belgium. His research focuses on public sector ethics as well as management in the criminal justice system. He has consulted on ethics management both within Belgium (local, regional, and federal government) and internationally (e.g., the Organisation for Economic Co-operation and Development). He studied Public Administration and Philosophy at the University of Ghent, Belgium and at the London School of Economics, UK. He holds a PhD in Social Sciences from KU Leuven. Louise Manning is Professor of Sustainable Agri-food Systems at the Lincoln Institute for Agri-food Technology, University of Lincoln, UK. She has published over 125 peer-reviewed papers, several books, and multiple book chapters in the areas of food policy, food supply chain management, sustainability, and organisational integrity. Roger C. Mayer is Professor of Leadership in the Department of Management, Innovation and Entrepreneurship at the Poole College of Management, NC State University, Raleigh, NC, USA. He received a PhD from Purdue University, West Lafayette, IN, USA. A leading scholar on trust in organisations, his research has been published in many premier scholarly journals and cited tens of thousands of times (according to Google Scholar). He serves on the editorial boards of Journal of Management, Journal of Managerial Psychology, and Journal of Trust Research. Nicholas Messina received a doctorate in management at Cleveland State University, OH, USA. His research focuses on healthcare administration, broadly addressing topics such as teams and crisis management, and his dissertation specifically addresses the impact of caregiver burden on workplace outcomes. He has been published in peer-reviewed journals including the Journal of Hospital Management and Health Policy and Management Research Review, along with presenting at multiple conferences. Marco Meyer has led a research group at the University of Hamburg, Germany since 2020, focusing on the ethical and political implications of organisational knowledge and decision-making. He holds a PhD in Philosophy from the University of Cambridge, UK and a PhD in Economics from the University of Groningen, the Netherlands. His main publications have focused on organisational ethics, the ethics of finance, and economic justice. Anthony D. Molina is Associate Professor and Chairperson of the Department of Political Science at Kent State University, OH, USA. Previously, he held positions at the University of South Dakota, Vermillion, SD, USA and at Cleveland State University, OH, USA. His research focuses on administrative ethics, public service integrity, and comparative anti-corruption policy. His work has appeared, among other venues, in American Review of Public Administration, Public Integrity, Administration and Society, Public Administration Quarterly, and the International Journal of Organization Theory and Behavior.

xiv  Research handbook on organisational integrity André van Montfort is Associate Professor in Public Administration at Vrije Universiteit Amsterdam, the Netherlands, a deputy judge in the district court of Overijssel, and the local ombudsman of the Dutch municipalities of De Wolden and Hoogeveen. His research focuses on the design and functioning of integrity management systems and administrative legal procedures. He has recently (co-)edited study books on law for non-lawyers and public policy. Yannik Morbach is Lecturer in Economic Sociology at Hof University, Germany and a PhD student at the University of Erlangen–Nuremberg, Germany. He is also Managing Director of a process management firm. His PhD revolves around fairness norms and refusal of payment in consumer transactions. He obtained his Bachelor’s degree in Business Administration from Hof University and his Master’s degree in Sociology from Otto-Friedrich-University Bamberg, Germany. Paul W. Mulvey is Alumni Distinguished Undergraduate Professor in the Poole College of Management at NC State University, Raleigh, NC, USA. Paul earned a PhD from The Ohio State University, Columbus, OH, USA and a Bachelor’s degree from Lehigh University, Bethlehem, PA, USA. He has won several teaching awards and his research focuses on employee motivation and rewards, compensation systems, teams, recruitment, organisational culture, and toxic leadership. His research has been published in journals including the Academy of Management Journal, Industrial Relations, and Organizational Behavior & Human Decision Processes. Paul serves as an associate editor of Group and Organization Management. Niki A. den Nieuwenboer is Associate Professor of Organizational Behavior and Business Ethics at the University of Kansas School of Business, Lawrence, KS, USA. Her research focuses on (un)ethical behaviour in the workplace, ethics and compliance management, and neurodiversity at work. She has published scholarly articles in top management journals and is currently serving as Associate Editor for Business Ethics Quarterly. Marc Orlitzky is Research Fellow at the University of Warsaw, Poland. His research interests focus on integrity/business ethics, evolutionary theory, corporate performance, psychometric meta-analysis, and organisational behaviour and human resources management. His award-winning research has appeared in such journals as Organization Studies, Organizational Research Methods, Personnel Psychology, Business Ethics Quarterly, Journal of Business Ethics, Academy of Management Perspectives, AMLE, Business & Society, International Journal of Human Resource Management, Long Range Planning, and Research Policy, among many others. Abidoun Owoloja began his career as a banker with Zenith Bank Nigeria, where he worked for more than a decade. He holds an undergraduate degree in Microbiology as well as two Master’s degrees, one in Environmental Quality Management and the other in Agri-food Technology, the latter at the University of Lincoln, UK. Lynn Sharp Paine is Baker Foundation Professor and John G. McLean Professor, Emerita, at Harvard Business School, Boston, MA, USA, where she co-founded the required MBA course Leadership and Corporate Accountability. She has written widely on leadership and corporate governance, with a focus on combining high ethical standards and outstanding financial results. Her most recent book is Capitalism at Risk: How Business Can Lead. She has served

Contributors  xv on numerous boards and advisory panels, including The Conference Board’s Blue Ribbon Commission on Public Trust and Private Enterprise. Nicola M. Pless is Chaired Professor of Management at the University of South Australia, Adelaide, Australia and former Vice President Leadership Development. She served at the World Bank, as Honorary Jef-Van-Gerwen Chair (University of Antwerp, Belgium), and on the faculties of ESADE, INSEAD, and the University of St Gallen, Switzerland. She is the recipient of several research and teaching awards (including the Aspen Institute’s Faculty Pioneer Award). Her research has appeared in leading academic journals (e.g., Human Resource Management, Journal of Business Ethics, Journal of Management Studies) and has been featured in the media (e.g., BBC, Business Week, Fortune). Tracy H. Porter is Associate Professor of Management at Cleveland State University, OH, USA. Within this role she teaches a variety of healthcare management courses. Her research currently focuses on the healthcare management field and specifically the influence of leadership and individual differences on the context. Her research has been presented at a variety of international conferences and published in top-tier journals such as Health Care Management Review, Medical Care Research & Review, and Journal of Vocational Behavior. Jacob Dahl Rendtorff is Professor of Philosophy of Management and Ethics at Roskilde University, Denmark. His research has a broad perspective on philosophy of management, business ethics, sustainability, corporate social responsibility, bioethics and biolaw, human rights, political theory, and philosophy of law. His recent book is Philosophy of Management and Sustainability: Rethinking Business Ethics and Corporate Social Responsibility in Sustainable Development. Benjamin van Rooij is Professor of Law and Society at the Faculty of Law, the University of Amsterdam, the Netherlands. He directs the Center for Law and Behavior, also at the University of Amsterdam. He is also a Global Professor of Law at the University of California, Irvine, CA, USA. He studies and teaches on the interaction between law and behaviour. His current research focuses on individual differences in compliance, toxic corporate culture, and assumptions about behavioural change. Maximilian J. L. Schormair is Assistant Professor in Business Ethics at Trinity Business School, Trinity College Dublin, Ireland. He received his PhD in the field of business ethics from the University of Hamburg, Germany. His research interests focus on multistakeholder governance, stakeholder engagement, political corporate social responsibility, deliberative democracy, business and human rights, and corporate sustainability. His research has been published in journals such as Business Ethics Quarterly, Business & Society, and Journal of Business Ethics. Mauricio C. Serafim is Full Professor in the Department of Public Administration and the Administration Graduate Program at the State University of Santa Catarina, Florianópolis, Brazil. He leads the research group AdmEthics – Ethics, Virtues and Moral Dilemmas in Administration. His academic experience covers the areas of administration and organisational studies and his research interests include moral dilemmas and rationality in organisations; innovative practices of research, teaching and learning in ethics in administration; tech ethics; and interfaces between ethics and anthropological dimension in administration.

xvi  Research handbook on organisational integrity Geoffrey A. Silvera is Associate Professor in the Department of Health Services Administration at The University of Alabama at Birmingham, AL, USA. He also serves on the editorial board of Quality Management in Healthcare and as Associate Editor of the Patient Experience Journal. Primarily, his research centres on the influence of strategic management on patient experience, patient safety, health information technology, and diversity, equity, and inclusion. In addition to his scholarly contributions, he has aided organisations in the development, strategic initiation, and sustaining of inclusionary practices and has led professional workshops on these topics. Carsten Stark is Senior Professor for Organization Studies and International Management at Hof University, Germany, as well as Director of the Institute of Corruption Prevention. He earned his PhD at the University of Bamberg, Germany and previously worked as an assistant professor at the University of Siegen, Germany. Prior to this, he studied sociology, political science, and history at the universities of Marburg, Jena, and Düsseldorf, Germany, with major research interests in corruption, political sociology, and internet democracy. Annemiek Stoopendaal worked as Assistant Professor of Organizational Anthropology in Health Care at the Department of Health Policy and Management, Erasmus University Rotterdam, the Netherlands. Her research interests are in healthcare management and governance, with specific emphasis on the work and behaviour of healthcare managers, complex interventions, and the governance, regulation, and supervision of quality and safety in healthcare. She is interested in the boundaries and bindings between different levels in the organisation of healthcare. Samuel Tang is Lecturer in Business and Sustainable Development and Course Director of the Business and Sustainability MSc at University College London, UK. He is an Aspen UK Rising Leaders Fellow and Education Industry Network Ambassador. He works with small and medium-sized enterprises on their sustainability strategy and was a member of Business Green’s Net Zero Festival 2022 Advisory Board. His research on business responses to climate change, environmental regulation, and transparency in business sustainability has been published in leading geography and management journals. Nina Tobsch is PhD Researcher at the University of Amsterdam, the Netherlands where she studies the relationship between organisational culture and organisational crime, with a specific focus on departmental culture and police misconduct. Linda Klebe Treviño is Distinguished Professor of Organizational Behavior and Ethics in the Smeal College of Business at Pennsylvania State University, State College, PA, USA. She has published over ninety peer-reviewed articles and three books. She is an elected member of the Academy of Management Fellows. Ethisphere named her one of business ethics’ 100 most influential people in 2015. In 2018, her research was named among the most impactful because of its representation in management textbooks and it was ranked in the top 1 per cent by citations in Web of Science from 2006 to 2016. Wim Vandekerckhove is Professor of Business Ethics at EDHEC Business School, France. He holds a PhD from Ghent University, Belgium. Before joining EDHEC, he held a lecturer post at Ghent University and visiting scholarships at the University of Oslo (Norway), Griffith University (Australia), and the International Anti-Corruption Academy (Laxenburg, Austria), and was Professor of Business Ethics at the University of Greenwich (London, UK). Wim has

Contributors  xvii been Editor-in-Chief for Philosophy of Management and currently serves as Section Editor for the Journal of Business Ethics. Peter Verhezen has been Visiting Professor at the University of Antwerp, Belgium since 2013. Prior to this, he was Associate Professor at the University of Melbourne, Australia from 2007 until 2019 and Research Fellow at the Harvard Kennedy School, Cambridge, MA, USA from 2010 until 2012. He has published in the fields of global governance, boards, and business ethics. As partner of the Boardroom Partnership, he advises boards on risk, governance, and environmental, social, and governance investments. Ben Wempe is Emeritus Professor in the Business-Society Management department at Erasmus University Rotterdam, the Netherlands. He has taught on corporations and justice and the moral limits of markets. He has published in Organizational Studies, Business Ethics Quarterly, and the Journal of Business Ethics, among others. He is a regular attendee of international conferences such as The International Association for Business and Society (IABS) and The Society for Business Ethics. In 2007 he organised IABS’s annual conference in Florence. Johan Wempe is Emeritus Professor in Business Ethics at the School of Business and Economics, Vrije Universiteit Amsterdam, the Netherlands. His research interests include corporate integrity, sustainability, governance, artificial intelligence and ethics, and the circular economy. He has published articles in the Journal of Business Ethics, Business Ethics: A European Review, Journal of Corporate Citizenship, Journal of Cleaner Production, and Voluntary Sector Review. He is the author of the books The Balanced Company (2002) and Management en Moraal (1991). Johan was a partner at KPMG. He is the founder of CSR Netherlands. Duane Windsor is Lynette S. Autrey Professor of Management at Rice University’s Jesse H. Jones Graduate School of Business, Houston, TX, USA. His main research interests are corporate social responsibility, stakeholder theory, and environmental sustainability. He is interested in anti-corruption reform theory and practice. He has published in such journals as Business & Society, Business Ethics Quarterly, Journal of Business Ethics, Journal of Business Research, Journal of Management Studies, Philosophy of Management, and Public Administration Review.

1. Introduction to Research Handbook on Organisational Integrity Muel Kaptein

The answer to the question, “Why study organisational integrity?” could be short and sweet: “Organisational integrity is a rich concept”. To the logical follow-up question, “Why is organisational integrity a rich concept?”, the answer could be: “Organisational integrity is valuable, unique, versatile, and holistic”. Therefore, these are four reasons why organisational integrity is a rich concept. The concept of organisational integrity is a rich one primarily because organisational integrity itself is valuable. Organisational integrity is precious, admired, important, and even necessary and essential (Erhard, Jensen, & Zaffron, 2018; Koehn, 2005). Without integrity, there is no society, and without organisational integrity, no organisations. Therefore, the study of organisational integrity is valuable and relevant because this contributes to the science and practice of integrity of organisations and thus of society. The concept of organisational integrity is a rich one because organisational integrity is unique. It is unique not because it is scarce in practice, at least we hope it is not, but because organisational integrity is about the singularity, individuality, originality, authenticity, purity, and genuineness of organisations (Dunn, 2009). Integrity is what makes organisations unique. Therefore, it is quite unique and fascinating to study organisational integrity precisely because the integrity of organisations is unique. The concept of organisational integrity is a rich one because organisational integrity is versatile. Organisational integrity has many definitions, interpretations, forms, layers, and dimensions, and it contains many perspectives and ideas (Audi & Murphy, 2006). Organisational integrity is therefore a multifaceted and inexhaustible subject to study because it can be explored in many ways and constantly leads to new insights. Finally, organisational integrity is a rich concept because organisational integrity is holistic. Through organisational integrity’s versatility, integrity offers coherence in the sense that integrity is about consistency, connection, unity, and wholeness (Dunn, 2009). Organisational integrity is a holistic concept because it is about the interconnection and interdependency of the parts of organisational integrity. Organisational integrity is therefore so holistic, comprehensive, and challenging to study because all these interconnections and interdependencies are interrelated and complex. These four reasons for the richness of the concept of organisational integrity are also the four qualities of the design of this Research Handbook on organisational integrity. If the above four reasons are important qualities of organisational integrity, then obviously these four reasons are also desirable qualities of a book on organisational integrity. A good, rich book on organisational integrity should therefore also be valuable, unique, versatile, and holistic. Thus, these four design qualities have been used as guiding principles in compiling this handbook. These four qualities (alternatively, values or virtues) may also be employed by the reader as assessment criteria for this book. 1

2  Research handbook on organisational integrity The four design qualities for the book are discussed below in the following order: its value, uniqueness, versatility, and finally its holistic character. This introductory chapter concludes with two other qualities of organisational integrity, namely humility and gratefulness.

VALUE OF THIS BOOK Just as organisational integrity is a valuable concept, so this book hopes to be valuable too. This book aims to be of value by providing readers with tools for doing their own research on organisational integrity. It is about how organisational integrity can be defined, operationalised, and organised, its importance and impact, and the perspectives and theories in studying it. This book describes the research done in the field of organisational integrity and some of the desirable new research directions. That this book is a handbook does not mean that readers will be tutored in doing their own research. The book is not an instruction manual, though it does aim to be handy by providing an overview of important insights into the subject of organisational integrity. The book also aims to be valuable by inspiring readers to conduct research on organisational integrity. The richness of this concept as shown in the book will hopefully not only be recognised and acknowledged by readers but also inspire them: that because organisational integrity is such a rich concept, and quite valuable, unique, multifaceted, and holistic to examine, readers would then be encouraged to start their own research on it. The book is successful if it manages to do this, thus further unlocking the richness of the concept itself. Now is the right time to bring forth this Research Handbook. The concept of organisational integrity has been around for about four decades. The fields of business and public administration ethics emerged at the end of the last century, and this was exemplified by the launch of journals such as Journal of Business Ethics in 1982, Business Ethics Quarterly in 1991, Business Ethics: A European Review in 1992, and Public Integrity in 1999. Since then, much has been published on organisational integrity. Lynn Sharp Paine’s 1994 Harvard Business Review article, “Managing for organisational integrity,” which has since been cited more than 2,000 times, has been a catalyst for research on organisational integrity. Now that research on this subject has been around for some time, the questions arise as to what this has all brought about and delivered, where we are now, and what the future could and should look like vis-à-vis this research area. It is with this in mind that the chapters in this book contain critical and engaging reviews of the relevant literature with the aim of providing impetus for research in organisational integrity in the coming decades.

UNIQUENESS OF THIS BOOK The richness of this book also lies in the fact that it is special. The book is unique or special in at least three ways. The book is unique because it consists completely of original chapters. All 37 chapters are unique: they are original contributions that have not yet been published elsewhere. Thus, this handbook does not contain any reprints. Incidentally, this does not mean that the authors have not drawn on their previous publications; if they did, this has been kept to a minimum.

Introduction  3 This book is particularly unique because it is the first research book to deal with organisational integrity in a general sense. The books that have appeared on this topic are either about the integrity of private organisations (e.g., Integrity in Business and Management, edited by Orlitzky and Monga, 2018) or the integrity of public organisations (e.g., Handbook on Corruption, Ethics and Integrity in Public Administration, edited by Graycar, 2020). The present Research Handbook deals with both types of organisations, i.e., businesses and governmental organisations. This provides an opportunity to bring the disciplines of business ethics and public administration ethics closer together because of the many similarities between the integrity of private and public organisations. While this handbook contains chapters that deal primarily with organisations in either one of these two sectors, in most cases the value to the other sector is also discussed. This book is likewise unique because it contains many original, in the sense of new, insights. It not only provides an overview and review of existing research but also aims to provide new insights that will trigger new research. The limited scope of this introductory chapter does not allow the enumeration of all these new insights. In any case, as a reader, it will be enriching to discover for yourself the new insights in this book. But to give a sneak peek and whet the reader’s curiosity, I would like to mention three new insights. A relatively new insight is the term “integritism”, which refers to the abuse of integrity that Leo Huberts warns against in his chapter. Also new is the plea, argued by Linda Klebe Treviño, Niki A. den Nieuwenboer, and Jennifer Kish-Gephart, for research to focus more on ethical behaviour rather than on unethical behaviour as current research tends to do. Also novel are the four desirable characteristics of integrity management models developed by Jeroen Maesschalck, Alain Hoekstra, and André van Montfort in their chapter. As mentioned above, these are but three of the many new insights this book contains. The book’s uniqueness also consists in its versatility. As far as we know, there is no other book on organisational integrity that features quite as many different authors. This brings us to the third design quality used for this book, namely its versatility.

VERSATILITY OF THIS BOOK This book seeks to unlock the richness of integrity by putting together a versatile book. This versatility consists of a rich diversity of authors, topics, and styles of chapters. A rich diversity of authors, 62 in total, contributed to this book. Almost half of the chapters are single authored. The authors represent various scientific positions (from PhD student to Emeritus), nationalities (more than 13 countries), academic affiliations (from more than 45 universities), and gender (30 per cent of the authors are female). The authors come from a variety of disciplines such as philosophy, political science, economics, ethics, psychology, sociology, criminology, engineering, public administration, and business administration. This book also has a rich diversity of topics that range from the definitions and forms of integrity and organisational integrity to the elements of and methods for managing organisational integrity. For example, there are chapters on the hypocrisy of organisations, on an evolutionary perspective on organisational integrity, and on the integrity in the supply chain. This diversity of topics and approaches means that there is no definition of organisational integrity given in this introductory chapter. Even if such a universally valid definition were to (ever) exist, it would not do justice to the very diversity proposed by and presented in this book’s

4  Research handbook on organisational integrity chapters. The lack of such a definition may perhaps be frustrating for the reader but hopefully it is a sign of the richness of integrity. The book is also characterised by a rich diversity of styles. The authors were not asked to contribute to a strictly defined template; each chapter reflects its author’s own approach, structure, and writing style. As a result, a diversity of styles has emerged, within certain margins, from personal to objective, from positive to critical, and from descriptive and evaluative to argumentative, creative, and innovative. Partly as a result of this, the sizes of the chapters range from 6,000 to 17,000 words. This does not mean that this book is a random collection of chapters. Rather, the diversity is held together precisely by the structure provided between the chapters. This brings us to the fourth design quality of this book, namely holism.

HOLISTIC CHARACTER OF THIS BOOK The richness of organisational integrity is its being holistic. For this research book, holistic means there is coherence between the various chapters. All authors have been selected for their proven scientific qualities, such as their scientific publications, and they have all received instructions on the purpose and format of the handbook. Apart from these, unity in the diversity of the chapters is achieved through a careful selection of the topics (to avoid, among other things, too much overlap between the chapters) and providing structure. This handbook consists of five parts that aim to complement each other, although there is some overlap, fortunately. The first part is about the positions of organisational integrity. This comprises four chapters that address the current state of research on organisational integrity and clarify its scope and boundaries. The chapters deal with where the research on organisational integrity stands and what organisational integrity is and is not. Lynn Sharp Paine describes what has remained unchanged and what has been learned in the past 30 years since her 1994 article in the Harvard Business Review. Carole L. Jurkiewicz presents a critical reflection on contemporary research on organisational integrity and many questions for follow-up research, some of which, incidentally, are picked up in the rest of the book. Duane Windsor’s chapter is on integrity in relation to other concepts and terms. A positioning is especially important today because of the complex challenges organisations face. As Windsor writes, “Defining organisational integrity and closely related concepts in this set of circumstances has acquired dramatically increased importance”. Leo Huberts’ chapter deals with eight different views on integrity and 10 types of integrity violations tailored to politics and government. The second part is about perspectives on organisational integrity. This part contains chapters that deal with a variety of different theoretical perspectives for studying organisational integrity. Each perspective emphasises different elements of organisational integrity and involves different research. The following are the perspectives covered sequentially: ● ● ● ●

nature perspective by Craig Dunn; evolutionary perspective by Marc Orlitzky; spiritual perspective by Tracy H. Porter, Kelly Gillerlain, and Nicholas Messina; criminological perspective by Nina Tobsch, Benjamin van Rooij, and Marieke Kluin;

Introduction  5 ● positive behavioural ethics perspective by Linda Klebe Treviño, Niki A. den Nieuwenboer, and Jennifer Kish-Gephart; ● intersubjective perspective by Wim Vandekerckhove; ● practical reasoning perspective by Thomas Donaldson; ● discursive justification perspective by Dirk Ulrich Gilbert, Michael Behnam, and Maximilian J. L. Schormair; ● virtue ethics perspective by Ignacio Ferrero, Maria Clara Ames, and Mauricio C. Serafim; ● contractual perspective by the brothers Ben Wempe and Johan Wempe; ● regulatory perspective by Martin de Bree and Annemiek Stoopendaal; ● institutional perspective by Timo Fiorito and Michel Ehrenhard; ● corporate governance perspective by Peter Verhezen; and ● critical perspective by Marcel Becker and Edgar Karssing. The third part focuses on the dimensions of organisational integrity and contains different aspects of the term organisational integrity: Marvin T. Brown’s organisational integrity as social coherence, Anthony D. Molina’s organisational integrity as congruence, and organisational integrity as wholeness by Thomas Maak and Nicola M. Pless. The part concludes with a chapter by Miguel Alzola on organisational integrity as a virtue and a chapter by Marco Meyer on organisational integrity as an epistemic virtue. The fourth part of this Research Handbook is on the various characteristics of organisational integrity. This part deals with important virtues of organisational integrity. The characteristics of organisational integrity discussed are, consecutively: responsibility by Mihaela Constantinescu, accountability by Natasha V. Christie, voice by Brett Beasley and Mary Gentile, inclusion by Geoffrey A. Silvera, Jonathan M. Fisk, and Courtney N. Haun, transparency by Colin Higgins and Samuel Tang, anti-hypocrisy by Gökhan Kılıçoğlu and Derya Kılıçoğlu, citizenship and legitimacy by Jacob Dahl Rendtorff, trust by Roger C. Mayer and Paul W. Mulvey, and success by Madeleine J. Fuerst and Christoph Luetge. The subject of the fifth and final part is management of organisational integrity: how the integrity of organisations can be organised. Jeroen Maesschalck, Alain Hoekstra, and André van Montfort formulate criteria for integrity management models and review five such existing models. Carsten Stark and Yannik Morbach describe an original method for measuring organisational integrity, namely the weak point analysis. Abidoun Owoloja and Louise Manning write about embedding organisational integrity in the culture and performance of the organisation. Finally, Louise Manning discusses operationalising integrity within supply chains.

TWO OTHER QUALITIES I hope that the operationalisation of the above four design qualities has resulted in a rich research book, one that is valuable, unique, versatile, and holistic, and shows the richness of organisational integrity. The study of organisational integrity is valuable, unique, versatile, and holistic, so hopefully this book provides many impulses for much new research on organisational integrity. This introductory chapter concludes with two other qualities or virtues of integrity. These are the two virtues mentioned by Treviño, den Nieuwenboer, and Kish-Gephart in their chapter.

6  Research handbook on organisational integrity The first quality is humility. Humility means that, despite the above “selling points” for the book, I do not claim this book to be perfect. For any imperfections, for instance too much overlap or too much diversity between chapters, the editor is ultimately responsible. In such cases: mea culpa. The editor is also ultimately responsible for chapters of insufficient quality. However, the hope at least is that such inferiority inspires the reader to do the same research better. All this incompleteness is inherent in integrity because organisational integrity could never be described exhaustively. At the same time, I did my best, but without much success, to make this book diverse by trying to include more authors from Asia or Africa, more female authors, and to include other types of organisations, such as non-governmental organisations. Similarly, many topics are missing from this book, but fortunately this is inherent to a rich concept like organisational integrity. The second quality is gratitude. A warm thank you to all the authors for the rich quality of their contributions to this handbook, and for their dedication and integrity. The fact that the authors voluntarily devoted a substantial part of their time to writing and submitting their chapters on time, even in the absence of any financial rewards or any form of contract, says a lot about their commitment to integrity. Special thanks to the authors whose submitted contributions were not included in this book. Hopefully, their writings will eventually find a place elsewhere. Thanks also to all those who agreed to contribute but were unable to due to circumstances beyond their control. I hope your work too will eventually come to fruition. Many thanks as well to the reviewers, who voluntarily and anonymously read draft chapters. Of course, thanks also to the publisher, who saw from the beginning the value of a handbook on organisational integrity and managed to shape all the authors’ loose files into one book. The quality and commitment of the publisher in the creation of this handbook is hopefully indicative of its efforts in promoting and making it accessible to many. I close this chapter in the same way I often close lectures, speeches, and meetings. From the richness of organisational integrity and the importance of nurturing and unlocking it together in scholarship and practice, the wish: “Long live integrity!”

REFERENCES Audi, R., & Murphy, P. E. (2006). The many faces of integrity. Business Ethics Quarterly, 16(1), 3–21. Dunn, C. P. (2009). Integrity matters. International Journal of Leadership Studies, 5(2), 102–125. Erhard, W. H., Jensen, M. C., & Zaffron, S. (2018). Integrity: A positive model that incorporates the normative phenomena of morality, ethics, and legality (abbreviated version). In M. Orlitzky, & M. Monga (Eds.). Integrity in Business and Management. New York: Routledge, pp. 11–39. Graycar, A. (2020). Handbook on Corruption, Ethics and Integrity in Public Administration. Cheltenham: Edward Elgar Publishing. Koehn, D. (2005). Integrity as a business asset. Journal of Business Ethics, 58, 125–136. Orlitzky, M., & Monga, M. (Eds.). (2018). Integrity in Business and Management. New York: Routledge. Paine, L. S. (1994). Managing for organizational integrity. Harvard Business Review, 72(2), 106–117.

PART I POSITIONS OF ORGANISATIONAL INTEGRITY

2. Managing for organisational integrity My take after three decades Lynn Sharp Paine

When I wrote “Managing for Organizational Integrity” in 1994, I hoped that it would help companies act more responsibly – that is to say, more in line with accepted ethical standards and their own espoused values and commitments (Paine, 1994). At the time, many business leaders were just waking up to the damaging effects of corporate misconduct not only for the companies involved but also for trust in business more generally. As a result, they were starting to develop ethics and compliance programmes to help reduce the incidence of such episodes. But many of these programmes were based on flawed assumptions about the drivers of misconduct and therefore seemed unlikely to have their intended effect. A large proportion of the breakdowns in corporate responsibility I had studied could not be attributed to rogue actors or “bad apples”, as was typically assumed at the time. Instead, many involved ordinarily decent people either not recognising the ethical aspects of issues they were dealing with or simply acting in response to organisational pressures and directives. For companies to act more responsibly, managers needed to see ethics as an organisational issue and not just a personal issue, and they needed to design and lead their organisations accordingly – or so it seemed to me. As I reread the article today, its core ideas strike me as sound and no less relevant than they were 30 years ago, notwithstanding the proliferation of ethics and compliance programmes in companies around the world since then. I am thinking, in particular, of the ideas about the origins of corporate misconduct, different ethics strategies, and the role of management in ensuring organisational integrity. At the same time, the article is clearly dated in some respects. I smiled when reading that the Sears Auto Centers debacle that came to light in 1992 cost the company some $60 million in total. For comparison, shareholders suing Wells Fargo in 2020 over its fake accounts scandal have alleged that it destroyed more than $54 billion in shareholder value.1 Fines alone have been put at $4.5 billion (Flitter, 2022; Stempel, 2021). Clearly, the stakes for companies are much higher today. Perhaps more important from a practitioner point of view, the article does not address the role of corporate boards. In fact, the term “board of directors” is mentioned only once in passing, and the term “corporate governance” does not appear at all. Yet, it is clear today that organisational ethics is as much a governance issue as it is a management issue. In the reflections that follow, I begin by reviewing core insights from the 1994 article that seem worth reiterating. In the first section, I share some personal experiences and discuss the organisational origins of corporate misconduct using examples drawn from the decades since the article was written. I then turn to the differences between compliance-orientated and integrity-orientated ethics strategies and review how compliance programmes have changed in the last 30 years. I argue that despite these changes, an integrity-orientated approach is still preferable for companies that are serious about earning and keeping the trust of their core stakeholders and society at large. The final section discusses corporate boards and how their 8

Managing for organisational integrity  9 role with regard to ethics has evolved in recent decades. I conclude with some thoughts about the board’s role in fostering organisational integrity. I continue to hope that these ideas will help companies act more responsibly and urge corporate leaders to take them to heart.

REVISITING THE CORE IDEAS: THE ORIGINS OF CORPORATE MISCONDUCT When I wrote “Managing for Organizational Integrity”, I was drawing on a decade of research and personal experience that had convinced me that a new approach to corporate ethics was needed. In a brief stint as a lawyer after graduate school and law school, for example, I had been asked to research insurance coverage for a raft of lawsuits being brought against Johns-Manville Corporation for injuries and deaths from exposure to asbestos. At the time, Johns-Manville was the leading manufacturer of asbestos products and supplier of raw asbestos in the United States. In that work, I learned that company management had known about the dangers of asbestos since the 1930s but had actively suppressed information linking it to cancer to protect the business. I became deeply curious about how respected executives could have made a series of decisions that were so clearly disastrous not only for workers and others exposed to asbestos but for the company itself. Shortly thereafter, in 1982, with its asbestos-related liabilities projected to exceed its assets, Johns-Manville shocked the business world by becoming the largest U.S. industrial corporation ever to declare bankruptcy. Then, a couple of years later, I was asked to advise on a new Defense Industry Initiative on Business Ethics and Conduct being organised by a consortium of U.S. defence contractors in response to recommendations put forth by the Packard Commission. President Ronald Reagan had appointed the commission to study defence procurement following a series of scandals involving fraud, waste, and abuse in the industry. Chaired by Hewlett-Packard co-founder David Packard, the commission had recommended, among other things, that defence contractors promulgate and enforce codes of ethics that addressed the unique problems of defence procurement.2 In my work for the initiative, I learned about the origins of these problems and saw that, contrary to public belief, they could not be chalked up simply to unethical individuals – they were systemic and had their roots in management and organisational practices. By this time, social science research had already shown that people’s behaviour is shaped as much by situational and contextual factors as by individual character. The 1963 Milgram experiments by Yale Professor Stanley Milgram had shown people’s willingness to set aside their ethical qualms in deference to perceived authority figures (Milgram, 1963). Similarly, the 1971 “prison” experiments by Stanford Professor Philip Zimbardo had demonstrated the power of context to alter people’s ethical orientation; after only a few days in a simulated prison context, the individuals assigned to be “guards” became abusive towards the “prisoners”, causing the “prisoners” to experience acute stress and anxiety (Haney, Banks, & Zimbardo, 1973). Role-play research by Professor Scott Armstrong of the Wharton School had shown that mock boards of directors were willing to approve continued sales of a drug known to be lethal to some customers in fulfilment of their assigned role to maximise value for shareholders (Armstrong, 1977, p. 204). And so on. Yet, the insights from this research and their implications for management and business ethics had not made their way into business school classrooms or the ranks of professional management.3 Most people I spoke with back then thought that ethics was a matter of individual character; that character was fixed

10  Research handbook on organisational integrity and unchanging over time; and that corporate misconduct was the work of bad actors, having nothing to do with management.4 In the article, I used the case examples of Sears Auto Centers and Beech-Nut Nutrition Corporation to challenge the view that individual character is fixed and unchanging, and to show how organisational factors – such as the culture, structure, systems, practices, and processes put in place by management – can corrupt the behaviour of both individuals and the organisation as a whole. At Sears, for example, management implemented a new goal-setting and compensation system to spur sales at the company’s auto repair centres across the United States. Minimum work quotas were introduced, and the hourly wage system was replaced by a system of base pay with productivity incentives for meeting targets. Service advisers were given product-specific sales quotas – sell so many brake jobs, shock absorbers, alignments, and so on per shift – and paid a commission on sales. Those who failed to meet the quotas could be transferred or have their work hours reduced. The unsurprising result is that when employees found themselves unable to meet the quotas, a significant number of them resorted to exaggeration and lying – telling customers their cars’ brakes were worn out and dangerous when they were not, for example. In the end, Sears faced charges of fraud filed by the state attorney general in each of more than 40 states. The new quota and compensation system apparently did not help Sears’ financial performance. In 1992, the year the scandal came to light, Sears had a $3.9 billion loss, the largest in its then-106-year history (Brooks, 1993). As this example illustrates, how a company is managed and led can make it harder – or easier – for individual employees to act ethically and for the organisation as a whole to meet its responsibilities to its stakeholders and the public at large. Thirty years on, this seems like an obvious point, but it perhaps bears repeating, as corporate misconduct does not appear to have abated over this period. If anything, its scope, scale, and impact have all increased as companies have gotten larger, more complex, and more far-flung, and the pressures to deliver ever greater returns have intensified. Consider some of the high-profile cases that have made the headlines over the years since the article was published: healthcare fraud at Columbia/HCA (1997), labour abuses in the supply chain at Nike (1998), unsafe tires at Bridgestone/Firestone (2000), related party transactions and accounting fraud at Enron (2001), accounting fraud at WorldCom (2002), corrupt payments at Siemens (2007), mortgage lending abuses at Countrywide Financial (2006) and Wall Street banks (2008), diesel emissions cheating at Volkswagen (2015), fake accounts at Wells Fargo (2016), bribery at Odebrecht (2016), sexual harassment at Uber (2017), misuse of personal data at Facebook (2018), airliner safety at Boeing (2019), fraudulent financial reporting at Wirecard (2020), opioid marketing at AmerisourceBergen, Cardinal Health, McKesson, and other drug distributors and makers (2022) – to name a few.5 Keep in mind that most cases of corporate malfeasance do not make the headlines. The particulars of these cases are quite varied and well worth studying in their own right. Each involves a unique mix of individual, organisational, and external circumstances, and its own set of ethical issues. But they all reinforce the first general point I was trying to make in my 1994 article – that corporate misconduct and irresponsibility are often rooted in organisational and management choices rather than in premeditated wrongdoing by malicious individuals (although, to be sure, that exists as well). If you dig into these cases, you will find organisational features and management behaviours similar to those discussed in the article, such as managers flying ethically blind and making decisions without any thought for the ethical issues involved. We don’t know precisely what

Managing for organisational integrity  11 factors went into the decisions made by managers in most of these companies, but for a few the public record provides a glimpse. For instance, a Siemens manager involved in arranging illicit payments for contracts before the scandal broke in 2007 described his role: “I was not the [one] responsible for bribery. I organized the cash” (Schubert & Miller, 2008). “I didn’t really look at it from an ethical standpoint”, he also noted (PBS Frontline, 2008). Similarly, when a top executive of Bridgestone/Firestone was asked by a member of the U.S. Congress about the company’s failure to act more quickly on discovering problems with the safety of its tires, he replied: “I am sorry to say that I believe [we looked at it from a financial point of view but not a consumer safety point of view]”.6 In the same vein, lawyers for Enron reportedly reassured executives about certain accounting practices, noting that “no one has reason to believe that it is inappropriate from a technical standpoint” (quoted in Cummings, Hamburger, & Kranhold, 2002). Judging from the overall behaviour of other companies in the ad hoc list above, it seems doubtful that decision makers in any of them put much weight on ethical considerations – if they thought about them at all. Compensation systems that seem to invite, if not encourage, unethical behaviour also show up again and again. The quota and incentive system put in place by managers of Wells Fargo’s community banking division in 2011 is an example. Interestingly, it was quite similar to the quota and incentive system that got Sears into trouble in 1992.7 Under the community banking division’s “Great 8” programme, employees were expected to sell an average of eight financial products to each of the bank’s customers and, on that basis, were assigned daily sales quotas. For hitting their targets, employees could earn bonuses of up to $2,000 per quarter on top of their quarterly base salary of $7,500. Daily scorecards ranked individual employees against sales goals, and daily conference calls reviewed branch managers’ performance against quotas set by their regional managers. Managers falling short were reportedly criticised and embarrassed in front of their colleagues. Between 2011 and 2016, this system seemed to be helping Wells Fargo grow its revenues.8 In 2016, however, the truth behind the figures came to light. It turns out that employees unable to meet their targets had resorted to opening unauthorised accounts in customers’ names and charging them for unwanted and unneeded products without their knowledge and consent. From 2011 to 2016, employees of the division opened more than 3.5 million fake accounts – notwithstanding the company’s various compliance programmes, ethical business practices initiative, and espoused long-term customer focus.9 During this period, the bank had a total shareholder return of more than 100 per cent,10 and the CEO’s compensation averaged over $20 million per year.11 Weak controls and ethically lax cultures are another feature of the more recent cases as well as the earlier ones. Perhaps the most striking recent example is Odebrecht, the Brazilian conglomerate caught up in Operation Car Wash (Lava Jato in Portuguese), the investigation of corrupt payments in Brazil’s construction industry launched in 2014. Following its admission of guilt for paying bribes and as part of its settlement with Brazilian, U.S., and Swiss authorities, Odebrecht implemented state-of-the-art audit, internal control, and compliance functions. Prior to the scandal, however, the holding company and some other parts of the Group had not had an internal audit or compliance function at all.12 By comparison, at Enron or Siemens, for example, compliance and control functions existed while the wrongdoing was ongoing, but these functions were underfunded or understaffed or simply disregarded. Similarly, AmerisourceBergen had a system for reporting suspicious opioid orders, but that system was thinly resourced, and the company’s sales personnel reportedly found ways to circumvent it.13

12  Research handbook on organisational integrity I could go on with other examples, but my intent here is not to catalogue all of the organisational and management factors that can lead to corporate misconduct and irresponsibility. My purpose is to show the continuing importance of understanding that corporate malfeasance cannot be written off to rogue actors or bad people. It is an organisational phenomenon whose roots lie in the decisions that managers make in the ordinary course of managing. How managers make decisions and what they decide – what opportunities to pursue, what goals to set, how to measure performance, how to pay people, how much to invest in risk management, technology, training and so on – together have a profound influence on how individuals do their jobs and whether the company as a whole acts responsibly. While I believe this connection is more widely understood today than it was in 1994, the steady stream of cases involving large-scale corporate malfeasance over the last three decades suggests that it is worth repeating.

REVISITING THE CORE IDEAS: DIFFERENT ETHICS STRATEGIES As noted earlier, the late 1980s and early 1990s was a period in which companies were just starting to pay attention to ethics and values, and to create ethics, values, compliance, and corporate conduct programmes. To some extent this development was spurred by stepped-up law enforcement and the adoption, in 1991, of the U.S. Federal Sentencing Guidelines for Organizations, which provided that companies convicted of a crime would pay a lower fine if they could show that they had an effective compliance programme.14 But it was also driven by business leaders’ own growing awareness of the damaging effects of misconduct as well as by several popular management books on the importance of culture and values for a company’s longevity and financial performance.15 Ongoing media attention to corporate malfeasance also played a critical role. I remember one manager’s succinct reply when I asked why his company was developing an ethics programme. His answer: “60 Minutes” (the popular television news show known for hard-hitting stories on corporate wrongdoing).16 I followed these developments closely and decided to do field research on the new programmes companies were adopting. This research revealed that these programmes could be grouped into two broad categories. One, which I called compliance-orientated, focused mostly on compliance with law and was geared to preventing individual misconduct. It involved educating employees about the standards they were expected to follow, establishing controls to ensure that they did so, setting up whistle-blower “hotlines” to receive reports of suspected wrongdoing, investigating such reports and, in cases of substantiated wrongdoing, imposing discipline and taking corrective action. These programmes tended to be lawyer-driven and typically hewed closely to the template for compliance programmes laid out in the Federal Sentencing Guidelines to ensure that, should the company be convicted of wrongdoing, it would be eligible for a reduced fine. Today, we might call this a “defensive” approach to ethics. The approach was also akin to the first generation of quality programmes that focused on end-of-line inspection and monitoring of outputs rather than building quality into product design and production processes. The other approach, which I called integrity-based, focused on acting in accord with the organisation’s own espoused values and commitments and was geared to enabling responsible conduct. I described an integrity approach as “broader, deeper, and more demanding” than a legal compliance approach. Broader in the sense that it seeks to enable responsible conduct –

Managing for organisational integrity  13 not just to avoid wrongdoing. Deeper in that it concerns the guiding values and commitments of the organisation and the design of all its operating systems and processes – not just the legal standards it is required to follow and the design of its compliance programme. And more demanding in that it calls for an active effort to define the company’s values and commitments, and (I should have said) to align its activities and operations accordingly. Above all, I emphasised, an integrity strategy sees organisational ethics as the work of management – not as something that can be outsourced to the legal function or even to a separate ethics function. When I wrote the 1994 article, the term “organisational integrity” was not widely used. In fact, I had not seen it anywhere in the business ethics or management literatures. However, it struck me as capturing the essence of this second approach – in particular, its focus on the behaviour of the company as a whole and not just on the behaviour of individuals, its appeal to aspirational values and not just minimum standards, and its embrace of active self-governance and not just acquiescence to externally imposed requirements. The managers taking this approach were putting forth a positive vision of ethics as a source of organisational strength and not just a tax on the company’s operations – something that was decidedly rare at the time both in practice and in academia. In those years, the academic field of business ethics was almost exclusively concerned with corporate wrongdoing and misbehaviour. In assuming that companies can be responsible, law-abiding actors in society, these managers were also (whether they knew it or not) rejecting the view, popular among financial economists, that corporations cannot have responsibilities, let alone purposes, values, and aspirations, because they are “legal fictions” or “artificial persons”.17 At the end of the article I conjectured that an integrity-orientated approach might, paradoxically, be more effective at preventing misconduct than a compliance-orientated approach even though preventing misconduct is an explicit purpose of most compliance programmes. This conjecture was based in part on the inherent nature of compliance programmes. They are mostly about individual offenders and typically do not address root causes of misconduct which often lie, as discussed above, in organisational factors or management decisions. It was also clear to me from my professional experience as well as my research that taking the law as your standard of conduct is very risky. As I described in the article by way of example, executives at Salomon Brothers were not legally obligated to disclose the government trading desk improprieties they discovered in 1991, but their failure to do so led to a crisis of confidence and costly loss of trust in the firm and its leadership among all its stakeholders. I was also well aware that the law is a lagging indicator of society’s norms and expectations. A course of action that harms other people but that is not explicitly unlawful today can turn into a calamity for the company down the road when the law catches up. The case of Johns-Manville that I worked on as a young lawyer is a case in point. When the executives in charge decided to suppress information about the health effects of exposure to asbestos, they were not breaking any law. But that didn’t stop tens of thousands of plaintiffs from filing lawsuits decades later when their asbestos-related injuries manifested themselves. When juries heard that executives had actively suppressed information linking asbestos to cancer, they increasingly turned against the company and began to award plaintiffs ever greater punitive damages. As described above, mounting asbestos liabilities eventually led to the company’s bankruptcy.18 From where I sit today, it seems more urgent than ever for business leaders to understand the differences between these two strategies for embedding ethics and to appreciate the inherent limitations of a compliance strategy. To be sure, compliance programmes have gotten much

14  Research handbook on organisational integrity more sophisticated over the last three decades, and the criteria used by the U.S. Department of Justice for assessing them have gotten more demanding.19 Board-level oversight is now considered a basic component of an effective programme, and prosecutors today take into account such matters as whether compliance-related factors are included in the company’s management performance and incentive system.20 Among the factors a prosecutor might consider, for example, is whether the company gives promotions or rewards to managers or employees for improving the compliance programme or, conversely, withholds promotions or rewards because of compliance failures. Expectations for periodic analysis of compliance data and testing of internal controls related to compliance have also become more rigorous. Yet, for all the investment in compliance programmes in recent decades, it’s hard to see much improvement in corporate behaviour.21 Note that the majority of errant companies listed above actually had compliance and ethics programmes in place at the time they were engaged in misconduct. In its 2013 annual report, for example, Wells Fargo made numerous references to its compliance programmes and reported that 99.96 per cent of eligible team members had completed the Code of Ethics and Business Conduct annual training that year.22 Some compliance experts see the solution in better measurement of compliance programme effectiveness: whether the hotline works, whether the firm is responsive to allegations, what employees actually learn from compliance training.23 The case for better measurement certainly has merit – all too often hotlines don’t work, investigations take too long, and compliance training is mind-numbingly dull. Nonetheless, better measurement of compliance programmes seems unlikely to have much effect on the more fundamental drivers of corporate behaviour seen in the examples discussed above. Moreover, the law’s limits as a standard of conduct have not changed since I wrote the article. The law is still (and in a dynamic society always will be) a lagging indicator of norms and expectations. It is especially problematic as a guide to conduct for companies on the cutting edge of new technologies. There was no law against writing algorithms to maximise user engagement on social media when Instagram was being developed in 2009 – or even in 2019 when Facebook’s in-house research showed that spending time on Instagram was harming the mental health of teen girls.24 But the fact that Instagram’s algorithms are not unlawful doesn’t make them any less harmful. The stunning advances in technology and its applications over the last few decades have presented companies with many new ethical questions. For most of them, the law simply has no answer. And I have not even mentioned the conundrums that arise for companies doing business in multiple jurisdictions with different, and sometimes conflicting, laws and legal systems. By reviewing the limits of a compliance-based approach to ethics, I am not suggesting that companies don’t need an effective compliance programme. They emphatically do. In most industries, employees cannot be expected to be familiar with all the relevant laws and regulations. But compliance programmes can only do so much given their inherent nature and design. And it must be acknowledged that a compliance programme is just one of many factors that influence decision-making and behaviour. A company’s behaviour is also shaped by the qualities and capabilities of its leaders, the design of its incentive and reward systems, its structure and information flows, its decision-making processes, its members’ shared values and beliefs (including those about the company’s purpose and responsibilities), and the context in which it operates. It is the interaction among these and other factors that creates a company’s ethical climate and drives its ethical performance.

Managing for organisational integrity  15 Moreover, organisational integrity cannot be reduced to the individual integrity of the company’s members. That is, even if individuals are acting with integrity the company as a whole can have an integrity problem. For example, when the sales force and the delivery team work in silos under different incentive systems, it is all too common for the sales force to make promises the delivery team cannot fulfil, putting the company’s reputation for integrity and reliability at risk. Similarly, responsible managers can fail to see an emerging ethical problem for quite some time if relevant information remains dispersed and fragmented across the organisation’s different functions and divisions as it was at Bridgestone/Firestone in the run-up to the tire recall crisis of 2000.25 Corporate compliance officers are rarely, if ever, in a position to fix or even see such problems, given their focus on individual misdeeds. External context also matters. Capital markets pressures, competitive dynamics, macro-economic conditions, the legal and cultural environment – all affect how people and companies behave and the extent to which various ethical norms are observed.26 Ethical problems rooted in external factors are difficult, if not impossible, to address with standard compliance programme tools. Combatting bribery in an environment where corruption is widespread, for example, may require an investment in training to improve employees’ selling skills, or innovation to differentiate the company’s offerings, or redesign of the company’s go-to-market strategy. These activities all go well beyond the standard compliance and ethics programme tool kit.27 The many conversations I’ve had with managers over the past 30 years have convinced me that the distinction between compliance- and integrity-based approaches is not well understood. There seems to be a bias or natural inclination towards thinking of ethics in terms of compliance – particularly in the United States, and among managers with training in finance and law. That inclination may reflect those fields’ underlying assumption that human behaviour is driven mainly by carrots and sticks – material rewards and penalties – and the related tendencies to discount structural factors that limit or enable action and to minimise the motivational power of leadership, values, aspirations, and other influences. But it might also be related to the fact that when companies experience misconduct, they turn to lawyers for protection and advice – and for good reason, I might quickly add. But the influx of lawyers, auditors, and controllers – most of whom think in terms of rules, standards, and enforcement – usually means that the remediation effort is mostly about strengthening compliance and controls rather than strengthening the company’s capacity to operate with integrity. Yet that is what is needed for the company to repair its reputation, earn back trust, and achieve its full potential to create value for its stakeholders and society.

A MISSING PIECE: THE BOARD OF DIRECTORS In the 1994 article, I emphasised that “organizational integrity depends on the integration of the company’s values into its driving systems”. I highlighted five characteristics of companies that at the time appeared to have had some success at implementing an integrity-orientated approach to ethics: ● The company has a set of guiding values and commitments that make sense and are clearly communicated.

16  Research handbook on organisational integrity ● Company leaders are personally committed, credible, and willing to take action on the values they espouse. ● The espoused values are integrated into the normal channels of management decision-making and are reflected in the company’s critical activities. ● The company’s systems and structures support and reinforce the espoused values. ● Managers throughout the company have the decision-making skills, knowledge, and competencies needed to make ethically sound decisions on a day-to-day basis. Noticeably missing from this list, at least from my vantage point today, is any mention of the company’s board of directors. A fair question is why the role of the board is not discussed in the article since the board is, by law, a corporation’s governing body. If ethics is important for the company, then presumably it should be of concern to the board. Part of the reason the article is silent on boards is that, back then, the role of the board rarely came up in my field research on companies’ ethics programmes. The article’s discussion of the Martin Marietta ethics initiative notes in passing the role of the board’s audit and ethics committee in overseeing the management steering committee for the initiative. But the managers I spoke to in the course of doing this research typically said little, if anything, about their company’s board. In retrospect, their relative silence on this topic was indicative of the times. In the early 1990s, boards of directors were thought by many to be lackeys of management, rubber stamps with little real power to carry out their legally mandated governance role.28 At the time, the vast majority of large U.S. companies were led by a chief executive officer who was also chairman of the board, and directors were often members of this individual’s professional and social network if not friends or fellow CEOs. Even though most boards of major companies had nominating committees for selecting directors, the influence of the Chairman/ CEO was significant and often decisive. Many directors were beholden for their positions to the CEOs of the companies they served, and many boards functioned more as clubs than as governing bodies. This state of affairs was of particular concern to institutional investors, whose numbers and clout had increased throughout the 1980s. Seeing a link between weak boards and poor performance, these investors were just beginning to campaign for more effective boards and better corporate governance. California Public Employees’ Retirement System (CalPERS), then the world’s fourth largest pension fund, was a leader in this regard, using shareholder proposals at poorly performing companies as a tool to “goad the boards into doing their job”.29 For boards that had a defined role in ethics at that time, it was mainly a matter of helping formulate the company’s ethical standards or dealing with crises triggered by misconduct. A Conference Board study of 124 companies in 22 countries found that about 41 per cent of the studied companies’ boards participated in drafting the company’s ethical standards in 1991, compared to 21 per cent in 1987.30 Notably, the 1991 U.S. Federal Sentencing Guidelines for Organizations was silent on the role of boards in overseeing compliance and ethics programmes.31 When it came to ethics, values, compliance, or corporate responsibility, the board’s role was decidedly in the background – if it had one at all. That would soon change, however. In 1996, the Court of Chancery in Delaware, legal home to more than 60 per cent of the Fortune 500 and more than 50 per cent of all U.S. listed companies, issued a decision that for the first time ever ascribed to corporate directors a legal duty to oversee corporate compliance.32 In the Caremark decision, which was affirmed by the Delaware Supreme Court

Managing for organisational integrity  17 in 2006,33 the court said that a board’s failure to ensure that the company has a reasonable information and reporting system for monitoring compliance would be a breach of directors’ fiduciary duty of loyalty. Many boards took notice, even though the possibility of director liability for breach of the duty was quite remote, given that liability could be imposed only if directors knowingly and consciously failed to exercise their oversight responsibility. The board’s role in overseeing compliance and ethics was further elevated following the Enron, WorldCom, Tyco, and other accounting scandals of 2001–2002. The involvement of senior executives in these scandals suggested to many observers the need for both stronger boards and for board-level oversight of ethics. In 2002, The Conference Board’s Commission on Public Trust and Private Enterprise, a 12-member group convened by The Conference Board to examine the causes of the scandals and make recommendations for restoring confidence in American capital markets, put forth a set of recommendations on corporate governance that explicitly called for boards to oversee corporate ethics and to strengthen their stance on ethics.34 (Full disclosure: I served on the commission.) That same year, the U.S. Congress adopted the Sarbanes–Oxley Act, which established new requirements for board audit committees and mandated disclosure of whether companies had a code of ethics for their chief executive and top financial and accounting officers.35 Two years later, in 2004, the U.S. Sentencing Commission amended the Organizational Sentencing Guidelines to make the board’s role in overseeing compliance and ethics programmes more explicit and to provide guidance on what that role entails.36 Since the guidelines apply to many types of organisations, the guidance was necessarily quite general, but it made clear that board-level oversight is essential to an effective programme.37 Notably, the 2004 amendments to the guidelines also changed the terminology for company programmes to “compliance and ethics program[s]” (from “program[s] to prevent and detect violations of law”).38 Today, few would question the importance of the board for corporate ethics. It is now written into law and widely accepted.39 But what, precisely, does that role entail? My impression is that many corporate directors believe it is mostly about overseeing the compliance and ethics programme. That typically means reviewing and approving updates to the company’s code of conduct and periodically hearing from the company’s chief compliance and ethics officer about various compliance and ethics programme activities: employee training and communications efforts, the volume and types of alerts received through the hotline, investigations undertaken, allegations validated, disciplinary action taken, and so on. In most companies, responsibility for overseeing the compliance and ethics programme is assigned to a committee, often the audit committee, whose chair then reports on its review to the full board. The chief ethics and compliance officer may also report to the full board periodically. This approach to the board’s role is thus very much in line with what I have described as a compliance-orientated approach to ethics. As has become increasingly clear, however, a company’s ability to operate with integrity depends on the board taking a broader view of its role. That is in part because the company’s ability to operate with integrity presupposes a framework defining the company’s purpose, responsibilities, and values, and it is the board that validates this framework. Today, it is widely understood that the board sets a company’s strategic direction, establishes its ethical standards and values, and approves critical policies and commitments. In most companies, the CEO and top management team actually develop and propose the framework but it is ultimately the board, as the corporation’s governing body, that gives its approval. Unless the

18  Research handbook on organisational integrity board endorses an integrity-orientated framework, it will be very difficult for management to implement one. Moreover, many of the decisions that boards themselves make are far more consequential for the company’s ethics than the ethics programme per se. Consider the appointment (or removal) of a CEO, which is arguably a board’s most important function. As illustrated by a number of the cases discussed above, the qualities and capabilities of the CEO have a profound influence not only on how individuals in the company behave but also on whether the company as a whole behaves responsibly. This influence plays out through all aspects of the CEO role – as decision maker, strategist, role model, and architect of the company’s systems, structures, and processes. This is not just a matter of the “tone” set by the CEO, although that is important. Consider the effect of choosing a CEO who doesn’t understand that poorly designed incentives can drive misbehaviour (think of the CEO at Sears), who makes decisions without considering ethical issues that may be involved (think of the executive at Bridgestone/ Firestone), or who behaves in ways that are disrespectful of others (think of the founder and former CEO of Uber). Large-sample research is also beginning to show how the personal values of CEOs play out in the strategies they choose. Recent work has found, for instance, that materialistic CEOs, compared to those who are more frugal, tend to favour higher-risk strategies and be less sensitive to negative externalities imposed on third parties and the public (Bushman et al., 2018). Boards also exert a powerful influence on the company’s ethics through the executive compensation and incentive systems they adopt. The Sears and Wells Fargo examples discussed above illustrate the powerful effects of pay systems on the behaviour and ethics of frontline employees and mid-level managers. The effects are no less powerful and arguably more so for senior executives given the very large amounts that are often at stake. Flawed incentives, for instance, played a role in driving the fraudulent accounting practices that came to light at Enron, WorldCom, Tyco, and other companies in the early 2000s.40 They were also a critical factor in the excessive risk-taking that led to the financial crisis of 2008.41 A growing body of research is finding links between the design of executive pay and other behaviours with implications for corporate ethics – such as the likelihood of accounting fraud (Johnson et al., 2009), the management of positive corporate news (Edmans et al., 2018), or the propensity to invest in stakeholder relations (Flammer & Bansal, 2015). CEO appointments and executive compensation are just two examples (out of many) board decisions that have a critical influence on a company’s ethical climate and performance. But they are enough to show why directors would be mistaken to see their role in ethics solely in terms of overseeing the compliance and ethics programme. As these examples suggest, the decisions directors make in the ordinary course of carrying out their governance function are even more fundamental. A compliance and ethics programme cannot make up for a poor CEO or a flawed executive pay plan. If directors want the company to act as a responsible, law-abiding organisation whose actions match its espoused values and commitments, the board needs to govern with that objective in mind. Corporate integrity does not happen by accident. Nor can it be driven solely by a compliance and ethics programme. In 1994, I wrote that achieving and maintaining organisational integrity was “the work of management”. Today, it would be more accurate to say that while maintaining organisational integrity is the work of management, it is ultimately the role of the board to ensure that organisational integrity is a leading priority for the company and that the company’s governance processes and structures fully support it.

Managing for organisational integrity  19

CONCLUDING REFLECTIONS Much has changed in business and the world since I wrote the article. Companies have gotten larger and more complex, and their activities now span the globe. Digitalisation and advances in technology have enabled new business models and transformed the nature of work in many industries. The rise of institutional investors and activist hedge funds has intensified the pressure on companies to deliver ever-increasing financial returns,42 and the heightened expectations of all stakeholders have brought other new demands – for higher wages, flexible work, environmentally sustainable products. In the early 1990s, few companies saw climate change, racial injustice, or political dysfunction as part of their remit. Today, companies are expected to do their part to address these and a host of other societal problems.43 In 1994, trade barriers were falling and tensions among trading nations were easing. Today, global trade is slowing and the world is beset by geo-political tensions. And these are just a few changes of the last 30 years. What has not changed, however, is the need for corporate integrity. Not only is corporate integrity essential for each and every company to achieve its own potential to create value for its stakeholders and society, it is also the basis of a well-functioning economy and public trust in business. My hope is that the research gathered in this volume will contribute to advancing our understanding of this important topic.

NOTES 1.

2. 3. 4. 5. 6.

7. 8.

In re Wells Fargo & Co. Securities Litigation, Consolidated Amended Class Action Complaint for Violations of The Federal Securities Laws, No. 1:20-CV-04494 (GHW), (S.D.N.Y. Nov. 9, 2020), p. 7 (“All told, investors lost over $54 billion in market capitalization, including a drop in Wells Fargo’s share price of over 22.5% after the conclusion of the congressional hearings”). www​.cohenmilstein​.com/​sites/​default/​files/​Wells​%20Fargo​%20​-​%20Consolidated​%20Amended​ %20Complaint​%2011092020​.pdf. President’s Blue Ribbon Commission on Defense Management. (1986, June 30). A Quest for Excellence, Final Report to the President, at xxix. https://​dair​.nps​.edu/​bitstream/​123456789/​3705/​ 1/​SEC809​-RL​-86​-0106​.pdf. A few business school faculties were beginning to do research on these issues, however. See, for example, Treviño & Youngblood (1990). See also Gaertner (1991). Opponents of ethics education in business schools typically held this view as well. The dates shown are meant to indicate the rough time frame for when the misconduct was acknowledged or revealed to the public, or when related legal charges were filed or settled. In most cases, the underlying behaviour in question would have started many years before the date shown. The Recent Firestone Tire Recall Action, Focusing on The Action as it Pertains to Relevant Ford Vehicles: Hearings before the Subcommittee on Telecommunications, Trade, and Consumer Protection and The Subcommittee on Oversight and Investigations of The Committee on Commerce, 106th U.S. Congress. (2000). www​.govinfo​.gov/​content/​pkg/​CHRG​-106hhrg67111/​pdf/​CHRG​ -106hhrg67111​.pdf. The description of the quota and incentive system at Wells Fargo’s Community Banking Division is based on Glazer (2016); Reckard (2013); and Independent Directors of the Board of Wells Fargo & Company (2017). Between 2011 and 2016, revenues grew from $73.1 billion to $84.5 billion, the bank had a total shareholder return of more than 100 per cent, and the company’s market value grew by $111 billion. Wells Fargo & Company (NYSE:WFC) revenue 2011 to 2016, and market capitalisation and total shareholder return data January 3, 2011 to December 30, 2016, Capital IQ, Inc., a division of Standard & Poor’s, accessed June 2022.

20  Research handbook on organisational integrity 9. See, e.g., Wells Fargo & Company (2013), p. 9 (compliance programmes), p. 26 (ethical business practices), and p. 51 (long-term customer focus). 10. Wells Fargo & Company (NYSE:WFC) total shareholder return January 3, 2011 to December 30, 2016, Capital IQ, Inc., a division of Standard & Poor’s, accessed June 2022. 11. Wells Fargo & Company. (2014, March 18). Form DEF 14A. https://www.sec.gov/Archives/​ edgar/​data/​72971/​000119312514104276/​d663896ddef14a​.htm​#tx663896​_31 and Wells Fargo & Company. (2017, March 15). Form DEF 14A. SEC.gov, www​.sec​.gov/​Archives/​edgar/​data/​72971/​ 000119312517083591/​d305364ddef14a​.htm​#toc305364​_50. 12. For a description, see Srinivasan et al. (2021). 13. State of Tennessee, ex rel., Herbert H. Slatery III v. AmerisourceBergen Drug Corp. (2019, October 3). Circuit Court of Knox County, Tenn. Case No. 1-345-19. www​.tn​.gov/​content/​dam/​tn/​ attorneygeneral/​documents/​pr/​2019/​pr19​-50​-complaint​.pdf. 14. United States Sentencing Commission. (2022, August). The Organizational Sentencing Guidelines: Thirty Years of Innovation and Influence. www.ussc.gov/sites/default/files/pdf/research-and​ -publications/​research​-publications/​2022/​20220829​_Organizational​-Guidelines​.pdf. 15. See, e.g., Peters & Waterman (1982); Kotter & Heskett (1992). 16. For this and other reasons given by executives for starting these programmes, see Paine (2003). 17. See, e.g., Jensen & Meckling (1976), at pp. 310–311 (emphasising that firms are “legal fictions” and warning against falling “into the trap” of asking what their objective should be or whether they can have a social responsibility); Friedman (1970). (“Only people can have responsibilities”; corporations cannot have responsibilities because they are artificial persons.) 18. For more details, see Paine & Gant (1993). 19. See Department of Justice (DOJ) (2020). 20. DOJ (2020, pp. 13–14). 21. See Chen & Soltes (2018) (citing various sources estimating the prevalence of fraud and misconduct). See also Dyck, Morse, & Zingales (2023) (estimating that 10 per cent of large publicly traded firms commit securities fraud each year and that 41 per cent of companies commit accounting violations). 22. Wells Fargo, Annual Report 2013, p. 26 for figures on Code of Ethics and Business Conduct training. 23. Chen & Soltes (2018). 24. Wells, Horwitz, & Seetharaman (2021). See also Peters & Brandom (2021). 25. For more details, see Paine & Bettcher (2001). 26. See, e.g., Paine, Deshpandé, & Margolis (2011) (employees in emerging markets countries report larger gaps between the standards of conduct they think their company should follow and what the company actually does). 27. Paine et al. (2011). 28. See, e.g., Lorsch & MacIver (1989). See also Lorsch & Young (1990) and Lorsch (2013). 29. CalPERS General Counsel Richard Koppes, quoted in Light, Lorsch, & Sailer (1991, p. 7). In 1991, for example, CalPERS launched shareholder proposals at 12 U.S. companies. 30. See Berenbeim (1999). By 1998, the figure was 78 per cent. 31. U.S. Sentencing Commission (1991). Sentencing of Organizations (chapter 8, pp. 347–383). In United States Sentencing Commission Guidelines Manual. www​.ussc​.gov/​sites/​default/​files/​pdf/​ guidelines​-manual/​1991/​manual​-pdf/​Chapter​_8​.pdf. The original guidelines called for oversight by “high-level personnel” and defined “high-level personnel” in such a way as to include a director, but they did not require or specify any particular role for directors or the board as a whole. For discussion, see McGreal (2018). 32. The case was In re Caremark International Inc. Derivative Litigation, 698 A.2d 959 (Del. Ch. 1996). For a discussion of the history, see McGreal (2018). 33. See Stone v. Ritter, 911 A.2d 362, 370 (Del. 2006). For recent cases reaffirming the duty, see, e.g., Marchand v. Barnhill, 212 A.3d 805 (Del. 2019) and Teamsters Local 443 Health Services & Insurance Plan v. Chou, No. 2019-0816-SG (Del. Ch. Aug. 24, 2020). See also In re the Boeing Co. Derivative Litig., No. 2019-0907 (Del. Ch. Sept 7, 2021). 34. The Conference Board (2003). Commission on Public Trust and Private Enterprise, Findings and Recommendations (Part 2: Corporate Governance; Principle VI: Ethics Oversight, p. 32). www​

Managing for organisational integrity  21 .conference​-board​.org/​pdf​_free/​SR​-03​-04​.pdf. The commission was co-chaired by Blackstone Group co-founder Peter G. Peterson and CSX Chairman and CEO John W. Snow. The commission also made recommendations on executive compensation, audit and accounting, and a number of other controversial board issues such as board leadership, board self-evaluation, and shareholder engagement. 35. Sarbanes–Oxley Act of 2002 (Pub.L. 107–204, 116 Stat. 745, enacted July 30, 2002), see, e.g., §301 Public company audit committees, §407 Disclosure of audit committee financial expert, and §406 Code of ethics for senior financial officers. www​.congress​.gov/​bill/​107th​-congress/​house​ -bill/​3763/​text. Sarbanes–Oxley did not mention boards in connection with the ethics code for chief executive and financial officers, but the following year the New York Stock Exchange and Nasdaq both modified their listing standards to require companies to adopt a code of conduct for all directors, officers, and employees, and made clear that board approval was required for any waivers of the code. See Pillsbury Winthrop LLP (2004). 36. Sentencing Guidelines for United States Courts, 69 Fed. Reg. 28,994 (May 19, 2004). www​ .federalregister​.gov/​documents/​2004/​05/​19/​04​-10990/​sentencing​-guidelines​-for​-united​-states​ -courts. The U.S. Sentencing Commission held a number of public hearings prior to adopting the amendments of 2004. I participated in a Plenary Session on November 14, 2002. See Bednar et al. (2003). 37. U.S. Sentencing Commission. (2021, current as of January 2023). Sentencing of Organizations (chapter 8, pp. 509–553). In United States Sentencing Commission Guidelines Manual, stating at §8B2.1(b)(2)(A): “The organization’s [board of directors] shall be knowledgeable about the content and operation of the compliance and ethics program and shall exercise reasonable oversight with respect to the implementation and effectiveness of the compliance and ethics program”. www​.ussc​ .gov/​guidelines/​2021​-guidelines​-manual/​annotated​-2021​-chapter​-8. 38. These changes are discussed in McGreal (2018). 39. Stout & Li (2004). See also Elms & Nicholson (2013). 40. Rezaee (2005). See also The Conference Board (2003). 41. See, e.g., Dobbin & Jung (2010). 42. See, e.g., Bower & Paine (2017) (discussing the rise in shareholder power in recent decades). 43. See, e.g., Bower, Leonard, & Paine (2020) (discussing large-scale societal problems and how companies can help address them).

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3. Contemporary research into organisational integrity Carole L. Jurkiewicz

Over decades and geographic boundaries, scholars, professionals, and pundits have offered insights into how to increase integrity in organisations. Employing a wide array of methodologies, expressed with certainty and logic, one can learn the answer lies in ordering employees to have integrity, celebrating those who have not been indicted for crimes, and promoting those who include integrity in their annual self-reviews. Not noticed is the double-loop of asking why we expect organisations to act with integrity in the first place. Isn’t the primary purpose of incorporating to follow through on the promise of profits to investors? Do we require integrity as an essential element in effective organisational functioning, such as a measurable output aligned with the currency to purchase it? Given that all organisations act without integrity some or most of the time, why do many hold it in such high regard? Is it more aspirational than possible or probable, and what if they don’t have it? Kaptein (1999) details the various consequences and advantages, which range from severe damage to an organisation and its employees, to a tool used to prevent integrity breaches, while Hoekstra and Kaptein (2021) call for a normative framework. Transparency International’s most recent Corruption Perceptions Index (2022) (an institution of ubiquitous standing that advocates a holistic perspective for national integrity systems (Huberts, 2008)) assesses corruption as the opposite of integrity, both as a cause and a result, leading to increased crime and a decrease in economic stability. Their latest scores indicate that countries’ level of grand (contrasted with petty) corruption is increasing, regardless of the many ameliorative efforts that result merely in highlighting the importance of and the need for organisational integrity systems and greater institutional controls. Examined here are a few of the dominant assumptions about organisational integrity that often blind us to what really requires our attention.

IS ORGANISATIONAL INTEGRITY MERELY AN ABSTRACTION? Integrity as an attribute was first considered to be an individual trait, the formal study of which is generally attributed to both Plato and Aristotle, with writings linking integrity and corruption as far back as 2700 bc in Mesopotamia (Dobel, 2020). Integrity is still often conceptualised as an internal, individual choice and ethics as an external system often imposed on individuals. It has varied in nomenclature from an individual characteristic to one extended to disciplines including hard and soft sciences, and vocational activities to encompass terms such as virtues, character, truth, honour, principles, honesty, ethics, religion, morality, and many more. As larger organisations expanded and needed to employ individuals beyond family members and friends whose integrity was deemed well known, concerns over the integrity of strangers being employed reached critical scale and such determinations were then made assuming it was inherited from good families, absorbed through experiences with neighbours or community 24

Contemporary research into organisational integrity  25 members, and gleaned from associations with various religious congregations. When the need for growth of companies required individuals to serve as directors for groups of people and an ideal span of control, the question of integrity of those hired as managers, then termed leaders, became a greater concern, roughly in the 1950s in the U.S. But why? Were all organisations functioning on an integrity model prior to that period, or was it spurred by a belief of top executives that people are basically unethical and they wanted to protect the organisations’ assets? To predict who would be successful as a manager or leader, leadership studies evolved into a separate discipline, led by scholars studying what traits or behaviours best provided indicators of whom to hire for these roles. Questions arose around if these qualities are innate or can be learned, yet still there was no common definition of organisational integrity. This literature evolved from what is known as the Michigan and Ohio State studies, whose scholars duelled for the definitive dimensions on what was required of an effective manager or leader, on to contingency theories (meaning manager/leader effectiveness depended upon qualities of the followers and organisational situations), to what is termed contemporary theories such as leader-member exchange, charismatic, transactional and transformational leadership, to name a few of those that followed. At an individual level we can measure integrity as a subset of an ethical framework, but the conclusions of course are not 100 per cent reliable. Regardless, leaders are increasingly held accountable for the corrupt activities of others, while also being urged to articulate a multi-stakeholder approach that serves both social and financial purposes for the organisation. These organisational theories in turn revealed the importance of authenticity, ethicality, and the negative impact of the laws in the U.S. that were passed during the period of slavery (i.e., the 14th Amendment to the U.S. Constitution). As what is seen as an appeasement to those who opposed ending slavery, courts established organisations as the legal equivalent of persons, inclusive of the requisite rights (though not the responsibilities of such). Due to the desire to determine the effectiveness of leadership in a global context (Kets De Vries, 2006), the question of leader integrity became a focus of yet more scholars which, since leaders were seen as the embodiment of organisational integrity, spurred the expansion of leadership studies. This edited book is both timely and important in establishing the critical areas for future study of the key questions, such as agreement on the definition of organisational integrity, whether organisations possess virtues separate from the individuals leading them, and how the public generally determines if an organisation is or is not one of integrity and whether that attribution changes over time (Demmke, 2020; Menzel, 2012). As most research has blended the study of organisational integrity across sectors, such as public vs. private, this chapter is inclusive across boundaries as well.

INTEGRITY OF THE INDIVIDUAL SEPARATE FROM THE ORGANISATION The concept of organisational integrity was first treated as a theoretical enquiry, then attempts were directed towards empirical notions, and now as the paradigm develops, it focuses upon the dual paths of both developing the definition and potentially as something that can be measured at an organisational level. Measures at an individual level are quite different from measures in the aggregate, and at this stage inferences and assumptions are rampant (Fuerst & Luetge, 2021). There are no reported studies that measure organisational integrity directly,

26  Research handbook on organisational integrity separate from an individual, despite claims to the contrary (e.g., Six & Huberts, 2008). Philosophers have discussed integrity on an abstract individual level, but those conclusions cannot be extrapolated to organisations as a whole. What is reported by those claiming to measure integrity at an organisational level is primarily endowing an abstract structure with a single human quality. The literature largely consists of studies using a single proxy term as if the ethical rules or systems created by organisations were synonymous with individual integrity; this is incorrect as organisations are entities and don’t possess the ability to cogitate (Dasi et al., 2017). Rather than the multi-faceted concept of ethical rules and the attempts by organisations to enforce them, it is not a substitute for or synonymous with organisational integrity. The majority of these scholars claim ethics and integrity are interchangeable (e.g., Menzel, 2012; Palazzo, 2007) and that accountability for organisational integrity lies with the leaders. These concepts are necessarily separate and organisations are entities that cannot possess individual values, thoughts, or motivations; they can state goals and rules as directives of organisations, but it is not possible for them to have autonomy of thought. Dobel (2020) asserts that integrity can exist at both levels simultaneously and can also, through behaviour and policy, advocate for and support the others for the benefit of both. As individuals possess human agency, they can make commitments towards integrity and strive within their internal frameworks to keep them; organisations can align with individuals exhibiting integrity and share integrated frameworks using discursive methods, which can merge to create an individual/organisational culture that resists corruption. They together can create a relationship of dependence wherein the individual agrees to abide by and be accountable to organisational standards, and the organisation commits to transparency policies, applicable laws, and to stewardship mandates. This is not the same as organisational integrity, but rather an organisation establishing policies or rules and agreeing to abide by them. Does a lack of organisational integrity indicate leader incompetence? The literature suggests most scholars and citizens believe that to be that be factual and accurate; a few do not. A need for the leader to model individual integrity and courage in contributing to processes that build a positive culture, develop controls to combat corruption, and manage organisational communications is an essential role, but they do not automatically possess them the day they assumed the leadership roles; these are attributes that can be learned. Leaders that possess these abilities along with the character that demonstrates a facility to refuse to compromise as morally necessitated by an organisation’s mission, and consistency in reward/punishment behaviour towards integrity or lack thereof is what an effective organisation requires. Anti-corruptive missions and integrity statements are inadequate to quell such negative behaviours. Anti-integrity pursuits if not punitively addressed, tend to foster the understood agreement that the leader and subordinate are aligned on the acceptance of such behaviour and thus they will continue such behaviour. Expressed indecisiveness in addition to lack of applicable punishments increases the likelihood that such behaviours will be repeated. Rokeach’s (1968) classic empirical studies of value belief systems and whether, and if so how, they can be changed is directly relevant to encouraging individual integrity in organisations. Employees, including leaders, will not respond to organisational efforts to learn integrity-related behaviours in the same way or to the same degree. Rokeach’s studies confirm the resistance of individuals who have deeply embraced alternative values, which may not be those associated with integrity, to change their views or behaviour regardless of training; and they are generally not likely to honestly share those views with others. Inversely, an organisational priority focused only on fighting corruption is also not sufficient, and can leave employees feeling denigrated and alone. Individuals

Contemporary research into organisational integrity  27 need both paths: reinforcement of valour for demonstrating integrity and accordingly acceptance of accountability for pursuing unethical outcomes (Dobel, 2020). Leaders are also followers of course, and although a formal or informal title or authority can be conferred upon them, they are responsible for themselves as well as presumably others. Honesty; ethics; virtue; character; reputation; legality; morality; sincerity; trustworthiness; and reliability are commonly used proxy terms, along with many others that are intended to indicate integrity. Research on organisational integrity frequently includes elements that individuals may possess but not structural entities (despite the 14th Amendment), such as a moral conscience or awareness. Or include those that are so broad they encompass the opposite of what they may intend. An example is Dacin et al. (2002) who advocate adherence to self-defined values and principles, similar to Huberts (2018) who defines it as acting in accord with germane moral values and norms, but individuals are left to define what is germane for themselves, and these can apply to street gangs (Jurkiewicz, 2013; Stephenson, 2016), the Mafia, and genocidal regimes (Jurkiewicz & Grossman, 2012), as well as to religious leaders and police captains (Jurkiewicz, 2013). Defining organisational integrity in a way that allows for measures that can be generalisable and replicated is a key challenge for scholars (Kirby, 2022; Schmitt, 2022). A few of the top considerations in doing so are noted in Box 3.1, but the primary question to ask is: why do we expect organisations to act with integrity? Is it an essential question in effective organisational functioning, or do we rather mean ethical systems and policies? Given that all organisations act without integrity some or most of the time, why do most hold it in such high regard?

BOX 3.1 CHALLENGES IN AGREEING ON A DEFINITION OF ORGANISATIONAL INTEGRITY • Can organisations possess a virtue or character (integrity) separate from those individuals who may embody it, and if so does that virtue or character stay ineradicable regardless of who leads/is employed/owns/invests in it? • Is there a minimum age for possessing organisational integrity, or is it the legal age at which one can work for an organisation? Can an organisation possess integrity from its incorporation, or does it come/ebb/flow over time? • Some define it as matter of following laws, but of course laws change over time and the law is not equated with ethics or integrity. For instance, some organisations in all sectors have employed or employ child workers, slaves, pay less than legally allowed, offer dangerous products or processes, and have working conditions that are harmful to employees and the community. • Is organisational integrity the sum total of the individual employees’ integrity? Is it an absolute measure inclusive of all employees, so even if one employee lacks integrity then is the entire organisation lacking integrity? Is it a categorical measure of have/have not, or does it exist along a continuum? Do employees have to possess integrity in their personal and professional lives, or either/or to count? In hiring, what assessments are needed before they become an employee? If one demonstrates a lack of integrity, in one or numerous instances, should they be fired? • How can an organisation ensure vendors, part-time or temporary employees, and consultants have integrity? Can it be outsourced?

28  Research handbook on organisational integrity • Do definitions of integrity change or shift over time to encompass changes in the environment such a technological developments, artificial intelligence, robots, or global interconnectedness?

ARE LEADERS RESPONSIBLE FOR ORGANISATIONAL INTEGRITY? The lack of an enduring and uniform definition of organisational integrity is arguably the thorniest issue in moving this field of study forward (Ent & Baumeister, 2012). The definitions vary widely within a rather narrow range of primarily positive connotations, much like efforts to define ethicality or workplace spirituality (Porter & Norris, 2013). It may be attempts to create a consummate definition are prohibitively over-reaching, and instead a matrix of attributes and concepts may allow for more expansive and accurate measures beyond leaders’ abilities (Dobel, 2020). It has been found over a large body of research that leaders are the primary influencers of ethics in an organisation (e.g., Jurkiewicz & Giacalone, 2016), yet as first detailed by Zaleznik and Kets De Vries (1975), leaders are likely to have the most negative ethical impact on an organisation, frequently unwittingly. While many assume the leader is the one to follow in terms of modelling integrity behaviours (e.g., Palazzo, 2007), that is rarely the case (cf. Kets De Vries, 1993). Leaders and managers are not sought out because of and are not generally selected based upon their individual integrity framework or skill in implementing such policies. Their appointment to a leading role is usually a result of their impression management skills and a narcissistic desire to manipulate and influence others (Kets De Vries, 1993). While that approach can be effective in the short term, especially during times of crises, their focus is usually on amassing power and prestige and short-term projects that are politically expedient, rather than long-term goals and creating systems for structure, and processes for establishing ethicality (Babiak & Hare, 2006). As Kets De Vries (1993) explicates, leaders are usually contemptuous of others, self-righteous, arrogant, and exclude others in policy-making. They are intolerant of criticism and generally unwilling to compromise. These qualities do not inspire or create organisational ethicality or individual integrity. Yet the focus on an individual leader as responsible for organisational integrity is a prominent assertion of many scholars (e.g., Ekberg, 2017; Odrakiewicz & Odrakiewicz, 2014). After the hurdle of definition, including the belief that leaders should guide integrity systems in the organisation, is surmounted, questions of how to measure it need to be tackled, and the definition itself creates this ambivalence, lacking an underlying theory in its construct (Schmitt, 2022). As an example, Kolodinsky et al. (2003) and Hendricks and Hendricks (2003) claim organisational integrity thrives on change, although they do not define it, while Ekberg (2017) among others asserts it is harmful to organisations. Others claim change is a communal source of both resistance and conformity regarding environmental threats (e.g., Selznick, 1996). Some additional challenges to be faced in measuring organisational integrity, beyond an accurate and operative definition, are outlined in Box 3.2.

Contemporary research into organisational integrity  29  

BOX 3.2 FACTORS TO BE CONSIDERED IN MEASURING ORGANISATIONAL INTEGRITY • Is organisational integrity something that can be measured categorically, or does it exist along a continuum from a level of nominal evidence to the maximum of total integrity across all employees? • As Machiavelli established, is it more important to convincingly present an entity as having a virtue rather than them actually possessing it? In other words, does one need full confidence the measure is per se valid, or could it simply be a matter of masterful impression management abilities? • As individuals working for and on behalf of organisations that necessarily change over time, how frequently and by what methods do measurements need to be taken to ensure the computation is reliable and valid? • Is it possible to establish that the measures and integrity instruments are reliable and valid, and thus generalisable across sectors, demographics, and between cultures? As organisations and individuals associated with them change over time, how often do these measures need to be verified? • What of the 14th Amendment to the U.S. Constitution which conferred upon organisations the same rights to personhood as those of individuals (Jurkiewicz & Grossman, 2012)? Can it be concluded that research on organisational integrity should be considered the same as that for a person, at least in the U.S.? • Is organisational integrity transferable from a physical existence to a digital one, meaning if they have it in one realm, they have it in the other, or is a different measure needed? What if they have subsidiaries, mergers, or are incorporated under various names; does a determination of integrity provide blanket coverage?

GENERATING INTEGRITY IN AN ORGANISATION Overall, suggestions in the literature for creating organisational integrity appear rather overarching and aspirational and usually omit details on how to address and implement their suggestions. A notable exception is the work of Hoekstra (2022), who details the framework of the Dutch Integrity System, which is actually an ethical system, as it developed and its implications within the broader cultural context were realised. The analysis is one that can be expanded upon and perhaps adapted to further organisational needs in additional republics. A large number of scholars assert the importance of organisational integrity, generally as a solution to reports of growing corruption in all sectors (cf. Odrakiewicz & Odrakiewicz, 2014). Of course, as noted previously, integrity is often conflated with other terms that are not clearly defined and not measurable at a macro level. Box 3.3 contains just some examples representative of developing organisational integrity. For example, Chesnut (2020) in the Harvard Business Review suggests an organisation of integrity should simply require all employees to tell the truth, be open-minded and share information freely, and share credit with others, despite it not being possible to measure compliance with such organisational requirements. Perhaps what is really suggested is to encourage and educate employees on

30  Research handbook on organisational integrity how to develop individual integrity, and what is required to do so. Compliance programmes (those established from criminal and regulatory statutes) generally create animosity among employees and a reduction in ethical self-responsibility (Hough, 2017). Choi et al. (2018) also assert integrity is an individual rather than an organisational concept, and claim that integrity is when an individual demonstrates a good character and is corruption-free; while rather vague in articulation, it is an observation that is on the appropriate path. Further, they state that compliance enforcement and ethical oversight of individuals are the keys to managing integrity risks, as do Kayes et al. (2006).

BOX 3.3 DEVELOPMENTAL CONSIDERATIONS IN ORGANISATIONAL INTEGRITY LOOKING FORWARD • Self-reports are notoriously inaccurate, on a par with others’ reports of someone, as are opinion surveys; can we only measure what members or affiliates of the organisation believe integrity to be, or are there concrete and immutable variables that can be predetermined? • As power structures exist in all organisations (both formal and informal) and as individuals are or pretend to be generally obedient to authority, will individual behaviour simply align with those who have power, for good or evil, which would be a measure of influence rather than integrity? • What of the organisations in some countries that collect our data without permission and sell it and/or use it for profit? Are they acting with integrity? Should we expect those with access to the virtual content we freely give to act with integrity on how they use it? What does that mean and who do we hold accountable? Should we have to pay for privacy? • Technology has introduced another level of complexity related to integrity measures (Hosseini et al., 2022; Menzel, 2012). Questions such as integrity in the use and application of AI introduce issues such as taking and selling others’ identity; using AI recording tools similar to ChatGPT-4 and the upcoming GPT-5 version to mimic human voices and produce false content never stated by the human recorded. • As we can create multiple identities and fluid roles online, should each be equally held to account for their own integrity? How? If brains are connected directly to AI networks, they could be hacked (Anderson & Rainie, 2021) and altered without our consciousness intervening. Are hacked humans then responsible or accountable for integrity violations? Are those hacking human brains subject to integrity oversight? Again, how? By whom? • Should robotic entities, anime, and artificial humans be afforded the same sense of personhood as humans? When individuals establish multiple personae on the Internet, are those personae equally responsible for their own integrity associated with an organisation, or should organisations in the virtual world be considered as having integrity only if they prevent it? What of augmented reality, and are the organisations that produce and market such tools demonstrative of organisational integrity? • Is creation of a metaverse an act of organisational integrity? An ethical system? • If organisational integrity is a communal effort to identify and abide by moral norms, as some suggest, can simulations we cannot tell apart from actual reality be part of that

Contemporary research into organisational integrity  31 norm creation? What about the lack of Q Code Regulations? Should we be informed on what obligations we are creating for ourselves if we are required to click upon them? • Should the words created and sent using ChatGPT have any obligation towards imbuing organisational integrity? Who defines the boundaries of how they are created and shared, and is the organisation responsible for their use? • Will commerce and the profit motive replace the search for organisational integrity? Has it already? • How do we address the integrity of AI systems that can create their own code and disseminate artificial information? Who should or can we shape the evolution of integrity in conscious technologies? Nearly 70 per cent of U.S. tech experts state that principles of ethicality will not be incorporated into AI systems within the next decade (Rainie et al., 2016), so can any level of trust be established? While perhaps iconoclastically, Machiavelli (1532, yet printed posthumously with intent so as not to appear to be motivated by seeking favour from Lorenzo) offers considerable insight into integrity in organisations. It is widely believed that the name of the political scientist, as he is frequently depicted, is an adjective to describe a manipulative and ruthless individual. Empirical studies across many centuries have shown (cf. Christie & Geis, 1970) that interpretation of his work on organisational leadership is incorrect. The many instruments available, for which there are validity and reliability measures, indicate that high Machs (as they are known, as opposed to low Machs based upon test scores) are less likely to demonstrate low ethicality or integrity. High Machs are more analytical in their determinations of the right and wrong sides of an issue based upon empirical evidence, and are less likely to change their opinions to appease others or capitulate to groupthink. Given clear evidence to the contrary, they may change their opinion on a matter based upon logic and measurable evidence, but unlike low Machs do not engage in herdlike behaviour, and are not interested in agreeing to something they believe is wrong just to fit in with the majority opinion. In sum, low Machs are much more likely to accede to cheating, lying, and engaging in illegal behaviour in order to win favour with a group than are high Machs; being popular or winning a vote of congeniality among their peers is not a motivation for high Machs as it is for low Machs. Low Machs are also more likely to rationalise their lack of ethicality or integrity in a personal and empathic manner in order to justify their acclimation to wrongdoing. If high Machs do lie, their justifications are usually compellingly stated and rooted in verifiable evidence (even if the evidence is not accurate). If one is attempting to develop and instil integrity policies, providing factual evidence to high Machs and concerning oneself more with the irresolute orientations of low Machs is advisable. Given the strength and consensus of the measures on this variable, it may be a notable factor to look into further as a possible component of a reliable measure of organisational integrity.

EMBEDDING INTEGRITY IN ORGANISATIONAL CULTURE International certifications or accreditations may be viable moving forward; whether for leaders, employees, boards/advisers, or organisations as a whole is up for discussion. Is there a proxy criterion that could be used and how often should it be renewed? Should an incremental rating scale be applied or a pass/fail? What, if any, consequences should there be either way,

32  Research handbook on organisational integrity and should they be posted to the public? Perhaps an international reporting system, curriculum, and reinforcement measures may serve both to increase knowledge and effective practice and bring different cultures together on the topic. Should there be a pre-screening measure that is reliable and valid to be given to potential hires, and a registration certificate to confirm verified training? Is there an accreditation body who could be trusted to conduct such trainings and certifications? As ethics officers are widely used in many international organisations, should there be integrity officers as well to oversee compliance to whatever systems may be developed? Should those overseers be independent as are ethics officers, and to whom should they report? They would also require independence and freedom from hierarchical influence. Should organisations provide training on integrity? If so, should it be from an external or internal source and what qualifications or experience should the trainers hold? Perhaps a required course needs to be completed as part of a degree programme in higher education, or perhaps a continuing education course yearly as issues change with time? We know that codes are ineffective in influencing behaviour (Jurkiewicz, 2012). Do these individuals need to be experts in both ethics and integrity, being able to distinguish between the two, and what oversights should be in place for their qualifications? Should they be required to train on theory and practise? Should it be continual training or one-offs, in person or online, monitored, and is it best to conduct in groups or individually? Is training required of all in the hierarchy, and how is the effectiveness of the training measured, by whom, how, and how often? Scholars in various countries are attempting to address the issues noted in the boxes in this chapter, and if they are successful, a new, cohesive body of literature may emerge. As many attempts from differing areas of study and across many continents have tried for decades to create a global conception of ethics, the study of organisational integrity demonstrated by individuals may also represent an ongoing task. Ethics, integrity, religion, and other such subjective topics are difficult to integrate into an objective truth acceptable by distinct cultures, traditions, and value systems. The topic of integrity is of concern not only to scholars but to politicians and international peace groups as well, and much emphasis has been placed on the importance of understanding and tolerance. This has been the aim of many international organisations, such as the United Nations. Multicultural values are inherently controversial, and the viability of reaching a format for global interconnectedness can be daunting, but it starts by calling for complex, multi-dimensional dialogue in a moderated, mutually respectful, comprehensive, and integrated forum (Köchler, 2012). Intentionality in choosing books and media from across belief systems and organisational structures is an excellent start to a multicultural approach, as is including discussions on transnational perspectives in education, business, diplomacy, sports, politics, and tourism.

CONCLUSION Research on organisational integrity introduces more problems than answers, problems that need to be addressed before the variables can be defined and a methodology established. Integrity as a value or characteristic of an individual may be measured with some consistency depending upon how it is defined, but extending that to a group of people with varying roles and demographics, who may enter and exit the group for varying reasons at various times, and whose financial futures may depend upon others projecting integrity upon them or not, means we cannot draw a conclusion from any research proposed at the macro level to date. If

Contemporary research into organisational integrity  33 it is possible to create a measure of organisational integrity in which one can have confidence, it would necessarily possess many multi-faceted data points and be based upon accepted and valid research, and address how the elements fit together. By any gauge, it will be a very dynamic and enduring process (e.g., Engelbrekt, 2009).

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Contemporary research into organisational integrity  35 Frontiers. Cheltenham: Edward Elgar Publishing, pp. 65–82. https://​doi​.org/​10​.4337/​9781848441378​ .00013. Stephenson, S. (2016). Russian bandit gangs, their moral code and practices of violence. Mir Rossii, 25(1), 35–54. Stephenson, S. (2018). Gangs of Russia: From the streets to the corridors of power. The International Journal of Anthropology, 62(1), 140–142. Transparency International (2022). Corruption Perceptions Index 2022. https://​images​.transparencycdn​ .org/​images/​Report​_CPI2022​_English​.pdf. Zaleznik, A., & Kets De Vries, M. F. R. (1975). Power and the Corporate Mind. New York: Houghton Mifflin.

4. Concepts closely related to organisational integrity Duane Windsor

This chapter explains a set of concepts closely related to the idea of organisational integrity. The focus here is on business, for which the related concepts were developed. Organisational integrity is broader in scope in applying to all organisations. The coverage addresses business and human rights (BHR), business ethics, compliance, corporate citizenship, corporate social performance (CSP), corporate social irresponsibility (CSIR), corporate social responsibility (CSR), corporate social responsiveness, responsible management, and sustainability. Otherwise alphabetically ordered, the discussion below places compliance with responsiveness, CSR with CSIR, and responsible management with sustainability. The twin purposes of the chapter are to consider how the concepts relate to each other and to organisational integrity. The chapter proposes a conceptual framework for working out these relationships and in turn linking those relationships to organisational integrity. The framework links responsibility, responsiveness, and performance concepts to organisational integrity. This sequencing follows the literature’s developmental history. The presentation weaves other concepts into the framework. The framework thereby develops a detailed definition of organisational integrity for businesses. The 21st-century business faces a complex set of grand challenges (Ferraro, Etzion, & Gehman, 2015), wicked problems (Lönngren & van Poeck, 2021), and black swan crises (Yarovaya, Matkovskyy, & Jalan, 2022). Grand challenges require bold ideas and innovative solutions. Wicked problems are ill defined, defying solution, and proposed courses of action may turn out to be worse than the problem itself. A black swan crisis is unexpected because of low probability but has markedly bad consequences. Defining organisational integrity and closely related concepts in this set of circumstances has acquired dramatically increased importance. The set of closely related concepts is not fully synonymous with either business and society (or social issues in management) as a discipline or with an environmental, social, and governance (ESG) framework for investment assessment. The related concepts are core ideas of the discipline and help inform ESG approaches. Differences among the three subjects – integrity related concepts, business and society, and ESG – constitutes a guide for restricting the chapter’s scope of coverage. The chapter is not directly concerned with shareholder wealth maximisation or stakeholder welfare maximisation as theories of the firm’s objective. The chapter is concerned with the relationship of those theories to conceptions of responsible capitalism (Freeman, 2017).

36

Concepts closely related to organisational integrity  37

ORGANISATIONAL INTEGRITY One meaning of “integrity” is strictly technical: an object should have internal soundness or lack of corruption. For instance, a ship should have watertight integrity. Data or programming should not be corrupted: an integrity check will find validity. This technical meaning suggests planned consistency, in the sense of design and practice according with desired values. In transferring this technical meaning to a person (from an object), integrity acquires a moral conception. Individual integrity suggests strict honesty, moral uprightness, and consistency of behaviour with such moral values or virtues. An individual adheres to a code of values and practices. An individual manager in an organisation will not pay or receive bribes and should report corrupt offers to the organisation or outside public authorities. Organisational integrity suggests the adoption and implementation of such moral values or virtues for the whole organisation. Organisational codes of ethics or conduct are common today in both private and public sectors. An organisation, like an individual, should be incorruptible. Organisational integrity conveys the theory and practice of an organisation composed of virtuous executives, managers, and employees (Palazzo, 2007). Both individual and organisation embrace and practice moral responsibility in the conduct of the organisation’s activities. An organisation is a set of people. If the individuals all have and practice moral responsibility, then the organisation practices moral responsibility through its personnel. There is organisational corruption to the extent that any individuals practice corruption. Business C-suite officers associated with matters related to organisational integrity might include chief compliance officer (CCO), chief ethics officer (EO), and chief sustainability officer (CSO). One test of corporate integrity is the absence of corporate hypocrisy: “Corporate hypocrisy refers to the phenomenon of inconsistency between words and deeds of a firm in the process of fulfilling its social responsibility” (Lu, Wang, Jamali, Gao, Zhang, & Liang, 2022, p. 1). Greenwashing variants and other forms of amoral reputation management may reveal information about the want of organisational integrity.

CLOSELY RELATED CONCEPTS The discussion below occurs basically in alphabetical order, but combines compliance with responsiveness, CSR with CSIR, and responsible management with sustainability for improved integration. Business and Human Rights The UN Global Compact of ten principles voluntarily accepted by participants, including businesses, has two principles concerned with human rights: (1) supporting and respecting “internationally proclaimed human rights” and (2) avoiding complicity in “human rights abuses.” Another four principles concern labour standards: (3) freedom of association and collective bargaining; (4) elimination of “forced and compulsory” labour forms; (5) “abolition of child labour”; and (6) “elimination of discrimination in … employment and occupation.” Discussed later, three principles concern environment and Principle 10 concerns corruption. The UN Human Rights Council in June 2011 endorsed the proposed UN Guiding Principles on Business and Human Rights. There are three pillars: (1) the state has the primary duty to

38  Research handbook on organisational integrity protect human rights; (2) corporations have a responsibility to respect human rights; and (3) there should be improved access to remedy for victims in the context of a business relationship to an abuse. Germany and Switzerland adopted legislation requiring human rights due diligence by businesses (Bueno & Kaufmann, 2021; Rünz, 2021). In November 2022, the US government’s Customs and Border Protection agency issued a “withhold release order” against sugar shipments (Domino brand) by the Central Romana Corp. of the Dominican Republic. The basis for blocking the sugar imports is allegations of “forced labour” with many employees being Haitian migrants. The relationship between business and human rights (BHR) is a prominent subject of scholarly investigation (Schrempf-Stirling & Van Buren, 2020; Wettstein, Giuliani, Santangelo, & Stahl, 2019). An essential feature of this attention is an emphasis that BHR should succeed or replace CSR. Two arguments for a proposed shift are that BHR will become obligatory in place of voluntarist CSR and that BHR should become enforceable in international and domestic courts. Essentially, the BHR approach moves from a stakeholder to a rightsholder perspective in which human rights become judicially enforceable (McPhail, 2022). Business Ethics and Virtuous Managers Business ethics concerns the practical moral duties of businesses and their managers. One can identify three key dimensions: (1) avoid doing harm; (2) comply with laws and public policies; and (3) practice good citizenship (see Table 4.3). Adam Smith in The Theory of Moral Sentiments (1759; VI.ii.2, para. 11, sixth edition, 1790) distinguished between citizenship as compliance and good citizenship as a concern with welfare of others. There is a distinction between a duty not to create or exploit market failures and a duty to address justice failures such as inequality (Bluden, 2022). Normative ethics concerning prescriptively right versus wrong actions and good versus bad outcomes is complex and technical. Behavioural ethics concerns what people believe and do. Moral development of individuals towards prescribed norms links behavioural ethics to normative ethics (DeTienne, Ellertson, Ingerson, & Dudley, 2021). Modern neoclassical economics is the dominant theory of capitalist markets and firms. Classical political economy of the 18th and 19th centuries, initially expounded in Adam Smith’s The Wealth of Nations (1776), drew in part on a compound of theology, moral philosophy, and jurisprudence (Matson, 2022). Matson argues that free commerce received depiction as a form of cooperation that served the common good and cultivated specific virtues. From the late 19th century, neoclassical economics focused on the interaction of demand-and-supply forces in determining prices and volumes of goods and services. Neoclassicism tended to set ethics and virtues aside in favour of value-neutral analysis of utilitarian outcomes. While economic analysis arguably emphasises a technical decision-making framework (Reilly & Kyj, 1990), ethics and virtues did not simply disappear. Friedman (1970) states explicitly that businesses should operate within basic “rules of the game” including ethical standards and legal requirements (Mulligan, 1986). Friedman’s short list of business ethics includes honesty and absence of fraud. One can argue that neoclassicism tends to foster a kind of “moral vacuum” in market transactions (Finnegan, 1995). A result historically was a separation between neoclassical economics and business ethics (De George, 2015). However, ethics is fundamental to busi-

Concepts closely related to organisational integrity  39 Table 4.1

Three major frameworks for normative ethics

Consequences

Pluralism

(“teleology”)

(everything else)

(“deontology”)

ASSUME: self-regarding egoists

 

ASSUME: other-regarding altruists

Machiavellianism – amoral ends-means

Religion – divine commandments (rules)

calculus Utilitarianism – aggregate welfare

Moral Duties

Social contract tradition (Hobbes, Locke, Rousseau, Rawls)

Caring sentiment (other-regarding)

Kantianism – rational absolute moral rules

achieved through institutions ● market contracts

Natural law (whatever is ought to be)

● democratic voting

Virtue theory (Aristotle, Buddha,

Integrative social contracts theory (ISCT)

Confucius)

Source: Adapted and modified from Goodpaster (1984).

ness: “In fact, ethics has everything to do with management” (Paine, 1994, p. 106). The moral businessperson thinks and behaves differently, relative to amoral or immoral persons (Carroll, 1991). The moral person is other-regarding; the amoral person is self-regarding but calculating and subject to influence; the immoral person does not respond to conventional norms for conduct (Taylor & Wolfram, 1968). Table 4.1 explains three major frameworks for normative ethics based on Goodpaster (1984). There is a key distinction between consequences (or outcomes) and moral duties. One or the other is superior to the other. The main theme in consequentialism is aggregation of the interests of self-regarding egoists (Taylor & Wolfram, 1968) through either market transactions or democratic voting arrangements. Utilitarianism is the chief example of consequentialism. “Machiavellianism” is consequentialist in focusing on amoral ends-means calculus. The term is unfairly applied to Machiavelli himself, who studied rather than advocated amoral conduct. Moral duty is prescriptive for other-regarding altruists and draws on the social contract tradition. Kantianism is the chief example of a set of rational absolute moral rules for conduct independent of consequences. A modern version of social contract perspective is integrative social contracts theory (ISCT), introduced by Donaldson and Dunfee (1999). ISCT combines global hypernorms with locally developed moral contracts. The broad rubric “pluralism” captures everything else: religion, caring as a mode of moral sentiment, natural law, and virtue theories (Burton, Dunn, & Goldsby, 2006). A key instance of guidance for business managers is virtue theory (Sison & Redín, 2023). While virtue ethics and integrity are not strictly synonymous, virtue ethics at the individual level may be the indispensable foundation for organisational integrity (Fuerst & Luetge, 2023). “Organizational integrity is a company investment that translates into avoiding fines for potential violations of the law or ethical missteps, as well as an investment in the company’s reputation. In turn, organizational integrity can protect a company from disruptions that can threaten its existence” (Fuerst & Luetge, 2023, p. 1). Fuerst and Luetge (2023, p. 1) operationalise the relationship between virtue and integrity as a three-step process: (1) “morally sound corporate commitments”; (2) “transparent institutionalization within the company”; and (3) implementation through concrete actions. Organisational integrity arguably requires virtuous managers. While intrinsic virtue can serve as a criticism of instrumental market rationality and extrinsic motivation, it can be argued from classical political economy that markets foster social cooperation for aggregate welfare improvement (Bruni & Sugden, 2013). There are

40  Research handbook on organisational integrity market participant virtues, and the market is not simply virtue free (Bruni & Sugden, 2013). The connection between individual virtues and organisational virtuousness (Constantinescu & Kaptein, 2021) may operate to help develop guidelines for assigning moral responsibility and blame to individual conditions and organisational conditions. Compliance and Corporate Social Responsiveness Integrity is an internal and morally orientated behaviour; compliance is an externally and amorally orientated behaviour (Paine, 1994). The distinction is between intrinsic motivation and extrinsic motivation. Integrity may impose cost; compliance may occur to reduce cost. Relevant instances of compliance failures concern business fraud, corruption, and monopolisation. A common feature of the FTX cryptocurrency, Madoff Ponzi, and Theranos medical false claims frauds is the apparent failure of due diligence by sophisticated investors to see “ridiculously visible red flags” (Cassin, 2022). DuPont engaged for decades in intentional environmental pollution in West Virginia in connection with the production of Teflon and arguably made a calculated cost-benefit decision to continue polluting (Shapira & Zingales, 2017). The broad category within which these instances fall is organisational deviance, defined in terms of failure to comply with legal and ethical norms for a business (Vaughan, 1999), and typically resulting in wrongdoing in various forms (Greve, Palmer, & Pozner, 2010). Corruption scandals (Nichols, 2017) in violation of domestic anti-bribery laws and international anti-corruption agreements, including a near-universal UN Convention Against Corruption (UNCAC), are a persistent occurrence (Transparency International, 2019). The tenth principle of the UN Global Compact is an anti-corruption requirement. A relationship to organisational integrity is the possibility that organisational socialisation processes help to make individuals think corruption is somehow “normal” within the organisation’s logic of conducting business (Gault, 2017). Individuals wind up on a “slippery slope” that generates a corrupt logic within organisational norms. Anti-corruption efforts require going beyond a focus on individual violators and a moralistic view of corruption to determine how to “un-normalize” corruption within the organisation through changed socialisation processes (Gault, 2017). Corporate social responsiveness (Frederick, 1994/1978) is a broader conception for compliance in which the external environment includes laws and public policies, social expectations, stakeholder pressures, and stakeholder activism. A business operates within this set of requirements, expectations, and pressures. Responsiveness is not necessarily anchored in integrity or business ethics. An event study analysis of abnormal returns following crises considers how executive acceptance or denial of malfeasance affects firm value. On average, stockholders do not reward either “ethical and timely acceptance of a firm’s role in malfeasance” or “delayed acceptance of malfeasance” (TenBrink, 2019, p. 217). That is, “ethics and honesty” are irrelevant because “value is multidimensional” (TenBrink, 2019, p. 217). Corporate Citizenship and Political CSR The concept of corporate citizenship tends to combine Adam Smith’s two conditions of compliance with laws and public policies and good citizenship as genuine concern for welfare of others, and partly as a proposed substitute for CSR (Logsdon & Wood, 2002). A text mining

Concepts closely related to organisational integrity  41 analysis of 1,235 articles on CSR, ESG, and corporate citizenship concluded that corporate citizenship is the higher-level concept that encompasses CSR and ESG (Park, Park, Kwon, Kim, Noh, Kim, & Zhu, 2022). The study points to employees as the most critical stakeholder in corporate citizenship; and views the concept as broadly touching on multiple dimensions of business and society. There are two main modes of social expectations for citizenship: corporate philanthropy and corporate compliance concerning expectations about, for example, proper political participation and proper tax payment. Schwartz and Carroll (2003) explicitly excluded philanthropy from their three-domain responsibility framework restricting responsibilities to economic, ethical, and legal. A study of 55 sources (1988–2014) examines philanthropy in family enterprises (Feliu & Botero, 2016). Philanthropy is not a moral obligation or test of integrity but a social expectation (Feliu & Botero, 2016) and increasingly a strategic tool for managing relationships with stakeholders (Saiia, Carroll, & Buchholtz, 2003). Philanthropy is a use of financial resources. The Indian government introduced in 2013 an initially voluntary and then amended in 2014 to a mandatory requirement for domestic and foreign businesses, meeting certain requirements, to spend at least 2 per cent of gross revenues on philanthropic contributions of the firm’s choice. In the voluntary version, firms might opt out with an explanation (Dixit, 2020). Political capitalism or political CSR, including social issue activism in the form of brands taking stands, is about the relationship between businesses and societies. Political CSR (PCSR) as expounded by Palazzo, Scherer, and colleagues argues for an expansive role of business in two domains (Scherer, Rasche, Palazzo, & Spicer, 2016). First, businesses should provide public goods and services in instances of governmental incapacity. Second, businesses should promote democracy both within the organisation and within societies. The idea of PCSR raises afresh the problem of the political role of business in lobbying or otherwise influencing public policy (den Hond, Rehbein, de Bakker, & Kooijmans-van Lankveld, 2014; Rehbein, Leonel, den Hond, & de Bakker, 2020). Another dimension is whether it is morally proper for businesses to avoid taxes and whether a global minimum business tax is the appropriate solution for tax avoidance. Evasion is illegal failure to pay taxes; avoidance is permitted by the design of tax legislation (Wang, Xu, Sun, & Cullinan, 2020). Corporate Social Performance (CSP) Wood’s (1991) theory of corporate social performance (CSP) combines CSR principles, socially responsive organisational processes, and outcomes including social impacts. Each of the three domains has three elements. Wood (2010) discussed empirical measurement of the various elements. In Wood’s approach, CSP subsumes CSR and business ethics into individual motives. Principles of CSR include an institutional principle of legitimacy at the societal level, a principle of public responsibility at the organisational level, and a principle of managerial discretion to act rightly at the individual level. Processes of corporate social responsiveness include environmental assessment, stakeholder management, and issues management. Outcomes of corporate behaviour include social outcomes external to the organisation and social programmes and social policies internal to the organisation. Outcomes are resultants and consequences of the interaction between principles and processes. Porter and Kramer (2011) proposed “creating shared value” (CSV) as an alternative to CSR (Menghwar & Daood, 2021). The basic idea is that there are many social issues and problems

42  Research handbook on organisational integrity that can be addressed profitably by businesses. The CSV approach applies the market logic to those social issues and problems. Criticism is that CSV restricts the responsibilities of business back to the position of Friedman (1970) that business has no social responsibility beyond shareholder wealth maximisation. Some organisations may reduce performance following a positive rating from some external source. An organisation does not necessarily seek an increasing favourable rating for reputational benefits. Rather, the organisation questions the value of attempting to maintain a superior performance and thus reduces effort on the rated dimension (Lewis & Carlos, 2022). The Lewis and Carlos study, a difference-in-differences analysis, found for the early 1990s that a charitable organisation rating was followed by reduction in contributions. The reason is that the business viewed charity as incompatible with shareholder maximisation logic. A number of organisational and institutional factors moderated the relationship positively or negatively. Corporate Social Irresponsibility (CSIR) and Corporate Social Responsibility (CSR) The fundamental core of business-and-society literature historically has been CSR (Carroll, 1999; Frederick, 2008, 2018). One prominent approach is that cross-country variations in CSR results from how implicit and explicit considerations interact (Matten & Moon, 2020). A fundamental problem in CSR literature is not that the idea is undertheorised in the sense of the absence of an integrated conceptual paradigm but rather that the basics of responsibility are contested (Mitnick, Windsor, & Wood, 2021) from multiple disciplines (Gond & Moser, 2021). Several themes in the literature are critical of CSR. The earliest argument was that a publicly traded business should focus on shareholder wealth and leave CSR matters to government (Friedman, 1970). On this argument, CSR appears to be a voluntary choice of a business. The essential features of voluntary choice appear in the principles of the voluntary UN Global Compact. The subsequent argument was that corporate social responsiveness is superior to responsibility (Frederick, 1994/1978), in that business is subordinate to society. A third argument is that controlling irresponsibility is more important in impact than fostering responsibility (Windsor, 2013). A fourth theme is that environmental sustainability is more important than conventional CSR (Frederick, 1998). A fifth theme proposes a shift to business and human rights. Relative to Friedman’s (1970) narrow conception of CSR as restricted to shareholder wealth maximisation in a market economy with limited government, Carroll (1979) proposed a four-dimensional conception depicted as a “pyramid” in which economic responsibility (or performance) is the foundation and philanthropy (a use of profits) is the apex, with legal responsibility and ethical responsibility in between. Kang and Wood (1995) proposed an inversion of the Carroll pyramid to emphasise the primary role of ethical responsibility. In this inversion, ethical responsibility is the foundation, followed by legal responsibility and only then economic responsibility. Philanthropy remains the apex and is more clearly a use of profit. Carroll (1991) has been explicit that all dimensions are morally infused. Table 4.2 explicates the Carroll pyramid and the Kang and Wood inversion. Kang and Wood do not allocate dimensions since ethical responsibility is mandatory. As Figure 4.1 depicts, Schwartz and Carroll’s (2003) three-domain model eliminated philanthropy as purely discretionary. One might treat philanthropy as a subset of economic performance: a business decides between profits and donations as a strategic calculus. The firm

Concepts closely related to organisational integrity  43 Table 4.2

Carroll’s four-dimensioned CSR pyramid and Kang and Wood’s inversion Carroll (1979, 1991, 1999)

CSR Dimension

Nature

Kang and Wood (1995) Relative Weight

CSR Dimension

(Total 10, 100%)

(not allocated)

Nature

Philanthropy

desirable

1 (10%)

Philanthropy

desirable

Ethical

expected

2 (20%)

Economic

expected

Legal

mandatory

3 (30%)

Legal

mandatory

Economic

mandatory

4 (40%)

Ethical

mandatory

decides relative balance and relative positioning among responsibilities. Figure 4.1 follows Kang and Wood (1995) in positioning ethical responsibility at the centre.

Figure 4.1

Schwartz and Carroll’s (2003) three-domain model

A way of expressing Kang and Wood (1995) is that corporate moral responsibility should substitute for CSR (Hess, 2015, 2017): “moral” should replace “social” in the conception (Frederick, 1986). The rationale is that “social” tends to let corporations and individuals escape from a clear and explicit understanding that business ethics is superior to profitability or even legal compliance in instances of morally justifiable civil disobedience. There is a distinction between corporate and personal responsibility, and thus issues of corporate control and internal socialisation processes (Phillips, 1995). There can be both corporate and personal responsibility (Smith, 2014). The crucial issue is whether there can be corporate responsibility but absence of personal responsibility, or vice versa, for specific actions and outcomes. The chief debate concerning voluntary acceptance of responsibility concerns the choice between an economic logic or a moral logic (Mitnick, Windsor, & Wood, 2023). In an economic logic, the emphasis is on the financial advantage of the business whether conceived of in terms of shareholder wealth maximisation (Friedman, 1970) or CSV (Porter & Kramer, 2011). The moral logic argues that managers should recognise that responsibility rests on moral standards concerning right versus wrong actions and good versus bad consequences. Responsiveness as a proposed alternative to responsibility argues that the business should be responsive to external (or institutional) pressures whether in terms of governmental demands including legal requirements or stakeholder demands. Responsiveness suggests that social requirements and expectations are effectively mandatory, and thus a strategic logic of necessity is at work: business complies or loses legitimacy and ultimately existence. The logic of

44  Research handbook on organisational integrity moral CSR is closest to organisational integrity: ethics is ultimately superior to other considerations (Kang & Wood, 1995). Responsible Management and Sustainability Sustainable development is a goal for improving human welfare and ecological sustainability simultaneously (Brundtland, 1987). In the context of sustainable development, “‘responsible management’ has become the popular buzzword” (Maitra, 2022, para. 1; Windsor, 2008). “In simple words, it means running industries in a manner that does not endanger the Earth by adding to the climate crisis” (Maitra, 2022, para. 1). This meaning is narrow in the sense that it suggests ceasing negative impacts on climate but does not suggest positive actions to improve climate. In November 2022, Swedish environmental activists headlined by Greta Thunberg filed a lawsuit asking Stockholm District Court to determine that the government’s climate policies violate the human rights of the country’s citizens. The UN Global Compact includes three environmental principles for business: (7) supporting a precautionary approach; (8) investing in greater environmental responsibility; and (9) encouraging environmentally friendly technologies. The UN 2030 Sustainable Development Goals (SDGs) include 17 broad goals (López-Concepción, Gil-Lacruz, & Saz-Gil, 2022). Sustainability has three different meanings, which are not necessarily compatible. One meaning is business sustainability: the business continues to operate. A second meaning is economic and social development: human welfare continues to rise (Steffen et al., 2015). A third meaning is planetary development: nature continues to improve in terms of viability for human and other life (Díaz, Settele, Brondízio, Ngo et al., 2019). The triple bottom line (TBL or 3BL) framework posits the compatibility of the three meanings: profit, people, and planet all improve jointly. The most ideal version of sustainable development is that everyone’s welfare increases, while planetary sustainability becomes assured. The United Nations Sustainable Development Goals (SDGs) combine human and ecological elements. In Frederick’s (1998) conception, ecological sustainability is the essential requirement for ethics, responsibility, and responsiveness. Frederick urged a shift from the conventional framework for social issues in management defined by CSP, business ethics, and stakeholder theory to a new paradigm grounded in the natural sciences. In Frederick’s view, the conventional framework combined social science, moral philosophy, and organisational science. The natural sciences expand research horizons to cosmology, evolution, and spirituality. There are three key objections to the concept of sustainable development. One objection is whether sustainable development is even attainable: that is, someone will be left out. A second objection concerns whether markets or governments are the better pathway to the future. A third objection substitutes “ecological civilisation” for sustainable development: there must be some ill-defined fundamental transformation of economy, society, and government in order to save the planet and humanity (Gare, 2017).

Concepts closely related to organisational integrity  45

TOWARDS AN INTEGRATIVE APPROACH Two Previous Proposals: ESG and VBA ESG is a narrow and technical approach for measurement for the purpose of allocating investment capital relative to risk (Hirai & Brady, 2021). ESG may not be particularly good for purposes of business-and-society theorising. Keeley (2022), formerly an asset manager at BlackRock, argues that ESG advocates are overly optimistic about what the investment approach can achieve in sustainability and social improvements. On the one hand, threatening to divest does not influence business behaviour; on the other hand, what are identified as good companies do not provide sufficient returns. Businesses alone cannot solve sustainability and social problems; their activities must be complementary to governmental, civil society, and individual contributions. Keeley recommends allocating capital to strategies that provide verifiable benefits to environment and society through impact investing (Au-Yeung, 2022). Schwartz and Carroll (2008) proposed an approach for formulating a framework for integrating five key approaches as complementary. Their approaches include (a) CSR, (b) business ethics, (c) stakeholder management, (d) sustainability, and (e) corporate citizenship. The proposed integration (VBA) combines value (V), balance (B), and accountability (A). A business should create value for society as well as its stakeholders. The key approaches should be in balance. A business should be accountable to society for its actions and impacts. Table 4.3 below embeds this VBA approach. A Proposed Integrative Framework Table 4.3 lays out the author’s proposed integrative framework for aligning the closely related concepts with one another and with organisational integrity. For convenience of exposition, the table structures around three lettered columns (A, B, and C) and 11 numbered rows. One reads the table row by row across the three columns. The object is to explore the logic of how the various concepts can fit together. In general terms, from top to bottom, the framework begins with responsibility, moves through responsiveness to performance, and then links to organisational integrity. The framework embraces a broad conception of responsibility (Windsor, 2013) in distinction to the narrow conception found in Friedman (1970). The framework embeds VBA. Column B captures value creation. Column A concerns accountability. The framework resolves balance through defining organisational integrity in combining with judgements regarding elements of Column C. For increased distinctions, Table 4.3 draws on the terminology of Frederick (1986, 1994/1978, 1998), who separated among corporate social responsibility (CSR1), corporate social responsiveness (CSR2), corporate moral rectitude (CSR3), and environmental sustainability (CSR4) in that developmental sequence. Frederick’s terminology, identified in Table 4.3 in italics, embeds the understanding that there has been a conceptual evolution over time from a general philosophical-moral concept of responsibility (CSR1) through responsiveness (CSR2) to performance (CSP) for society and stakeholders to a strengthened emphasis on ethical analysis (CSR3) to a final resting position at environmental sustainability (CSR4). Sustainability is a moral obligation, not a strategic choice. The notation = 0, prohibited, means that the action or outcome should not occur. The notation = 1, mandatory, means that the action or outcome should occur. The notation ≥ 0

46  Research handbook on organisational integrity Table 4.3

An integrative framework for concepts closely related to organisational integrity

Rows

Columns A, B, and C Corporate Social Responsibility (CSR1) > 0

1 Negative Welfare Effects

Legitimacy = Market Actions within Positive Welfare Effects through

from Illegal or Unethical

Legal Institutions and Ethical

Actions

Norms

 

Column A

Column B

Column C

3

Corporate Social Irresponsibility

Shareholder Wealth Maximisation

Voluntary Contributions ≥ 0

2

Good Citizenship Actions

● Moral motive

(CSIR)

● Strategic motive

=0

Corporate Social Responsiveness (CSR2) > 0

4 5

Social Compliance = 1

6

Corporate Social Performance (CSP) > 0: principles, processes, and outcomes (social programmes and policies

Stakeholder Welfare Maximisation

Philanthropy ≥ 0

resulting in positive social and environmental impacts) 7

Environmental damage = 0

Planetary sustainability (CSR4) = 1

Responsible management = 1

Anti-corruption efforts ≥ 0

Corruption = 0

Human rights promotion ≥ 0

Human rights abuses = 0 8 9

Organisational Integrity = 1 Business Ethics = 1 and Legal

Corporate Hypocrisy = 0

Compliance = 1 10 11

Corporate Political Activity (CPA) is orientated to the public interest = 1

Corporate Moral Rectitude (CSR3) Civil Disobedience ≥ 0 and Political CSR1 ≥ 0

means some positive action or outcome is desirable but the specific action or outcome is not mandatory beyond the minimum threshold of 0. There is a management judgement involved. No notation < 0 is necessary in this logic since such an empirical condition would violate the prohibition standard. The various elements of Table 4.3 are requirements or standards: 0 means none, 1 means perfect, and ≥ 0 means a minimum requirement. A theoretician cannot state a prescriptive requirement beyond the minimum ≥ 0 for voluntary judgements of management: the requirement is simply that the judgement not result in negative welfare effects for society or stakeholders. A theoretician can suggest the reasonable implications of moral or strategic considerations. Where no standard is stated, the element is simply definitional, as in wealth or welfare maximisation. Shareholder and stakeholder theories are conceptions of whose goals management should serve. Dmytriyev, Freeman, and Hörisch (2021) discuss the possibilities for the relationship between stakeholder and CSR theories. One idea might be a subset of the other; the two ideas might be complementary; the two ideas might be in competition. Dmytriyev et al. argue that the two ideas are complementary, and scholars should work on collaboration. CSR1, responsibility, in Row 1 is the historically dominant idea in the business-and-society field. Windsor (2013) subdivides the general concept of CSR1 into the three domains labelled as Columns A, B, and C. Table 4.3 structures around these three domains shown in bold font in Row 2, also used for Organisational Integrity in Row 8. Each domain defines a column of the table. Windsor equates ethics with a no harm principle, compliance with the legal framework, and good citizenship with making social contributions beyond market outcomes. Column B in the centre defines “legitimacy” in terms of market actions within legal institutions and ethical norms (Friedman, 1970; Rendtorff, 2019). Regulated demand-and-supply

Concepts closely related to organisational integrity  47 interactions determine aggregate social welfare (ignoring equity of distribution) as a baseline outcome. Beyond this institutionally determined outcome, a business can affect social welfare through specific actions. From this fundamental interpretation, the table then defines relevant concepts and conditions. Column B thus shapes value creation. Column A to left of the centre column defines negative welfare effects reducing the baseline due to illegal or unethical (even if legal) actions. For instance, environmental damage, violating ethical principles and laws, reduces social welfare. Column A addresses accountability. Column B to the right of the centre column defines positive welfare effects adding to the baseline through good citizenship actions. For instance, philanthropy promotes social welfare. At Column B and Row 8, Organisational Integrity addresses defining balance among multiple considerations. Row 3 amplifies on these three domains in terms of corporate social irresponsibility (CSIR) in Column A, shareholder wealth maximisation in B, and voluntary contributions in C. Intentional or negligent failures of business ethics or compliance are irresponsible conduct (CSIR). Voluntary citizenship actions may occur out of moral motive, strategic motive, or a mix of motives. Row 3 can align with Friedman’s (1970) narrow definition of CSR as follows. The publicly traded firm focuses on shareholder wealth maximisation as its sole social responsibility, but within legal and ethical “rules of the game” captured in Column A as no CSIR. What Friedman argues against is Column C: he opposes voluntary social contribution, especially in the form of philanthropy. Friedman exempts privately owned businesses from his arguments because those businesses are the same as households free to engage in philanthropy. Row 4 shifts conception, following Frederick (1994/1978) from responsibility to CSR2, responsiveness. Row 5 amplifies on this conception in terms of social compliance (A), stakeholder welfare maximisation (B), and philanthropy (C) defined in general terms. Row 6 shifts following Wood (1991) to CSP, performance, drawing on both CSR1 and CSR2 conceptions. The essential idea of CSP is that there should be no negative social or environmental impacts and thus desirably only positive social or environmental impacts. The CSP approach tends to merge together Columns A and B, as demonstrated in Table 4.3’s Row 7. The table provides three key illustrations: environmental damage, corruption, and human rights abuses should not occur (thus = 0). Responsible management is a synonym for zero environmental damage. The positive welfare versions of these illustrations are Frederick’s (1998) CSR4, planetary sustainability, anti-corruption efforts, and human rights promotion. The logic in Column C of Row 7 is somewhat more complicated, as planetary sustainability must be 1 (mandatory and overriding) whereas anti-corruption efforts and human rights promotion are desirable but voluntary and thus ≥ 0. Row 8 shifts to organisational integrity. Examination of closely related concepts suggests that organisational integrity must include a number of elements. In Row 9, Column A, business ethics and legal compliance must equal 1: that is, a business must implement both standards rigorously. The definition or requirement in Table 4.3 is that there be no negative welfare effects from illegal or unethical actions. In Column B, there must be no corporate hypocrisy (thus = 0), such as greenwashing or variants. A business should be honest, honourable, and transparent to the extent feasible. (There are legitimate issues of socially acceptable business secrets.) Row 10 suggests that those requirements are the essential elements of Frederick’s (1986) CSR3. The concept of organisational integrity does not extend to the elements of Row 7, Column C, which are voluntary actions of good citizenship resulting in positive outcomes. Column C

48  Research handbook on organisational integrity must stand on its own, as a mix of moral and strategic motives. However, there are two likely implications of organisational integrity. First, corporate political activity (CPA), for influencing government policy, should be orientated to the public interest (and thus = 1) rather than being opportunistically self-serving. An organisation with integrity cannot be opportunistic but employ personnel who are concerned with the broader interest of society and government. Friedman (1970) argued that CPA should, when reflecting realistically the “rules of the game,” be conducted in the firm’s self-interest as all other political actors are behaving. Row 11 concerns at least two special conditions that may arise for business operations. The idea of a special condition is that linking organisational integrity to specific actions depends on the particular circumstances. In those circumstances, the condition becomes ≥ 0 rather than being generally compelling as in CSR4 = 1 or CSIR = 0. One special condition is circumstances requiring the organisation to engage in morally required civil disobedience. An example is whether Google or similar social media platforms can properly operate in China subject to censorship requirements that such platforms would oppose in democracies. A second special condition concerns the admonition to engage in political CSR1. As explicated earlier, PCSR arguably divides into two requirements. One requirement is to provide public goods and services in circumstances of governmental incapability: the requirement is stated conditionally – there must be incapability. Friedman (1970) characterised this requirement as socialism in violation of a proper separation of business and government functions. The other requirement is stated more generally: a business should foster democracy internally and externally – this requirement assumes a condition of insufficient democracy (Scherer et al., 2016). The counter-case is that there are limits to internal democracy; and how to define external democracy is a matter of political contest, in which business is simply one potentially powerful stakeholder and actor. An organisation with integrity cannot properly fail to act on matters of civil disobedience and democratisation when such actions are legitimate and feasible. Non-feasibility becomes a problem in judging moral and strategic considerations jointly. The more a business meets the conditions stated in Table 4.3, the greater organisational integrity is likely to be; and vice versa. The ideal conditions for supporting organisational integrity are now identified as follows, with some grouping for convenience: ● CSIR = 0 ● Good corporate citizenship ≥ 0, philanthropy ≥ 0 ● Social compliance = 1 (except in special conditions of civil disobedience and PCSR1 duties) ● Environmental damage = 0, Responsible management = 1, CSR4 = 1 ● Corruption = 0, Anti-corruption ≥ 0 ● Human rights abuses = 0, Human rights promotion ≥ 0 ● CSR3 = 1, Business ethics = 1, Legal compliance = 1, Corporate hypocrisy = 0 ● CPA (public interest) = 1 ● Civil disobedience ≥ 0, PCSR1 ≥ 0 These conditions are simultaneous. The notations 0 and 1 involve mandatory requirements; the notation ≥ 0 involves voluntary choices above a minimum threshold. These conditions also imply that CSR1 > 0, CSR2 > 0, and CSP > 0 simultaneously. These concepts cannot be zero

Concepts closely related to organisational integrity  49 much less negative, but they cannot be set to = 1 because some actions are voluntary; however, the concepts must be greater than 0. In contrast, organisational integrity must = 1: in principle, there cannot be deviation from perfect integrity. Organisational integrity is an internal choice, of arguably mixed moral and strategic motives, reflecting the interface between internally orientated CSR1 and externally orientated CSR2. However, integrity imposes some restrictions on choices such as binding duties for civil disobedience and PCSR1 out of moral motives that are arguably more relaxed in defining responsibility, responsiveness, and performance. Integrity more strongly reflects CSR3, moral rectitude, and CSR4, environmental sustainability, or responsible management.

CONCLUSION: CONTRIBUTIONS AND RECOMMENDATIONS The role of responsibility (Aguinis & Glavas, 2012) is to reduce the negative impacts of business on environment, society, and stakeholders and to help assess how business can produce positive solutions for grand challenges, wicked problems, and the threat of future black swan events (Reinecke & Ansari, 2016). Recent research into CSR emphasises psychological and sociological micro-foundations of how managers come to understand and implement responsibility (Gond & Moser, 2021). Two general findings emerge from this review. One finding is that organisational integrity rests on a necessary foundation of responsible and responsive managers and employees. Organisational integrity is an intrinsic matter intertwined with ethics and virtues. A second finding is that organisational integrity must translate into socially desirable and environmentally necessary actions. As indicated in the CSP theory, organisational process is the linkage between integrity (i.e., principles) and positive impacts through proper actions. The translation involves extrinsic considerations. Business ethics, CSR, and CSIR focus on the moral development of business personnel. Corporate citizenship, corporate social responsiveness, and sustainability and responsible management focus on the relationship with environment and society. ESG and CSP focus on measuring negative and positive impacts of business activities. Table 4.3 proposes a framework for putting various concepts and elements together in a logically consistent way. Broadly defined, a business should be responsible, responsive, sustainable, and a good citizen. Combination of these characteristics should help reduce negative impacts and foster positive impacts of business activities for environment, society, and stakeholders. Organisational integrity is an important element in this desirable set of outcomes.

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5. Integrity, integrity violations and integritism What they are and why they matter Leo Huberts

This Research Handbook offers many relevant and challenging contributions on ‘organisational integrity’ (OI). They are about important aspects of the topic. What is organisational integrity? Many disciplinary perspectives are addressed as well as dimensions and characteristics of the OI phenomenon, how to measure it and what to consider in the management of OI. The many contributions concern integrity in the private and the public sector and ‘organisational’ is interpreted broadly with attention to the overall organisation but also to the behaviour of involved individuals at all levels. When a scholar is asked to contribute to a handbook, normally the first idea will be to summarise the research and theorising he or she is involved in. For an emeritus professor like myself, that was the starting point. This chapter will summarise some basic ideas stemming from our research at the Vrije Universiteit Amsterdam. That research is primarily about the quality and integrity of (public) governance, with Public Administration as the discipline to start from (which is multi-disciplinary in its own ambition). The first paragraphs that follow will present that framework on the meaning of integrity and integrity violations. I will summarise and discuss this, also with the Research Handbook content and the OI concept in mind. This also brings up the question of how the integrity of an organisation could or should be interpreted. After that I will focus on a specific phenomenon that is not very well known and, in my view, underestimated in research and the literature as well as in actual organisational, societal and political debates about integrity: integritism. Integrity is about moral norms and values, about good and bad behaviour, based on what we share. So, when someone’s integrity is put in doubt, that really matters and hurts the accused. Its importance also points at the necessity to be careful in using the integrity word (I-word) (Huberts, 2014, pp. 127–128). Integritism refers to the misuse of the topic, to inappropriate accusations on violating integrity, without good reason, possibly with an opportunistic background (trying to harm the opponent) or misunderstanding of what integrity is about (moral quality of policymaking and not about the content and outcome of decisions). In the last paragraph of this chapter, I will summarise the presented framework on integrity and integritism and the importance of clarity of the integrity concept including the awareness of integritism.1

INTEGRITY OF GOVERNANCE2 Integrity is in the title of this Research Handbook as well as in (almost) all the chapters, with ‘organisational integrity’ as the central concept. That will hopefully lead to enough common ground but also give us all an idea of the diversity of interpretations and visions concern54

Integrity, integrity violations and integritism  55 ing ‘integrity’. What is integrity in my view?3 In our research we focus on the integrity of governance. Governance is nowadays a popular concept that relates to organisation, management, power, authority, politics, policy, administration, government and steering (Bevir, 2009; Fukuyama, 2016; Kettl, 2015; Rose-Ackerman, 2017). Governance can be defined as ‘authoritative policy-making on collective problems and interests and implementation of these policies’ (Huberts, 2014, p. 68). Governance is about addressing collective problems and interests, possibly by one actor but also by a network of actors. A second important element is ‘authoritative’, a term referring to the relation between the governing actor(s) and the collectivity involved. It presupposes support and legitimacy of the organisation or community whose problems and interests are addressed (the relation to Easton’s (1953) famous definition of politics as the authoritative allocation of values is of course not coincidental). This idea of governance thus includes public as well as private organisations. Public and corporate governance do of course differ, also public and corporate integrity. Acting with integrity as a (prime) minister or top civil servant differs from acting as an integritous4 Chief Executive Officer (CEO), a board member or employee in a company. Nevertheless, in both contexts integrity refers to the same characteristic of that behaviour. That does not mean (at all) that we all agree about the definition of ‘integrity’. Integrity ‘Integrity’ has become a concept with some prominence in research on public and corporate governance, as well as in actual policymaking and implementation at all levels, but what is integrity? What characterises the integrity of a person, a functionary or an organisation? In the literature on public and business ethics and integrity, many views or perspectives or definitions can be found. At least eight views or perspectives are present (Huberts, 2014). Box 5.1 lists these. These will be summarised briefly afterwards, followed by a reflection on their content and some clarification of the chosen perspective.

BOX 5.1 EIGHT VIEWS ON INTEGRITY 1. 2. 3. 4. 5. 6. 7. 8.

Integrity as wholeness Integrity as being integrated into the environment Integrity as professional responsibility Integrity as conscious and open acting based on moral reflection Integrity as a (number of) value(s) or virtue(s), e.g., incorruptibility and accountability Integrity as accordance with laws and codes Integrity as accordance with relevant moral values and norms Integrity as exemplary moral behaviour

(Huberts, 2014, p. 39.)

A dominant perspective on integrity, Montefiore and Vines (1999, p. 9) concluded, is in line with the meanings of the Latin integras: intact, whole, harmony, with integrity as ‘wholeness’ or completeness, as consistency and coherence of principles and values (in Dutch often summarised with ‘you say what you think, and you do what you say’). Another view sees integrity

56  Research handbook on organisational integrity as professional wholeness or responsibility (including a view with a focus on taking into account the environment): ‘integrity means that a professional exercises his tasks adequately, carefully and responsibly, taking into account all relevant interests’ (Karssing, 2007, p. 3). Other perspectives focus on one or more other specific values (Dobel, 1999, 2016); for example, incorruptibility, honesty, impartiality, accountability (as also in many codes of conduct). A view that fits into this category relates integrity to virtues, with integrity as acting in line with virtues such as wisdom, justice, courage and temperance (Becker & Talsma, 2016; Van Tongeren & Becker, 2009). In other views the relationship between integrity and morals is more prominent (what is right and wrong, good or bad). The first sees integrity as open reflection on morals (Carter, 1996). Other views see integrity more as an umbrella concept, one that combines sets of values that are relevant for the functionary being judged. Among these is the more legal view that seems attractive because of the clarity of laws and rules on what matters (Rosenbloom, 2011; Lee & Rosenbloom, 2005), following up on Rohr (1989) with the focus on ‘constitutional or regime values’ (pp. 4–5). The seventh perspective shown in Box 5.1 argues that a broader interpretation is necessary, also because the ‘law’ does not always offer a clear guiding principle for many aspects of actual decision-making and implementation processes in government and business, with an interpretation therefore in terms of complying with the relevant moral values and norms (see, e.g., Becker, 1998; Fijnaut & Huberts, 2002; Paine, 1994; Thompson, 1995; Uhr, 1999). This interpretation, of course, comes close to ‘a general way of acting morally’ and ‘morality’ (Brenkert, 2004, p. 5), or, as De George (1993) put it, ‘acting with integrity is the same as acting ethically or morally’ (p. 5). The last perspective sees integrity as the ‘stuff of moral courage and even heroism’ (Brenkert, 2004, p. 5), which means that it ‘stands for complying in an exemplary way with specific moral standards’ (Van Luijk, 2004, p. 39). All of the mentioned interpretations of integrity focus primarily on the behaviour of the participants in governance, in decision-making and decision implementation. That is, it does not concern everything in politics and business; integrity concerns behaviour, process and procedure (in a broad sense). It is not about the content of the output or the societal results (outcome) (Huberts, 2018). The ethics of the content of decisions, policies, goods and services should thus be distinguished from the ‘moral quality’ of the governance process. Policy ethics and business ethics concerning the output and the outcome are very important but should be distinguished from the integrity of the involved actors. To simplify: a government can decide to go to war (or not) or to limit immigration (or not) with or without a process of policy and decision-making (and implementation) in line with the valid moral values and norms for that process. And a corporation can decide to continue or to skip its oil extraction through morally correct or morally wrong decision-making and implementation. Whether going to war or winning oil is ethically okay is as important but integrity focuses on the process, not the outcome. Integrity as Moral Quality In this chapter integrity is seen as the quality of acting in accordance or harmony with relevant moral values, norms and rules. That is, of course, not an original approach. Much of the literature on integrity considers integrity to be synonymous with being moral or ethical,

Integrity, integrity violations and integritism  57 which is, to a certain extent, in line with the presented perspective. What is often missing then is a clarification. What, for example, is a value or norm, a moral value or norm, a relevant or valid moral value or norm? Defining integrity in terms of the accordance with relevant moral values, norms and rules requires understanding of what a moral value, norm or rule is; of what is meant by ethics, morals and morality. Despite agreement that both concern ‘right and wrong’ or ‘good and evil’, different interpretations of the terms abound, especially in the realm of philosophy and the study of ethics. The terms ‘ethical’ and ‘moral’ are almost always used as synonyms, both denoting the principle of right and wrong in conduct (Thompson, 1985), acknowledging that ‘ethics’ is also seen as the study of such principles (Huberts, 2014). Kaptein and Wempe (2002) distinguished six features exhibited by moral pronouncements. They concern ‘right and wrong’ (a normative judgement that expresses approval or disapproval, evokes shame or pride), but they also appeal to the general consent; are not a matter of individual taste; apply to everyone in similar circumstances and involve the interests of others (interpersonal); and the interests at stake are ‘fundamental’ (2002, p. 42). Thus, not all values and norms are relevant for ethical or moral judgements. Ethics are not, for example, concerned with what is beautiful (aesthetics), what is conventional (etiquette) or what works (science and technology; e.g., ‘ISO norms’ – worldwide proprietary, industrial and commercial standards developed by the International Organization for Standardization). Integrity is about ‘moral’ norms and values, those that refer to what is right or wrong, good or bad. The features also refer to a general consent with relevance for everyone in the same circumstances. That relates to the relevant or ‘valid’ moral values and norms. In sum, morality and ethics refer to what is right or wrong, good or bad. They concern values and norms that people feel rather strongly about, because serious interests are involved that affect the community of which they are a part. A value is a belief or quality that contributes to judgements about what is good; right; beautiful; or admirable. Values thus have weight in the choice of action by individuals and collectives. A norm is more specific. Norms tell us whether something is good or bad, right or wrong, beautiful or ugly. For types of behaviour, they answer the question ‘what is the correct thing to do?’ (De Graaf, 2003; Fijnaut & Huberts, 2002, pp. 10–11; Van der Wal, 2008, pp. 10–12). Individual, Collective, Organisational Behaviour? The integrity framework that was (and will be) presented must also lead to questions, I realise, in the context of this book about organisational integrity. Integrity as behaviour in accordance with the relevant moral values and norms primarily focuses on individuals and not on the organisation. How does the integrity of those individuals relate to ‘organisational integrity’? It of course also depends on one’s definition of organisational integrity whether there is a tension between the two concepts. Palazzo (2007, p. 113) on organisational (and corporate) integrity links both: ‘Organizational integrity refers to the ethical integrity of the individual actors, the ethical quality of their interaction as well as that of the dominating norms, activities, decision making procedures and results within a given organization.’ Palazzo continues with: Organizational integrity goes beyond managerial integrity and is more than the presence of individuals with good characters within the organization. Having ‘good’ managers is certainly a precondition for organizational integrity, but it does not prevent organizations from obtaining bad ethical results. It is possible to take the bad apples out of the barrel, but the risk of deviant organizational behaviour

58  Research handbook on organisational integrity will not be reduced to zero. The good apples might develop a bad taste and sometimes it might be a problem of the barrel itself. (2007, p. 113)

Stark’s (2019) work on organisational integrity is clear on the importance of the organisational level: We should change the focus from the individual to the organisation. Instead, the specific organizational situation of scandals must be looked into. It is not the individual actor who is less integrated and compliant, but the organization itself, the organizational integrity, and specially the possible lack of organizational integrity. Though there may be other variables explaining misconduct, this book will focus on the organizational part. (pp. vii–viii)

My idea is different. Acting in accordance with the relevant moral values and norms (and rules) is a (possible) characteristic of individual behaviour as well as of organisations but we have to be clear on what organisational integrity then is about. I’ll come back to that later in this chapter. First on the agenda is behaviour that violates the moral norms and values, integrity violations.

INTEGRITY VIOLATIONS Types of Integrity Violations5 What types of integrity violation are relevant to distinguish (Huberts & Van Montfort, 2020)? Different bodies of knowledge point to many types of behaviour that conflict with values and norms in different contexts. Corruption is often part of that literature, with the focus on ‘inappropriate private interests’ conflicting with the public or organisational interest. Additional interesting research often uses other concepts for immoral or inappropriate behaviour (Huberts & Lasthuizen, 2020), for example police deviance and misconduct (Punch, 1985), organisational misbehaviour (Vardi & Weitz, 2004), white-collar crime (Kolthoff, 2016), state crime (Peoples & Sutton, 2017; Ross, 2000) and administrative evil (Adams & Balfour, 2004; Berndsen, 2015). This broad spectrum of unethical behaviour was the starting point for researchers at the Vrije Universiteit Amsterdam to construct, step by step, a broad typology of integrity violation categories. The ambition was to present an overview of types of unethical behaviour, from the diverse literature, with relevance for almost all (semi) public organisational contexts. The types of violations are present in many contexts, though the concrete behaviour will of course vary in different times and places. Since its original formulation, the typology has been discussed and tested many times using available (quantitative and qualitative) data on integrity violations (with an operationalisation in specific behaviours depending on the context). Lasthuizen (2008) made a first successful attempt to empirically validate the typology for standardised surveys within the field of ethics and integrity and for organisational (mis)behaviour research (see also De Graaf, Huberts, & Strüwer, 2017; Huberts, Lasthuizen, & Peeters, 2006; Lasthuizen, Huberts, & Heres, 2011; Sampford, Shacklock, Connors, & Galtung, 2006). This resulted in a typology distinguishing ten categories of integrity violations. The typology is summarised in Table 5.1 with a very brief explanation.

Integrity, integrity violations and integritism  59 Table 5.1

Typology of integrity violations (Huberts & Van Montfort, 2021, pp. 8–9)

1.

Corruption: bribery

Misuse of (public) power for private gain: asking, offering, or accepting

2.

Corruption: favouritism (nepotism, cronyism,

Misuse of authority or position to favour family (nepotism), friends

patronage)

(cronyism) or party (patronage)

3.

Fraud and theft of resources

Improper private gain acquired from the organisation or from colleagues

4.

Conflict of (private and public) interest through

Interference (or potential interference) of personal interest with public

‘gifts’

or organisational interest because of gifts, services or assets accepted or

bribes

and citizens, with no involvement of an external actor

promises made 5.

Conflict of (private and public) interest through

Interference (or potential interference) of personal interest with public or

sideline activities

organisational interest because of jobs or activities practised outside the organisation

6.

Improper use of authority

Use of illegal or improper means or methods (possibly for ‘noble causes’)

7.

Misuse and manipulation of information

Intended or unintended abuse of (access to) information, such as cheating, violation of secrecy rules, breaching confidentiality of information or concealing information

8.

Waste and abuse of organisational resources

Failure to comply with organisational standards and/or improper performance or incorrect or dysfunctional internal behaviour

9.

Indecent treatment of colleagues or citizens and

Unacceptable treatment that includes not only discrimination (based on

customers

gender, race or sexual orientation), intimidation and sexual harassment but also improper behaviour like bullying, nagging and gossiping

10. Misconduct in private time

Misconduct in the private sphere that harms people’s trust in the (public) organisation

Source: Huberts and Lasthuizen (2020); Huberts & Van Montfort (2020); Lasthuizen (2008); Lasthuizen, Huberts, & Heres (2011).

In the typology corruption is of course included as the abuse of powers for private gain (Pope, 2000; also central in, for example, Transparency International’s Corruption Perception Index). Two types of corruption are distinguished: bribery and favouritism. ‘Private gain’ is clearly an element, but the three types of favouritism point at a broad interpretation of ‘private’, including favouring family (nepotism), friends (cronyism) or party (patronage). Fraud and theft also involve ‘private gain’ but there are no outside interests involved. Two other types involve (the appearance of) conflicting private interest by gifts and jobs or positions elsewhere. Sometimes these are combined and seen as one type (conflict of interest). Misuse of authority is the case in all violations, but here we focus on other misuse, including in the organisation’s interest (noble cause). Manipulation of information (including lying and leaking) and serious waste and abuse of resources are clearer. Numbers 9 and 10 are among the violations that attract much publicity and get much more attention since ‘#MeToo’. Sexual misconduct and violence are part of the violation ‘indecent treatment’ (including also discrimination, other types of intimidation). Often this misconduct is work-related but also in the private sphere (more becomes public through the social media) misconduct is discovered that leads to serious discussions about someone’s integrity (from domestic violence to alcohol abuse and so on).

60  Research handbook on organisational integrity Integrity Violations in Public and Business Contexts Is the typology of integrity violations also applicable in the business sector (Kaptein & Wempe, 1999)? Kaptein (2008) distinguished a total of 37 ‘items’ of corporate ‘unethical behaviour’ in the workplace towards financiers (10 items), customers (8), employees (5), suppliers (7) and society (7). That distinction with the ‘object’ of unethical behaviour as starting point is of course different than the focus on the types of behaviour in connection to the moral norms and values violated. Misuse of information, including leaking and lying, is, for example, possible in all of the categories. On the other hand, the types of unethical behaviour and the distinguished integrity violations are in my view considerably similar. Among the five types of unethical behaviour towards customers are, for example, discrimination, (sexual) harassment and intimidation, racism, pestering, verbal abuse and physical violence, violating workplace health and safety rules or principles, violating employee wage, overtime, benefits rules and breaching employee privacy. The same parallels are present in the items in the Global Business Ethics Survey (ECI, 2021). The most observed types of misconduct in 2020 in the United States are favouritism towards certain employees, management lying to employees, conflicts of interest, improper hiring practices, abusive behaviour and health violations (ECI, 2021, pp. 18, 21). For now, and with some hesitation, my idea would be that the proposed typology of integrity violations seems useful to apply in research and policy development in the public but also in the private and business sector. More research, comparative research in different sectors using the framework would be challenging. That would have to consider the differences (and similarities) between the moral values in both sectors (Van der Wal, 2008). Integrity Violations in (Non-)Western Contexts Ethics, integrity, integrity violations and corruption are seen as relevant topics for the theory and practice of public and corporate governance. Nevertheless, a serious question concerns the adaptability of the conceptual framework in research and policy practice all over the world. In the corruption literature, attention is given to what can be summarised as the ‘Western bias’ (De Graaf, Wagenaar, & Hoenderboom, 2010; Lawton, Huberts, & Van der Wal, 2016; Mungiu-Pippidi, 2006; Sissener, 2001). How applicable are existing corruption frameworks to non-Western societies? A similar question on possible cultural bias is also very important for the interpretations and perspectives on integrity. What are the ‘relevant’ moral values and norms, in so many different contexts, and how do they relate to the global and international ideas on integritous governance (Lawton, Huberts, & Van der Wal, 2016)? International law, international codes of conduct, international treaties etc. give an idea about the ‘global’ moral values and norms. But are they supported by the international community and by national and subnational governments (and corporations)? To mention one vulnerable and sensitive example: the United Nations System Code of Conduct on Sexual Harassment (United Nations, n.d.). That global perspective in addition suggests the possibility of a ‘non-Western bias’ in integrity research. This concerns research that only focuses on financial-economic types of violations such as corruption and fraud and ignores moral values and norms on, for example, discrimination and (sexual) intimidation (Khalid, 2016). What is seen in ‘the West’ as an integrity violation is acceptable in many other countries.

Integrity, integrity violations and integritism  61 Overall, the meaning of integrity and integrity violations suits the agenda for future research. Sometimes this is primarily semantics (the word ‘integrity’ may not be so familiar in many countries, with other words for a number of the integrity violations), but more important is more clarity about the global moral values and norms and the differences between countries concerning those norms and values.

INTEGRITISM: WHAT IT IS AND WHY IT MATTERS Integritism: What It Is When integrity is seen as important, it is almost by definition also important that it is clear what integrity and integrity violations are about (Huberts, 2018). Many things can go wrong in an organisation. There are, as Caiden (1991) convincingly argued, many bureaupathologies. But not all these 179 pathologies should be considered integrity violations. Functionaries make mistakes, even stupid mistakes, without the violation of the moral norms and values that really do matter. Yet, when this distinction becomes too blurred, an organisation loses sight of what is morally important and what is not, possibly leading to negative outcomes. For example, employees may become too afraid to risk doing anything wrong or may become paralysed, with good reason, by the idea that making a mistake might lead to an investigation of their integrity. To avoid such repercussions, organisations must clearly identify their central moral values and norms and must develop organisational ethics that clarify what type of (moral) value or norm violation is considered serious enough to warrant an investigation of integrity. Although never easy, this undertaking is crucial for any organisation that takes ethics and integrity seriously and that wants to prevent the oversimplification and/or overgeneralisation or ‘integritism’ (Huberts, 2014, pp. 127–128). Integritism refers to the misuse of the integrity topic, to inappropriate accusations that functionaries did not act with integrity, without good reason because of misunderstanding what integrity is about and/or possibly with an opportunistic background (trying to harm the opponent). Previously in this chapter I mentioned an element that is also relevant in this context. Integrity is about the moral quality of the preparation, making and implementation of decisions and not about the content and outcome of the decisions. So, when a mayor’s integrity is questioned by a member of the local council, because of their very fundamental objections against the mayor’s policy proposal, the use of the I-word is unjust and damaging, an example of integritism. The second type of integritism does concern the behaviour of functionaries. Everybody makes mistakes but when those mistakes do not concern relevant moral values and norms, accusations that they violate integrity are examples of integritism. Mentioning examples is always a bit risky, but, e.g., mistakes they made could be spending too much money, not listening to their stakeholders, deciding too late, misunderstanding policy advice etc. Mistakes for which the functionary is responsible have possible consequences. At the same time, questioning their integrity would be wrong when there are no (other) moral norms violated. The framework with the integrity violations gave an idea of those moral norms. For example, private interest involved (instead of public interest), intimidation of the staff, hiding information or lying.

62  Research handbook on organisational integrity The third type of integritism was briefly described as ‘overgeneralisation’. When somebody is accused of an integrity violation, of behaviour that is morally wrong, does that mean that person is unethical, non-integritous? In the media this very often is the supposition. I doubt that. The seriousness of the violation does matter, of course. Proof of structural domestic violence against a partner and/or children gives rise to other conclusions about one’s personality then being caught driving a car after drinking (a little) too much alcohol (or am I too soft on this?). The seriousness also varies with one’s position. For the minister that initiated a campaign against drunken driving, such behaviour justifies serious doubts about one’s integrity. However, an overall good person can get involved in bad behaviour and we should be cautious in generalising (absolutising) too easily (from the specific act to all behaviour to the person to the functionary, and so on). Integritism in Research and Theories Integritism is a concept that I introduced in 2005; it still is rather unknown, but it seems to have become more popular in particular in political debates. I have mixed feelings about that attendance. First, more in general. An indicator of how well known or popular a concept is concerns the number of hits when we google the term. Searching for ‘integritism’ and ‘integritisme’ (the Dutch term) leads to 4,080 results (April 3, 2023). In comparison, the number of hits for ‘integrity’ is 2.490 million, ‘integriteit’ (Dutch) is 127 million, ‘corruption’ is 407 million and ‘corruptie’ (Dutch) is 4.67 million. So hardly any scores for integritism. In line with that, there is only limited attention in our fields of study for integritism. I regret that but I am to blame for it as well. The topic is also lacking in the research on the integrity and quality of (public) governance at the Vrije Universiteit. So, there is not much research that explicitly focuses on integritism. Two Vrije Universiteit Master’s students in public administration chose it as a topic for their Master’s thesis. Beeke (2013) researched a directorate within the Dutch Ministry of Justice and how it dealt with reports of integrity violations. Hoffman (2013) interviewed confidential officers about their experiences with integritism. Both focused on the integrity investigations that ended with the conclusion ‘no integrity violation’. That happened regularly (38 per cent of the reports in the directory ended with ‘not found’), with the conclusion that integritism might explain those cases. In addition, information was presented about the motives of the reporters of violations that appeared to be unjustified. Most of these unjustified reports were done ‘in good faith’. These are mainly reports about industrial disputes. It is rare for a report to be made in ‘bad faith’, with malicious intent. The confidential officers indicated that they regularly speak to potential reporters that think someone violated integrity while it in fact concerns an organisational labour dispute, which should be dealt with by the human resource management office. Three respondents had experiences with improper reports from improper motives. The motive for these reports was resentment. More research would be appropriate, which is also apparent when we look at the statistics about reporting and investigating (suspicions) of integrity violations in local government in Amsterdam (more than 18,000 civil servants). The Amsterdam Integrity Office plays a central and coordinating role within the city’s integrity system (Hoekstra, Huberts, & Van Montfort, 2022). The office employed 23 full-time integrity specialists in 2021. The tasks of the office

Integrity, integrity violations and integritism  63 Table 5.2

Reporting and investigating integrity violations in Amsterdam

Reporting Integrity Violations in Amsterdam

2020

2021

Number of reports of suspicions of integrity violations

92

102

Investigation by the police

2

4

Decision to investigate by the office

13

15

Conclusion of internal integrity investigation (incl. investigations started in 2019)

 

 

● violation found/plausible

12

9

● no violation found

8

2

● still under treatment

2

4

include: serving as a reporting point for (suspected) integrity violations, conducting investigations into (suspected) integrity violations, performing integrity risk analyses, providing training and advice, screening external business partners, and coordinating the work of confidential counsellors who can be consulted by employees on all integrity issues. The Amsterdam Integrity Office annually reports about the number of integrity reports, investigations and what was found (Bureau Integriteit Amsterdam, 2021, 2022). Table 5.2 gives an idea. The number of reports, investigations and results shows that, for example, in 2020 only a limited number of the 92 reports of suspicions led to investigations and the 20 internal investigations led in 40 per cent of the cases to ‘no violation found’. Integritism might play a role in this. There is also some idea given about the motives of the reporters of which the suspected integrity violation was not found. The driving forces are sometimes malicious. ‘Guerrilla employees’ (O’Leary, 2010) do exist, but overall naivety on the concept in combination with really felt injustice is much more important. The reporter sincerely sees it as an integrity violation, also when the office or a confidential officer concludes the opposite. This will and should not lead to an integrity investigation but to further contact and possibly mediation. The importance of paying attention to integritism and a plea for research is also part of recent publications by Maesschalck, titled ‘When integrity and integrity management are taken too seriously: On integritism and the integrity industry’ (Maesschalck, 2019; also 2020). Interestingly, he thus broadens the topic, with integritism as an aspect of the dark side of ethics but also the ethics or integrity ‘industry’ (all professionals and companies with involvement and (financial) interest in integrity). The growth of this industry also creates several risks, Maesschalck adds. In particular, there are concerns about the various biases one might expect in such an industry (Maesschalck, 2020). These biases could simply be the result of interests. For example, advocates’ enthusiasm for the integrity training they offer might simply be the consequence of the money and reputation that it offers them. Yet biases could also be of a more cognitive and often more unobtrusive nature. To someone whose job focuses on integrity management, most problems will look like ethical problems that need an answer from integrity management (see also Kaptein, 2022 on ethical responsibility of business). Without a self-reflective attitude, these biases could combine with an unquestioned conviction that there never is enough integrity management (Bovens, 2006). Huberts (2014, p. 219) questions this ‘tendency of existing institutions on ethics and integrity to broaden their scope beyond the essentials of the subject, often while favouring a “the more the better” approach to policies, instruments and resources’. Maesschalck concludes: Many integrity practitioners are still working hard to raise ethical awareness and do not have the luxury of wondering about the effects of too much integrity or integrity management. Overlooking

64  Research handbook on organisational integrity these risks would be a mistake, however. Both risks are very real, and integrity practitioners should be aware of them and look for ways to avoid them. They should cultivate a degree of self-restraint (not everything is ethical) and a sensitivity to the risks of framing issues and discussions in ethical terms. And if all the well-intended initiatives are to keep their credibility, then the integrity industry should be the first guard against integritism; it is exactly because integrity is so important, that integritism can be so damaging. (Maesschalck, 2019, p. 74; quote from Huberts, 2005, p. 18)

In line with the previous arguments, I am convinced that ‘integritism’ is a phenomenon to take seriously, in order to protect and cherish behaviour in line with the relevant moral values and norms. It has recently also become more popular in discussions about in particular the integrity of politicians (in The Netherlands), with mixed feelings on my behalf. Often the term integritism is used in a doubtful and counterproductive way. Some politicians that are accused of an integrity violation by definition respond with ‘this is a clear case of integritism’ which needs no further explanation and thus I do not have to answer to the accusations. End of story. This then prevents serious attention for and discussion about the moral quality of our politicians, it hinders the integrity of politics. We might call it a new form of misusing the concept, a new form of integritism.

CONCLUSIONS AND REFLECTION This chapter in the Research Handbook addressed several different topics, I realise. On the one hand, I sketched the framework used in research on integrity and integrity violations. This hopefully is a useful contribution to our further discussion and progress in our field of study on the integrity of organisations in the public and private sector. In addition, the concept ‘integritism’ was introduced and explained. In order to protect integrity, awareness of integritism is important. I summarise below some of the ideas that were posed as elements of the framework that might be useful for our further discussions. 1.

2. 3.

4.

There are many views on integrity which makes is very important to be clear about the meaning that is central in one’s approach. Central in this chapter is integrity in accordance with the relevant moral values and norms (and rules) and integrity violations concern behaviour that violates those moral norms and values (and rules). Integrity concerns the moral quality of everybody’s behaviour and not the ethics or moral quality of the resulting decisions and outcome. Despite the differences in views, there seems to be much more agreement about the types of behaviour that are in conflict with or violating integrity. Besides corruption and fraud and conflict of interest, misuse of information, of powers and of resources, as well as indecent treatment of colleagues or citizens/customers (work-related) and private sphere misbehaviour are among the types of integrity violation. In global debates about integrity, corruption often is the dominant concept. A ‘Western bias’ in research and policymaking is often suggested. That opens the discussion about the possible content of global ethics, a global idea of the moral norms and values that are relevant for integrity. I added the possibility of a non-Western bias (when only corruption and fraud are addressed and many other integrity violations are ignored). Future research at an international and global level could bring more clarity.

Integrity, integrity violations and integritism  65 5.

6. 7. 8.

9.

Given the importance of integrity and the radicalness of accusations of violating integrity, it is crucial to limit the use of the I-word to situations in which it is justified. Integritism points at the inappropriate use of the I-word (mixing behaviour and outcome, mistakes without the moral meaning, overgeneralisation). Most of what has been said and suggested is in my view relevant and applicable in the public and private sector. More comparative research is necessary to make that more plausible. Integrity focuses on behaviour which makes it logical that public and business integrity concentrate on the integrity of individuals (politicians, civil servants, managers, employees). The concept of organisational integrity can refer to the integrity of everybody’s behaviour but also opens the discussion about the integrity of collectivities (communities, societal sectors, groups and of course organisations). Then it is again important to distinguish between collective and organisational integrity (how) and organisational and collective ethics (how/process and what/outcome). Organisational integrity also puts the question on our (research) agenda what the relevant moral values and norms are to consider for judging the integrity of the whole organisation. We should avoid ‘organisational integritism’.

NOTES 1.

In this chapter I will build on my previous publications. The sources will be clarified, as well as how the text is copied, summarised, and adjusted. 2. Building on the texts of Huberts (2014, 2018). 3. Please keep in mind that almost always ‘my view’ is referring to ‘our view’ (in particular of the research group at the Vrije Universiteit of which I was and still am a member). 4. It is difficult to choose in English the adjective for the noun ‘integrity’. Carter (1996), for example, used the adjective ‘integral’; ‘integer’ is common in French (integre), German (integer) and Dutch (integer). Because the term ‘integer’ seems inappropriate in English, and ‘integral’ refers more to integrality then integrity, in English the term ‘integritous’ is chosen. 5. Based on Huberts and Van Montfort (2021).

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PART II PERSPECTIVES ON ORGANISATIONAL INTEGRITY

6. A nature perspective on organisational integrity Craig Dunn

This chapter unfolds in two parts. The first is a descriptive story outlining the root causes of the decline in the population of southern resident orca whales in the Salish Sea – an area spanning the very north-western coast of the United States and the very south-western coast of Canada. The telling of this story reveals the current challenges facing these orcas who are struggling to survive in a highly modified ecosystem. More importantly, the telling pulls back the curtain as to how the interconnectedness of a natural system – one predating the invasion by humans largely coming from Europe and carrying with them a reductionist pre-industrial mindset – had effortlessly evolved to be well equipped to support the orcas. The second is a normative interpretation of how values embedded within a natural integrated system such as that which had historically supported the southern resident orcas can inform a more humane construct of moral integrity – and thereby organisational integrity.

CONTEXT: THE STORY There is little more majestic than the sighting of an orca breaching here in the Pacific Northwest region of the Americas. Such whale breaches emblazon an iconic image in the mind of the observer – one that for many fully represents life in this part of the world. As to orcas themselves, the raw statistics are rather straightforward: adult orcas range from 25 to 30 feet long, depending on gender, and can weigh from 8,000 to 16,000 pounds. Perhaps more interestingly, orcas are known to live long lives – with males living to be up to 60 years old and females up to 90 years of age. But before proceeding with an exploration of these behemoth mammals and the interconnected web of systems that support their well-being, it is worth reflecting on the land and sea that comprise the primary ecosystem the species occupies. It was not long ago this general area was routinely referred to as Puget Sound. Greater precision had been offered by the Washington State Legislature – yes, a public governance body – as cited in the Encyclopedia of Puget Sound: Puget Sound and related inland marine waters, including all salt waters of the state of Washington inside the international boundary line between Washington and British Columbia, and lying east of the junction of the Pacific Ocean and the Strait of Juan de Fuca, and the river sand streams draining to Puget Sound as mapped by water resource inventory areas 1–19 in WAC 173-500-040 as it exists on July 1, 2007. (RCW 90.71.010: Definitions, n.d.)1

What is striking about this definition is the veneration for international boundaries that is clearly embedded in the language. The term Puget Sound is itself a decidedly European-centric construction of reality,2 now conceived as ending abruptly at the northern border between the 70

A nature perspective on organisational integrity  71 U.S. and Canada. From a political vantage this may make sense – but nature, or topography, or geography, or biology, or chemistry does not always, or even usually, respect international political boundaries. The restrictive and partisan terminological inferences of the label Puget Sound has for over several decades given rise to a well-orchestrated undertaking to offer a more inclusive definition of the region that better embraces the interconnected structures that support the fauna and flora – and culture – of the area. The naming that has gained traction is Salish Sea. To again cite the Encyclopedia of Puget Sound: The Salish Sea extends across the U.S.-Canada border, and includes the combined waters of the Strait of Georgia, the Strait of Juan de Fuca, Puget Sound and the San Juan Islands. The name Salish Sea was proposed in 1989 to reflect the cross-border ecosystem. Both Washington State and British Columbia voted to officially recognize the name in late 2009. The name honors the Coast Salish people, who were the first to live in the region. (Salish Sea: Naming, n.d.)

It is critical to note that adoption of the Salish Sea lexicon by the two national bodies referenced herein was preceded in 2005 by collective action of “70 tribes and First nations from Washington State and British Columbia that are located on or near the Salish Sea [who] joined together … to protect and manage the resources of their Salish Sea” (Webber). In their convening – known as the CoastSalishGathering – there was explicit adoption of the Salish Sea name as the following statement of commitment was certified: We have come together to share, prioritize, develop and recommend policies and actions to ensure the protection of our shared environment and natural resources of our homeland, the Salish Sea. (Webber)

Three years later – and that would be one year prior to action taken by the governing bodies of Washington State and British Columbia – a shared mission statement by the Coast Salish Gathering offered two references using the Salish terminology: “To conserve and restore the Salish Sea ecosystem to a level that insures the sustainability of the Coast Salish People and our cultural life always” (Webber).3 So a bit of foreshadowing would be apropos here. One story throughline that is being devised should be apparent – that the logic behind adoption of the Salish Sea terminology is grounded in viewing the region as an integrated system, and furthermore that embracing integrated systems thinking as a mindset will be instructive in terms of evolving a nature-based conception of moral integrity. But now back to the orcas. It has continually been the case that reference to orcas and/ or killer whales has been terminology used interchangeably. And yet there are essential and useful distinctions between these two constructs – this is not a distinction without a difference. The first distinction to be made is between whales and dolphins. Turns out orcas are not whales at all; they are rather the largest member of the dolphin family. But there is a more fundamental point to be made: while orcas and killer whales currently are identified as a single species, there is not universal agreement that this is an accurate categorisation. Within several species there have been identified ecotypes that may eventually exhibit enough disparate characteristics that they will be reclassified as distinct species. One expert – Lance Barrett-Lennard – who has extensively studied orcas suggests there are currently at least 10 individuated ecotypes of the species.4 And he further crucially notes:

72  Research handbook on organisational integrity For now, I often refer to Orcinus orca as a species complex … a cluster of closely related, as-yet unnamed species … [w]e might eventually call them subspecies or even species, but using those terms properly means formally revising the taxonomy of Orcinus orca, which hasn’t been done yet.

Now on to the facts regarding the south resident orca population – and how this community is distinct from what are more widely known as killer whales. The foundational dissimilarity here is between transient and resident orcas. As the tags imply, the geographic range of the former is considerably more expansive than that of the latter. It is these unlocalised orcas that are often considered killer whales. Their “pods are typically comprised of two to five whales, often found skulking silently around rocky shores near the haulouts of acoustically aware seals or sea lions” – one of their chief food sources.5 The small numbers of orcas in such transient pods allows for effective – and collaborative – stealth hunting. And here is another distinction with a difference, well outlined on the David Suzuki Foundation website: Southern residents are known as “salmon whales” because of their intimate and unique connection with Chinook. More than 80 per cent of their diet is Chinook salmon – the population eats more than 1,400 Chinook a day. They share their catch with each other, indicating their social cohesion. Their fish-eating habits differentiate them from transient orcas, which eat marine mammals, and offshore orcas, which have a more general diet that includes sharks, fish and more.6

Then there is the more fundamental distinction to be made between the socialisation habits of transient and resident orca populations. Returning to the David Suzuki Foundation as a source of responsible information, “Salish Sea [resident] orcas are social and genetically isolated from other orcas found in Canadian Pacific waters, including transient and offshore orcas … [a]lthough northern and southern populations overlap in range, they do not interact or interbreed.” To now return to the opening reference in this chapter regarding orcas in the Pacific Northwest, Barrett-Lennard offers a prescient observation: “even if, on the whole, Orcinus orca has enough individuals to be considered not at risk … regional populations of killer whales can be small and highly specialized, and therefore vulnerable to exploitation, disturbance, prey reductions and habitat deterioration.” And so here is another distinction that is a difference. The Salish Sea resident orcas are an endangered species. No, perhaps not a separate species – yet. But consider the following: The southern resident community is a unique extended family, or clan [or ecotype], that is distinct and has no interactions with other orca populations. Both male and female offspring remain with their mothers throughout their lives.7

Conjoin this observation with the fact that the U.S. Environmental Protection Agency has declared “Southern Resident Killer Whales [orcas] have been listed as endangered species in both the U.S. and Canada, and their population is closely tied to the overall health of the ecosystem.” So another bit of moral integrity foreshadowing. Within integrated systems, distinctions with a difference matter. One cannot, or at least should not, treat all ostensibly similar contexts as if they are identical. There are often gradations within integrated systems that demand attention be given to these specific points of differentiation – and that correspondingly demand tailored expressions of ethical response. Think moral pluralism here.

A nature perspective on organisational integrity  73 All orca communities are not created equal. The Salish Sea resident orcas are unique, if not in their range of travel, then in both their socialisation predilections as well as their deeply rooted Chinook-eating preferences. These propensities, when conjoined, have colluded to create a perfect storm of slowly declining numbers for resident orcas – a distinction that now has these mammals officially categorised, as noted above, as an endangered species. Not all distinctions are meritorious, after all. So how are the unique resident orcas in this specific region faring today? The numeric data is abundant.8 The annual monitoring of the southern resident killer whale population has revealed variations in population size over time. The initial population census conducted in 1973 recorded the sighting of 66 whales. Subsequently, the population experienced a surge, reaching its peak at 98 individuals in 1995. However, it then underwent a decline, with a count of 80 individuals in 2001, followed by a period of moderate growth, resulting in 89 individuals by 2006. Since 2006, the population has exhibited a general downward trend, without displaying any indications of recovery, with only 74 individuals reported as of December 2020. There is deep concern that in spite of now officially holding endangered status these mammoth mammals have suffered at best a stable population over the past 60 years. And the obvious question hangs in the air: why have recent protection measures specifically crafted with the intention of expanding the number of orcas been essentially ineffective in yielding a rebound in the population of southern resident orcas? These data present an opportunity for additional insight foreshadowing a critical dimension of moral integrity. When confronted with ethical challenges, it is essential to address not only symptoms, but rather root causes. Changes in outcomes matter, but crafting solutions that are enduring necessitates consideration be paid to the underlying causes of observable harms. The consensus across data sources is striking when it comes to isolating the core reasons for the decline in numbers of orcas in the Salish Sea. One of the most egregious and impactful and well-documented origins of orca population degeneration occurred in 1970 as “[o]ne of the most infamous capture incidents saw over 80 whales from the Southern Resident population of orcas in Washington State rounded up in Penn Cove … [s]even were taken into captivity while as many as five whales died.”9 Why the captures? Entertainment. The lives of these majestic creatures were monetised as a mechanism for producing revenue for theme parks that featured the mammals as a mere means to the end of generating profit for investors. But while this single event accounts for a significant population drop at a particular point in time, it does little to explain the overall contraction in the population of orcas over the decades that followed. Thankfully, orcas are no longer being captured for their entertainment value. So why have they so consistently suffered a forfeiture in total numbers over such a prolonged period of time? There are several consistent reasons, the first having to do with a decline in the food source of this specific subspecies. While Chinook salmon have exhibited a remarkable resilience when confronted with adversity, the data tell a story that is conclusive. The total abundance of Chinook has exhibited a declining trend since 1984. According to data supplied by the Washington Department of Fish, the Chinook population was approximately 900,000 in 1984 and has gradually decreased to 400,000 in 2010.10 Resident orcas in the Pacific Northwest are starving. As a result, they are spending less and less time in the region – opting to instead range further and further from their preferred habitat to coastal regions north and south of the Salish Sea. According to the data provided by the Orca Behavior Institute,11 the Southern Resident Killer Whales were present in the Salish Sea

74  Research handbook on organisational integrity for an average of 24 days in May, 29 days in June, and 28 days in July during the period from 1995 to 2005. However, in 2019, their presence in the Salish Sea decreased significantly, with only three days observed in May, no days in June, and just two days in July. Root cause analysis demands that one continues to ask probing questions. Most enlightening here is the “5 whys” process: The method is remarkably simple: when a problem occurs, you drill down to its root cause by asking “Why?” five times. Then, when a counter-measure becomes apparent, you follow it through to prevent the issue from recurring.12

In this particular case, why is the Chinook salmon population in decline? One answer is that Chinook salmon are not spawning in the numbers they have previously. So why are the Chinook salmon not spawning as prolifically as they have in the past? One answer is they have lost the capability to follow their innate impulse to travel customary paths to their spawning grounds. So why have Chinook salmon lost the ability to travel to their historic spawning grounds? One answer is that there are dams impeding their ability to do so. And herein lies perhaps the most controversial aspect of the gradual and consistent decline in the population of the orca population in the Salish Sea. There has recently been, at the federal level, a call for removal of four dams on the Snake River, in order to restore the natural spawning opportunities for the Chinook salmon: Construction of the first dam on the lower river, Ice Harbor, began in 1955. Lower Monumental followed in 1969, Little Goose in 1970, and Lower Granite in 1975. The dams stretch from Pasco, Washington to near Pullman, Washington, and stand between migrating salmon and 5,500 miles (8,850 kilometers) of spawning habitat in central Idaho.13

It should be noted the Snake River is a tributary that feeds the Columbia River – with the latter being in part a natural border between the states of Oregon and Washington. This river system also serves as a major water passage for freight moving by barge from east to west in the region. Further, the reservoirs behind the dams offer recreational opportunities to literally thousands of local residents and visitors each year. And the reservoirs are a source of irrigation for farmers that grow crops that feed both people as well as livestock. Additionally, the dams provide an enormous amount of clean energy to the region.14 And of course the dams also provide flood control in an area that might otherwise be subject to intermittent and significant disruption from severe rainfall. But the reality for the orcas, and for the Chinook salmon on which they rely for 80 per cent of their food intake, is that the current spawning migration system is not working.15 In spite of fish ladders and/or elevators designed to allow for effective upstream passage of adult spawning salmon around dams, and in spite of downstream sluicing programmes designed to prevent juvenile salmon from being pulverised by dam turbines as they transit from their fresh-water headwaters to the Salish Sea, there remain serious obstructions to the ability of Chinook salmon to maintain their historic reproductive capabilities. Beyond this are the implications for tribal nations, for whom connections with land, water, salmon, and orcas provide the warp and woof to the tapestry of their lives. In their article in The High Country News, Hayley Austin and Anna Smith (2023) offer the following insight – which cuts to the spirit of the connection between person and planet, an essential element of moral integrity:16

A nature perspective on organisational integrity  75 The Nez Perce, Yakama Nation, Shoshone-Bannock Tribes, and the Confederated Tribes of the Warm Springs and of the Umatilla Indian Reservation have long seen the Snake as a living being, both in its ecological functions and through the relational act of fishing. The dams upset tribal relationships to the river and violate treaty rights by causing the loss of salmon and land and restricting tribal lifeways. So the tribes have vocally supported dam removal.

There are other challenges, beyond reliable food access, that confront the resident orca population in the Salish Sea. While boat strikes are rare, with a population now numbering barely over 70 the loss of even a single life – particularly given the familial nature of this ecotype of the orca species – can prove devastating. Sonar systems now in common use on seagoing vessels have additionally proven disruptive to the ability of orcas to maintain critical communication with one another. Contaminants in storm water runoff from urban areas is increasingly fouling the very water that is the literal lifeblood for these mammals. And the list goes one – with one common theme: all these challenges to the well-being of orcas are originating from the actions of humans who increasingly see themselves as disconnected from the remainder of nature. And a final bit of foreshadowing is in order here, before attention fully turns to addressing how moral integrity can be informed by a healthier understanding of natural systems. Respect nature: it has been working for millennia to create arrangements that are well-integrated and effective in terms of maintaining balanced systems. Counter to this are disruptions – human disruptions – that while having anthropocentric benefits are devastating to the perpetuation of other species and the planet more generally.

APPLICATION: BIOINTEGRITY Many will likely be familiar with the concept of biomimicry, which has been well introduced and elaborated by Janine Benyus: According to the Biomimicry Institute, biomimicry can be defined as “an approach to innovation that seeks sustainable solutions to human challenges by emulating nature’s time-tested patterns and strategies. The goal is to create products, processes, and policies – new ways of living – that are well-adapted to life on earth over the long haul.” Biomimicry is a process based on the observation of our planet and its 3.8 billion years of evolution and development. Historically, biological organisms (animals, plants, microbes) have been able to develop strategies to survive, optimize their organization and functioning, and adapt their form to their function. As noted by the American biologist Janine Benyus, a renowned specialist in biomimicry: “Nature has already solved all the challenges we face. Failures have become fossils, and what surrounds us is the key to survival”. Benyus was the first scientist to pioneer the notion of biomimicry in the late 1990s by developing the basic premise that human beings should consciously emulate nature’s ways when looking for solutions to their problems, products and policies. (Venturini, 2021)

What is universally distinct regarding the concept of biomimicry is that the focus is on finding solutions to very specific and particular problems. What can we learn about solving the challenge facing bullet trains as they transition from one medium to another, creating a sonic shock wave as they exit tunnels – from observing the shape of the kingfisher’s bill as it moves from air to water in pursuit of prey, all with barely a ripple? What can we learn about ways to reduce the turbulence and resulting strain at the wingtips of commercial aircraft – from observing the contour of the wings of birds of prey in flight? What can we learn about natural and efficient means of cooling human domiciles – from observing termite mounds? What can we learn

76  Research handbook on organisational integrity about how to reduce the drag on the blades of traditional wind turbines – from observing the structure of the leading edge of the flippers, fins and tails of whales and dolphins? The concept of biointegrity is meant to move from the micro approach of biomimicry to a more macro perspective – asking whether or not humans can find in nature examples that would serve to inform our construction of integrity, and more particularly moral integrity. Thus the essential theme throughout the second wave of this chapter is that the words integrated and integrity are and should be inextricably linked. Systems of interdependence exist naturally in nature and can serve as exemplars for human moral action – if we actively seek out connections and associated consequences. Herein lies the power of the initial story. As we observe the plight of the southern resident orcas off the west coast of North America, it is apparent there are a plethora of interrelated causes that have conspired to push this specific ecotype to the brink of extinction. The orcas are part of an integrated system that has been systemically disrupted by the only species that is more widespread globally than its own: humans.17 Such incursions have had multiple unintended yet foreseeable consequences that have imperilled this ecotype of orcas. And embedded in this observation is a lesson about moral integrity: Lesson 1: Persons of integrity actively anticipate the unintended foreseeable negative consequences of their actions, and put in place mechanisms to mitigate these impacts – or avoid the contemplated initial action altogether. The Snake River dam removal proposal is instructive here. Early on in the dam design phase and construction process key decisionmakers were well aware of the negative consequences these four dams would have on the natural migration of Chinook salmon to their traditional spawning grounds. Mitigation efforts were put in place, these involving building into the planning process fish ladders and elevators – as well as a trucking and in draconian cases an airlift system that would move juvenile salmon around or over the dams so they would not be pulverised by the blades of the turbines that were running generators that supplied electric power to thousands of local residents. Additionally, fish hatchery construction and fish-stocking practices were implemented in an attempt to offset the reduction in what had been prolific naturally-reproducing fish populations. However, these mitigation efforts have been deemed largely ineffective. The number of salmon that successfully utilise the fish ladders and elevators has never resulted in reaching the spawning levels that occurred prior to the dam construction. And now there is escalating tribal and national political momentum to simply recognise the dam construction as, in the final analysis, a failed enterprise – and to remove them. Which leads to a second dimension of integrity: Lesson 2: A critical aspect of moral integrity is admitting when you are wrong, followed by remediating past harm and preventing future harm. Attempts to modify deeply complex integrated systems is oftentimes a fool’s errand. Nature has been at work since time immemorial crafting a give-and-take that benefits the majority of the species on the planet. A balance has been found throughout this progression. Of course, there are instances of natural extinction of species. But the sheer number of species that have

A nature perspective on organisational integrity  77 been pushed to the brink since the advent of the industrial age is mind-boggling. Consider a recent report published by the United Nations:18 The average abundance of native species in most major land-based habitats has fallen by at least 20%, mostly since 1900. More than 40% of amphibian species, almost 33% of reef-forming corals and more than a third of all marine mammals are threatened. The picture is less clear for insect species, but available evidence supports a tentative estimate of 10% being threatened. At least 680 vertebrate species had been driven to extinction since the 16th century and more than 9% of all domesticated breeds of mammals used for food and agriculture had become extinct by 2016, with at least 1,000 more breeds still threatened.

What is here referenced are predictable outcomes of critical choices that have now become manifest – many in the economic sphere by dominant individuals with a vested self-interest in disregarding unintended consequences and little if any interest in remedying harms their very actions have generated: in short, by people who do not exhibit integrity as defined to this point. Thankfully this same report drafted by the United Nations does not limit itself to cataloguing the degree of harm done over the past century; rather it begins with advocating for an ecosystem perspective that embraces the integrated nature of wealth, health, quality of life, and the well-being of “all other species”: “The overwhelming evidence of the IPBES Global Assessment, from a wide range of different fields of knowledge, presents an ominous picture,” said IPBES Chair, Sir Robert Watson. “The health of ecosystems on which we and all other species depend is deteriorating more rapidly than ever. We are eroding the very foundations of our economies, livelihoods, food security, health and quality of life worldwide.” “The Report also tells us that it is not too late to make a difference, but only if we start now at every level from local to global,” he said. “Through ‘transformative change’, nature can still be conserved, restored and used sustainably – this is also key to meeting most other global goals. By transformative change, we mean a fundamental, system-wide reorganization across technological, economic and social factors, including paradigms, goals and values.”

The sentiment suggested in this preamble to the full IPBES report is a clear reflection of Lesson 2 outlined above. There is another integrity lesson embedded in both the initial story as well as the implicit decision model that is (over)used in a business as well as a public policy context. Oftentimes decision models are structured in such a way that these privilege cost–benefit analysis above alternative but equally legitimate ways of thinking about how to best determine right versus wrong. So, for example, when it comes to dam construction the costs in terms of both financial investment and reduction in Chinook salmon spawning migration is suggested as overshadowed by the benefits in terms of clean energy production and shipping efficiencies and enhanced recreational opportunities and farmland irrigation and flood control. However, those advocating for moral pluralism promote finding a balance between principles, and outcomes, and fairness, and caring, and liberty, and virtue, and the planet (see, e.g., Burton, Dunn, & Goldsby, 2006). Embracing this polymorphist perspective supports a third qualification for being a person of integrity: Lesson 3: Moral integrity necessitates the ability to accurately differentiate among alternative ethical perspectives, select those that are most relevant to the situation at hand, and structure decisions accordingly.

78  Research handbook on organisational integrity Again, the importance of storytelling. The tension in the dam removal decision – and if an accurate and comprehensive unintended consequence analysis had initially been completed then perhaps such removal would not have to be contemplated, as the dams would never have been built in the first instance – is in some ways the stress that exists between principles and outcomes. Members of the first nations in the region have legitimate, guaranteed, legal, deontological rights to continue fishing practices they have practised for generations – which are not only financially beneficial but more importantly reinforce their connection with the land and sea. Construction of the dams has proven to be an incursion on these rights, which are now being leveraged to overturn the utilitarian benefits related to energy, shipping, recreation, irrigation, and flood control. The argument here is that a person of integrity should be deeply familiar with a range of ethical perspectives and theories, be able to identify which are most applicable to a particular circumstance, and be adept at both exploring and resolving any dilemmas that are presented by competing conceptions of morality. Integrity is in part about impartiality in the application of alternative moral models – but further requires rigor in the selection and implementation of those frameworks that are most relevant to the circumstance at hand. No time like the present to revisit a foregoing work of mine (Dunn, 2009) that defined integrity as necessitating internal coherence, external consistency, value–behaviour congruence, temporal stability, and permanence across roles. The abstract for this article follows: Integrity is a concept oftentimes referenced in organizational studies, but not well understood as a theoretical construct. This paper aims to remedy this shortcoming by honing in on a conception of integrity grounded in the writings of moral philosophy. In order to accomplish this, competing definitions of integrity will be vetted. The concept of integrity will be critically distinguished from those of virtue, character and honesty. Integrity will next be explored as consistency across contexts, coherence between values and action, stability over time, permanence across roles, and union of ethical perspectives. Finally, the notion of organizational integrity will be assessed and suggestions for operationalization of the integrity construct offered. (Dunn, 2009: 102)

What a huge opportunity it is to now let you know how my thinking has evolved over the past 15 years. Upon first writing I viewed this standpoint on integrity as a quite linear model – with my left brain at that time taking prominence. More particularly, I imagined that personal moral perspectives would always have to yield to social norms, should there be a conflict between the two. But my right brain having now finally gained some eminence I see in great particularity the ways in which one’s personal ethical perspectives can be instrumental in shaping cultural norms over time – if one has the moral courage to advocate for critical social change. Thus – Lesson 4: When social norms conflict with well-thought-through core moral values, embedded within a person of integrity is the resolve to spend political and social capital to the end of favourably shifting the perspective of society writ large. So what is moral courage, and why does it matter? Osswald et al. (2010: 393) offer the following description: Moral courage is a prosocial behavior with high social costs and no (or rare) direct rewards for the actor … In situations which demand a moral courageous intervention, instances of injustice happen, human rights are violated, persons are treated unfairly and degrading, or nature and cultural assets are in danger; these situations are about discrimination against foreigners or other minorities, violence

A nature perspective on organisational integrity  79 and aggression against weaker individuals, sexual harassment or abuse, mobbing, or illegal business practices.

It is not at all difficult to find examples of moral courage; these tend to be legendary, unfortunately due to their rarity – but are at the same time memorable. Sometimes it is the pen, or the person behind the pen, that is the instrument for social change. Consider what it took, in 1863 and in the midst of a deep fissure in the very fabric of society in the United States, to suggest “[f]our score and seven years ago our fathers brought forth on this continent a new nation, conceived in liberty, and dedicated to the proposition that all men are created equal … [n]ow we are engaged in a great civil war, testing whether that nation, or any nation so conceived and so dedicated, can long endure.” The speech was less than two minutes long and fewer than 275 words. What was most impactful was that over the 87 years since the founding of the country the language “all men are created equal” had taken on new meaning in the minds of many. Social norms were shifting, and the language no longer referred exclusively to white men who owned property. The phrase now, Abraham Lincoln was denoting, included black men as well. Yes, still only men – women were not allowed to vote in the country until 1920, and it took an amendment to the Constitution of the country to memorialise this right. And in both cases – that of extending rights to black citizens and women citizens – it was the voices of courageous individuals speaking their truth to the power of the time who bent the long moral arc of history towards justice.19 Another example. Several years ago now a great controversy was unfolding in the Pacific Northwest. A Seattle-based company, SSA Marine, proposed constructing and operating what would have been the largest bulk goods shipping terminal on the west coast of North America. The site would have been at Cherry Point (or Xwe’chieXen as the Lummi Nation for whom the area is traditional territory reference the land), a natural deep-water terminal on the coast of Washington State that is 8.7 miles from the Canadian border. Cherry Point currently houses the largest refinery in the state. It was well known that the term “bulk goods” in the SSA Marine proposal was a euphemism for coal – coal that would be mined in the states of Montana and Wyoming, transferred by rail roughly 1,000 miles to Washington, and then transported roughly 6,000 miles by ship to China. As the proposal went through the public hearing process, there was clearly no consensus among all key stakeholders as to whether this was a good or a bad idea; the environmental impact study similarly offered no clear conclusions on this matter, in spite of the depth of the utilitarian analysis contained therein. But then, decisions are not all about cost–benefit analysis (see Lesson 3 above). It so happened that the ships that would be retrieving the coal from Cherry Point would have had to round the southern tip of Vancouver Island in Canada in order to proceed through the Salish Sea to the west coast of Washington. In so doing, they would have had to traverse an area of water to which the local Lummi held fishing rights. It was the U.S. Army Corps of Engineers that held the final decision authority to issue the permit for what would have been known as the Gateway Pacific Terminal. In their statement of findings is the following language:20

80  Research handbook on organisational integrity After careful consideration of all the information available to him, Seattle District Commander Col. John Buck has determined the potential impacts to the Lummi Nation’s usual and accustomed (U&A) fishing rights from the proposed Gateway Pacific Terminal are greater than de minimis. Because the district has determined the effects to the Lummi’s rights are more than de minimis and because the Lummi maintain their objections to this proposal, the project cannot be permitted by the Corps.

The term de minimis has come to hold a fairly precise legal meaning; according to the Cornell law school, “[d]i minimis is something that is very trifling or of little importance … [u]sually refers to something so small, whether in dollar terms, importance, or severity, that the law will not consider it.”21 The Army Corps of Engineers unequivocally determined the impact of the terminal construction and operations on the treaty rights of the Lummi Nation would not be “trifling or of little importance.” The response of the then-Lummi Nation Chairman Tim Ballew affirmed the Corp’s decision: This is a historic victory for treaty rights and the constitution. It is a historic victory for the Lummi Nation and our entire region. We are pleased to see that the Corps has honored the treaty and the constitution by providing a decision that recognizes the terminal’s impacts to our fishing rights. This decision is a win for the treaty and protects our sacred site. Our ancient ones at Xwe’chieXen, Cherry Point, will rest protected. Because of this decision, the water we rely on to feed our families, for our ceremonies and for commercial purposes remains protected. But this is more than a victory for our people; it’s a victory for treaty rights. Treaty rights shape our region and nation. As tribes across the United States face pressures from development and resource extraction, we’ll continue to see tribes lead the fight to defend their treaty rights and protect and manage their lands and waters for future generations. The impact of a coal terminal on our treaty fishing rights would be severe, irreparable and impossible to mitigate. Today’s victory is monumental and the Corps followed a fair process defined by law to make the right decision. The Corps has honored the treaty between Lummi and the United States. We will always fight to protect Xwe’chieXen.

Integrity in action, consistent with the four lessons outlined in this latter part of the chapter.

CONCLUSION Nature is comprised of complex, interconnected, interdependent structures that throughout time immemorial have evolved to be fully integrated systems. They are metaphors for integrity. The initial story providing the grounding for this chapter was meant to illustrate the variety of ways in which hubris has served to disrupt the natural order of nature in ways that are disruptive to other species – and ultimately to our own species as well. The application was meant to provide specific lessons that illustrate integrity in action in ways that will inspire us to do better. If I could offer a charge – and I won’t presume to have any authority to do so – let us pay attention to and respect natural systems, identify the characteristics of these systems that lead to their smooth functioning, and then apply these learnings to our individual moral choices. In so doing, we will evolve into persons of integrity. And then the matter of humility. More than anything else, my observations of natural systems has led me to the conclusion that we are part of nature, not dominators of nature. That

A nature perspective on organisational integrity  81 is a normative, not a descriptive, claim. Our efforts throughout time to reform nature for our own self-regarding purposes have never led to good outcomes. Nature has got it right – and if we are to get it right, we need to set aside any notion of dominion we might hold to. We need to simply listen to nature, with not a mind attuned to reformation of “the other” – but with a mind attuned to self-renewal. Finally, a note regarding organisational integrity. Organisations are fully social constructions of reality, and as such cannot be considered moral or immoral (Dunn, 1991). They have no agency, nor any ability, to act on their own behalf. So they therefore have no capacity to exhibit integrity, which is a characteristic unique to the human animal. This having been said, it can legitimately be claimed that leaders and managers of organisations have the obligation to structure organisations in such a way that those who work on behalf of the institution manifest the characteristics of moral integrity in their everyday work. Practically, this means positive exemplars of integrity on the part of employees should be celebrated, and at the margin performance evaluation systems should be structured in such a way that worker integrity is routinely assessed – with accompanying rewards and sanctions. It is only by so doing that the concept of moral integrity can become reality within organisations.

NOTES 1. WAC refers to “Washington Administrative Code,” while RCW refers to “Revised Code of Washington.” 2. The sound, called Whulge by the Salish Indians, was explored in 1792 by British navigator George Vancouver and named by him for Peter Puget, a second lieutenant in his expedition, who probed the main channel. 3. It is worth noting there is not full consensus as to the advisability of using the term Salish Sea; Buerge (2021) has argued that “It has been convenient regionally to identify all these languages as Salish or Coast Salish but the old practice does not reflect the renewal of identity that native groups have labored for over a century to achieve … [t]hat goal is to be called by their own names and not some bastardized white term.” 4. https://​baleinesendirect​.org/​en/​are​_there​_actually​_several​_species​_of​_killer​_whales. 5. www​.orcanetwork​.org/​orca​-resource​-center/​orcas​-of​-the​-salish​-sea. 6. https://​davidsuzuki​.org/​what​-you​-can​-do/​get​-to​-know​-the​-salish​-sea​-orcas/​. 7. www​.orcanetwork​.org/​orca​-resource​-center/​orcas​-of​-the​-salish​-sea. 8. www​.epa​.gov/​salish​-sea/​southern​-resident​-killer​-whales. 9. https://​uk​.whales​.org/​our​-4​-goals/​end​-captivity/​orca​-captivity. 10. www​.thesalishseaschool​.org/​orcas. 11. www​.thesalishseaschool​.org/​orcas. 12. www​.mindtools​.com/​a3mi00v/​5​-whys. 13. https://apnews.com/article/dams-spokane-salmon-climate-and-environment-9ae99854d619​ 87e42da9a9​24df286142​#:​~:​text​=​SPOKANE​%2C​%20Wash​.​,​%2411​%20billion​%20to​%20​%2419​ %20billion. 14. One estimate from July 2022 is that “the cost of replacing the output would range from $425 million to $860 million per year through 2045, and that the reliability of the regional power system could depend on technologies such as hydrogen-fueled combustion turbines that are not yet readily available” (www​.nwcouncil​.org/​news/​2022/​07/​20/​lower​-snake​-river​-dams​-replacement​-power​-study​-by​ -e3). 15. For a dissenting point of view, see McKern (2016). 16. www​.hcn​.org/​issues/​55​.1/​indigenous​-affairs​-dams​-can​-dam​-removal​-save​-the​-snake​-river. 17. “As a species, orcas have the widest global range of any mammal except humans and may be seen in all types of marine ecosystems” (www​.orcanetwork​.org/​orca​-resource​-center/​orcas​-of​-the​-salish​

82  Research handbook on organisational integrity

18.

19. 20. 21.

-sea​#:​~:​text​=​The​%20three​%20Southern​%20resident​%20pods​,about​%2080​%25​%20of​%20their​ %20diet). The report, published in 2019, was drafted by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES). “The Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) is an independent intergovernmental body which provides policymakers with objective scientific assessments about the state of knowledge regarding the planet’s biodiversity, ecosystems and the benefits they provide to people, as well as the tools and methods to protect and sustainably use these vital natural assets.” (www​.cbd​.int/​cop/​cop​-14/​media/​ briefs/​en/​cop14​-press​-brief​-ipbes​.pdf). “We shall overcome because the arc of the moral universe is long but it bends toward justice.” Dr. Martin Luther King Jr., “Remaining Awake Through a Great Revolution.” Speech given at the National Cathedral, March 31, 1968. https://​nwtreatytribes​.org/​army​-corps​-denies​-coal​-terminal​-permit​-cherry​-point. www​.law​.cornell​.edu/​wex/​de​_minimis​#:​~:​text​=​Di​%20minimis​%20is​%20something​%20that​,on​ %20di​%20minimis​%20fringe​%20benefits.

REFERENCES Austin, H. & A. Smith (2023). Can dam removal save the Snake River? High Country News. www​.hcn​ .org/​issues/​55​.1/​indigenous​-affairs​-dams​-can​-dam​-removal​-save​-the​-snake​-river. Buerge, D. 2021. Why We Should Stop Calling it the Salish Sea. Post Alley: Seattle. 04/20/2021. www​ .postalley​.org/​2021/​04/​20/​why​-we​-should​-stop​-calling​-it​-the​-salish​-sea. Burton, B. K., C. P. Dunn, & M. Goldsby (2006). Moral pluralism in business ethics education: It is about time. Journal of Management Education, 30(1): 1–16. Dunn, C. P. (1991). Are corporations inherently wicked? Business Horizons, 34(4), 3–8. Dunn, C. P. (2009). Integrity matters. International Journal of Leadership Studies, 5(2), 102–125. McKern, J. (2016). The case against breaching the four lower Snake River dams to recover wild Snake River salmon. Fish Passage Solutions LLC, 1–14. Osswald, S., T. Greitemeyer, P. Fischer, & D. Frey (2010). What is moral courage? Definition, explication, and classification of a complex construct. In: C. L. Pury, & S. J. Lopez (Eds.), The Psychology of Courage: Modern Research on an Ancient Virtue. Washington, DC: American Psychological Association, pp.  149–164. www​.jstor​.org/​stable/​j​.ctv1chs3w5​.14. United States Environmental Protection Agency (2021). Southern Resident Killer Whales. 06/2021. www​.epa​.gov/​salish​-sea/​southern​-resident​-killer​-whales​#:​~:​text​=​Southern​%20Resident​%20Killer​ %20Whales​%20have​,overall​%20health​%20of​%20the​%20ecosystem. University of Washington: Puget Sound Institute. Geographic boundaries of Puget Sound and the Salish Sea. Encyclopedia of Puget Sound. www​.eopugetsound​.org/​articles/​geographic​-boundaries​-puget​ -sound​-and​-salish​-sea​#:​~:​text​=​The​%20Salish​%20Sea​%20extends​%20across​,the​%20entire​%20cross​ %2Dborder​%20ecosystem. Venturini (2021). What is biomimicry? EHL Insights. https://​hospitalityinsights​.ehl​.edu/​what​ -biomimicry. Webber, B. How the Salish Sea got its name. The SeaDoc Society. www​.seadocsociety​.org/​how​-the​ -salish​-sea​-got​-its​-name​#:​~:​text​=​As​%20well​%2C​%20the​%20indigenous​%20people​,shores​%20of​ %20our​%20inland​%20sea. Western Washington University: College of the Environment. Salish Sea Naming Project. https://​cenv​ .wwu​.edu/​si/​salish​-sea​-naming​-project.

7. An evolutionary perspective on individual integrity in organisations Marc Orlitzky

In two seminal articles, Becker (1998) and Locke and Becker (1998) theorised managerial integrity from an objectivist perspective. Rejecting relativistic, subjectivist, and intersubjectivist conceptualisations of integrity, Thomas Becker and Ed Locke persuasively presented the construct as based on Ayn Rand’s (1964) individualist philosophy (Peikoff, 1991). In an enormous service to the field, integrity was clearly distinguished from honesty and conscientiousness and defined as “loyalty, in action, to rational principles (general truths) and values” (Becker, 1998, p. 157; italics mine). Like that important conceptualisation of 1998, the evolutionary analysis of integrity in this chapter focuses on the individual level and does not refer to any higher units of analysis (e.g., the group or organisational level). Thus, I consistently refer to (individual) integrity in organisations (and other social entities) rather than the integrity of organisations. In fact, as already argued elsewhere (Orlitzky, 2018), methodological individualism (Homans, 1967) is, in my view, the most promising path forward in this area of research, as it is in economics (e.g., Hayek, 1980; Hoppe, 2007; Mises, 1963) and probably most other fields of inquiry in the social sciences. In general, this type of individualist theorising also seems most consistent with biological explanations (Dawkins, 1989; Nozick, 1977; Pinker, 2016). This chapter addresses an oversight in previous accounts of integrity in organisations: it describes the possible evolutionary origins of individual-level integrity, as defined above by Locke and Becker (1998), and presents the argument that integrity, like all other individual cognitive or psychological features (Barkow, Cosmides, & Tooby, 1992; Tooby, 2020), must ultimately be explained in terms of human evolutionary history (Lawrence & Nohria, 2002; Nicholson, 2000; Nicholson & White, 2006). Aided by such a correct biological description of human nature, an even more solid foundation of integrity can be offered than that of Locke and Becker (1998), especially as it relates to morality and ethics. The chapter starts with the premise that a rational metacognitive process is necessary to steer and control one’s emotions – moral and otherwise. So, the functions of morality will be clearly distinguished from those of integrity. After offering a modified definition, I explore the role of integrity (as defined herein) in the context of contemporary developments, pointing out the emergent complexities because of virtue signalling, mismatch, and possible dysfunctions.

RATIONALITY AS THE CENTRAL FEATURE OF INTEGRITY Today, the concept of integrity has become even more ambiguous than the vagueness noted by Becker (1998) as a key weakness of the construct. Unfortunately, the conceptual fragmentation and cacophony have only increased, not declined, since 1998 (Monga & Orlitzky, 2018). Integrity has variously been defined as (a) behavioural consistency, (b) steadfastness 83

84  Research handbook on organisational integrity in adversity, (c) moral or ethical behaviour, (d) authenticity, and (e) wholeness (Palanski & Yammarino, 2007). Even within only one of those dimensions, namely (c), it can be shown that explanations of moral behaviour are an intellectual morass (Locke, 2006). Because overly broad constructs run the risk of becoming meaningless (“Can you tell me what ‘integrity’ is not?”), a conceptualisation of integrity that is distinct from, and more precise than, morality and ethics would be helpful. Moral judgements are driven not only by altruism and the consideration of consequential harm but a wide variety of moral emotions, as the literature in moral psychology has pointed out (Casebeer, 2008; Haidt, 2013; Moll, de Oliveira-Souza, Zahn, & Grafmann, 2008; Tangney, Stuewig, & Mashek, 2007). According to Haidt’s (2007, 2008, 2012) cross-cultural theory, the moral foundations of harm, fairness, loyalty, authority, and sanctity have evolved in response to different adaptive problems centred on parental care, reciprocity, coalitions, hierarchies, and contamination, respectively (Kurzban & DeScioli, 2016). Influential research by de Waal (2006) suggests that moral emotions are, in the final analysis, grounded in human genetic inclinations, thus in turn rooted in hundreds of thousands of years of evolutionary history (see also Barkow et al., 1992; Plomin, 2018). However, because of numerous gene–environment interactions, it would be mistaken to postulate genetic determinism as a consequence (see also Hinde, 2002; Sapolsky, 2017). Morality as a Natural Coordination and Conflict Resolution Mechanism From an evolutionary perspective, moral emotions seem to be functional (Ariew, Cummins, & Perlman, 2002; Perlman, 2004; Wright, 1973) as a conflict resolution mechanism (Flack & de Waal, 2000) and coordination mechanism (Kurzban & DeScioli, 2016; Nozick, 2001). Social and territorial species like humans face constant conflict over resources, mates, and status. To resolve such conflict, at least three mechanisms can be deployed: dominance (bandwagon strategy), alliances, and moral judgements (Kurzban & DeScioli, 2016). When sides in conflict situations are chosen based on hierarchical control (bandwagon strategy), dominant individuals always win. When sides are chosen based on prior alliances, conflict escalation is likely (Snyder, 1984). Hence, in many social situations, the most effective way to resolve conflict is by relying on moral beliefs and representations as public signals (analogous to traffic lights) guiding individuals on how sides should be chosen (DeScioli & Kurzban, 2013). If morality is conceptualised as such a coordination mechanism, the requisite emphasis of moral systems on impartiality, non-consequentialism, and punishment for moral infractions is more easily understood (Kurzban & DeScioli, 2016). Overall, de Waal’s research on primates suggests that humans and their closest biological relatives do not inhabit a Hobbesian world where brutish power and selfishness rule, but are endowed with moral emotions that – at least sometimes – naturally predispose them toward pro-social behaviours (de Waal, 2006, 2013, 2019). Because some elements of human morality are observable in our closest biological relatives, morality is only in (small) part a cultural invention; instead, it is part of our evolutionary heritage (Barkow et al., 1992; de Waal, 2019; Flack & de Waal, 2000). Many sentiments like sympathy or guilt and (typically unspoken) norms of reciprocity serve the function of conflict resolution. Other moral emotions that signify moral condemnation are, for example, anger, impelling us to punish the violator of a moral rule (DeScioli & Kurzban, 2009; Haidt, 2012), and disgust, predisposing us to the avoidance of cheaters and other immoral operators in future (Hutcherson & Gross, 2011;

An evolutionary perspective on individual integrity in organisations  85 Schnall, Haidt, Clore, & Jordan, 2008). Moral judgements exhibit a considerable extent of emotive automaticity – without the involvement of reason as substantiated in the dorsolateral prefrontal cortex (dlPFC) of the human brain (Greene & Haidt, 2002; Haidt, 2001; Orlitzky, 2017; Sapolsky, 2017). Of course, in following their moral emotions, few individuals are expected to be as pro-social and self-sacrificial as Zell Kravinsky (Parker, 2004) because our biological drive of self-preservation sets a natural limit on the behavioural manifestation of these pro-social sentiments. However, to guide moral judgements in specific situations, humans need to rely on another control mechanism – something we may call integrity. Need for an Evolved Metacognitive Control Mechanism When individuals ponder the full range of implications of specific decisions regarding ethics, such as whether to blow the whistle on specific instances of organisational corruption (Bowden, 2014), the biological drive towards self-preservation, which counterbalances our moral impulses, will be useless as a decision aid because it does not allow for the detailed, situation-specific accounting of the inevitable trade-offs necessary for moral decision-making. Instead, for such a complex and contingent task an overarching metacognitive process is needed, exploring information about the problem in an objective and impartial way, considering all angles of any given decision, and assigning, at least implicitly, weights to different outcomes. This cognitive process requires fairly sophisticated processing of one’s intuitions and updating of one’s current understanding of the situation. In short, it involves thinking about one’s perceptions, information processing, emotions, and intuition and is, therefore, a metacognitive effort. Ultimately, this metacognitive effort is necessary to perceive reality accurately and consciously (Ghate, 2003) for making fully informed decisions. Objective reality exists independent of our perceptions and volitions (Peikoff, 1991; Popper, 1983). Because reason is fallible (Locke, 2006) it must be firmly entrenched in empirical, sensory information (see also Hayek, 1952). Thus, human reason is, when properly understood, non-Kantian (Hauser, 2006; Locke, 2006; Locke & Becker, 1998) – probably closer to Hume’s (1969) conceptualisation (see also Muller, 1997). That is, effective decision-making is not merely a process of introspection, but requires considerable inductive effort (Locke, 2006, 2007; Orlitzky, 2012). It demands careful observation of circumstances and makes logical predictions based on this knowledge. Good judgement requires regular testing and re-testing of assumptions, perceptions, and interpretations. As part of this information-processing task, all cognitive elements must be integrated without contradiction (Locke, 2006). The needed metacognitive control mechanism avoids the pitfalls of pro-social emotiveness and reality denial. First, moral decision-making can go wrong when it prioritises self-sacrifice and altruism (Locke, 2006; Rand, 1964). For example, Harman’s (2009) biography The Price of Altruism describes the psychopathology that could be triggered by excess altruism. Pathological altruists may harm themselves because self-interest is not properly integrated consciously; thus, seemingly altruistic acts are performed defensively, blindly, or irrationally (Sun, 2018). Unaided by proper cognitive integration (metacognition), pathological altruism may even harm the object of the focal actor’s altruism or third parties (Oakley, Knafo, Madhavan, & Wilson, 2012). Furthermore, wishful thinking that is divorced from facts and reality is also deleterious to good managerial decisions (Locke, 2006). Objective, impartial, conscientious attention to

86  Research handbook on organisational integrity data – and detail – is vital. Therefore, the overarching control mechanism of integrity sidesteps the partiality of a feminist ethics of care (Gilligan, 1982; Orlitzky, Swanson, & Quartermaine, 2006). Without integrity as an integrative control mechanism, individuals would often be at the whim and behest of external pressures and/or their inner emotions. In other words, to avoid being adrift cognitively, reason is an essential element in all judgement and decision-making for maintaining Aristotelian centredness and balance (Aristotle, 1975; Hartman, 2006). Although the conceptual and empirical analysis of morality may be focused on beliefs, attitudes, and judgements only (Kurzban & DeScioli, 2016) rather than action, integrity always has a behavioural component (Locke, 2006). So, if employee actions are inconsistent with their virtue-signalling pro-social rhetoric, which seems to be an occurrence as widespread today (Berthon, Ferguson, Pitt, & Wang, 2021; Orlitzky, 2018) as it was yesterday (Jackall, 1983), any observer’s attribution to, or conclusion of, the actor’s high integrity would be mistaken, even if the actor repeatedly insisted, in words, on the integrity of his/her motivations. Indeed, the actor’s lack of integrity in this case would not only be the result of a word–action gap, but also reflect only a superficial application of rational principles and values. Biological Function and Brain Structure How could the different cognitive processes described so far fulfil biological functions from an evolutionary-historical perspective? One answer is straightforward: relying on intuitions and emotions, while appropriate in some situations, is disadvantageous from the viewpoint of individual survival and prosperity because such decision-making automaticity, especially when it becomes excessive, misses the deliberative element of slow thinking (Gilovich, Griffin, & Kahneman, 2002; Kahneman, 2011). Emotive automaticity can be especially harmful in situations of direct Us/Them group conflict (Sapolsky, 2017), for example when emotional arousal is more pronounced in response to faces than words (Rellecke, Palazova, Sommer, & Schacht, 2011). The positive fitness value of rational and deliberative cognition (Plotkin, 2010) was the emphasis in the previous section. At the same time, reason without an emotive foundation is not only epistemologically naïve (Jacobs, 2004, 2018; Orlitzky & Jacobs, 1998) but is also likely to impede moral behaviour because it lacks its motivational drive (Sapolsky, 2017). It may, for example, lead to paralysis by analysis (Langley, 1995; Lenz & Lyles, 1985). In other words, moral emotions are vital behavioural anchors and drivers (de Waal, 2006, 2019; Thomas, Croft, & Tranel, 2011). Of course, the obvious fact of moral emotions and automaticity facilitating pro-social behaviours and, thus, strengthening group bonds may or may not be a persuasive functional explanation of their existence. Group selection remains one of the most controversial topics in evolutionary theory. Although some prominent evolutionary biologists (e.g., Gould, 2002; D. S. Wilson & Wilson, 2007; E. O. Wilson, 2012) defend the validity of group selection processes, group selection is, ultimately, an implausible explanation of most human behaviour (Pinker, 2016). Therefore, it will not be pursued in any further detail here; nonetheless, this topic remains a legitimate concern, even in the context of individual integrity. What needs to be emphasised here is that, from the viewpoint of sexual selection, a well-balanced application of emotion and reason may be considered most desirable, especially in the context of long-term mating. Long-term romantic partners are likely to reject individuals that are either unpredictable in their emotiveness or unemotional/emotionally stunted in deciding whom to help, how to cooperate, and so on (Buss, 2016). This goal ori-

An evolutionary perspective on individual integrity in organisations  87 entation of the required balanced interaction between a deliberative control mechanism and the emotional-intuitive substrate of sentiments would constitute naturalistic functionality in Godfrey-Smith’s (1994) analytic framework – reinforced by the perceiver (Millikan, 1986; Perlman, 2004). Somewhat speculatively from observations in comparative evolutionary psychology (i.e., across species), the long-term sexual partner’s preference for stable individuals with predictable behavioural patterns may be important signals in individuals with stable pair bonds and high paternal involvement in child-rearing; that is, in humans behavioural predictability and non-impulsiveness are cues signalling dependable parenting, analogous to males’ demonstration of parenting skills in several pair-bonded bird species during courtship rituals (Sapolsky, 2017). Notably, the structure of the human brain seems to reflect this differentiated (deliberative control) function of integrity in relation to moral emotions and the environment (objective reality) – at least to some extent. In general, different areas of the prefrontal cortex (PFC) seem to correspond to different types of cognitive processing discussed so far, although it must be emphasised that insistence on a stark dichotomy between reason and emotion would be misleading (Damasio, 2000; de Waal, 2013; Sapolsky, 2017). While the ventromedial PFC (vmPFC) tends to perform processes aligned with emotive automaticity, the dorsolateral PFC (dlPFC) reflects the kind of deliberative (meta)cognitive processing necessary for individual integrity (Greene, Nystrom, Engell, Darley, & Cohen, 2004; Greene, Sommerville, Nystrom, Darley, & Cohen, 2001). Generally, neurological studies support this proposition of the executive control function of the dlPFC in avoiding the siren calls of temptation (Greene et al., 2004; McClure, Laibson, Loewenstein, & Cohen, 2004). In short, this deliberative part of the brain helps individuals perform the “harder thing” (Sapolsky, 2017). Moreover, the anterior cingulate cortex (ACC) and other regions in close proximity to the dlPFC are involved in navigating conflict between two or more temptations (Volz, Vogeley, Tittgemeyer, von Cramon, & Sutter, 2015). At the same time, a well-developed dlPFC is a double-edged sword because the dlPFC has also been shown to be instrumental for effective lying (Yang et al., 2005; Yang et al., 2007). More specifically, pathological liars apparently have increased white matter (i.e., axons connecting neurons), but decreased grey matter (i.e., cell bodies of neurons). What makes matters about brain structure particularly interesting and complex is the fact that, in individuals that are honest to a fault, the dlPFC (and proximate regions) seem to be dormant during such cognitive processing (Greene & Paxton, 2009). Given this finding, to capture Cummins’s (2010) functional analysis and full complexity of moral cognitions, much more detailed causal and materialist mapping of neural processes and activation is needed in future empirical research (see also Orlitzky, 2017). In this preliminary development, I can only briefly allude to potential alignments of biological function and structure. Note that the evolutionary theorising presented herein also suggests a reason why the rational control mechanism is not typically focused on utilitarian principles. The abnegation of individual/personal enjoyment of life, as promoted by the architect of utilitarianism, John Stuart Mill, in favour of others’ happiness represents a deeply problematic ethic – a curious marriage of Christianity and hedonism (Locke, 2006; Peikoff, 1991). However, this normative problem by itself would not explain why the utilitarian calculus is not second nature to the cognitive processing for most of us. Rather, there is simply no compelling evolutionary reason for instilling a natural sense of maximising collective overall happiness in any part of the human brain (Greene, 2013; Sapolsky, 2017). The highest cognitive level that humans and

88  Research handbook on organisational integrity many other mammals probably go in assessing conspecifics’ happiness is through kin selection (also known as inclusive fitness theory) and reciprocal altruism – in other words, with respect to individuals genetically related to the decision-maker (Dugatkin, 2006; Smith, 1964) and other individuals that can reasonably be expected to reciprocate favours (de Waal, 2006), perhaps indirectly in species capable of higher reasoning and language (Nowak & Sigmund, 2005). If the aforementioned group selection had shaped human behaviour to a larger extent, a utilitarian calculus would, arguably, have been programmed to be as “automatic” as the more visceral emotive-cognitive processes that are, in the final analysis, more in line with virtue ethics (Sapolsky, 2017; Solomon, 2003). Definition of Integrity So, from an evolutionary perspective, the conceptualisation of individual integrity requires only a minor adjustment relative to the objectivist definition. First, it concedes the insight from evolutionary psychology that reason is not the only element in morally attuned decision-making; rather, emotions play a key role in determining morally appropriate action (de Waal, 2006, 2013, 2019; Flack & de Waal, 2000). At the same time, it preserves an important function of reason as part of a metacognitive control mechanism that guides and directs human moral emotions to optimise long-term outcomes for the individual decision-maker. Integrity, properly understood, reins in affective impulses and intuitions and cross-checks them against various rational principles and values – most important, their coherence with the individual’s long-term self-interest (Rand, 1964). So, a proper definition of integrity could be proposed as follows (see also Becker, 1998; Locke, 2006): metacognitive adherence, manifested in action, to rational principles (general truths) in directing moral emotions.

The term adherence is, in my view, preferable to loyalty because the latter may be misinterpreted as having an affective component; one is typically loyal to people rather than abstract principles. So, integrity is metacognitive, impartial, and objective to the greatest extent possible. From an evolutionary perspective, integrity is not – and cannot be – the outcome of an affective commitment to a particular ideology, dogma, or epistemological framework, which are cultural artefacts. From this definition it follows that, to demonstrate high integrity, an individual must exhibit a correct understanding of objective reality and act accordingly. In a way, integrity works as an intermediary between the external environment (objective reality) and one’s moral emotions. It keeps in check wishful thinking (Locke, 2006) and intuitive moral predispositions (Sapolsky, 2017), both of which are likely to lead to suboptimal decisions and actions, especially in the long run. Figure 7.1 provides an abstract overview summarising the evolutionary theorising of the previous sections.

An evolutionary perspective on individual integrity in organisations  89

Figure 7.1

Integrity as metacognitive control mechanism of moral emotions

COMPLICATIONS PRESENTED BY CONTEMPORARY CONTEXT Dishonest Signalling Because reputation for high integrity still holds value for climbing status hierarchies (Barclay, 2016), especially in organisations that follow seemingly “rational decision-making processes,” the contemporary context presents remarkable incentives for false signalling about one’s integrity (Orlitzky, 2018; Solomon, 1999). Dishonest signalling, brought about by natural selection, is certainly widespread in the animal realm. For example, harmless butterflies that mimic toxic butterflies in appearance are more likely to escape predators (Dawkins, 1989; Orlitzky, 2018). In higher animals like vervet monkeys, males exhibit behavioural impression management in the presence of females: when an infant’s mother observes their interaction with her infant, males exhibit more careful handling (Matos & Schlupp, 2005). From an evolutionary perspective, signals are deployed to manipulate receivers’ attitudes and behaviour (Dawkins & Krebs, 1978; Krebs & Dawkins, 1984). For impression management to work, though, the signal must be credible, typically related to the costliness of the signal for the signaller (e.g., a peacock’s tail or the Irish elk’s antlers) (see also Fu, Boehe, & Orlitzky, 2022; Gould, 2002). Thus, when signals of “integrity” are not costly to the signaller observers ought to be suspicious about any such self-acclamations. A brief anecdotal survey of the deployment of “integrity” in contemporary usage certainly suggests talk about “integrity” may have turned into compliance rituals with certain fashionable social mores and values so that such talk has in fact become largely meaningless; notably, signals that are merely self-serving rituals tend to diminish in their credibility. For example, public health officials and organisations may invoke “integrity” when marketing – sometimes even mandating – new mRNA vaccines with unknown long-term effects to an unsuspecting

90  Research handbook on organisational integrity public – and accusing actors whose own conscience and integrity might have prescribed acts of civil disobedience to be criminals that “lack integrity.” Similarly, violating a core principle of ethics, the duty not to interfere in a person’s domain of choice (Nozick, 2001; Riggenbach, 2010), several corporations seem to have collaborated with governments to prevent open discussion of matters that relate, for example, to elections and vaccines – all in the name of collectivist conformity, or systemic “integrity.” Or so-called “integrity pacts” accelerate private–public partnerships and, thus, the influence of members of unelected nongovernmental organisations over governmental policy decisions, which might be highly problematic from the perspective of genuine democracy and liberty (DiLorenzo, 1994; Elliott & Freeman, 2004), as anyone with a high level of integrity (as defined herein) would quickly realise. Especially if dishonest signals with low credibility are repeated frequently, their credibility and, thus, intended impact may not only suffer, but even backfire among species with a well-developed Theory of Mind; that is, an astute ability to read other people’s minds (Bzdok et al., 2012). Communication facilitates our ability to make inferences about the sincerity of repetitive insistence on some abstract, typically ambiguous concept. In those cases, receivers may make attributions to inverted language: the repeated signal of a low-credibility signaller will be taken to denote the opposite of what is communicated. Once such attributions of linguistic inversion are made, they may even carry over to other domains. Even though credibility, like reputation (Barclay, 2016), is receiver-specific or perhaps group-specific, a postmodern societal environment, which decentred genuine virtue (MacIntyre, 2007) in favour of oversocialised virtue signalling (Orlitzky, 2018), may present a wide array of challenges for the maintenance and functionality of deliberative reason, as discussed next. Dysfunction and Mismatch Given contemporary developments and trends, can a lack of authentic integrity (as defined herein) still be described as dysfunctional? From a biological-evolutionary perspective, integrity fulfils a dual function (Figure 7.1), selected in the distant past of human evolution: (1) controlling impulsiveness in moral decision-making/limiting the influence of intuition and (2) ensuring that specific moral judgements are aligned with objective reality. In the distant evolutionary past, individuals would be unappealing co-operators (including long-term partners) if they were prone to emotional outbursts and unpredictable decision-making. For example, if individuals had lacked reason as a self-control mechanism, they might have been killed by other members of the tribe. Thus, the deliberative aspect of integrity could be considered functional in that (a) integrity was reinforced because it reduced impulsiveness in moral decisions and (b) impulse control was a consequence of integrity (Wakefield, 2016; Wright, 1973, 1976). Likewise, in the distant past, being out of touch with objective reality could quickly result in the loss of one’s life or at least an inability to find a long-term sexual partner and, thus, a lost opportunity to spread one’s genes. Insofar as circumstances do not change over evolutionary time (from the distant to recent past), functions are maintained. In analyses of biological functions from a “modern history” etiological perspective, goal-directedness is a central aspect (Godfrey-Smith, 1994). This requires the assumption of sufficient mental capacity to develop intentions and make plans and attributions about others’ behaviours (Perlman, 2004). Clearly, humans qualify for such a “modern history” view, which would also allow for goals other than biological survival

An evolutionary perspective on individual integrity in organisations  91 and reproduction, though. Hence, some theorists question such a “modern history” view as a proper evolutionary explanation (e.g., Millikan, 1986). In contemporary societal and organisational settings, various changes in technology, life-style, and social processes may have allowed integrity (as defined herein) to atrophy. First, technological advances allow modern humans to lead more sheltered lives, which are more independent and solitary than our ancestors. This means that, in general, feedback loops from objective reality to punishment for poor judgement (because of institutional protections) have become more tenuous or delayed. This may over time (over many generations) lead to the degeneration of the externally directed arrows as functions of integrity in Figure 7.1, unless a new goal, facilitated by reason, takes their place. In addition, social media may impede that rational goal-orientated substitution, impair mental health more generally (Haltigan, Pringsheim, & Rajkumar, 2023), and prioritise emotive demonstrations of tribal belonging over balanced independent judgement. Overall, contemporary social developments – sometimes reinforced by new technology – accelerate the trend towards moral beliefs and attitudes as tribal signals (Greene, 2013; Haidt, 2012; Lukianoff & Haidt, 2018). For example, rather than applying reason to decisions about climate change, infectious diseases, or war and peace, what now seems to matter most is the emotive appeal to the in-group and moral condemnation or even vilification of the out-group (see also Orlitzky, 2017). That is, the inner core of Figure 7.1 may, arguably, be reinforced and rewarded rather than the deliberative metacognitive control mechanism with its counterbalancing characteristics (Haltigan, 2022). In such an educational environment, which seems to denigrate reason (Nola, 2003), wishful thinking and the maintenance of coalitions become individuals’ cognitive guides rather than integrity. In turn, these societal trends are likely to increase patterns of pathological altruism (Oakley et al., 2012; Sun, 2018). Yet, the observation that current trends may de-emphasise metacognitive rationality in moral judgement does not imply that the function of integrity has become irrelevant in decision-making. Rationality and deliberation will always remain important factors for optimal decision-making, human survival, prosperity, and reproduction (Kahneman, 2003, 2011; Kahneman, Slovic, & Tversky, 1982), including in moral judgements (Becker, 1998; Locke, 2006; Sapolsky, 2017), even though sometimes commitment to reason may contradict the zeitgeist of the Western intelligentsia (Nola, 2003). What needs to be noted here is that an individual possessing a high level of integrity (as defined herein) may be in mismatch with the societal context described in the previous paragraph. Researchers, however, should not confuse (a possibly temporary) mismatch with cultural settings and dysfunction: dysfunctions are “failures of organismic mechanisms to perform their biologically designed functions” (Wakefield, 2016, p. 1000). In the case of insufficient rational control of moral emotions and insufficient attention to objective reality, the mismatched individual, who does not comply with the zeitgeist, could be the one where integrity (as defined herein) indeed operates at its functional best. As Kurt Vonnegut (1968, p. 33) noted, “A sane person to an insane society must appear insane.” In other words, the assessment of functionality depends on normal conditions, that is, the conditions (in the distant past) that exerted selection pressure on the majority of humans in the first place (Millikan, 1986; Perlman, 2004). Conversely, individuals in high congruence with contemporary social mores may be the most likely to be diagnosed with a deficiency of integrity, the actual dysfunction (Orlitzky, 2018). Compassion is one of the most highly praised moral emotions in today’s social context, which insists on unqualified agreeableness and self-sacrifice for the common good.

92  Research handbook on organisational integrity Worryingly, disagreeable heretics that reject emotive dogma are vilified in this crisis of identity-based compassion, which in the long run will only exacerbate emotive tribalism and undermine Western civilisation. So, what are the traits of the individuals surviving this remarkable historical moment? The expectation that the genes of high-integrity individuals will be the ones that survive is perfectly reasonable; but so is the expectation of the opposite.

CONCLUSION This chapter covered largely uncharted territory. Thus, its theorising must be considered speculative, preliminary, and provisional. Although the latter two characteristics are true of all science, it ought to be stressed here and was emphasised especially in the previous section. Developing an evolutionary account of individual integrity, I aimed to pose new questions about its role as metacognitive arbiter, ultimately manifested in action, between the moral emotions, impulses, and intuitions on the one hand and objective reality on the other. Ultimately, the function of integrity was stipulated to be about contingent deliberative and behavioural integration of moral and other inclinations, which harkens back to its Latin etymological root – “wholeness” (Orlitzky & Monga, 2018) – and highlights its positive behavioural core (Erhard, Jensen, & Zaffron, 2018). My evolutionary-biological characterisation also underscores its role in contributing to an individual’s mental health because integrity seems to help individuals circumnavigate the Scylla of excessive emotiveness (whether based on one’s own inner emotions or preoccupation with others’ feelings) and Charybdis of excess “cold” rationality. Not only did I differentiate integrity from morality in this chapter, but I also reviewed some research suggesting that the functions of rational-deliberative versus emotional processes may be reflected in distinct brain structures. To understand integrity in its full complexity, researchers need to be cognisant of its possible selection in humans’ distant past and the aetiology of its deficiency (and corresponding impression management) in the recent past and present.

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8. A spiritual perspective on organisational integrity Tracy H. Porter, Kelly Gillerlain, and Nicholas Messina

Since 2020, business environments have struggled to adjust to the changes stemming from the Covid-19 pandemic. Prior to the pandemic, organisations utilised a variety of employee development mechanisms to support the retention of their very best employees, but the pandemic has caused the foundation of previous initiatives to shift. Contemporary workers are more focused than ever on their own health, ways to preserve their psychological wellbeing and finding organisations which support these desires (Hisam & Sanyal, 2021). Post-pandemic, many organisations are dealing with what some have coined the Great Resignation where employees are leaving to find better positions which align with their needs and desires (i.e., values). This has led many employers to self-reflect on their true ambitions, missions, and vision and to reimagine how those tenets might intersect with employee goals. In recent years, many employees have begun to feel that their workplaces had become impersonal entities which were highly out of touch to the needs of their workers. Such feelings expedited a trend in workers to become increasingly disenfranchised with their employers’ constant drive for profitability and productivity (Porter & Norris, 2013). For many years, employees often felt demoralised and undervalued because of downsizing, layoffs, and job reengineering, which often left employees struggling to understand the loyalty of their employers (Brandt, 1996). Other scholars have shown employees often feel their work environments have become increasingly unfriendly, cold, and unsupportive of their needs (Fry & Cohen, 2009). However, more progressive organisations are beginning to recognise the importance of their employee’s perspective as being equally important to their long-term viability as is their financial foundation. Today’s employees are striving to work for organisations which are reflective of their need for a balance between their work and personal lives (Hisam & Sanyal, 2021). This means working for organisations which treat them with integrity, respect, and also wanting to understand how best to make their employees happy (Hisam & Sanyal, 2021). Organisational integrity has been shown to offer several benefits to both organisations themselves and their employees. Integrity is described as one having the quality of being honest, demonstrating strong moral principles, and being morally upright. Specifically, organisations which act with integrity have been shown to increase employee creativity (Peng & Wei, 2018), have increased levels of organisational citizenship behaviours (Vigoda, 2000), and increased levels of job engagement (Hassan, 2015) just to note a few benefits. Therefore, establishing an effective organisational culture which might act as a mechanism to create, enhance, and maintain organisational integrity is an important area of applied research and for some scholars, the key might lie in the literature focused on workplace spirituality. The concept of spirituality in business began to surface a few decades ago when several management scholars noted a shift from a highly transactional approach between employees and employers (i.e., focused solely on pay for work) to a more collaborative approach 97

98  Research handbook on organisational integrity where employers have more of a transformational employer perspective (i.e., focused on the development of employees) (Capra, 1996; Fox, 1994; House & Shamir, 1993). Such collaborative research began to demonstrate the numerous benefits of building trusting relationships with employees where employees might be empowered to work at higher levels (Conger & Kanungo, 1988). Also, in recent years scholars noted the importance of an employee’s spiritual aspirations in both their personal and professional lives (Beehner & Beehner, 2019). Within this chapter we first define workplace spirituality, explore the numerous benefits associated with this type of organisational culture, highlight the connection between spirituality and organ­isational integrity, and offer a roadmap for employers to build a spiritual work context.

WORKPLACE SPIRITUALITY Historically, the inner life of individuals has been referred to as their spirit from the Latin word spiritus, meaning the force that gives one energy and life (Howard, 2002). There are over 70 definitions of workplace spirituality in the literature, and some encompass a religious focus where others focus more on a meaningful perspective (Karakas, 2010). For example, Khatri and Gupta (2017) define organisational spirituality as “an employee’s perceived relationship with their organisation with respect to the extent of their alignment with the organization’s goals and values” (p. 286). This definition aligns with Gibbons (2000) definition of spirit at work which is described as an employee’s “journey toward integration of work and spirituality, for individuals and organizations, which provides direction, wholeness and connectedness at work” (p. 111). Khatri and Gupta (2017) describe workplace spirituality as, “the amalgamation of humanistic principles, practices and behaviours with business performance” (p. 286). Although the definitions vary slightly within the literature, each clearly notes the importance of an individual’s inner self, how this manifests within their work environment, and how an employee’s inner self might align with the organisation. Therefore, within this chapter we focus on the work of Giacalone and Jurkiewicz (2010) who define workplace spirituality as: A framework of organizational values evidenced in the culture that promotes employees’ experience of transcendence through the work process, facilitating their sense of being connected to others in a way that provides feelings of completeness and joy. (p. 129)

A spiritual workplace recognises their employee’s contributions (i.e., tangible, and intangible), encourages their employee’s spiritual wellbeing through a variety of initiatives, and offers development opportunities to feed the employee’s needs (Ashmos & Duchon, 2000; Guillory, 2000; Mitroff & Denton, 1999a).

WORKPLACE SPIRITUALITY AND VALUES Holistically, a spiritual workplace is an organisational culture which is socially responsible and grounded in a strong value system. Such values should drive their employers’ principles, business practices, and mission and vision statements. Giacalone and Jurkiewicz (2010) note the importance of not only the organisation’s value systems but also the alignment of these values between three important levels of an organisational structure. Specifically, these three

A spiritual perspective on organisational integrity  99 levels include: The individual employee’s own value system, their immediate work group’s value system, and the organisation’s value system. The personal connection between the employee and organisational values has become increasingly important over the years since traditional support systems such as cohesive family units, supportive worship communities, and close neighbourhoods have been declining in importance to individuals (Conger, 1994). Time spent at work has also increased for many individuals and therefore an individual’s time at work has become a focal point for an employee’s personal growth (Jaffe, 1995). With the increased merging of personal and professional lives, employees are now seeking to achieve personal fulfilment often through the lens of their workplace (Block, 1993). This is a dramatic change from a more traditional perspective in the mid-nineteenth century. Previous research has also demonstrated that organisational culture can be shaped by how its values are exhibited in work processes, policies, and daily practice (Ashmos & Duchon, 2000). Organisations which adopt a values-centred culture strive to infuse values into their organisational strategy and have found such approaches to increase organisational performance (Ashmos & Duchon, 2000; Mitroff & Denton, 1999b). Pfeffer (2003) notes that the power of values lies in four fundamental dimensions contemporary employees pursue in their workplace: 1. 2. 3. 4.

interesting work that permits them to learn, develop, and have a sense of competence and mastery; meaningful work that provides some feeling of purpose; a sense of connection and positive social relations with their coworkers; and the ability to live an integrated life, so that one’s work role and other roles are not inherently in conflict and so that a person’s work role does not conflict with his or her essential nature and who the person is as a human being.

Organisations are recognising numerous benefits associated with value-based cultures and are seeking the best ways to build them into their structures (Bolman & Deal, 1995; Graham et al., 2022; Vaill, 1998). Jurkiewicz and Giacalone (2004) empirically evaluated a variety of individual and organisational values and found the following to be the most impactful to workplace spirituality: Benevolence, generativity, humanism, integrity, justice, mutuality, receptivity, respect, responsibility, and trust. Also, previous research has demonstrated the importance of these values to organisations. For example, benevolence (through the promotion of hope and happiness), better equips employees to deal with workplace stress (Adams et al., 2003). Generativity tasks (i.e., mentoring, or environmental concern) are positively correlated with role clarity, job satisfaction and career outcomes (Altman, 2001). Humanism, which impacts self-esteem and work satisfaction, is “a worldview that affirms the ability and responsibility of each individual to live in a manner which seeks to bring about the greater good of humanity” (Jurkiewicz & Giacalone, 2004, p. 132). Employers who view their organisation as a conduit to advance workplace spirituality, instil a sense of integrity, and lead employees to a higher level of performance (Himmelfarb, 1994). Justice (i.e., perceived fairness) has been equated with a more productive and happier employee and a more productive organisation (Lazarus, 2000). Mutuality (i.e., perceptions of social support) increases work group cohesiveness (Friedman et al., 1998). Receptivity (i.e., supportive and open relationships) promotes creativity and productivity (Karasek & Theorell, 1990). Organisations which value mutual respect report decreased

100  Research handbook on organisational integrity burnout, stress, and employee loss (Adams et al., 2003; Snyder, 1994). Organisations which value responsibility experience less conflict and deal with challenges more efficiently (Adams et al., 2003). Organisations which create a trusting environment have employees who exhibit less political behaviours, are collaborative, supportive, and exhibit greater commitment (Anderson, 2000). Individual Level As previously noted, under the tenets of workplace spirituality, values are important to understand at a variety of levels. Specifically, at the individual level, workplace spirituality has been described as a personal experience related to one’s personal growth, feelings of interconnectedness with those around you, and transcendence (Jurkiewicz & Giacalone, 2004; Marques et al., 2007; Mitroff & Denton, 1999a). The concept of transcendence has been described through various means but, for the purposes of this chapter, we focus on an individual’s inner life. An inner life is manifested through an individual’s self-identity and how one’s self-identity is viewed in their social identity (Marques et al., 2007). Therefore, an employee’s work will be motivating and fulfilling to the individual if it is compatible with their perceived self-identity (i.e., does the work align and reflect who the individuals is). This also acknowledges the importance of one’s social identity within the larger social and organisational context (Pirkola et al., 2016). Existentially, spirituality in the workplace is a search for meaning (Krishnakumar & Neck, 2002) and when an employee feels nourished by their work, they are more likely to believe their work is meaningful. Marques and colleagues note that spiritual transformation at the individual level begins with the recognition of one’s inner power (2005). This can be viewed as an understanding of the source of one’s inner nourishment or the meaning that work provides on a personal basis. Previous research has demonstrated there are two types of workplace spirituality at the individual level, specifically pure spirituality and applied spirituality (Heaton et al., 2004). Pure spirituality is described as the silent, inner experience of awareness that one might have with regard to the level of meaning one derives from work. Applied spirituality is described through the practical outcomes one exhibits stemming from the inner awareness (Heaton et al., 2004). Examples might include an individual who recognises their inner strengths (pure spirituality) and then utilises their applied spirituality to improve their personal functioning (i.e., interpersonal skills, greater interdepartmental understanding). It is also important to note the connection between the individual level and the organisational level (Smith, 2008; Thakur & Singh, 2016). Employees may carry with them a sense of inner poverty when they feel as though their work does not matter or provide meaning to their lives. This inner poverty can be at times more burdensome than financial strains (Porter & Norris, 2013). Employers should strive to understand how to provide support to their subordinates and must also work to create a system where peers and colleagues can easily support each other. Employers should also work to create a workplace culture where respect and dignity for each employee is held in high esteem. An individual’s spirituality should be viewed from the individual’s (micro) perspective through an organisational (macro) lens (Giacalone & Jurkiewicz, 2010) to fully gain the benefits. However, such an approach requires organisations to create environments where employees can share their spiritual goals with others in their organisation (Sapta et al., 2021).

A spiritual perspective on organisational integrity  101 Group and Organisational Levels Both the group and the organisational levels of workplace spirituality refer to the internal organisational culture (Pirkola et al., 2016). This culture might apply to one’s direct work group, those they interact with on a day-to-day basis, or this might refer to the larger organisation. An effective organisational culture can assist in community building and lead to high quality connections between employees (Dutton, 2003). Also, a truly effective culture builds a community which transcends any inherent differences amongst members (Mirvis, 1997; Pawar, 2009). Groups which lack a sense of connectedness might be fraught with infighting, rivalries, distrust, and dislike amongst members (Neal, 1998). Contrarily, when group members feel connected to one another they will often describe one another as being caring, compassionate, honest, and acting with integrity (Neal, 1998). A sense of connection and community has been found to benefit both employers and employees who might cope with the hardships of work, such as loneliness, disappointment, and other pains of belonging to a modern organisation (Vaill, 1998). Some scholars have described the power associated with social connectedness at work as being spiritual capital. This has been described as a term to reflect the shared outlooks, ideals, and beliefs amongst organisational members (Marsh, 2007). For the organisation itself spiritual capital might refer to its reason for existence, who they aspire to be, and what responsibility the organisation believes it has to the greater good (Zohar & Marshall, 2004). Since workplace spirituality involves an alignment of values between employees and their organisation, spiritual capital can be linked to workplace spirituality (Porter & Norris, 2013). Though there are clearly benefits to workplace spirituality, not all organisations might be encouraging such a cultural approach. For example, workplace spirituality could potentially be limited within organisations whose structures are authoritarian and that take a command-and-control approach to daily operation. Workplace spirituality is most enhanced by organisations where structures are highly participative and allow individuals to work harmoniously and encourage one another to thrive (Porter & Norris, 2013). Such relationships, covenantal relationships, are described as those which fill deep personal needs and enable work to have meaning and to be fulfilling (Cavanaugh & Bandsuch, 2002). These types of understandings amongst organisational members can act as a covenant (i.e., promise). The following quotation offers a bit more detail on covenantal relationships. In covenantal relationships there is reciprocity, interdependency, and respect amongst members, regardless of their position in the organization’s hierarchy. Even when interactions involve challenging issues and problems, members of covenantal relationships remain kind and considerate and engage without deceit or manipulation. These relationships are built with intentionality and sacrificed and are developed and maintained through employers who focus on fostering workplace spirituality. (Porter & Norris, 2013, p. 427)

SPIRITUALITY AND ORGANISATIONAL INTEGRITY Integrity is critical in organisations because it drives the workability in the workplace. “Integrity is a concept which consists of actions, values, methods, measures, principles, expectations and outcomes that connotes a deep commitment to do the right thing for the right

102  Research handbook on organisational integrity reason, regardless of the circumstances” (Hanapiya et al., 2019, p. 39). An individual’s integrity impacts their perception of what they believe is true and important to themselves. From an organisational standpoint, there are at least eight different viewpoints on the relationship between the fundamental aspects of integrity and the way employees view ethics, corruption, and good corporate governance (Huberts, 2014). Integrity is sometimes called the substance in decisions regarding the policies which should be in effect in organisations (Huberts, 2018). Thus, the absences of integrity, in organisations, can negatively change daily behaviours and ultimately the culture of the organisation (Hanapiya et al., 2019). Hanapiya et al. (2019) conducted research examining the effect of spirituality on an employee’s integrity and found it positively impacted integrity. This research noted the importance of hiring employees with strong value systems as a way to encourage integrity and such building mechanisms could be achieved through spiritual means. Milton (2015) also found that integrity had a direct relationship to the concept of morality (i.e., values) and organisations with integrity saw a reduction in needed external regulation (Najib, 2009; Sidek, 2009). At the organisational level, integrity begins with the employer, the organisation’s policies, stakeholders, and employers (Hanapiya et al., 2019). Finally, Somera and Holt (2015) demonstrated the importance of organisational integrity when addressing various organisational needs (i.e., hiring, promotion, resource allocation). These findings were supported by other scholars who demonstrated integrity having a primary role in an employee’s job alignment, moral and ethical principles, and ultimate productivity (Cleary et al., 2013). Therefore, integrity should not be simply one component of an organisation but should be purposefully interwoven throughout all aspects of the operations of the organisation. Religiosity has often been layered with topics such as integrity, spirituality, and morality. Religiosity refers to an individual possessing strong religious feelings or beliefs but does not necessarily need to fall within the parameters of an established formal religion. However, all religions (e.g., established or not) have documented guidelines for acceptable behaviour of their members or believers which are used to determine good citizenship. Bouarif (2015) noted that religiosity was a symbol of an individual’s relationship with God as a creator and the obligations concerning a religion’s qualities and standards. Additionally, in 2012, Koenig et al. (2012) viewed values as well-organised religious beliefs and practices that were designed (a) to facilitate the proximity of the sacred or transcendent God and (b) to promote an understanding of a person's relationships and responsibilities to others and the community. Religiosity espouses qualities such as duty, dedication, and a sense of obligation as those that help people focus on work and become better employees (Bouarif, 2015). Research has shown that religious values have a significant impact on employee performance (Zahrah et al., 2016). Religion and spirituality have been shown to significantly influence people’s values, attitudes, and behaviours, and “contributes to increasing the positive consensus towards the integrity of employees in the organization” (Hanapiya et al., 2019, p. 43). Workplace spirituality improves an individual’s sense of responsibility that directly affects overall work and productivity and organisational growth (Islam et al., 2019). Research has demonstrated that organisations with a more positive and supportive work environment have a higher percentage of employees who highly value workplace spirituality (Caza et al., 2004). In the workplace, spirituality can be viewed from different viewpoints, including from a religious, spiritual, or integrity focus. Some view spirituality as the ability to incorporate personal values of integrity, truthfulness and morality into quality work (McLaughlin, 2005). For others, it can be participating in spiritual practices or treating colleagues in a collegial and

A spiritual perspective on organisational integrity  103 responsible manner which demonstrates spirituality (Gocer & Özgan, 2018). Religiosity and spirituality contribute to growing a positive organisational environment and the promotion of employee integrity (Hanapiya et al., 2019). To fully achieve organisational integrity from a spiritual perspective, employers must first offer an environment where employees can reflect their true self (i.e., share their values) and adequately communicate the organisation’s stated values (Lennick & Kiel, 2011). Understanding how to foster a spiritual workplace will help employers and organisations achieve organisational integrity.

ORGANISATIONAL BENEFITS OF SPIRITUALITY In 2016, Crossman found that interest in spirituality was growing within organisations. This change is said to be based on the realisation that employees are seeking to work for organisations which have the capacity to generate social good and have the means to offer value to society (Karakas, 2010; Poole, 2009). Research has demonstrated that spirituality in the work environment offers employees and the larger organisation a variety of benefits (Lips-Wiersman et al., 2009). These benefits are derived from daily organisational life which reflects the personal and cultural values of the employees through organisational initiatives (Giacalone & Jurkiewicz, 2010). Some have referred to these daily acts as reflections of their organisational integrity (Porter & Norris, 2013). However, it is important to also note that not all organisations or their employees act with integrity. It is the alignment of values (i.e., the employee and the organisation) which acts as a catalyst to reflect the values of the whole. Research has also demonstrated several benefits of workplace spirituality for organisations (Gotsis & Kortezi, 2008; Parboteeah & Cullen, 2010). Specifically, these benefits include increased honesty and trust amongst employees (Krishnakumar & Neck, 2002; Wagner-Marsh & Conley, 1999), increased profits and morale (Benefeil, 1999), higher productivity (Sass, 2000), increased commitment to organisational goals (Fry, 2003), increased retention and higher organisational commitment (Fry, 2003; Porter, 2011), and more productive cultures (Giacalone & Jurkiewicz, 2010). Organisations which seek to align their fundamental values have been shown to outperform those companies that are simply focused on the bottom line (Collins & Porras, 1994). Therefore, spirituality is considered to be the ultimate competitive advantage to some scholars (Mitroff & Denton, 1999b).

EMPLOYEE BENEFITS OF WORKPLACE SPIRITUALITY An organisational culture grounded in workplace spirituality has also demonstrated several benefits to employees. These benefits range from enhanced individual creativity (Freshman, 1999; Krishnakumar & Neck, 2002), improved sense of personal fulfilment (Burack, 1999; Krishnakumar & Neck, 2002), better individual work success (Tischler et al., 2002), and an expanded sense of joy, peace, serenity, and job satisfaction (Giacalone & Jurkiewicz, 2010). Employees that perceive their organisations as more spiritual also found the decision-making processes more participative, inclu­sive, and transparent (Kolodinsky et al., 2003). This reduction in friction and frustration at work aligns with subsequent research which demonstrated workplace spirituality could reduce overall organ­isational frustration (Kolodinsky et al., 2008).

104  Research handbook on organisational integrity Within spiritual environments, employees have been shown to be more creative and have higher moral standards for their work (Garcia-Zamor, 2003). Research has also shown that organisations which adopt an ethical framework within their structures to be more associated with respectful treatment of all members of the organisation and subsequently optimise organisational performance (Graham et al., 2022). In addition, spiritual organisations have been linked to companies being considered as “best places to work” and have often demonstrated higher long-term profit (Burack, 1999; Burack & Mathys, 1998). Spiritual employees live in the present but welcome learning new things about themselves and others while they learn from the past. (Marques et al., 2007). Spir­itual employees experience greater contentment with their lives and bring positivity to others and the workplaces (Marques et al., 2007). Ultimately, spirituality at work increases an employee’s goal commitment, thus contributing to higher levels of performance, a decrease in absenteeism, an increase in morale, job satisfaction, and intrinsic motivation, and an increased sense of community in the workplace (Gotsis & Kortezi, 2008).

HOW TO BUILD A SPIRITUAL WORKPLACE CULTURE Employers must act intentionally to create an organisational culture based in workplace spirituality (Porter & Norris, 2013). We offer three areas of consideration for employers to focus on when striving to create a spiritual workplace culture and encourage a workplace based on strong values and integrity. First, since a company’s mission and values guide its plans and operations, these can be a starting point to creating workplace spirituality. Employers should carefully assess how their mission and values statements might guide the daily operations, how they might be utilised to promote positive values (e.g., fairness, inspiration, learning, respect, and trust), and consequently how the mission/values can bring integrity into the organisation at all levels (Porter & Norris, 2013). Adjustments should be made to clearly define the organisational expectations, and this is also a good point in the process to examine the organisation’s ethical guidelines. Changes should be made to all documents, and it is often beneficial to include key organisational stakeholders in such decisions. Second, it is also important to carefully consider the organisation’s hiring practices. Are the right individuals being hired who possess the values which are important to the organisation or is the organisation hoping to change their current employees to suit their needs? There are numerous human resource tools available to assess the values of potential and current employees. If the shift to a spiritual culture is dramatic for the organisation this may mean some current employees may no longer be a good fit and they may leave. Change can be difficult but this is an important step towards a spiritual culture.Third, the organisation should also work to create a working environment which encourages community. In attempting to create a sense of community and connectedness, employers should strive to develop an environment which is respectful of differences, promotes inclusivity, and offers employees tools to proactively deal with any problems before they manifest (Mirvis, 1997). Such an environment should also allow employees to feel purpose and meaning in work, find connection with one another towards positive relationships, and find alignment between organisational and personal values

A spiritual perspective on organisational integrity  105 (Milliman et al., 2003). To accomplish this goal employers should encourage the following be applied to any organisational context which seeks to develop a spiritual (connected) culture: ● Consciousness of the self or consciousness of others and being in harmony with the unseen order of things. ● Creation of group/team/departmental systems which allow individuals to become conscious of others and conscious of the group. Another way for employers to accomplish these types of relationships is to adopt management practices that enrich the human spirit by building upon organisational values (Pfeffer, 2003). Tangible recommendations might include: 1. 2. 3. 4. 5. 6. 7.

Striving to develop employee-orientated values, Allowing employees autonomy and decision-making ability, Developing self-managed teams, Developing collective forms of recognitions and rewards, Allowing employees to use and develop their skills, Allowing employees the flexibility to address their social and family obligations. Removing fear and abuse from the workplace (Pfeffer, 2003).

SPIRITUAL LEADERSHIP Finally, it is also important for the employers to examine their own approach and to determine if that approach might be supportive of a spiritual workplace. Research consistently supports that good employers are an essential element in determining organisational success (Hughes et al., 2018). Spiritual leadership (Fry, 2003) is rooted in workplace spirituality and is focused on creating a vision that allows employees to “experience a sense of calling so that their lives have meaning and make a difference” (Fry & Slocum, 2008, p. 90). Spiritual leaders cultivate workplace cultures which are: Based on the values of altruistic love whereby leaders and followers have a sense of membership, feel understood and appreciated, and have genuine care, concerns and appreciation for BOTH self and others. (Fry & Slocum, 2008, p. 90)

Employers can work to foster a spiritual workplace by focusing on two aspects of a spiritual workplace which are calling (vocation) and membership (Fry, 2003). Vocation refers to the sense of meaning and purpose employees might find in their work. Membership refers to the sense of social connectedness employees seek in the workplace. When all these elements work in tandem employees are truly able to feel fulfilled by their work (Fry, 2003; Pawar, 2009). Employers can work to create organisational changes and processes that work to promote spiritual changes in employees at the individual level, and this will eventually translate to spiritual change at the group and organisational level (Pawar, 2009).

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FUTURE RESEARCH While current research touches on workplace spirituality at the individual and organisation levels, further research is needed to determine the overarching benefit of organisations embracing spirituality in practice. Specifically, how would such an approach be integrated into established mission, vision, and policy statements? Shifting an organisation’s culture can be one of the most challenging tasks for an employer. Therefore, examining the barriers and challenges of moving to a spiritual culture would be of value to the literature. Another area in need of empirical research would be how best to allow employees to share their spiritual preferences and value systems in the workplace. Such conversations can be challenging from a human resource perspective and can present hurdles in policy development. Another area of research might examine the overall impact on the financial health of organisations or how a spiritual culture might affect the organisational structure. Finally, research is also needed on how the adoption of workplace spirituality affects an organisation’s external stakeholders. Implementing spirituality in the workplace has been shown to bring positive outcomes when incorporated into organisational outcomes in the workplace. Research has shown that workplace spirituality can play a useful role in improving organisational health by influencing all aspects of employee wellbeing. Spirituality is now viewed as an instrument of change based on the assumption that employees seek to achieve more than just material gains in the workplace. Individuals now seek mental satisfaction and a sense of harmony in their work environment and want an alignment of their individual values with the organisation’s goals and objectives. Since all types of spirituality encourage their followers to become “good” individuals, it can be surmised that spirituality contributes to increasing the positive consensus towards the integrity of employees in the organisation.

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9. A criminological perspective on organisational integrity Nina Tobsch, Benjamin van Rooij, and Marieke Kluin

Organisational integrity can be defined as ‘the ethical integrity of the individual actors, the ethical quality of their interaction as well as that of the dominating norms, activities, decision making procedures and results within a given organization’ (Palazzo, 2007, p. 113). It focuses on the ethicality of individuals, the motivations for their actions, and the outcomes thereof. One of the core aspects of organisational integrity is whether members follow or violate organisational and societal ethical and legal norms. As such, a core question in the field is to understand compliance and violation of rules. In this respect, criminology has a wealth of knowledge to offer. At its core, the criminological literature is concerned with the sociology of deviance, centring theories and explanations around the fundamental question: ‘Why do individuals and corporations engage in rule-breaking behaviour?’ Criminology has developed several theoretical approaches to understand the root causes and mechanisms behind deviant and illegal behaviour generally, explaining rule-violating behaviour from three levels. The macro level places its focus on large-scale forms of behaviour across countries, states, or cities. The meso-level perspective focuses on group-level patterns of behaviour within for example organisations, occupational groups, and industries. Finally, the micro level focuses on individual-level patterns of behaviour within or across people. In this chapter, we will focus on micro- and meso-level theories, since macro-level theories address factors that exist beyond the level of the organisation, whereas micro- and meso-level approaches offer explanations for both individual differences in behaviour as well as influences the organisational setting might have. Criminologists have sought to understand deviant and illegal behaviour as it occurs in organisations and by people in positions of power, developing two interrelated fields: organisational crime and white-collar crime. These two fields have drawn on theories and empirical insights from general criminology and organisational science to understand to what extent deviance in organisations and involving people in positions of power (‘in the suite’) has similar origins as crimes committed ‘on the street’. While the notion of crime specific to the workplace has been around for a longer time, Edwin Sutherland was the first to introduce the formal concept of white-collar crime in 1939. He called attention to crimes which are not ordinarily included within the scope of criminology by studying ‘a crime committed by a person of respectability and high social status in the course of his occupation’ (1949, p. 7). More than eight decades have passed since Sutherland’s introduction of the term, and studying rule violation of corporations has resulted in a dispersed body of criminological work that seeks to understand both individual and organisational aspects of illegal behaviour committed in and by organisations. Important to highlight is that traditional crimes do not differ between acts committed for individuals themselves and rule-violating acts committed for others. However, according to Kennedy (2019, p. 178), ‘corporate crime, as a form of white-collar crime, makes an important difference about the entity to which the benefits of the crime accrue’. Clinard and Quinney 111

112  Research handbook on organisational integrity Table 9.1 Opportunity

Overview of theories Routine activities

Deviance occurs when a motivated offender and suitable target come together in a situation where there is no capable guardian present

Situational crime prevention

Strategic adaptations in situations and environments can prevent criminal

Deterrence

Perpetrators and/or other members of the public can be deterred from

offending Motivation

future offending by imposing punishments Strain

Negative stressors and pressures can lead to deviance when an individual does not have legitimate means to relieve these

Social learning

Individuals have no natural tendency towards deviance; this behaviour is learned through social processes

Neutralisation

In order to rationalise their misconduct and guilt resulting from this behaviour, offenders use neutralising techniques

Social control

Individuals can have a natural tendency towards deviance; this behaviour is controlled through social processes

(1973) discussed that white-collar crime can be divided into two types (1) corporate crime: offences committed by corporate officials for their corporation and the offences of the corporation itself, and (2) occupational crime: offences committed by individuals in the course of their occupations and the offences of employees against their employers. This distinction made it possible to study individual and organisational dispositions for white-collar crime (Huisman, 2016). Criminological thinking about deviant behaviour, and particularly about organisational deviance, concerns two root causes of such deviance: opportunity to commit a criminal act, and the motivation to do so (Coleman, 1987). The term opportunity refers to a particular act that has been made possible by social conditions and is seen by an individual as a possible course of action (Coleman, 1987). Within an organisational context, opportunity emerges as an institutional opportunity structure (Van Baar, 2019). Motivation is seen here as ‘a set of symbolic constructions defining certain kinds of goals and activities as appropriate and desirable and others as lacking those qualities’ (Coleman, 1987, p. 409). While the present chapter does not contain an exhaustive discussion of all criminological theories, it will provide a concise overview of those most relevant to understand organisational deviance. It will highlight both criminological theories and general empirical findings as well as studies focusing on organisational and white-collar crime (for a brief overview of theories to be discussed in this chapter, see Table 9.1). It will first look at opportunity approaches to crime and assess theories and empirics that originate deviance in factual opportunities to break rules. Second, it will look at deterrence theory and assess to what extent punishing deviant behaviour will deter illegal conduct amongst those punished and others who learn of such punishment. Third, it will look into strain theories of crime and look at how a mismatch between individual and organisational goals and means to attain such goals can result in negative emotions that stimulate deviancy. Fourth, it will look at the social learning and neutralisation theories and assess what influence the mechanisms that people and organisations use to neutralise shame and guilt of deviance have in enabling illegal behaviour. Fifth, it will look at control theories of crime, and look at how people’s ability to control their impulses plays a role in acts of deviance. This chapter concludes with some general thoughts on the use and implications of criminological insights in the field of ethical and organisational studies.

A criminological perspective on organisational integrity  113

OPPORTUNITY The first core line of thinking about root causes of deviance and illegal behaviour is opportunity (Coleman, 1987). The essence of opportunity theories is that motivation alone is not sufficient to explain why individuals turn to crime: to engage in deviant behaviour, people must also have the opportunity to do so. There are several criminological theories within this approach, but at their core is the idea of rational choice (Cornish & Clarke, 1989), which presumes that violating rules is a choice and the product of a rational process that considers the costs and benefits of crime versus legitimate alternatives. A key assumption is that persons can be highly rational actors and can accurately predict an action’s outcome. Paternoster and Simpson’s (1996) modified version of rational choice theory showed systematically that intentions to commit white-collar offences were influenced by the perceived costs and benefits. Important to highlight here is that they noticed that when the corporate climate was perceived to advance (or at least permit) offending, this increased the reported intent to violate the rules. This has also been found in the studies by Sims and Keon (1999) and Appelbaum and colleagues (2005). Assuming that individuals are rational actors with a free will, routine activities theory proposes that changes in the daily activities of individuals has an important influence on the levels of crime; criminal activity will ensue when the opportunity for it comes up in an individual’s daily routine (Cohen & Felson, 1979). According to this theory, the opportunity for crime arises when three elements come together in time and space: a motivated offender, a suitable target, and the absence of an adequate guardian (Cohen & Felson, 1979; Miró, 2014). Regarding the first element, the theory does not give much information on why some people would be motivated offenders and not others; they just base their decision on a rational cost-benefit analysis. Suitable targets can be anything that is left relatively open to the offender, like an unlocked bike, or an elderly lady alone on the streets. The absence of an adequate guardian entails things in the environmental location, like lighting and cameras, but also human guardians, like a bouncer at a dance club, or a police-officer (Tibbetts, 2018); in other words, a place where the offender can interact with the target undisturbed. Empirical studies have shown that there are certain locations within larger areas where these three elements seem to come together more prevalently; these are called hot spots (Deryol et al., 2016). Expanding on this original framework, studies have also included a person’s lifestyle choice, making some (both potential offenders and potential victims) more exposed to these three core elements than others (Van Rooij & Fine, 2021b). Building on the routine activities framework, situational crime prevention asserts that motivated offenders who encounter potential targets in a suitable environment choose to engage in criminal activity on the basis of five characteristics of the presented opportunity: the effort it takes to undertake the criminal activity, the risk of getting caught while committing the crime, the rewards resulting from the crime, any situational factors that might provoke the criminal behaviour, and the offender’s ability to neutralise and rationalise their behaviour (Clarke, 1980). The theory proposes twenty-five different techniques for increasing effort, increasing the risks, reducing the rewards, reducing provocations, and removing excuses. Routine activities theory has been studied much more frequently in empirical studies than situational crime prevention. The best reviews we have for the opportunity approach thus also focus on routine activities theory. These reviews have found that there is support for the theory. Spano and Freilich (2009), conducting a meta-analysis of twenty-two studies published between 1995

114  Research handbook on organisational integrity and 2003, conclude that the results show a clear pattern consistent with the theory. McNeeley (2015), who has conducted a review of forty-seven studies published between 1986 and 2012, comes to a similar conclusion. Several studies have sought to apply opportunity theory to organisational and white-collar crime settings. One study looked at how routine activities play a role in medical fraud, finding that in this particular setting the offender’s (the hospital) access to the target (the insurance company) was inevitable, but that the lack of proper guardianship of such target created a higher risk of fraud (Benson et al., 2009). Another study sought to understand how routine activities played a role in fraud within the European Emissions Trading System, analysing how offenders could get access to targets without effective guardianship within the market for carbon trading (Gibbs et al., 2013). The study found that the routine activities framework was applicable here and helped to account for rule-breaking practices. Opportunity approaches to deal with unwanted behaviour do not seek to sway motivations for deviance, but rather they seek to make such unwanted behaviour more difficult or impossible. This entails an analysis of how unwanted behaviour occurs and looking at practical interventions that may affect the ability to engage in (parts of) what enables such misconduct. The opportunity approach can be highly effective in reducing bad organisational behaviour. However, it should be noted that it does come with several risks. A first problem is that a focus on protecting targets may lead to victim blaming, as the routine activities approach may lead to extra pressure on potential victims to reduce their own attractiveness or accessibility as targets. A second problem is that opportunity approaches may not always be desirable or even ethical as they inherently entail a limiting of freedom of choice by disabling pathways to unwanted behaviour. A third problem is that these approaches may result in a displacement effect, where closing off one opportunity will spread it towards others (Guerette & Bowers, 2009). Important for organisational integrity and opportunity theories is that one’s weighing of the costs and benefits to violate the rules depends on the employees’ work environment.

DETERRENCE In addition to the opportunity for crime, Coleman’s model (1987) prescribes that an individual needs the motivation to offend. One of the most influential and well-known motivational frameworks in criminology is the deterrence theory (Pratt et al., 2008). Deterrence theory also assumes that individuals are rational actors that carefully weigh the costs and benefits of their actions, and proposes that people obey the rules out of fear of the punishment that will ensue if they get caught breaking them. If an individual does not fear punishment, or if the advantages of breaking the law outweigh this fear, deterrence theory prescribes that people will subsequently engage in rule-breaking behaviour. For formal punishments to be perceived as a cost, and therefore to deter unwanted behaviour, they need to be based on three characteristics. The first characteristic is referred to as the swiftness of the punishment, important for both its justness and deterrent effect. The second characteristic is severity; in order for punishment to be effective in deterring criminals, it should outweigh the potential benefits of the crime. The last characteristic is the certainty that any criminal offence will not go unpunished (Beccaria, 1764; Tibbetts & Piquero, 2021). According to the theory, deterrence can prevent deviant behaviour in two ways. First, the theory assumes that the unpleasant experience of the punishment alone will have such an

A criminological perspective on organisational integrity  115 impact on the punished individual that he or she will refrain from committing future deviant acts (Van Rooij & Fine, 2021a). Furthermore, getting caught and receiving punishment might also increase an offender’s estimation of the costs of crime (Nagin, 2013b). This is referred to as specific deterrence. However, according to this theory, imposing punitive measures on one individual will also scare other potential offenders, therefore discouraging them from committing criminal acts; this is referred to as general deterrence (Nagin, 2013a, 2013b). The concept of deterrence has been extensively studied (Nagin, 1998), with the overall conclusion that there is limited evidence that supports the theory. In the largest meta-analysis we have of the existing body of empirical work, covering 700 criminal statistics with 7,822 effect estimates across a range of types of punishments, offenders, offences, jurisdictions, and research approaches, including both survey and experimental studies, Dölling and colleagues (2009) set out to answer the question whether the threat of punishment prevents crime like the deterrence theory claims. It finds that with the exception of capital punishment studies, the number of studies that support the deterrence hypothesis exceeds those that falsify it. However, this review finds that the deterrent effect of punishment is most often rather small, and dependent on the type of offence (Dölling et al., 2009). It finds that there is less evidence for deterrence for more serious forms of delinquency: significant findings for deterrence concern relatively minor offences such as property crimes, tax evasion, and environmental offences (Dölling et al., 2009). Criminologists have further found that punishment may have negative effects on offending behaviour, including criminogenic effects of imprisonment (Petrich et al., 2021), obstruction of socio-economic opportunities that allow offenders to desist from crime (Kirk, 2018; Kirk & Sampson, 2013; Kirk & Wakefield, 2018), and adaptation effects where punishment leads to more evasion (Dupuis et al., 2021; Gornall, 2010; Ryder, 2008) or replacement by other offenders (Kleiman, 1997; Miles & Ludwig, 2007). While evidence for deterrence for general crime is mixed, the theory might hold up more consistently for corporate deviance, because most corporations are designed to be focused on seeking the highest possible profits while maintaining the lowest costs (Yeager, 2007, 2016). Assessing this empirical relationship, the unit of analysis of some studies focused on the corporate entity as the subject of sanctions (Buell, 2006; Cohen, 2000; Simpson et al., 2007), while other studies focused on how management and/or executives of corporations responded to received sanctions (Simpson et al., 2013; Yiu et al., 2014). Evaluating the overall impact of deterrence on corporate crime, a review by Schell-Busey and colleagues (2016) shows, again, that most forms of punishment do not seem to have significant deterrent impacts. Assessing effect sizes from fifty-eight studies (assessing deterrent effects of legal sanctions, punitive sanctions, as well as of legal rules), they found no significant evidence that legal sanctions deter corporate offending. Furthermore, the overall conclusion of their meta-analysis is that there were not enough methodologically rigorous studies to draw strong conclusions regarding existing corporate crime interventions. When looking at the effectiveness of the individual elements of punishment, namely the swiftness, certainty and severity, research shows that the certainty of punishment is most important for deterrence’s success (Nagin, 2013a). A core issue here is that there seems to be a threshold level of certainty below which more severe punishment will not be effective (Brown, 1978). A second issue is that deterrence is subjective and norm addressees have limited knowledge of what the certainty and severity of punishment actually is, over or underestimating both (Apel, 2013; Thornton et al., 2005; Van Rooij, 2016). For corporate offending the disconnect between objective punishment and subjective understanding of deterrence of

116  Research handbook on organisational integrity such punishment was most clearly evidenced in a study on the chemical industry, finding that environmental managers did not have a proper understanding of key (so-called ‘signal’) cases of enforcement against violators, nor did they understand the certainty or severity of punishment. The study therefore could not establish a direct causal link between environmental sanctions, perceptions of deterrence of such sanctions, and compliance with environmental standards (Thornton et al., 2005). A third issue is that the deterrent effect of formal punishment is moderated through informal norms (Pogarsky, 2002). One of the most important factors that people consider are the internal feelings of shame and guilt that might follow the offending. The perception and judgement of the social surroundings – like family members, friends or colleagues – is also shown to be an important consideration for someone to either engage in criminal activity or refrain from it (Pogarsky, 2002). These results call into question the impact formal punishments can have on a person’s willingness to engage in crime. What implications can we draw from this unclarity of deterrent effects in regard to the internal and external oversight of organisational deviance? First, those interested in enhancing integrity and compliance should not assume that instituting punishment for rule violations will do so automatically. As empirical studies show, there does not seem to be a clear-cut solution, where simply instituting a form of punishment will lead to more desired behaviour. Sanctions that are in place should ideally focus on all three characteristics previously discussed, as well as consider any social or personal perceptions of unwanted behaviour an offender could have within the organisational setting. A second core implication is that punishment will only deter if it is certain enough, and thus the focus should be on the detection of violations. This can be extra difficult in larger companies with complex hierarchies, in which many corporate forms of deviance do not have direct (visible) victims, nor occur in easily detectable settings. In this respect, focusing efforts on certain high-risk situations and people can be helpful. Lastly, to overcome the gap between subjective and objective deterrence, communication is key to ensure that organisational members have sound knowledge and understanding of the certainty and severity of punishment, should they break the rules. Furthermore, the organisation should take care in communicating the rules as part of both the formal and informal system of norms and values within the company. In sum, to make interventions based on deterrence as effective as possible, compliance and integrity officers should aim to make both the rules and subsequent sanctions transparent, consistent and visible.

STRAIN Deterrence theory views criminal behaviour as a rational choice made by the individual. However, the framework of strain sees deviance not merely as a matter of individual choice, but one that is embedded in a broader social fabric. Criminologists have theorised that social pressures to achieve social and cultural goals, like financial success, can lead to criminal activity (Agnew, 1985, 1992; Agnew et al., 2002; Bernard, 1987; Wang & Holtfreter, 2012). Due to various forms of inequality, some groups experience a discrepancy between the goals society tells them they should strive for and the legitimate means available to them to achieve these. This leads to tensions and feelings of frustration – referred to here as strain (Tibbetts, 2018). Robert Agnew, who proposed the most dominant strain theory to date, argues that, additional to inequality, people can experience strain from two other types of events. The second category is when someone experiences

A criminological perspective on organisational integrity  117 so-called ‘noxious stimuli’: major negative events or shocks in their personal or professional lives (Agnew, 1985, 1992, 2017). Examples of this are abusive relationships, criminal victimisation and economic problems (Agnew, 2017). Agnew further finds that the loss of positively valued stimuli can be a third cause for strain; for example, when someone gets fired from their job. According to Agnew, the feelings of strain from these three categories (lack of means to achieve goals, negative stimuli and loss of positive stimuli) can lead to feelings of anger and frustration. If a person is not able to cope with these negative feelings in a positive manner, this then can lead to crime (Agnew, 1985, 2001; Agnew & White, 1992). Initially, strain theory was mostly developed for and applied to juvenile delinquency (Agnew, 1992; Agnew & White, 1992; Aseltine Jr et al., 2000; Baron, 2004; Froggio, 2007; Mazerolle et al., 2003). However, following empirical support for the theoretical model, strain theory was used to explain a wider variety of criminal offences, like terrorism and inter-relational violence (Agnew, 2010, 2016; Eriksson & Mazerolle, 2013). Overall, support for strain theory is mixed; while some forms of strain do consistently seem to be related to negative feelings, these negative feelings do not automatically lead to criminal behaviour (Agnew et al., 2002; Aseltine Jr et al., 2000; Mazerolle & Piquero, 1998). Furthermore, strain seems to be most consistently and strongly related to violent offences (Langton & Piquero, 2007). In the organisational context, financial success is often heavily stressed and sought after, making the theoretical framework of strain seem eminently applicable (Agnew et al., 2009; Schell-Busey et al., 2016; Wang & Holtfreter, 2012). Since the achievement of economic goals is such an essential element within most organisational contexts, Agnew argued that the obstruction thereof is relevant in (a) particular white-collar offences, such as fraud and embezzlement; (b) occupational offending by higher class individuals; and (c) corporate crime (Agnew et al., 2009, p. 41). As most corporations are in some way expected to keep growing, to maximise profits and be able to compete within their industry, those that cannot fulfil this expectation are, according to the strain framework, expected to resort to illegitimate ways (Wang & Holtfreter, 2012). Furthermore, individuals can experience strain in the workplace due to the inability to achieve status goals and work-related stress (Agnew et al., 2009). Indeed, case study analysis of organisations have shown that the blocking of goals, pressures to grow and the accessibility of resources contribute to the likelihood of organisational crime (Simpson & Koper, 1997; Van Rooij & Fine, 2018; Vaughan, 1983). Besides the financial state of the organisation itself, Wang and Holtfreter (2012, p. 155) argue that strain can also operate at the industry level, asserting that financial goals may be more heavily implied in certain industries, while legitimate means may be constricted in these particular industries also. This is seen in earlier empirical studies as well (Baucus & Near, 1991; Sutherland, 1949). These various types of strains are more likely to result in corporate crime if they are ‘high in magnitude and perceived as unjust’ (Agnew et al., 2009, p. 48) Several studies have tested the applicability of the strain theory on forms of white-collar and organisational crime. Langton and Piquero (2007) studied the relationships between feelings of strain and eight different offence types, including antitrust, bribery, false claims, embezzlement, mail and wire fraud, securities violations, and lending and credit institution fraud. They found that strain, operationalised as a count of six strainful events, was not significantly related to negative emotions. However, strain was significantly related to financial motivations to commit crime. Their results did seem to find support for the strain theory framework for some offences, like embezzlement and credit fraud, but not for all, concluding that strain theory seems to be a promising framework to explain offences within the workplace, as long as some

118  Research handbook on organisational integrity adaptations would be made in relation to differences in social status (p. 14). Other scholars studying white-collar criminals have noted that these individuals were often motivated by the fear of losing what they had (Van Erp, 2013), therefore resorting to illegitimate means to be able to maintain their status within the organisation (Langton & Piquero, 2007; Weisburd et al., 1991). Furthermore, research shows that corporate crime is generally more prevalent in for-profit organisations experiencing financial troubles like profit losses than in organisations that do not experience those struggles (see Agnew et al., 2009). Further studies have reported mixed findings; some found support for the relationship between organisational strain and white-collar crime (Simpson & Koper, 1997; Van Wyk et al., 2000), while others did not find a definitive link between the two (Wang & Holtfreter, 2012). Strain theories generally show us that organisations that have high financial targets may well develop strain that enhances negative emotions, which in turn can lead to deviance. Further, those exposed to a high prevalence of other stressful situations at work might also be more at risk of developing strain. It is possible that the occurrence of individual and corporate strain can be combined when individual concerns are connected with corporate goals (Huisman, 2016), creating a higher risk for corporate offending. Besides the individual and organisational context, the industry an organisation operates in can also put them at higher risk of strain in situations of high competition and little resources. However, the empirics for the full causal pathway between strain and corporate deviance are not so clear cut, specifically when it comes to the relationship between the experience of negative emotions and engaging in deviant and criminal behaviour (for a discussion about the impact of high targets on the development of a toxic work environment, and other factors that might play a role, see Van Rooij & Fine, 2018). The claim that strain theory would be universally applicable to explain any form of (white-collar) offences has not been fully empirically supported. Scholars have proposed several contributing factors in the relationship between strain and corporate deviance, including conventional and criminal coping mechanisms and resources, social support and control, internal beliefs, costs and benefits of offending, and opportunity; these factors could enhance or decrease the likelihood of offending based on experienced strains (Agnew et al., 2009). Those interested in compliance and integrity should ideally take all these factors into account to assess to what extent members of their organisation experience strain, and whether they have the formal resources and social means to cope with these strains in a legitimate way.

SOCIAL LEARNING AND NEUTRALISATION TECHNIQUES Another strand of theories that incorporate the social environment in their explanatory frameworks are the social learning theories. Social learning theories view an individual as having no natural tendencies towards criminal or deviant behaviour (Tibbetts, 2018). Within this framework, such behaviour is learned on the basis of the way that significant others within the individual’s network, like family, friends, and colleagues, act and communicate. Where strain theory focuses on the social events and experiences creating tendencies towards deviant behaviours, learning theory centres around social interactions. The theory of differential association states that people will have a higher likelihood of criminal activity if others in their immediate surroundings are positive towards this kind of behaviour (Matsueda, 2001; Sutherland, 1939, 1947). As individuals interact with those close to them, they learn about the methods and motives of criminal behaviour, which are reinforced

A criminological perspective on organisational integrity  119 through certain social interactions. At the core of the theory lies the assumption that when the favourable definitions and techniques of criminal behaviour available to an individual are stronger than the unfavourable definitions and techniques, crime will ensue. In an organisational setting where deviant behaviour is the norm, colleagues learn the abilities to participate in white-collar crime and the predispositions towards rule-violating behaviour (Sutherland, 1941). Scholars have criticised the vagueness of the theoretical framework and have argued that associations with delinquent others may be formed after engaging in criminal activity, instead of before. In response to the limitations of Sutherland’s model, Burgess and Akers (1966) conceptually expanded on the way in which relationships with others can shape individual behaviour, formulating the differential reinforcement theory (Akers & Jennings, 2019). This model is based on the ideas of operant conditioning and overlaps with ideas used in the deterrence model, in that it states that individuals learn to behave in a certain way based on punishments and rewards. Furthermore, the model of differential reinforcement puts forward the concept of imitation as a way people learn from their social network; that is, through the modelling of other people’s behaviour, one can learn new ways to behave (Akers, 1973). In both the differential association and differential enforcement theories, definitions refer to a person’s attitudes and perceptions for deviant and non-deviant behaviour (Severson et al., 2019). Techniques here include both the means on how to carry out the crime and the intellectual justifications, like the motives and rationales, for committing the crime (Piquero et al., 2005; Sutherland, 1947). Whereas traditional criminologists have focused mostly on the impact of an individual’s primary relationships with their significant others, like spouses, direct family and close friends (Akers & Jensen, 2006; Matsueda, 2001), organisational scholars have argued that the associations within the workplace are equally important, seeing as people spend a considerable amount of time with their colleagues and the workplace is an important factor in most people’s lives (Piquero et al., 2005, p. 162). Indeed, while conceptualising his theory, Sutherland (1983) specifically put forward the argument that white-collar crime results from the learned attitudes and definitions in the workplace. In his qualitative assessment of the motives of a professional thief, he concluded that people learn both the ways to steal and favourable definitions regarding this behaviour from their social networks (Sutherland, 1937). Studying the applicability of social learning theories on white-collar offending, scholars have found modest support for the hypothesis that the attitudes of work associations can lead to corporate crime (Piquero et al., 2005; Steffensmeier et al., 2013). Focusing on the learned intellectual techniques, motives and rationales that play a central role in social learning theories, another concept that is widely used to explain corporate crime is that of neutralisation. In his explanation of white-collar crime, Sutherland (1941) argued that different forms of rationalisations are the most important way for managers to be able to justify their deviant behaviour. This so-called neutralisation framework was further developed by Sykes and Matza (1957) and, in short, suggests that most individuals do not have favourable attitudes or values when it comes to deviant behaviour. Rather, they learn to rationalise and neutralise deviant behaviour when presented with an opportunity to commit crime that, for whatever reason, they feel like they want to pursue (Piquero et al., 2005; Sykes & Matza, 1957). As mentioned before in the discussion of the deterrence theory, individuals often refrain from crime out of fear that the social surroundings will negatively respond to their behaviour, and internal feelings of shame and guilt that will follow their actions (Pogarsky,

120  Research handbook on organisational integrity 2002). However, these fears can be overcome by utilising techniques of neutralisation, thereby preserving self-image (Cardwell & Copes, 2021). These neutralisation techniques can be used both before and after committing an offence (Van Baar, 2019). In their original framework, Sykes and Matza (1957) offer five forms of neutralisation. The first technique is referred to as denial of responsibility, in which the individual does not hold themselves accountable for the deviant act, instead claiming it as something outside of their control. In the organisational context, one can easily theorise how the hierarchical structure of a corporation can lead to individuals ‘pointing the finger’, or claiming that the order for illegitimate behaviour came from higher up (Heath, 2008; Severson et al., 2019). Thus, it becomes easier for offenders to deflect blame and assume anonymity as a ‘small cog’ in the system. The second technique is denial of injury, which denies the harm caused by the deviant behaviour. Injury or harm caused by white-collar offending is seldom as evident as is the case in ‘ordinary’ street crime (Michel, 2016). Furthermore, it is harder to identify one single victim, since white-collar offending usually impacts many at once in varying degrees of seriousness, therefore making it easier for the offender to disregard its harm (Severson et al., 2019). By using the denying victims technique, an individual rationalises their behaviour by claiming that the victims are deserving of the consequences. In the organisational context, scholars have argued that many offenders do not see their actions as seriously harming others (Heath, 2008). The condemnation of the condemners technique pertains to the rationale that the ones who condemn the deviant behaviour have their own hypocritical motives. In this sense, corporations can put blame on their regulators, claiming for example that there are ‘too many’ or contradicting rules and laws in place (Parker & Nielsen, 2009). Finally, the technique of the appeal to higher loyalties is applied in order to argue that the individual acted according to norms and values of a specific subgroup; in the organisational context, these loyalties could lie with for example colleagues, managers and customers (Heath, 2008; Severson et al., 2019). In addition to these five original techniques, countless others have been proposed (Cardwell & Copes, 2021), of which some are specifically in the realm of corporate crime (Severson et al., 2019). These include the claim of normality, in which organisational members can rationalise their behaviour by claiming that many others in their organisation, profession or industry resolve to the same illegitimate ways; sense of entitlement, in which the corporate offender feels he is simply taking ‘what is owed’; and defence of necessity, in which offenders feel that they have no other choice but to commit a crime in order to keep their job, or to maintain their organisation’s place within the market or industry (Benson, 1985; Clinard & Yeager, 2011; Heath, 2018; Klenowski et al., 2011; Maruna & Copes, 2005). Furthermore, following an extensive literature study of neutralisation techniques identified in a broad range of disciplines, Kaptein and Van Helvoort (2019) developed a detailed neutralisation model, in which the authors identify an array of overarching categories, neutralisation techniques and sub-techniques. As with most theories discussed in this chapter, empirical support for the concept of neutralisation techniques is mixed. In their review of the literature on neutralisation, Maruna and Copes (2005) mentioned that the theoretical framework is used in a wide variety of disciplines, finding strong support in some, but not in others. In the realm of white-collar crime research, evidence has been found for the idea that white-collar criminals, like fraudsters, embezzlers and even (representatives of) corporations, commonly use neutralisation techniques (Benson, 1985; Cressey, 1953; Jordanoska, 2018; Klenowski, 2012; Van Baar, 2019; Willott et al., 2001).

A criminological perspective on organisational integrity  121 What can we learn from these social learning perspectives when it comes to deviant organisational behaviour? First and foremost, these theories and empirical studies point to the notion that the environment in which the individual operates matters; if you have one bad apple, you might soon end up with a bad barrel, due to learning processes within divisions and departments. Furthermore, individuals employ various rationalisation tactics that allow them to neutralise behaviour otherwise seen as deviant or criminal. In this respect, another criminological concept can be relevant, namely that of normalisation of deviance: this is more of a concept than a theory, and describes how deviance from the correct behaviour can become normalised, specifically within organisations, over time (Le Coze, 2008; Vaughan, 1996). Diane Vaughan’s (1996) case study on the NASA Challenger space shuttle showed that certain activities can lose their deviant nature when normal occurrences in the workplace are part of otherwise legitimate organisational behaviour. Moreover, it allows well-intentioned people to engage in activities that otherwise would be labelled as deviant. This creates risk for employees who recognise these patterns of deviance, but are afraid to speak up against their colleagues (Maxfield et al., 2011). When organisational members normalise deviant behaviours that subvert processes designed to safeguard others that rely on the organisation for essential products or services, this creates a prominent risk (Banja, 2010). Pinto (2014) suggests that the normalisation of deviance can affect how an organisation interacts with strategic partners during the course of business relationships. Important to note here is that normalisation of deviance does not always reflect creative ways around regulations, but that these deviant behaviours reflect alternative processes that are normalised which in the end replace the ineffective or inefficient organisation’s ability to achieve its goals (Price & Williams, 2018).

CONTROL In contrast to the social learning theories, control theories assume that all human beings have a natural tendency towards crime due to their selfish nature (Britt & Gottfredson, 2003). If these tendencies are not controlled adequately, all people would exhibit antisocial and criminal behaviour. The question here differs from the question that is usually asked in criminological research: instead of asking ‘Why do people commit crime?’, the control theories debate why people do not commit crime. One of the most influential and empirically valid theories in the criminological literature is the theory of low self-control established by Gottfredson and Hirschi (1990). In short, this theory assumes that the psychological trait of low self-control, which develops early in a child’s life and stays consistent over the life course, causes criminal behaviour. Empirical research has shown that individuals with low self-control are more focused on the acquirement of short-term pleasure and the avoidance of negative feelings (Gottfredson & Hirschi, 1990; Hirschi & Gottfredson, 1993). Although Gottfredson and Hirschi contend that their theory is universally applicable to all forms of crime, many scholars have critiqued this claim when it comes to white-collar crime (Piquero et al., 2010). Empirical work studying the link between self-control and forms of white-collar crime has not been able to establish support for the theory (Benson, 1985; Piquero et al., 2010; Simpson & Piquero, 2002). Benson and Moore’s study (1992) even showed that white-collar offenders contradict the self-control theory, since careers of white-collar offenders differ from street criminals.

122  Research handbook on organisational integrity While the theory of self-control presently does not seem to be an adequate model to predict white-collar crime, a related concept has begun to take shape in the last couple of years: the desire to be in control (Craig & Piquero, 2016; Piquero et al., 2010; Schoepfer et al., 2014). Desire for control, as defined by psychologists Burger and Cooper (1979), is the need to be in control over one’s life. Like self-control, it is seen as a personality trait, but whereas the former focuses on the influence of self-control on here-and-now behaviour, desire for control includes both current and future situations (Schoepfer et al., 2014). Individuals with high desire for control are generally seen to be active, assertive and decisive, assert influence over others when needed, and want to avoid failure as much as possible (Piquero et al., 2010, p. 631). While desire for control can be related to the successful achievement of legitimate goals, scholars also note that the trait can have counter-productive outcomes (Schoepfer et al., 2014). In contrast to self-control, the desire for control trait does seem to be significantly linked to white-collar offending, showing that this control personality trait seems to be better suited to predicting white-collar crime (Craig & Piquero, 2016; Piquero et al., 2010; Schoepfer et al., 2014). On the one hand, this short overview of the control theories of crime shows us, again, how important the social environment is in promoting or discouraging deviant behaviour, even from an early age. Moreover, self-control implies an individual characteristic that is hard to predict. It is not easy to assess every personal characteristic, or to control for these. However, one should be aware that there can be personal differences here, and that there can be organisational members with lower self-control, which in itself is hard to combat. Furthermore, it shows us the broader issue that, for some people, complying with rules may be harder, and therefore additional organisational support may be needed. There are ways to assess a person’s level of self-control, for example by looking out for risk factors associated with the trait, including antisocial behaviours and substance abuse. Within the organisational context, assessing these factors might not always be possible or realistic due to a range of privacy reasons, and there will still be a large number of people and individual factors that lay outside the scope of organisational interventions. Therefore, while it is important to recognise that individual differences can play a role in corporate offending, an approach focused on a wide variety of factors, like minimising opportunities for crime within the organisation, might be more efficient to combat individual influences.

CONCLUSION There is a wide range of explanations for deviant behaviour in the criminological literature that can be applied to the study and regulation of corporate integrity and compliance. As this chapter has shown, explanations of crime can focus on motivation, debating the question of why people engage in criminal conduct, and opportunity, relating to how people engage in criminal conduct. For an intervention to be effective in changing undesired behaviour within the organisation, it should focus on both these aspects, altering an organisational member’s impulse for crime as well as the opportunity for offending. Both the individuals themselves as well as the organisational context they operate in can have an impact on their behaviour. In this chapter, we have focused on both micro- and meso-level explanations of deviant behaviour and crime. When the organisation fosters a climate based on integrity, prioritising rules and regulations, and providing organisational members with the

A criminological perspective on organisational integrity  123 instrumental and social resources to follow these, it might well inspire compliance. Reversely, when individuals operate in stressful situations where support is scarce and deviant behaviour is the norm, the chances of offending increase. In addition, those interested in enhancing compliance and integrity within their organisation should be aware of personal differences that can occur amongst organisational members – in this regard, lowering opportunity for deviance can be an effective way to minimise these micro-level risks and stimulate compliant behaviour. Focusing on the protection of potential targets, improving their guardianship, and limiting chances in the organisational environment to engage in corporate crime, restricts an individual’s possibilities for illegal behaviour. Reaching a full understanding of corporate and white-collar crime is no easy feat due to both definitional problems as well as issues surrounding access to reliable data (Severson et al., 2019), and empirical support remains scant for the application of all theories discussed in this chapter to the organisational context. However, as previously highlighted, criminological theories can offer valuable insights and tools to combat deviant behaviour and stimulate organisational integrity.

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10. A positive behavioural ethics perspective on organisational integrity Linda Klebe Treviño, Niki A. den Nieuwenboer, and Jennifer Kish-Gephart

When considering how to orientate our chapter, we chose to take a decidedly positive tack to highlight what we know about ethically positive individual differences, emotions, cognitions, behaviours, and structures. We wanted to orientate our chapter in this way as a complement to much behavioural ethics research that has focused on understanding the causes and prevention of unethical behaviour in the workplace, such as lying, stealing, and cheating. Extant research has also emphasised negative emotions such as guilt and shame, negative cognitive processes such as moral licensing (Merritt et al., 2010) and negative individual differences such as Machiavellianism and (external) locus of control (Nelson & Gilbertson, 1991; Treviño & Youngblood, 1990). Further, as we noted in our 2014 behavioural ethics literature review (Treviño et al., 2014a), beyond the negative, prior research has focused on “routine ethical behaviour that meets the minimum moral standards of society” (e.g., following rules) rather than more positive extra-role behaviours such as voice. Therefore, rather than focus on either the neutral or the negative as much prior research has done, in this chapter we aim to emphasise more positive concepts in behavioural ethics— individual differences such as moral attentiveness and moral efficacy, cognitive factors such as ethical frames and cognitive resources, moral emotions such as compassion and moral elevation, extraordinary behaviours such as ethical leadership and ethical voice, and ethical infrastructure elements such as ethical climate and culture (see Figure 10.1). In that way, we wish to align this review with positive organisational scholarship as it relates to behavioural ethics in organisations and hope to spur more positively orientated research in the future. The only previous attempt to explicitly link positive psychology to business ethics that we could find was a nearly twenty-year-old edited volume by Giacalone and colleagues (2005) that put forward some interesting ideas but that appears to have spawned little empirical research. So, in the discussion we propose consideration of even more positive research that would help us to understand what might contribute to ethically positive behaviours in organisations (i.e., flourishing, resilience, and/or wisdom). Having stated our mission to orientate our review in a positive direction, we want to note that this goal was sometimes difficult to accomplish. Therefore, readers will find, in some sections, references to “less negative” or “less unethical” behaviours as outcomes rather than the hoped-for references to the positives we were seeking. We also note that readers interested in a review that takes a broader perspective on behavioural ethics in organisations can turn to multiple existing literature reviews (e.g., De Cremer & Moore, 2020; Moore & Gino, 2013; Tenbrunsel & Chugh, 2015; Tenbrunsel & Smith-Crowe, 2008) in addition to the one we published in 2014 (Treviño et al., 2014a). We begin by focusing on topics that look inside the individual such as individual differences, cognitions, and emotions. We follow that by ethical actions such as ethical leadership, 129

130  Research handbook on organisational integrity

Figure 10.1

A positive behavioural ethics literature review

behavioural integrity, ethical voice, and courage. Finally, we consider organisational issues that influence individuals and groups such as ethical infrastructures.

INDIVIDUAL DIFFERENCES In this section, we review recent work on individual differences that may help contribute to our understanding of positive behaviours in organisations. Moral Attentiveness Introduced by Reynolds (2008), moral attentiveness can be defined as “the extent to which an individual chronically perceives and considers morality and moral elements in his or her experiences” (p. 1028). This “innate tendency to perceive issues as moral issues” (Reynolds & Miller, 2015, p. 114) is distinct from moral awareness (Rest, 1986) and moral sensitivity (Jordan, 2007), which focus on recognising the moral issues present in a specific event or one’s skill at recognising moral issues across moral events, respectively (Reynolds & Miller, 2015). Since our last review (Treviño et al., 2014a), organisational scholars have pointed to ethical leadership (Zhu et al., 2016), meaningful work (Dawson, 2018), and ethics education (Wurthmann, 2013) as predictors of moral attentiveness. Moral attentiveness has also been linked to moral imagination (Whitaker & Godwin, 2013) and moral awareness (Sturm, 2017). In a series of studies, Babaloa and colleagues (2022) found that group ethical voice was related to less abusive supervision through its effect on leaders’ moral attentiveness. Moral attentiveness has also been found to moderate the relationship between ethical climate and employees’ ethical behaviour (Al Halbusi et al., 2021); and the relationship between ethical leadership and follower unethical behaviour (Van Gils et al., 2015); such that employees who have higher levels of moral attentiveness will engage in more ethically positive behaviour. Despite this increased attention, much yet remains to be understood about this construct, including further consideration of its outcomes and boundary conditions (Reynolds & Miller, 2015).

A positive behavioural ethics perspective on organisational integrity  131 Humility-Honesty (H-H) In contrast to the widely known five-factor model of personality, the HEXACO model includes an additional factor, honesty-humility or H-H (Ashton et al., 2014). This personality dimension refers to “one’s tendency to cooperate with others even when one could be exploited by them” (Lee et al., 2019, p. 1536) and consists of four facets: sincerity, fairness, greed avoidance, and modesty (Ashton et al., 2014). Individuals with high levels of H-H are theorised to have a strong moral conscience (Marcus et al., 2007) and thus are more likely to engage in prosocial behaviours (Hilbig & Zettler, 2009). Support for this relationship has been borne out in empirical research, with the honesty-humility personality trait being linked to cooperative behaviour (e.g., Hilbig et al., 2012; Zettler et al., 2013; see Hilbig et al., 2013 for a meta-analysis), generosity (Exline & Hill, 2012), prosociality (e.g., Aghababaei et al., 2014; Zhao & Smillie, 2015), and willingness to apologise for transgressions (Dunlop et al., 2015). Research has also linked the H-H disposition to ethical leadership (e.g., De Vries, 2012; Sosik et al., 2019) and follower self-efficacy (Owens et al., 2019), as well as preferences for certain types of organisations (e.g., benevolent organisations, Lukacik & Bourdage, 2020) and leadership styles (e.g., charismatic leadership, Breevaart & De Vries, 2021). Despite consistent findings linking H-H to prosocial behaviour, a recent meta-analysis found only a weak significant correlation (.13) between H-H and organisational citizenship behaviours (OCBs include discretionary behaviours beyond task performance that help the organisation but that are not formally required by the job description or reward system and not punished if not performed; Organ, 1988) and a wide credibility interval, suggesting the potential for moderating factors and future research opportunities (Lee et al., 2019). Moreover, the proliferation of new constructs related to humility, such as humble leadership (see Kelemen et al., 2022 for a review), suggests opportunities for construct clarity and exploration of its nomological network of related constructs. Moral Efficacy Drawing primarily on Bandura‘s (1997) theorising, organisational scholars have suggested that a critical component of motivating ethical action is individuals’ “confidence in their ability to behave ethically when faced with a moral challenge” (Mitchell & Palmer, 2010, p. 90). This has been referred to as ethical (Mitchell & Palmer, 2010) or moral efficacy (Hannah et al., 2011a), and can be defined as an “individual’s belief in his/her capabilities to organize and mobilize the motivation, cognitive resources, means, and courses of action needed to attain moral performance” (Hannah et al., 2011a, p. 675).1 Much of this work has focused on the role of moral efficacy in leadership and followership. For example, ethical leadership has been linked to followers’ ethical voice and OCBs via the mediating mechanism of moral efficacy (e.g., Kim & Vandenberghe, 2020; Lee et al., 2019). In a recent study, Owens and colleagues (2019) drew on social-cognitive theory (Bandura, 1986) to suggest that leader moral humility will increase followers’ moral efficacy through leader role modelling, expectations, and verbal persuasion. Across two studies, the authors found support for their moderated-mediation model, ultimately linking leader moral humility and followers’ moral efficacy to increased follower ethical behaviour. Similarly, Wang and colleagues (2018) found evidence that moral efficacy helps to explain the trickle-down effect

132  Research handbook on organisational integrity of high-level managers on middle-level managers. In a study looking at the broader ethical context in organisations, collective ethical efficacy and collective moral emotions strengthened the relationship between ethical climate and ethical behaviour (Arnaud & Schminke, 2012). Additional work is necessary to fully understand the effect of moral efficacy on positive workplace outcomes. Moreover, earlier work has led the way in considering interventions aimed at improving individuals’ ethical or moral efficacy, including inclusion of an ethical decision-making course in business (May et al., 2014) and use of graphic novels (Fischbach, 2015). To the extent that moral efficacy is beneficial in the workplace, future organisational scholarship should further investigate when and how it can be enhanced. Moral Conation Introduced by Hannah and colleagues (2011a), moral conation represents “the capacity to generate responsibility and motivation to take moral action in the face of adversity and persevere through challenges” (p. 644). According to the authors, moral conation—consisting of three components: moral courage, moral efficacy (see above), and moral ownership—is necessary for ethical decision-making. While conceptualised by the authors as an individual difference, moral conation can also be developed via social learning, training, and ethical role models. Consistent with our conclusions in our prior review, little additional work has focused on moral conation overall (see Pohling et al., 2016 for an exception). Instead, scholars have tended to focus on one or more of the three components. For example, Liao and colleagues (2018) focused on how leaders respond after engaging in abusive behaviours. Across two field studies using experience sampling methodology (ESM), the authors found support for their moderated-mediation model, such that leaders perceived loss of moral credits and guilt after they engaged in abusive supervision, which motivated reparative actions when the leader was morally courageous. In another study, Ogunfowora and colleagues (2021) found that employee moral ownership—“a sense of responsibility over one’s ethical conduct and those of one’s social group” (p. 484)—mediated the relationship between a leader’s ethical role modelling and an employee’s morally courageous behaviours. Moral Identity While the concept of moral identity was originally introduced in the 1980s by Blasi (1984), the most well-known approach to moral identity in the behavioural ethics literature is that of Aquino and Reed (2002), who define moral identity as “a self-conception organized around a set of moral traits” (p. 1424), or “a network of moral trait associations that collectively define a person’s moral character” (Boegershausen et al., 2015, p. 162). Moral identity has long been promoted as one of the most important predictors of ethical behaviour (Lefebvre & Krettenauer, 2019). According to Hertz and Krettenauer (2016), most research on moral identity (65.3 per cent of the studies included in their meta-analysis) uses the Self-Importance of Moral Identity Questionnaire developed by Aquino and Reed (2002). It includes two dimensions—internalisation and symbolisation, the former being a private dimension, and the latter a public one (Aquino & Reed, 2002; Boegershausen et al., 2015). The internalisation dimension refers to the extent to which a person believes that moral traits are an essential part of their self-concept (Aquino & Reed, 2002). The symbolisation dimension refers to

A positive behavioural ethics perspective on organisational integrity  133 the importance that a person places on affirming one’s moral self by exhibiting it in public. Research finds, though, that the internalisation dimension is the more reliable predictor, and that it predicts a whole host of ethics-related outcomes. The meta-analysis by Boegershausen and colleagues (2015) finds that moral identity also influences volunteering (both the intention to and the act itself). Higher moral identity internalisers also have a wider circle of moral regard (i.e., they feel more obliged to show moral concern for distant others), which increases their giving of time, and to some extent money. They are also less likely to engage in antisocial or unfair acts against others. Furthermore, high internalisers are more likely to engage in compensatory moral behaviour to make up for previous unethical behaviour as well as to combat threats to their moral identities. They appear to have a greater stock of moral resources to help restrain themselves from their desires to act selfishly or unethically as well, even when their self-control is depleted. Importantly, the meta-analysis by Hertz and Krettenauer (2016), which included 111 studies from a broad range of academic fields, found that while moral identity positively predicted moral behaviour in people from Western countries, the effect of moral identity is not much stronger than that of moral judgment or moral emotions. These authors therefore encourage researchers to use a broader conceptual framework that includes situational and personological factors beyond just moral identity to study how moral action comes about. Another meta-analysis that drew on 57 independent studies (Lefebvre & Krettenauer, 2019) supported the idea that there is a robust empirical connection between moral identity and moral emotions. Specifically, moral identity is apt to amplify emotions such as shame, guilt, pride and empathy, though this relationship is not as strong for the more negatively charged other-evaluative emotions such as moral outrage or disgust. On the whole, then, moral identity appears to play a multifaceted role in moral functioning, having an impact on moral behaviour, but an even greater impact on moral emotions, especially other-regarding ones (Lefebvre & Krettenauer, 2019). Studying the influence of moral identity on moral behaviour by itself, without including factors such as moral emotions, might therefore underestimate the role that moral identity plays in determining moral behaviour. Finally, a more recent meta-analysis focuses on the antecedents of moral identity (Xu et al., working paper). These authors find that agreeableness, extraversion, conscientiousness, openness, moral personality, honesty-humility, integrity, guilt proneness, shame proneness, and proactive personality were all positively and significantly related to moral identity, while neuroticism was negatively related. No relationship was found with Machiavellianism, narcissism, trait aggression or social desirability. Ethical leadership, servant leadership, authentic leadership, transformational leadership, and transactional leadership also had positive significant relationships with moral identity. The relationships between leader narcissism and abusive supervision and moral identity were, however, nonsignificant. Ethical climate on the other hand was positively and significantly related to moral identity. Finally, this meta-analysis found that gender had a positive and significant relationship with moral identity, with women more likely to express a moral self-concept. The meta-analyses find inconsistent results regarding the effect that a collectivistic versus individualistic country culture can have on moral identity. That is, Lefebvre and Krettenauer (2019) did not find a culture effect, but Hertz and Krettenauer (2016) and Xu and colleagues (working paper) did. Specifically, Hertz and Krettenauer (2016) found that studies conducted in more collectivistic cultures had lower effect sizes than studies conducted in individualistic cultures. Xu and colleagues (working paper), found that narcissism and leader narcissism had

134  Research handbook on organisational integrity a stronger relationship with follower moral identity in collectivistic cultures than they did in individualistic countries. Conversely, education and gender had a stronger relationship with moral identity in individualistic cultures than they did in collectivistic cultures. Clearly, more work will be needed to sort out these differences and the theoretical reasons for them. In all, research on moral identity is thriving and it remains an important predictor of ethical behaviour. We encourage authors to consider moral identity to be just one of various antecedents of moral behaviour and the inclusion of moral emotions should be considered as a motivating factor to help translate intent into action.

INDIVIDUALS AND COGNITION Much behavioural ethics research has focused on cognition, or on how people “think” about ethics at work. In this section, we review recent research on decision frames and cognitive resource depletion and replenishment. Decision Frames Decision frames are “the mental narratives that help shape meaning and understanding in daily events” (Rees et al., 2022, p. 430). Within an ethics context they are important for helping individuals to “see the ethics” in a situation—or not (Rees et al., 2022, p. 431). Tenbrunsel and Messick (1999) proposed that ethical frames generally prioritise considerations about what is acceptable for a particular group or about adhering to some set of collective and agreed upon standards, while business frames are more orientated towards considering economic questions such as costs and benefits (Rees et al., 2022). Research finds that when people use business frames, they tend to engage in more unethical behaviour while ethical frames are associated with more ethical behaviour (Chen et al., 2020). Rees and colleagues (2022) set out to examine whether there are ways to mitigate the negative effect of business framing on misrepresentation in addition to examining what might discourage the more positive effects of ethical frames. They found that when people in an ethical frame are encouraged to think in terms of cost-benefit analyses, they engage in more misrepresentation. But, importantly, when people in a business frame are prompted to think about others (and not just themselves), they are more honest. Rees and colleagues (2022) also examined construal level, which refers to the level at which information is represented. This can be very abstract (a higher level of construal) and is associated more with an ethical frame. But it can also be very concrete, where people’s focus is more on details that are useful for immediate goal attainment, and not on values or identity. This is a lower level of construal that is related more to a business than an ethical frame. The authors found that when issues are presented at a high level of construal (versus a low level), those who use a business frame engage in less misrepresentation (than those in the low-level construal condition). These are important findings because the use of business frames seems quite prevalent in companies, and it can be challenging to get people to consistently focus on the ethical aspects of situations. Future research that wishes to advance a positive perspective should focus on how to shift people in business settings from business frames to ethical frames. Using ethical frames in a group decision context can also persuade others in the group to engage in more ethical behaviour. For instance, Chen and colleagues’ (2020) work on ethical

A positive behavioural ethics perspective on organisational integrity  135 voice (reviewed under ethical voice below), showed that ethical champions’ use of ethical frames increased group members’ moral awareness and reduced team moral disengagement, which resulted in more ethical team decisions. Desai and Kouchaki’s (2017) work examined a similar idea of trying to increase others’ concern for ethics by activating the concept of morality, specifically by focusing on how subordinates can discourage their superiors from giving them unethical directives. Anecdotally, we certainly know about situations where managers pressure subordinates to engage in unethical acts by using the reward and punishment system. For example, in the Wells Fargo scandal, evidence suggests that some managers pressured subordinates to open fraudulent customer accounts. Desai and Kouchaki (2017) focused on whether workers can use moral symbols to increase moral awareness and thereby discourage such behaviour. Moral symbols might be words, images or even actual physical objects that carry moral meaning—such as quotations that exhort people to act ethically, pictures of people who are “moral exemplars,” or religious objects, among others. The authors theorised and found that by displaying such symbols at work, people can increase others’ moral awareness. Moral awareness refers to the recognition that a situation has “moral content and legitimately can be considered from a moral point of view” (Reynolds, 2006, p. 233), an important first step in ethical decision-making. Increased moral awareness leads to more ethical and less unethical behaviour. Desai and Kouchaki (2017) also found that the display of moral symbols leads to fewer unethical directives being given to those who are displaying such symbols in conditions where unethical gains could be had. Importantly, their work also suggested that this decrease is due to those individuals being seen as having higher moral character. Hardin and colleagues (2020) built on this idea of using symbols or environmental cues to reduce people’s propensity for unethical conduct. In their case, they examined and found through one field study and three experiments, that the presence of photographs of close others reduces people’s unethical behaviour (specifically, financial transgressions). They also found that this effect is driven by a decrease in the salience of the economic schema in people’s minds, which resembles the idea of the business frame that was discussed above. Thus, much research takes this “ethical” versus “business” frame perspective, and it generally finds that cuing, priming or simply thinking in ethics terms is associated with more ethical behaviour. This therefore seems like an extraordinary—and relatively cost-effective—way for organisations to encourage more employee ethical behaviour. We encourage future research to dive deeper into what symbols or cues are more or less effective and who can best employ them to ensure more ethical behaviour in organisations. We wonder, for example, whether in organisations that have experienced scandals, cues or symbols that commemorate those scandals (in a moral way, perhaps learning-orientated way) can help moral awareness and encourage more ethical behaviour. We also wonder whether the effects of such symbols or cues wear off over time or can be sustained. And, if they can be sustained, how? Finding the answer to the latter question requires longitudinal research, a methodological approach that has rarely been used in the behavioural ethics literature but is needed. Cognitive Resource Depletion and Replenishment Empirical evidence is accumulating about how cognitive resource depletion leads to an increase in the likelihood of engaging in unethical behaviour (cf. Barnes et al., 2011; Kouchaki & Smith, 2014; Welsh & Ordóñez, 2014). Self-regulatory resources are thought to aid in self-control. So, an important question is: how can self-regulatory resources be protected

136  Research handbook on organisational integrity from depletion, or even be replenished? Liang and colleagues (2018) examined whether mindfulness, considered to be part of the self-control process, can be used to curb aggression. Mindfulness is defined as “a state of consciousness that is characterized by present-moment awareness and nonjudgmental acceptance of moment-to-moment experiences” (Liang et al., 2018, p. 283). A mindfulness technique can be used to enhance the self-regulation of behaviour. Previous studies have shown that mindful individuals are less likely to engage in abusive supervision or retaliate when provoked. But Liang and colleagues (2018) argued that it’s not clear what mindfulness is exactly, how it works, or why it is beneficial to self-control. In the end, the authors found that mindful awareness does play a critical role in regulating aggression, and that it does so by reducing the degree to which the person relies on or uses maladaptive emotional regulation. Thus, giving undivided attention to “moment-to-moment experiences, emotions, and desires without preoccupation with past or future events (Roemer & Orsillo, 2006)” (Liang et al., 2018, p. 283) appears to be helpful in maintaining self-control and not losing the self-regulatory capacity needed to ensure responsible behaviour. While Liang and colleagues’ (2018) work focuses on reducing a very specific form of unethical behaviour (aggression), other work has focused on how mindfulness can increase a specific form of ethical behaviour, specifically prosocial behaviour. That is, Hafenbrack and colleagues (Hafenbrack et al., 2020) examined the influence of two different types of mindfulness practices (focused breathing and loving kindness meditation) on different types of prosocial behaviour (e.g., helping behaviour, financial generosity, and compassionate responding to show support for others). These authors found that state mindfulness indeed enhanced prosocial behaviour, and that this effect was mediated by increased empathy and perspective taking. Future work should examine whether mindful awareness can also increase other types of ethical behaviour beyond prosocial behaviour and decrease other forms of unethical behaviour besides aggression. Further, if we consider how self-control resources can be replenished, we can look to a chapter by Gailliot and Baumeister (2005) who report on previous research findings that show that these resources can be replenished with rest and with positive affect. This suggests that ethics in organisations can benefit if employees are not overly stressed and are well rested and feeling positive about their work and organisation.

INDIVIDUALS AND DISCRETE EMOTIONS In our 2014 review (Treviño et al., 2014a), we noted that few studies within behavioural ethics had explicitly considered discrete emotions, with most of the newer work focused on envy, a negative emotion (e.g., Duffy et al., 2012). Here, we explicitly consider positive discrete emotions, including compassion, empathy, gratitude, forgiveness, and moral elevation. As we describe below, much of the work on positive discrete emotions has been conducted outside of organisation studies (e.g., in psychology) and even less work is specific to the field of behavioural ethics. Still, we provide a brief description of each discrete emotion, noting findings relevant to behavioural ethics scholars, with the hope of encouraging future work in this area. Compassion According to a review by Dutton and colleagues (2014), “compassion is a normal and pervasive way of interrelating at work (and beyond) and thus central rather than peripheral to

A positive behavioural ethics perspective on organisational integrity  137 understanding human experience” (p. 278). The authors conceptualised compassion as an interpersonal process, involving two actors (a sufferer and a focal actor), and point to the many benefits of experiencing compassion at work, including reduced anxiety, increased organisational commitment, a sense of dignity (from being valued), a more positive outlook, prosocial behaviour, and better relationships (Dutton et al., 2014). Since their review, research related to behavioural ethics suggests that ethical climate may elicit compassion (Zoghbi-Manrique-de-Lara & Guerra-Baez, 2016) and that compassion mediates the relationship between perceptions of an organisation’s corporate social responsibility (CSR) activities and employee creativity (Hur et al., 2018). In a recent study, Wee and Fehr (2021) found that a team’s compassion behaviour reduced the negative impact of the COVID pandemic on employees’ suffering and increased their willingness to engage in voice behaviour. Recent work has also considered self-compassion, a form of self-directed (versus other-directed) compassion (see Dodson & Heng, 2022 for a review). In an experience sampling study, for example, Jennings and colleagues (2023) found that having a self-compassionate mindset (characterised by “kindness, gentleness, and care toward oneself as an employee”) reduced cognitive depletion, increased self-esteem, and improved daily resilience and work engagement (p. 1). Schabram and Heng (2022) suggest that the type of compassion (self-directed or other-directed) may be more or less effective depending on the type of burnout an employee is experiencing (e.g., cynicism may be reduced with other-directed compassion while exhaustion may be helped with self-directed compassion). Empathy Empathy has been the subject of study for philosophers and scientists across disciplines for more than a century (Clark et al., 2019). It arises when “the observation or imagination of affective states in another induces shared states in the observer” (Bernhardt & Singer, 2012, p. 3). For example, research in neuroscience demonstrates that when observing a friend experiencing pain (e.g., via an electric shock), a subject’s brain response is similar to directly experiencing pain oneself; and this finding has been reproduced with vicarious experiences of anxiety, disgust, and social exclusion (see Bernhardt & Singer, 2012 for a review). Such experiences can motivate adaptive responses to the vicariously experienced emotions, including engaging in behaviours intended to help others (Klimecki & Singer, 2012). In this way, empathy represents “feeling as” another person rather than “feeling for the other” (Hein & Singer, 2008, p. 157; italics original). In addition, state empathy involves both cognitive and affective components: state affective empathy captures “feeling the same state as another person” (p. 167) while state cognitive empathy refers to the “tendency to understand … others’ internal states” (Clark et al., 2019, p. 168). Within the field of organisation studies, empathy has been linked to a variety of positive behaviours at work. According to a recent review by Clark and colleagues (2019), extant research suggests that empathy is positively related to organisational citizenship behaviours (OCBs) and helping behaviours (e.g., Joireman et al., 2006; Kamdar et al., 2006; Lindsey et al., 2015). Similarly, in a meta-analysis of 304 independent samples, perspective taking and empathetic concern were found to be positively related to supportive behaviours towards others (e.g., helping, sharing information or resources, cooperating) (Longmire & Harrison, 2018). Other studies have linked empathy to positive interpersonal experiences in the workplace, including higher quality communication between peers (e.g., Patient & Skarlicki, 2010)

138  Research handbook on organisational integrity and positive perceptions of leaders (e.g., leaders’ likeability, Meinecke & Kauffeld, 2019). While the aforementioned evidence suggests that empathy has many positive benefits for employees and organisations, scholars have noted the conceptual confusion around empathy and called for clarity and future research in this area (see Clark et al., 2019 and Cuff et al., 2016 for reviews). Clark and colleagues (2019), for example, concluded that in many studies, scholars either failed to provide a definition or failed to consider empathy’s multidimensional nature (e.g., state vs. trait, cognitive and affective components). We encourage scholars interested in examining the positive impacts of empathy to carefully consider how they define and operationalise this construct. Furthermore, additional research is warranted to understand the boundary conditions around the positive effects of empathy (e.g., see Longmire & Harrison, 2018). Lastly, insofar as empathy motivates positive outcomes, scholars might consider possible interventions within organisations and business schools (e.g., see Baker, 2017). Gratitude Gratitude represents a moral emotion (McCullough et al., 2001) and can be defined as “a feeling of appreciation in response to an experience that is beneficial to, but not attributable to, the self” (Fehr et al., 2017, p. 363). Whereas empathy is triggered in response to the needs or suffering of another person, gratitude “operates typically when people are the recipient of prosocial behavior” (McCullough et al., 2001, p. 252). Although gratitude has been studied extensively in psychology, it has received less attention in the organisation sciences (Fehr et al., 2017; Locklear et al., 2022). This is surprising given that gratitude has been linked to a host of positive outcomes, including improved well-being, higher life and job satisfaction, reduced burnout, and increased prosocial behaviours (see Greenbaum et al., 2020 and Locklear et al., 2022 for reviews; Ma et al., 2017). Within organisation studies, recent work has identified the benefits of gratitude for individuals and teams. For example, engaging in daily gratitude journaling reduced negative behaviours, such as gossiping and incivility (Locklear et al., 2022) while state mindfulness was found to be related to higher levels of gratitude and concomitant helping behaviour at work (Sawyer et al., 2022). At the team level, higher levels of gratitude within teams were linked to team creativity via greater information sharing and integration (Pillay et al., 2020), and teams with a leader characterised by high trait gratitude were found to be more innovative (Li et al., 2022). More specific to behavioural ethics, gratitude has been linked to a higher sense of responsibility towards employees and societal issues (Andersson et al., 2007). Forgiveness Forgiveness can be defined as an “intraindividual process involving a prosocial change toward a perceived transgressor” (Brady et al., 2022, p. 2). As such, the construct represents a within-individual phenomenon that excludes intention or behaviour (such as reconciliation behaviours). Within organisation studies, research on forgiveness was scant before it began to receive increased attention in the early 2010s (see Fehr & Gelfand, 2019 for a review). Extant work within and outside of organisation sciences points to the potential for forgiveness to yield positive outcomes for employees, including better physical and mental health; lower absenteeism and turnover; improved job satisfaction and organisational commitment; and higher quality work relationships (Brady et al., 2022; Palanski, 2012).

A positive behavioural ethics perspective on organisational integrity  139 Forgiveness is influenced by characteristics of the offender as well as characteristics of the offense, including status of the transgressor and severity of the offense (e.g., Aquino et al., 2006; Beattie & Griffin, 2014; Berndsen et al., 2018; Booth et al., 2018; Bradfield & Aquino, 1999). For example, in a recent study, Van Houwelingen and colleagues (2022) found that organisational leaders were more likely to forgive (versus punish) an offending follower when the infraction was viewed as unintentional (versus intentional). This relationship was strengthened in the case of high moral identity centrality presumably because a leader with high moral identity centrality is more motivated to restore moral order. Other recent work has considered the effect of various forms of amends on forgiveness, including apologies (e.g., Zheng et al., 2016) and restitution (e.g., DiFonzo et al., 2020; Grover et al., 2019; Haesevoets et al., 2018). To the extent that forgiveness is a valuable response in organisations, a recent study found that engaging in an expressive writing intervention (e.g., writing about an unfair workplace situation) can positively influence forgiveness (Barclay & Saldanha, 2016). At the organisational level, early work suggests that a forgiveness climate, “shared perception that empathic, benevolent responses to conflict from victims and offenders are rewarded, supported, and expected in the organisation” (Fehr & Gelfand, 2012, p. 665) increases the likelihood of employee forgiveness (e.g., Cox, 2011), though little empirical work exists in this area (Fehr & Gelfand, 2019). Moral Elevation Introduced by Haidt (2000), moral elevation represents a generally positive emotion that is elicited by witnessing “unexpected acts of human goodness, kindness, and compassion” (Haidt, 2000, p. 1) or “moral beauty” (Pohling & Diessner, 2016, p. 413). He theorised that individuals who witnessed moral excellence will be motivated to become better people and to help others (Haidt, 2000). Empirical work outside of organisation studies supports a relationship between elevation and prosocial behaviours (see Pohling & Diessner, 2016; Thomson & Siegel, 2017 for reviews), which is “at least partially explained by feelings of inspiration and upliftment, more favorable views toward others and humanity in general, and a desire to be a better person” (Thomson & Siegel, 2017, p. 634). Within organisation studies, few published studies exist on this topic (for exceptions, see Aquino et al., 2011; Chen & Treviño, 2022; Deng et al., 2022). For example, across three studies, Chen and Treviño (2022) found evidence that witnessing ethical voice by a coworker elicited moral elevation and the willingness to help that coworker. In another study, Deng and colleagues (2022) found that moral elevation partially mediated the relationship between ethical leadership and peer monitoring. Finally, extant work suggests that organisations can motivate a perceiver’s sense of elevation and charitable behaviour via the organisation’s CSR initiatives (e.g., Romani & Grappi, 2014; Romani et al., 2016).

INDIVIDUALS AND ETHICAL ACTION Positive behavioural ethics also encompasses individual ethical behaviour or action in the organisation. This ranges from leadership styles such as ethical leadership, behavioural integrity or servant leadership to ethical voice and other courageous action. We review that work here.

140  Research handbook on organisational integrity Ethical Leadership Treviño and colleagues developed the ethical leadership construct in the early 2000s (Treviño et al., 2000, 2003). Based upon qualitative research—interviews with senior executives and ethics and compliance officers—the authors surfaced a “moral person” and a “moral manager” dimension of ethical leadership, which suggested that leaders who are perceived by their subordinates to be ethical leaders often have ethical personal characteristics such as caring, fairness, trustworthiness, and principled decision-making. These leaders also make ethics a part of their leadership agenda by clearly role modelling ethical conduct, explicitly stating their ethical conduct standards, and holding everyone accountable to those standards. Brown and colleagues (2005) subsequently defined ethical leadership as “the demonstration of personal actions and interpersonal relationships and the promotion of such conduct to followers through two-way communication, reinforcement, and decision making” (p. 120) and developed a reliable measure. Since 2005, many ethical leadership empirical studies have been conducted. Multiple conceptual reviews (e.g., Brown & Treviño, 2006; Brown & Mitchell, 2010) and meta-analyses—discussed below—on ethical leadership have been published, which have helped us to understand the power of ethical leadership to influence followers’ ethics-related attitudes and behaviours. In what follows, we will focus on selected meta-analyses because they are best able to tell us how the ethical leadership construct has fared empirically. Ng and Feldman’s (2015) meta-analysis evaluated ethical leadership‘s ability to explain follower job attitudes, leader evaluations, as well as task performance, organisational citizenship behaviours (OCBs), and employee deviance. Robinson and Bennett (1995) defined employee deviance as “voluntary behaviour that violates significant organisational norms and … threatens the well-being of an organisation, its members, or both” (p. 556). The meta-analysis found that trust in the leader was a significant mediator of the relationships between ethical leadership and outcomes. In this meta-analysis, ethical leadership explained variance in outcomes as expected (e.g., improved attitudes, increased OCBs, reduced deviance) even when leadership styles such as transformational leadership and destructive leadership were controlled. The authors proposed that the incremental validity of ethical leadership could be strengthened by focusing on the “moral manager” aspect because the ethical leadership construct is unique in focusing on this type of ethical influence on followers—not just being an ethical person but making ethics an explicit part of the leadership agenda. Peng and Kim’s (2020) meta-analysis focused on understanding the mechanisms that explain the relationships between ethical leadership and outcomes. They found that three mediators (leader-member exchange, ethical culture, and identification with the organisation) helped to explain the positive relationship between ethical leadership and organisational citizenship behaviour. The takeaway from this meta-analysis was that ethical leaders influence followers by creating social exchange relationships of trust, by creating an ethical culture and by increasing followers’ organisational identification. Finally, a meta-analysis by Hoch and colleagues (2018) explored the effects of ethical leadership on outcomes while also investigating whether ethical leadership explains variance in these outcomes when compared with three other positive leadership styles: transformational leadership, servant leadership, and authentic leadership. When examined on its own, ethical leadership was found to be related in expected ways with a large number of attitudinal (e.g., job satisfaction, organisational commitment, trust in manager) and behavioural (OCBs, reduced employee deviance) outcomes. But when asked to explain a significant amount of additional

A positive behavioural ethics perspective on organisational integrity  141 variance beyond transformational leadership, it did so only for increasing job satisfaction and reducing employee deviance. This finding is different from the Ng and Feldman (2015) findings likely because Hoch and colleagues used a different analytic approach (i.e., relative weights analysis) which may be more appropriate when predictors are highly correlated. Thus, we can conclude that ethical leadership is particularly useful when researchers are studying leadership effects on employee deviance and job satisfaction, two very important outcomes. In addition to these meta-analyses that focused mostly on consequences of ethical leadership, the antecedents of ethical leadership have also been studied, although not meta-analysed. In their conceptual review of the literature, Ko and colleagues (2017) reported that of the Big 5 personality characteristics, leader agreeableness and conscientiousness were likely the most strongly associated with perceived ethical leadership. Further, moral identity (both the internalisation and symbolisation dimensions, Aquino & Reed, 2002) has been positively associated, and moral disengagement (Bandura, 1999) has been negatively associated, with ethical leadership. For situational antecedents, they found evidence for the effect of role models including senior leaders in a trickle-down effect. Beyond what was covered in the review, there is evidence that a leader who is comparatively higher in cognitive moral development than a follower, is more likely to be perceived to be an ethical leader by that follower (Jordan et al., 2013). Behavioural Integrity Around the same time that ethical leadership was introduced, Simons (2002) introduced behavioural integrity, a construct that is related to, though narrower than, ethical leadership. Behavioural integrity is defined as “an observer’s perception of the extent to which an actor’s words and actions do or do not align,” essentially answering the question “do they keep their promises?” (Simons et al., 2022, p. 366). While it is a more general construct that can apply beyond leaders, behavioural integrity’s effects have been studied mostly in relation to the consequences of employees’ perceptions of their leaders. Simons and colleagues’ (2015) meta-analysis of 35 samples found strong support for the originally proposed relationships between perceived behavioural integrity and trust, affective commitment, employee citizenship behaviour as well as in-role performance. Trust had been proposed to be the mediating mechanism between behavioural integrity and outcomes but was found to only partially mediate these relationships. In their 2022 conceptual review, Simons and colleagues concluded that behavioural integrity is associated with a variety of positive outcomes including citizenship, task performance, and reduced turnover. More recently, it has also been associated with voice and creativity, and the cognitive dimension of trust (McAllister, 1995) is now thought to be the likely mediator. It would be interesting to learn whether perceptions of the leader’s behavioural integrity are enough to reduce employee unethical conduct as well. Servant Leadership Servant leadership has had many definitions. Eva and colleagues (2019) reviewed the literature and offered the following definition: “Servant leadership is an (1) other-oriented approach to leadership (2) manifested through one-on-one prioritizing of follower individual needs and interests, (3) and outward reorienting of their concern for self towards concern for others within the organization and the larger community” (p. 114). The primary focus of the servant leader

142  Research handbook on organisational integrity is care for others over the self. The research review reported many study results showing that servant leadership is associated with a host of positive outcomes including positive employee attitudes (including towards the leader and organisation) and psychological well-being (e.g., flourishing). It also found that servant leadership has been negatively associated with ego depletion, cynicism, and turnover intentions. Servant leadership has also been associated with higher team-level psychological safety, innovation, organisational citizenship behaviour, voice and reduced employee deviance. Mediators have included such constructs as trust and team psychological safety. Moderators of these relationships have also included trust in the supervisor and a caring ethical climate. Hoch and colleagues’ (2018) meta-analysis found that (relative to transformational leadership) ethical leadership was consequential in explaining reduced deviance while servant leadership was consequential in explaining increased OCBs. Readers are encouraged to read the reviews if they are interested in learning more. Ethical Voice In our consideration of the ethical voice literature, we relied heavily on a recent review of ethical voice and its consequences by Chen and Treviño (in press). In their review, they included related literatures from outside behavioural ethics such as the research on moral rebels (e.g., Monin et al., 2008). The authors began by differentiating ethical voice from the more traditional voice literature. Although voice was originally defined broadly as prosocial behaviour that could include speaking up about ethical issues (Morrison, 2014), traditional voice studies have focused almost exclusively on employees speaking up to their supervisor about operational or efficiency issues in the interest of helping the organisation. By contrast, Chen and Treviño defined ethical voice as “employees communicating concerns about violations of societal ethical standards (e.g., honesty, fairness, care, respect) and/or suggestions about ethical standards, to people who might be able to effect changes (e.g., managers or co-workers).” Thus, ethical voice includes behaviours such as issue selling, moral objection, speaking up about ethical issues to co-workers or managers, and reporting ethical problems internally. A key difference between ethical voice and traditional voice, then, is the emphasis in ethical voice on speaking up about violations of societal ethical standards or the desire to advance societal ethical standards rather than a focus on what is good operationally for the organisation. Morrison (2022) further explained that ethical voice is likely to be perceived as more risky than traditional voice, and it should be studied separately if we are to better understand its unique antecedents and consequences. Traditional voice researchers have noted that silence is a notable problem and may be the default in organisations (see Detert & Edmondson, 2011; Kish-Gephart et al., 2009; Morrison, 2014). But the tendency towards silence is likely even more problematic with ethical voice because employees have long been known to suffer from “moral muteness” (Bird & Waters, 1989) and often perceive speaking up about ethical issues to be inappropriate or unwelcome, this despite the many calls in organisations to “speak up” or “if you see something, say something.” Yet, Chen and Treviño (in press) document a number of studies showing that ethical voice can also have positive consequences. These include reducing unethical behaviour, moving a group’s decision in an ethical direction, and increasing observer support for the voice and voicer (Chen et al., 2020; Czopp et al., 2006; Martinez et al., 2017). However, even with these positive outcomes, ethical voice observers may respond to ethical voice with negative attitudes towards the voicer because they may feel threatened by the ethical voice while simultaneously feeling elevated by it (i.e., admiring the

A positive behavioural ethics perspective on organisational integrity  143 voicer for doing it). This suggests the possibility of ambivalent responses to ethical voice that can result in paralysis or, alternatively, can spur divergent thinking. Additional research will be necessary to better understand these complexities. Regarding the antecedents of ethical voice, findings thus far have favoured mainly contextual antecedents. Ko and colleagues (2017), for instance, noted studies that have found a positive relationship between ethical leadership and increased ethical voice. In addition, Mayer and colleagues (2013) found that the ethical leadership effect on employees reporting ethical problems was enhanced when co-workers were also ethical. Ashford and colleagues (1998), in a study on issue selling, found that women’s willingness to raise gender equity issues depended, not on individual differences, but rather a supportive organisational context and a close relationship with those in a position to make decisions. More research is surely needed to understand the antecedents of ethical voice. For example, a number of individual differences that we know play a role in ethical behaviour, such as moral identity (Aquino & Reed, 2002), moral attentiveness (Reynolds, 2008), moral efficacy (Hannah et al., 2011a), and values (Schwartz, 1992) are likely to be ethical voice antecedent candidates. It is important to note that the related whistleblowing literature has a longstanding history (see Miceli et al., 2008 for a review). It has focused on speaking up within and/or outside the organisation about issues of concern to someone with the power to make change. So, most whistleblowing studies include those who report issues of ethical concern to outsiders such as journalists or the government, often after their efforts to address management internally have failed. Like Chen and Treviño (in press), and in accordance with recommendations from Jubb (1999), we constrain our focus here to ethical voice behaviour inside the organisation, meaning that we are excluding the majority of the whistleblowing literature. Although we see whistleblowing as positive ethical behaviour, the research that focuses on it emphasises predominantly negative outcomes such as retaliation. That may be because whistleblowing studies typically include both internal and external reporting, making it difficult to disentangle the results. It would be helpful if future researchers would make it easier to differentiate between internal voice and reporting to external audiences. Courage Courage overlaps with ethical voice in that it includes speaking truth to authority figures or to co-workers. However, it includes much more. In their review of the workplace courage literature, Detert and Bruno (2017) defined workplace courage as “a work domain-relevant act done for a worthy cause despite significant risks perceivable in the moment to the actor” (p. 594). They referred to workplace courage as an umbrella construct that includes a variety of types of behaviour and see it as a social construction. They delved particularly into the riskiness and worthiness parts of the definition. For example, according to the authors, much workplace courage risks one’s financial well-being, professional standing, and social acceptance rather than physical risk (although that is also possible in some work environments). Regarding the worthiness part of the definition, the authors do not restrict workplace courage to “morally” worthy acts because assessing worthiness is complex and, in the workplace, may require consideration of both hypernorms and local norms. Donaldson and Dunfee (1999) defined hypernorms as representing “norms sufficiently fundamental to serve as a source of evaluation and criticism of community-generated norms” (p. 50).

144  Research handbook on organisational integrity After reviewing work on courage more generally, Detert and Bruno (2017) noted that research on workplace courage remains rather scant. Some exceptions include research on the antecedents of workplace courage such as identity tensions (Koerner, 2014), training (e.g., Rachman, 2010), and felt responsibility and perceived autonomy (Schilpzand et al., 2015). In a study of courage’s consequences conducted in the U.S. military, Hannah and colleagues (2011b) found moral courage to be positively related to reducing unethical behaviour and increasing prosocial behaviour. Finally, Detert and Bruno (2017) concluded that “numerous antecedents and outcomes of courage have been proposed, but few could be said to have been demonstrated in valid and reliable ways across multiple studies” (p. 602). Thus, much more research is needed in this nascent research domain and Detert and Bruno (2017) outline a useful agenda to guide this future research.

ETHICAL INFRASTRUCTURE Ethical infrastructures (Tenbrunsel et al., 2003) consist of both formal and informal organisational elements or tools that can be used to manage ethical and legally compliant behaviour in the workplace. The primary constructs that have been studied are ethical climate and ethical culture. Ethical Climates Ethical climate is the oldest ethical infrastructure construct to have received attention in the literature. Victor and Cullen (1988) defined an ethical work climate as the “perception of what constitutes right behavior” that is shared by employees within an organisation or within a part of an organisation (Martin & Cullen, 2006, p. 177), and that therefore influences individuals’ ethical decision-making and behaviour. Building on an earlier meta-analysis (Martin & Cullen, 2006), a more recent meta-analysis by Newman and colleagues (2017) focused on the antecedents and outcomes of ethical climate dimensions, with outcomes receiving most attention. Relevant for our review are outcomes such as increased moral awareness, personal justice norms, ethical intentions, reduced (un-)ethical behaviour, and psychological states such as increased mindfulness and empathetic concern and reduced moral distress. More specifically, Newman and colleagues (2017) reported that benevolent and principled climates reduce employees’ intention to commit unethical acts and increase their moral awareness, whereas egoistic climates positively predict unethical intentions and reduce moral awareness. Newman and colleagues (2017) further reported that research has found that ethical climate dimensions like norms of empathetic concern, collective moral motivation, and collective moral character are negatively related to different forms of misconduct or deviance and positively related to ethical behaviour. Relatively little research has examined the relationship between ethical climates and psychological states. The little that does exist, however, has found that in climates that stress adherence to ethical norms, workers experience more mindfulness, and that rules and codes and efficiency climates lead to more empathetic concern and increased mindfulness. Rules and codes and social responsibility climates lead workers to be more understanding of others as well. Other outcomes of ethical climates are not immediately ethics relevant, including work attitudes, with research generally finding that caring climates are positively related to organi-

A positive behavioural ethics perspective on organisational integrity  145 sational commitment and job satisfaction, while instrumental climates are negatively related to job satisfaction and organisational commitment, yet positively related to turnover intentions. Some research reported by Newman and colleagues (2017) has also explored the relationship between ethical climates and employee performance, which generally finds a positive relationship between performance and ethical climates that emphasise adherence to rules and codes. Law and code and caring climates are also associated with more organisational citizenship behaviour. Based upon these meta-analytic results, we can say that ethical climates as defined by Victor and Cullen have a positive ethical impact on employees. According to Newman and colleagues (2017), less attention has been given to the antecedents of ethical climates. However, they include (ethical) leadership, an organisation’s human resource management practices, its justice climate, and the organisation’s industry or the type of organisation (family/non-family business, government entity or non-profits, public and private sector businesses). In a more recent study, Kuenzi and colleagues (2019) criticised previous approaches to ethical climate research and developed an alternative measure for ethical organisational climate. Specifically, Kuenzi and colleagues (2019) argued that Victor and Cullen’s (1988) climate measure captures individuals’ perceptions of the organisational principles that are used in ethical decision-making, and that this is not in line with how the organisational behaviour literature defines and operationalises climates. Instead, Kuenzi and colleagues (2019) proposed that climate research should focus on organisational practices, which are referred to as “actions or activities that are repeated and recognizable in organizations” (p. 47). Their measure of ethical organisational climate therefore includes perceptions of formal organisational systems or formal ethical infrastructure (Treviño, 1990; Treviño & Nelson, 2017), such as recruitment practices and reward and punishment practices. Importantly, their measure is designed to be a unit-level measure representing a unit-level construct—not an individual level one that measures psychological climate or the individual’s perception of the organisational environment. In their study, Kuenzi and colleagues (2019) found that ethical leadership is positively related to the organisation’s ethical climate, and that this results in less unethical behaviour, such that the ethical organisational climate mediates the relationship between ethical leadership and reduced unethical behaviour. Moreover, they found that collective moral identity (for which they developed a measure) moderates the relationship between ethical organisational climate and unethical behaviour, such that those collectives with higher moral identity pay more attention to the ethical organisational climate, resulting in even less unethical behaviours (measured as organisational deviance using Bennett and Robinson’s (2000) scale). Because this measure is so new, future research will need to investigate whether ethical organisational climate using the measure developed by Kuenzi and colleagues (2019) will have the same positive effects as found with the earlier measure. In all, the ethical climate literature is thriving and research has found many positive effects of ethical climate dimensions on employees’ ethical behaviour. Given their positive effects, we especially encourage future research to focus on the antecedents of ethical organisational climates, and perhaps on the role that managers and ethics and compliance officers can play in enhancing those climates.

146  Research handbook on organisational integrity Ethical Culture The voluminous literature on ethical climate notwithstanding, a recent review on ethical culture argued that ethical culture is a better predictor of (un)ethical outcomes in organisations and that more research on the topic is needed (Roy et al., forthcoming). Treviño (1990) introduced the ethical culture construct around the same time that Victor and Cullen introduced ethical climate. Since then, Treviño and colleagues (1998) studied how the two constructs (ethical climate and culture) were similar yet also different, finding that an ethical climate is more strongly related with (less) observed unethical behaviour in organisations without an ethical code, while culture was more strongly related in organisations with an ethical code. And Kish-Gephart and colleagues (2010) found that ethical climate—as measured by Victor and Cullen—was a better predictor of ethical choice. More recently, Kaptein (2011) introduced a more complex conceptualisation and multidimensional measure of ethical culture, which Roy and colleagues draw heavily upon in their review. Roy and colleagues (forthcoming) define ethical culture as “a subset of organisational culture, which reflects the shared values, norms, and beliefs about what constitutes appropriate behaviour shaping ethical or unethical decision-making in an organizational context” (p. 6). Citing Kaptein (2011), Roy and colleagues (forthcoming), explain the difference between ethical culture and ethical climate as follows: “climate refers to employees’ perceptions about what is the right thing to do in the organization, while ethical culture is procedural in that it relates to whether employees believe the conditions are in place within the organization to influence ethical behavior” (p. 9). Note that these definitions differ from those offered by others (discussed above), adding to the confusion that remains in the ethical climate/culture space. Conceptualised as virtues, Kaptein (2008) identified eight dimensions of ethical culture: clarity, congruency of management, congruency of supervisors, feasibility, supportability, transparency, discussability, and sanctionability. The following discussion of a review of research findings often focuses on only some of these dimensions. Therefore, we encourage interested readers to seek out the review by Roy and colleagues in order to better understand the findings. Roy and colleagues (forthcoming) review the research on ethical culture, finding research that supports antecedents of ethical culture, such as ethical or authentic leadership as well as employees’ awareness of the different components of an ethics programme (e.g., ethical training, codes of ethics, ethics hotline, ethical communication, incentives and rewards for ethical conduct). The literature reviewed by Roy and colleagues has also examined many positive outcomes of ethical culture, including positive work attitudes, employee motivation, engagement and well-being, as well as ethical decision-making and intentions and employee behaviours. One somewhat surprising outcome associated with ethical culture was enhanced innovation on both the organisational as well as workgroup levels, as well as organisational performance. In terms of employee outcomes, research reviewed by Roy and colleagues generally finds a positive effect of organisational ethical culture on ethical decision-making as well as ethical intentions (such as to report others’ unethical behaviour to managers or to use the ethics hotline). Ethical culture also appears to have a positive effect on employees’ job satisfaction, commitment, and trust in the organisation, and to positively influence employee motivation and work engagement. In terms of behaviour, ethical culture has been found to be positively related to behaviours such as organisational citizenship and (regular) voice. Some limited research has also examined ethical culture as a mediator. For example, ethical culture

A positive behavioural ethics perspective on organisational integrity  147 has been found to mediate the relationship between ethical leadership and follower ethical and voice behaviour, and the relationship between CSR practices and sustainable organisational performance. Roy and colleagues end with a lengthy discussion of directions for future research, which we encourage interested readers to look into. We might add, however, that significant confusion remains in the research around ethical environments or infrastructures (e.g., exactly what they are, how they are defined and measured, and what they should be called) that is problematic for our understanding. Additional research will be required to sort this out. Rules and Policies Rules and policies are key to the formal ethical infrastructure, and behavioural ethics scholars have long been interested in rule-breaking (and rule-following) behaviour. Derfler-Rozin and colleagues (2016) examined whether managers can use tools to mitigate rule breaking, specifically focusing on task variety. In a field study, the authors established that workers who have a higher daily variety of tasks engage in less rule breaking. In three lab studies, the authors also found that increased deliberative thinking (and less intuitive/automatic thinking) explains the relationship between task variety and rule breaking, such that those who have a greater variety of tasks engage in more deliberative thinking, and subsequently less rule breaking. According to the authors, deliberative thinking results in less rule-breaking behaviour because with automatic thinking people are more likely to act in their own immediate self-interest. Research has previously found that an increase in self-interestedness makes people less likely to see how their own behaviour negatively impacts others, and more likely to see their own choices, even unethical ones, as legitimate and fair. Thus, when managers design tasks with enough variety, their subordinates are less likely to lapse into self-serving behaviour and subsequent unethical behaviour. This is an interesting contrast to the recent research on cognitive resource depletion—where more deliberative thinking can arguably drain one’s cognitive resources because one remains more “cognitively alert” (Derfler-Rozin et al., 2016, p. 1362), and research has found that such depletion results in more unethical behaviour (e.g., Gino et al., 2011; Mead et al., 2009; Welsh & Ordóñez, 2014). Future research may want to investigate when deliberative thinking is desirable and replenishing and when it is draining. While behavioural ethics researchers have been interested in examining why people might break rules, it is interesting to note that less research exists on whether and how the rules or policies can be shaped in a way that encourages more ethical behaviour. Researchers seem to take the existence of rules or policies at face value, and do not consider whether different types of rules may affect employees differently. This is also an area in need of future research. One of the things that organisations do to ensure rule following is monitoring. Taking an agency-theory perspective, Burbano and Chiles (2022) examined the idea of monitoring in the context of (remote) gig work, i.e., a principal’s credible efforts to reduce the problem of information asymmetry by observing the worker as they engage in work, thus decreasing the opportunities for the agent to deceive the principal. Additionally, they examined the role of communicating organisational values in reducing misconduct. The idea here is that to the extent that employees share the organisation’s values, communicating those values should increase workers’ perceived value congruence and enhance workers’ person–organisation fit. This, according to the authors, should in turn be positively related to such outcomes as favourable work attitudes (e.g., higher job satisfaction, commitment to the organisation), and lower

148  Research handbook on organisational integrity turnover intentions, as well as increased citizenship behaviours and support for the organisation’s goals and objectives. Misconduct should therefore be less likely to occur in these workers. The values can be internal facing values such as expectations towards employees that they adhere to ethical norms or values like honesty, but they can also be external facing values such as CSR or environmental initiatives. While the authors found that these managerial practices do reduce misconduct when studied individually, when they were combined the threat of monitoring cancelled out any positive effect of values communication. The authors argued that is likely caused by an erosion of trust that is thought to happen as a consequence of monitoring, but that is needed to develop a sense of shared values. Related to monitoring are the sanctioning systems that organisations use not just to detect and punish misconduct, but also to communicate ethical norms or signal moral values (Chui & Grieder, 2020; Fehr & Fischbacher, 2004). Interestingly, sanctioning systems played a role in early work on ethical frames (cf. Tenbrunsel & Messick, 1999—whereby the presence of a sanctioning system put people in a business frame mindset while they more likely used an ethical frame when no such system was present). But the effectiveness of sanctioning systems in encouraging ethical behaviour has remained somewhat understudied ever since, this despite the fact that for many organisations it is an obvious go-to in their ethics management toolkit (Chui & Grieder, 2020). In their work, Chui and Grieder (2020) focused specifically on the detection characteristic of sanctioning systems, or, on the probability of getting caught when engaging in unethical behaviour. While some of their work focuses on more negative outcomes (e.g., the prevalence of unethical behaviour), Chui and Grieder (2020) also found that stronger sanctioning systems inspire third party observers to engage in more rule-supporting behaviour (e.g., to support those who report wrongdoing)—which these authors consider helping behaviours. And workers do so even if it comes at their own expense. Therefore, it seems that monitoring and control is an area with much room for future research. Specifically, the recognition and rewarding of ethical behaviour is understudied— whether or how that might result in more ethical behaviour.

DISCUSSION We are pleased to have chosen a more “positive” behavioural ethics path in this chapter, despite our felt need to sometimes include research that focused on more neutral (rule-following) or just less negative (reduced deviant or unethical) behaviours rather than the positive behaviours we preferred to discuss. Although reducing unethical behaviour is, admittedly, a “good” thing, we were hoping to be able to focus more on truly positive consequences that go beyond just reducing the negative. Nevertheless, our choice allowed us to search narrowly for material related to “ethics” and ethical processes and outcomes rather than just research related to reducing unethical behaviour or advancing routine behaviour. In the end, we were pleased by how much research was available to discuss. Had we written the more traditional review, these topics may have been buried among the many other topics that are more prominent in the behavioural ethics literature. So, our approach allowed us to discover what the literature currently offers but, perhaps just as importantly, what it lacks, opening the door to future research. Along the way, we recognised that the current literature often treats reducing unethical conduct or deviance as the “good” or maybe even the “best” outcome. We think we (and organisations) can do better and behavioural ethics researchers can contribute to understanding

A positive behavioural ethics perspective on organisational integrity  149 what that will take. Recognising that positive organisational psychology includes such topics as flourishing, wisdom, thriving, and resilience, we believe that many opportunities exist to contribute to a more positive behavioural ethics. We hope that future researchers will ask what it takes to create ethical flourishing, wisdom, thriving, and resilience in organisations. In earlier sections of the chapter, we identified multiple opportunities for future research. But we add a few here that did not get unique attention above. By proposing ideas for what’s possible, we hope to inspire more positive behavioural ethics research. One area that behavioural ethics researchers have become more interested in is the intersection between behavioural ethics and research on diversity, equity, and inclusion (DEI). There has been enough interest among behavioural ethics researchers to spawn a proposed Professional Development Workshop on this intersection at the 2023 annual Academy of Management meeting. Clearly, there is overlap between DEI topics and the topics related to fair treatment (of employees, customers, etc.) with dignity and respect, and without bias. Gen Z workers have been found to care a great deal about DEI, with 91 per cent reported to believe that everyone should be treated equally (Barnes & Noble College Insights, 2018). So, researchers and organisations should attend to how organisations can satisfy Gen Z workers who are thirsty for a more equitable workplace. Respect and diversity are often touted in organisations’ values statements but living up to these espoused values can pose challenges for managers and organisations. We suspect that employees who feel respected and valued as fully contributing members of the organisation are more likely to feel free to speak up, to be creative, and to grow both inside and outside the organisation. Research also tells us that ethical climates and cultures matter for reducing employees’ unethical choices (Kish-Gephart et al., 2010). Future research could also investigate the more positive questions of whether these cultures can create ethical behaviour such as ethical voice and, if so, how they do so. We wonder how new forms of work such as work from home and contingent work (e.g., independent contractors, gig workers who are not officially considered “employees”) will affect the development and sustenance of ethical culture (or climate) and the effect on employees. We also know little about whether and, if so, how different aspects of ethical infrastructure support ethics in the workplace, particularly leaders and employees going above and beyond to hold each other to the highest ethical standards. For example, today’s work organisations, especially the large ones, invest heavily in annual (or sometimes more frequent) ethics “training.” But we know very little about how much (if any) learning or growth actually occurs in these sessions. We know from research on cognitive moral development (Kohlberg, 1969) that adults can continue to grow in their ability to reason about ethical issues and that people in certain professions who face regular ethical dilemmas (e.g., medicine) are more likely to continue this growth than others. What would happen if organisations encouraged their employees to grow ethically and then re-orientated their programmes and trainings away from rote memorisation of policies and standard scenarios, to support ethical growth instead? We encourage researchers to do more to try to understand what kinds of experiences or training could contribute to ethical growth for employees. In a related vein, Chugh and Kern (2016) proposed that people can work towards narrowing the existing gap between the ethical beings they believe they are and the (less flattering) reality of their behaviour. They argue that this is more likely to occur for individuals who have a strong central moral identity (Aquino & Reed, 2002), those who recognise that the gap exists in the first place (what they refer to as psychological literacy—or what we propose might be referred to as ethical self-awareness) and, finally who believe that, with effort, they

150  Research handbook on organisational integrity can become more ethical (what the authors liken to having a growth mindset, Dweck, 2006). Chugh and Kern (2016) then propose that this ethical learning can be translated to more ethical behaviour by reducing the possibility of self-threat via psychological safety in the team (Edmondson, 1999) and an organisation that values learning and reduces the possibility of self-threat in its employees through its formal and informal systems (its infrastructure). That is a tall order because organisations also suffer from the gap between who they believe or say they are (i.e., their espoused values) and their actual behaviour. But organisations can also model learning and growth by showing how one can learn from mistakes, for example. We can imagine interesting research questions related to how individuals and organisations respond to ethical challenges and even crises and scandals. For example, are organisations inclined to close ranks and go on defence after a scandal breaks rather than using the opportunity provided by the scandal to promote learning and growth both for employees and the organisation itself? Clair and Dufresne (2005) addressed the possibility of positive consequences of organisational crises. For example, they noted that, post crisis, organisations may heighten their attention to important stakeholder relationships, clarify the organisation’s identity resulting in higher employee organisational identification, increase awareness of the organisation’s vulnerability, become an altruistic leader in their industry regarding the issue of concern, and/or become better prepared to deal with members’ emotions, spiritual needs, and search for meaning. However, we know of no empirical work that has studied this ethical learning phenomenon. Although we did not fully cover it in our review, organisational behaviour researchers have shown significant interest in mindfulness and mindfulness (and similar) interventions (e.g., meditation) in organisations (see Sutcliffe et al., 2016 for a review). Such interventions can have a positive impact on employees’ well-being and prosocial behaviour. We see an opportunity here for behavioural ethics research that looks more explicitly at the potential relationship between mindfulness and mindfulness interventions and ethical conduct that goes above and beyond just rule following. Along similar lines, interest in self-reflection is growing (see Kross et al., 2023, for a review). Although self-reflection (accomplished through journaling or other means), done individually or in groups, is sometimes associated with negative outcomes in organisational behaviour research (e.g., rumination), it has also been associated with measures of well-being, positive mood, and helping behaviour. Although we know of no explicit connection to research on ethical behaviour, we do see an opportunity here. For example, reflection on one’s less than ethical behaviours might lead to feelings of guilt or shame, but perhaps in the right organisational context, it could also lead to learning and positive behaviour change. By contrast, reflection on things one has done right, on one’s values, could contribute to feelings of empowerment, pride, and moral self-efficacy, especially if those are valued in the organisation. Particularly relevant to behavioural ethics, the review cited above suggests that self-reflection may contribute to perspective taking which should increase moral awareness, especially about potential harm to others and that should increase ethical decision-making. There is much for behavioural ethics researchers to explore here. In the context of emotions, opportunities exist to further study positive moral emotions and their potential effects on employees. Beyond the research thus far, opportunities exist to study the role of moral elevation and other positive moral emotions in the workplace. We need to learn what other types of actions by leaders or co-workers lead to moral elevation and with what outcomes. For example, can celebrating an individual’s ethical behaviour at the unit or organisational level contribute to the unit’s or organisation’s level of moral awareness, values congruence, and ethical voice? Further, how might emotional intelligence inform ethical

A positive behavioural ethics perspective on organisational integrity  151 decision-making? Rubin and Riggio (2005) offer multiple ways that being high on emotional intelligence could be useful for making good ethical decisions because it may lead to more authentic discussions and more informed decisions. They also propose that leaders with high emotional intelligence can be more effective in their (emotional) appeals to others about ethical issues. Emotionally intelligent people are also more likely to be empathetic and able to take others’ perspectives which is essential for good ethical decision-making. Finally, they argue that those who are good at regulating their own emotions are more likely to make good decisions. We would agree so long as regulating one’s emotions is not used to silence them when they are needed to raise moral awareness. We suspect that the relationship between emotional intelligence and ethical outcomes may be complex but it offers yet another opportunity for research. Another potential research area that interests us involves questions about the effects of the language used in organisations to talk about ethics. Ethics officers have suggested that the “ethics and compliance” words are problematic from a perceived legitimacy perspective and that they therefore search for other words to describe themselves and what they do such as integrity, business conduct standards, or values so that employees don’t put up a self-protective shield for fear that the “ethics” sheriff is coming to town (Treviño et al., 2014b). More systematic research could be conducted on the language that works best if the goal is to raise ethical awareness and reduce ethical threat. Interestingly, the use of values in ethics management is also relatively understudied despite virtually all organisations espousing values and claiming that they are important to their organisational identities. Yet, values have rarely been studied in behavioural ethics, at least not taking into account explicit values content. In organisational behaviour more generally, values are typically discussed in broad terms. For example, they are thought to be crucial for both individual and organisational identity (Ashforth et al., 2008; Turner, 1968). We have also long known the benefits of perceived values congruence with one’s leader and we know that transformational leaders who convey a values message produce positive outcomes (attitudes, performance) in followers (Jung & Avolio, 2000). But if we are going to think in behavioural ethics terms, arguably we need to think about the content of the values being conveyed. Does the content matter and, if so, how and how much? Schwartz (1992) defines values as “trans-situational goals, varying in importance, that serve as guiding principles in the life of a person or group” (p. 21). Schwartz’s (1992) circumplex values model is designed to apply at the individual or organisation (and even national levels). So, it could be very helpful in future behavioural ethics research focused on understanding how specific values content might matter for understanding ethical behaviour in organisational contexts.

CONCLUSION In this review, we have offered insight into what we know from the behavioural ethics literature about a more positive behavioural ethics. Our review has covered individual differences, cognitions, emotions, actions, and organisational infrastructures that are associated with ethical behaviour rather than just rule following or the reduction of unethical behaviour. We have also made suggestions for future research that would push the boundaries of a positive behavioural ethics. We hope that our efforts at gathering this material and our suggestions for

152  Research handbook on organisational integrity the future will inspire behavioural ethics researchers to delve into this positive behavioural ethics arena so that, next time, we will have even more research to review.

NOTE 1. Given their similarities, we use the terms ethical and moral efficacy interchangeably. When referring to specific studies, however, we stick with the terminology used by the author(s).

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11. An intersubjective perspective on organisational integrity Wim Vandekerckhove

This chapter offers a discussion of organisational integrity through an intersubjective lens. The perspective put forward in this chapter resonates with the common notion of integrity as wholeness or consistency of action and values. Specific to the intersubjectivist perspective, however, is that this wholeness is not merely something the individual needs to achieve on their own, but instead can only be achieved with others, between subjects or intersubjectively. Intersubjective organisational integrity – which I will abbreviate as IOI – involves the organisational efforts to allow this between-subjects exploration and alignment. The chapter is structured as follows. I first explain what an intersubjectivist account of integrity entails, and do this by contrasting it to objectivist and subjectivist notions of integrity. The emphasis in intersubjective integrity is on the process and locus of aligning discernments of values and actions. I discuss the corresponding meta-ethical propositions. In the section after that, I explain what makes an intersubjectivist account of integrity so appealing to think about integrity in an organisational context. I explain this has to do with how the personal and organisational level of intersubjectivist integrity can be distinguished without getting stuck into the debate of whether or not organisations have personhood. Thus, IOI does not rely on an analogy with intersubjective integrity at the personal level. After all the good news follows a section in which I caution against over-ontologising moral norms as social constructionist. I suggest a critical realist position, which acknowledges a realist ontology to moral norms whilst requiring social constructionism to gain knowledge of these norms. This cautioning is not only philosophically intriguing. I argue in a subsequent section that this position has concrete implications for the practice of IOI. More precisely, since we cannot assume that moral norms are always clearly articulated and well delineated, organisations must put effort in making speaking and listening happen through a range of means: whistleblowing channels, open conversations, and listeners’ negative capabilities. A brief conclusion summarising these discussion points closes the chapter.

WHAT IS THE INTERSUBJECTIVE ACCOUNT OF INTEGRITY? Different accounts of integrity rest on different meta-ethical propositions about what exactly integrity is a wholeness of. As I will explain in this section, meta-ethical propositions have implications for the ‘locus of integrity’ (Vandekerckhove, 2010), by which I mean the following. A common notion of integrity is that of wholeness. But a wholeness of what? Action and values, of course. But that wholeness is also situated somewhere. I will argue that what distinguishes intersubjective integrity from other accounts of integrity is that in the intersubjective account the locus of integrity lies within the interaction between people. That what needs to be whole is situated in the interaction itself. And in this sense intersubjective integrity can 162

An intersubjective perspective on organisational integrity  163 be contrasted to both subjectivist as well as objectivist accounts of integrity, since both these accounts have the locus of integrity outside of the interaction. In this section I first discuss why the objectivist and subjectivist meta-ethical propositions are problematic, then explain how intersubjective integrity overcomes these problems. A proposition of meta-ethical objectivism is that ‘the fact that we don’t know the correct answers does not mean there are no correct answers’ (Double, 2006, p. 4). Thus, objectivist integrity implies that it is possible that I act with integrity even when everyone else (including me) is convinced that I am not. Whilst I believe we cannot fully dismiss the objectivist meta-ethical proposition – something I will come back to in section three – it is clear that an objectivist integrity tends to underplay the epistemological or ontological importance of the social dimension of an organisation. Within business ethics, objectivist positions often draw on the work of Ayn Rand, and are positions of moral egoism. Becker (1998), for example, argues that long-term survival and well-being of individuals as rational beings is suitable as a foundation of integrity, precisely because life and survival are not subjective opinions. Rationality is key for one’s survival and therefore the purpose of one’s moral code is to further and protect one’s life (Locke & Becker, 1998). Egoism in objectivism refers to the individual being the beneficiary of one’s moral code, and regards altruism as a contradiction because someone else is the beneficiary of one’s moral code to further life. In other words, it’s about your own survival and well-being, not that of others. Barry and Stephens (1998) object to Becker’s account, arguing that Becker’s egoist objectivism seems to ignore the rational basis of altruism and hence dismisses too easily the role of social ties in the lives of individuals. Svanberg and Svanberg (2022) argue that rational egoism does not imply we can simply disregard others, or that we don’t owe others any kindness. It is indeed possible that within the field of business ethics, rational egoism is too quickly caricaturised. However, what is relevant for our discussion here is that, in any case, for rational egoism in business ethics and objectivism in general, the locus of integrity or what needs to be kept whole is not situated in the interaction between people. Objectivist integrity does imply prescriptions for good interactions with other people, but the wholeness in rational egoism is that of an individual’s actions with rational principles of which the purpose is the furthering of that individual’s life. These rational principles exist regardless of anyone. In that sense, in objectivism the locus of integrity is external to the human being. The subjectivist account of integrity also requires a wholeness, but one which lies firmly within an individual: consistency of commitments and upholding these commitments in speaking and acting. Hence the locus of subjectivist integrity also lies outside of the interactions between people. That does not mean interactions are not relevant. McFall (1987) for example, argues that two more conditions need to be met with regard to the content of those commitments. One is that commitments need to be upheld when facing a challenge, for example situations in which some of our commitments are in conflict. McFall argues that in the absence of such challenges the ascription of integrity is not appropriate. The other condition is that conflicting commitments must be identity conferring, which means that integrity only applies to situations in which someone not only upholds conflicting commitments, but also that acting in a way that does not uphold these commitments would make that person no longer who she was before those actions. Hence, whilst subjectivism also implies prescriptions for human interaction, the meta-ethical proposition of subjectivist integrity situates the wholeness that matters internal to the individual rather than within the interaction between people.

164  Research handbook on organisational integrity The meta-ethical proposition of the intersubjectivist account of integrity, then, situates the wholeness within the interaction. More precisely, it is within that interaction that the wholeness that matters to integrity can be achieved. Let me explain this further through the work of Calhoun (1995) and Carter (1997), both of whom posit an intersubjectivist account of integrity. Carter defines integrity as the wholeness of: discerning what is right and what is wrong, acting on that discernment, and openly stating the connection between action and discernment. The first two elements in Carter’s depiction of integrity imply that we make sense of a situation based on beliefs and attitudes we happen to have, and that we act upon that sense-making. The third element acknowledges that we share a situation with others. Thus, other people are a necessary aspect of integrity. Objectivist as well as subjectivist accounts of integrity mention interactions with others and have implication for human interaction, but these approaches do not stipulate it as a crucial condition for the ascription of integrity. Carter’s ‘openly stating’ our actions and discernment makes integrity intersubjective. We cannot speak of integrity unless that interaction is there; only in speaking to others about my discernments and action can I show integrity. It is in this way that an intersubjective account of integrity is based on specific attitudes towards others, more precisely a willingness to discuss, explain, and justify one’s actions and discernment. Now, if we share a situation with others, then these others will influence the belief and attitudes with which we make sense of our experiences and discern what is right and wrong. Hence, Carter’s three elements to integrity need to be seen in a cyclical way. No situation is a one-off event. Rather, life is a continuous flex, stretch, drip, flow of situations, not necessarily a sequence of clearly delineated events. The human interaction required for integrity is a two-way interaction. Perhaps Carter’s depiction of a uni-directional sequence – discernment, action, communication – does not convey that well enough. The interaction is what seals the wholeness of integrity. However, any communication is a new situation that will impact discernment. In this way, I posit that human interaction is not just an add-on condition to objectivist or subjectivist accounts of integrity. There is a distinct intersubjective account of integrity, in which human interaction is the pivot of the wholeness that matters to integrity. Intersubjective integrity entails an aligning of the personal discernment with the social discernment, and back. This is an ongoing activity – hence aligning. Calhoun (1995) can help to explain this further. Calhoun asserts that integrity is a social virtue. All of us are faced with the question ‘What is worth doing?’ Yet, we can only answer that question from within our own deliberative points of view. This subjectivist position, argues Calhoun, is just that: just my judgement. The only way in which someone’s judgement can gain some gravity is to acknowledge the individual as ‘one among many deliberators who may themselves go astray’ (Calhoun, 1995, p. 257), and in that sense ‘one’s own judgment serves a common interest of co-deliberators’ (p. 258). Integrity requires that we treat our own endorsements as ones that matter to others in making endorsements themselves, which in turn matter to us for own endorsements. Hence, integrity cannot be ‘a matter of sticking one’s guns’ and shouting that from rooftops. Inherent to integrity as a social virtue is the willingness and ability to at the same time ‘stand behind our convictions and to take seriously others’ doubts about them’ (Calhoun, 1995, p. 260). Getting that ambiguity right is the wholeness that is implied with intersubjective integrity. Its meta-ethical proposition situates that wholeness in the interaction itself. The implication is that ambivalence and compromise might very well be what intersubjective integrity requires of us. At least, argues Calhoun (1995), it demands due care from us in how we act

An intersubjective perspective on organisational integrity  165 out our discernment. Proponents of integrity as a personal virtue – be that the objectivist or the subjectivist version – put forward the image of a person with integrity as someone who is loyal to commitments, autonomous, uncontaminated, and with enough courage to ‘not cave in’. Intersubjective integrity brings forward another kind of exemplar, as Calhoun notes that ‘[h]owever admirable those with the confrontational courage of their convictions may be, even protesters risk losing their integrity to arrogance’ (Calhoun, 1995, p. 260). What kind of exemplar behaviour intersubjective integrity implies in an organisational context, will become clear further on in this chapter. But let me first suggest why intersubjective integrity suits an organisational context. I turn to that in the next section.

WHAT MAKES THE INTERSUBJECTIVE ACCOUNT OF INTEGRITY SO APPEALING TO THE ORGANISATIONAL CONTEXT? In the previous section I have relied on the work of philosophers who discuss notions of personal integrity. However, this Research Handbook concerns itself with organisational integrity. These levels of integrity are often confused, or perhaps it is more correct to say that the difference is often ignored. Indeed, organisations are often discussed in an anthropomorphic way. Take, for example, the notion of corporate citizenship that resonated within the field of business ethics in the first decade of the 21st century (De George, 2008). Whether or not an organisation can be regarded as having moral agency is an ongoing debate within the business ethics literature. Yet, even proponents of the assertion that organisations as non-human actors have moral agency do not stick to the organisation-as-person metaphor in a very strict way. Their position is somewhat more moderate, referring to ‘person-like characteristics’. Kaptein and Wempe (2002) provide a useful overview of the numerous positions. The distinction between personal and organisational levels of agency – hence also of integrity – is relevant with regard to liabilities, or how we attribute blame to organisations. In the middle of the 20th century, English courts adopted alter ego or identification theory, which stipulates that a layer of senior officers within the organisation are identified as its ‘brains’. The organisation is then only liable for their wrongdoing, not for that of its other workers (Wells, 2008). More recently and in other jurisdictions, different notions of organisation are used to attribute blame to organisations when wrongdoing occurs. One of these is the agency model, according to which the organisation as a legal person is liable for the wrongdoing of all its workers. Wells (2008) argues that both identification theory as well as the agency model underlie versions of vicarious liability that fail to acknowledge effects triggered at the organisational level per se. This makes it difficult to establish corporate criminal liability – something that is needed especially in cases of serious wrongdoing such as corporate manslaughter or corruption. According to Wells (2008), a more holistic approach has been gaining popularity. This approach locates blame in the procedures, operating systems or culture of an organisation, thereby acknowledging ‘the “corporateness” of corporate conduct’ (Wells, 2008, p. 153). The intersubjective notion of organisational integrity is compatible with acknowledging the organisational level as an appropriate location for the attribution of blame, whilst at the same time appreciating integrity at the personal level. In my previous work (Vandekerckhove, 2007, 2010) I have emphasised organisations as communicative regimes, i.e. structural and

166  Research handbook on organisational integrity situational interventions that facilitate forms of communication between people. I argued that an intersubjectivist account of personal integrity is appealing to organisations, and that organisational integrity denotes organisational efforts and policies to support and enhance personal intersubjective integrity. In what follows, I briefly recap the reasons for the appeal of personal intersubjectivist integrity, and then point at what that implies for organisational integrity. Solomon argues that one reason why the term ‘integrity’ is so popular in organisational contexts has to do ‘with the expectation that [employees] will (on the basis of past experience and accumulated confidence) resist and perhaps straighten out structural distortions in the organization’ (Solomon, 1993, pp. 81–82). Organisations do not have fool proof policies or structures, and thus remain always vulnerable to fraud and moral disengagement. Because there is no way to fully avoid these risks, organisations have to rely on the integrity of the members to compensate for the imperfection of policies and structures. It is in that sense that Solomon writes that in an organisational context we use the term integrity to denote an expectation. Note, however, that for Solomon workers’ attempts to meet that expectation will be based on ‘past experience and accumulated confidence’, part of which occurs in life in general but part of that is also specific to the organisation of which one is a member. Thus, the manifestation of personal integrity is based on one’s experience of and confidence about the organisational integrity. I posited that interaction between people is the pivot of the wholeness that matters to intersubjective integrity. Hence, it is the interaction between people within the organisation that renders people the experience and confidence to meet the expectation of resisting opportunism that results from organisational imperfection. The sort of organisational imperfections that call for intersubjectivist account of personal integrity relate to functional and temporal flexibility. An organisation is a coordinated division of labour. This means that different functions comprise any organisation, each function with its own roles and mandates. It is quite usual for us to act within different roles throughout one day. And if that is not the case during our work time, we do assume different roles between work and home. Consider some of the different roles you take during a single day: friend, partner, customer, child, parent, manager, team member, advisor, etc. Which values apply, and to what extent do these roles conflict or at least cause unease? Many of our discernments will not hold across our different roles. The interactive pivot of intersubjective integrity foresees this functional flexibility as something that needs to be dealt with for integrity to exist. In other words, it is not a threat to integrity, but rather how integrity might be achieved at all. Temporal flexibility refers to aligning personal and social discernments over a time period. We cannot keep that alignment constant over time. First, because we cannot rule out that we will change our minds, and second, because sometimes we face new situations. Change is unpredictable and brings both new opportunities and challenges. Dealing with new situations implies approaching the newness of the situation with already acquired discernments. Yet dealing with those new situations also implies that we question the appropriateness and sustainability of those discernments. We may very well alter these. Even if I were not to change my discernments, all or some of the relevant others might change theirs. They might do so in such a way that it shifts the social value appraisal. Hence, aligning the personal and social discernments involved a continued questioning of both my personal as well as the social discernments. This is not a problem to intersubjective integrity. Rather, the aligning of personal and social discernments is what intersubjective integrity is all about. The continued aligning occurs through interaction between people. This interaction is not something in abstracto. It actually needs to happen. I need to actually speak about my discern-

An intersubjective perspective on organisational integrity  167 ments, also in contexts that are not designed to carry such voice, and perhaps also at moments where I am less convinced of my voice. To whom must we speak? Anyone who questions our actions is a relevant other for an intersubjective account of integrity. This could be any stakeholder of the organisation. However, integrity also includes a proactive speaking. The relevant others of our speaking are those with whom we make up community. In an organisational context that is the workplace community: our team members, colleagues, management. The relationships between these individuals are constitutive of that community. Therefore, speaking about our discernment and actions to those with whom we form a community reemphasises not only that community but also us being part of it. If I do not speak with those others, I fail to acknowledge my relationships within that particular community. Of course, if the organisation is big – say, a hundred or a thousand workers across various sites – then I will have to rely on organisational structures, policies, and processes to speak with relevant others. IOI denotes interventions in organisational structures, policies, and processes, to encourage communication between relevant others about their discernments.

SOME POINTS FOR CAUTION In the previous sections I have casted the intersubjectivist account of integrity as a dynamic conceptualisation of integrity. Intersubjective integrity seeks to align personal and social discernments through speaking to relevant others about those discernment. Hence, wholeness is not something that has to be preserved, but rather something that has to be attained. It is in the speaking that individuals put their moral agency under the scrutiny of others and thereby examine social values’ applicability to new situations. From this emerges a collective reinterpretation of social values, and an aligning of personal values is possible. This collective examination, reinterpretation and aligning form an ongoing process. Wholeness, in this sense, is something that is socially constructed time and time again. Within the field of business ethics, at least two of the main approaches are intersubjectivist and rest on a social constructionist ontology of moral norms. Stakeholder theories depict ways in which we can consider different positions to find or construct a common ground (Freeman et al., 2020); the political corporate social responsibility (CSR) approach advocates the lens of deliberative democracy to analyse moral legitimacy of corporate actors’ role in society (Scherer & Palazzo, 2011). Both these approaches imply a social constructionist ontology in how they assume the validity of moral norms, namely that what makes a norm valid is how the consensus was achieved around the moral norm. Stakeholder theories can be used to devise processes to consider different stakes and voices; political CSR provides the critical lens to find faults and cracks in that process. The tandem works well to produce scholarship that is relevant to practice and impactful. However, when we take a closer look at how ethical problems become salient issues, we can see that social constructionism as ontological basis for moral norms runs into a problem. On the one hand, acknowledging there is an ethical problem implies that a moral norm has been breached. Yet, if moral norms are social constructs, then we do not have an ethical problem until there is some alignment, some consensus around the moral norm that the ethical problem is a breach of. But, on the other hand, we experience ethical problems as problems even before we have constructed a norm.

168  Research handbook on organisational integrity Let me give an example. In October 2017 #MeToo went viral, triggering what would be the downfall of Harvey Weinstein. It also led other people to use #MeToo to make public statements – on social media and later on all kinds of media – about experiences of sexual harassment. Among them were also people alleging sexual harassment that occurred decades earlier. Dr Christine Blasey Ford testified in September 2018 about Brett Kavanaugh’s (who was then US Supreme Court nominee) sexual assault of her in the 1980s when they were teenagers. Also, about 40 former cheerleaders and other employees of the Washington Football Team alleged an abusive work environment going back two decades. Why did they not come forward earlier? Was the moral norm about sexual behaviour different in the 1980s than it was in 2017? Or at the end of the 1990s? Does it mean that the behaviour decades ago was unremarkable? Or that the people who spoke out after 2017 did not find the experience problematic two or three decades earlier? Or did people not speak out because there was no platform? So how did moral norms come about before social media? In 2006 Tarana Burke started the non-profit organisation Just Be to assist survivors of sexual violence. She named the campaign ‘Me Too’, remembering a youth camp in 1997 at which she heard a 13-year-old sexual abuse survivor share her story. Burke had found it hard to show solidarity with the survivor because there was no way to simply say ‘me too’. Burke (2022) was seven years old when she was first sexually assaulted. Indeed, vocabulary and imagery to articulate notions and meanings are an important part of socially constructing. But the wrongness of an experience seems to occur even before there is the means of articulation and shared understanding. Hence, important elements in the social constructing here are the 2006 ‘Me Too’ turned into a #hashtag in 2017, which allowed people to indicate that they recognise an experience and offer their alliance. Before that occurs, there has to be an understanding that sexual harassment includes a range of behaviours. The vocabulary to articulate the wrongdoing must be developed. These are social constructs but it is already wrong before the construct is there. A seven-year-old does not have the vocabulary and would not know how to articulate the experience, but still experiences the situation as wrong. What I am suggesting is that moral norms have a reality outside the construct or even the process of socially constructing articulations. That is the caution for intersubjective integrity: the ontology of moral norms cannot be fully reduced to social constructionism. There is a realist element to ethics. An event does not become a scandal because there is a consensus. Rather, events build up to a scandal, which galvanises a consensus. A useful position to cope with this, is critical realism. Towards the end of the 1970s, Roy Bhaskar asked, ‘What must the world be like for science to be possible?’ (Bhaskar, 2008 [1975], p. 57). At the core of Bhaskar’s critical realism is a distinction between three levels of reality: the real, the actual, and the empirical. Mechanisms that cause things to happen are real. They exist independent of any mind, although they are not at work in every situation. Hence, they can be real without being actual. If a mechanism is at work, then it is both real and actual. If we also experience the mechanism, then it is real, actual, and empirical. Science is a social activity for Bhaskar, and brings the three levels ‘in phase’, i.e. we produce knowledge about what is actual and real. What I propose is to assume these three levels for moral norms too. What is relevant to us here, then, is to consider how a norm that is actual-but-not-empirical becomes actual-and-empirical. We do not immediately reach a consensus. Social constructionists have no problem with the idea that we never reach full consensus, and that we are always at work

An intersubjective perspective on organisational integrity  169 socially constructing understanding and meaning, through contestation. This is also where intersubjective integrity is unproblematic. But contestation already supposes an ability to articulate and voice an understanding. And that might very well be quite a long way into that transition from actual-but-not-empirical to actual-and-empirical. What about earlier on in that transition? What about situations perhaps best described as you sense something is wrong but you cannot put your finger on it, when you don’t have the right words to say what is wrong, to express an experience as wrong? These too are situations in which intersubjective integrity must work. In the next section I set out the implications for putting intersubjective organisational integrity into practice.

ORGANISATIONAL INTEGRITY AS INTERSUBJECTIVE PRACTICES I noted earlier that IOI denotes interventions in organisational structures, policies, and processes that encourage the communication between members about their discernments, and thus enhances an alignment of personal with social discernments. The philosophical sidestep in the previous section indicates that IOI needs to cater for a range of situations, with on the one hand norms that are well articulated and on the other norms that are sensed but not well articulated yet. What sort of interventions can constitute organisational integrity across that range? What the organisational efforts of intersubjective organisational integrity need to bring about resonates well with what Kaptein (2008) has called the organisational virtue of discussability, as part of his corporate ethical virtues model. Kaptein defines discussability as the organisational virtue that ‘concerns the opportunity employees have to raise and discuss ethical issues’ (p. 926). This opportunity is the perceived scope employees have to ‘exchange, analyze, and discuss their experiences’ (p. 927), so that they can ‘learn from others’ (near) mistakes, transgressions, and dilemmas’ (p. 927). Whistleblowing, peer-reporting, and the organisational responsibilities to provide safe channels for that are mentioned as examples, but equally that organisations should facilitate discussion about unclear moral expectations and moral dilemmas (Kaptein, 2008). The items in the scale Kaptein (2008) develops are consistent with the broad scope used to conceptually describe ‘discussability’ as an organisational virtue. On the one hand are items related to the perceived ability to report unethical behaviour, escalate a report elsewhere in the organisation, feel assured that reports are taken seriously, etc. (cf. items 7.1, 7.4, 7.6, 7.8, 7.9, and 7.10). On the other hand, we can see items that denote a perceived ability to discuss less clearcut wrongdoing, rather than report unethical behaviour. These ask about discussing moral dilemmas, personal dilemmas, asking questions, etc. (cf. items 7.2, 7.3, 7.5, 7.7). Hence, I believe we can distinguish two forms of ‘discussability’ within Kaptein’s construct, which require, in my view, two different types of organisational interventions and processes. I will comment on these further in this section. The first concerns situations in which the wrongdoing is carried by a strong consensus, both that it is wrongdoing as well as how it is articulated and delineated. This is where speak-up or internal whistleblowing channels work best. In Kaptein’s construct it is the reporting part of discussability. The second type of organisational interventions and processes are needed for discussions and conversations where the consensus around a moral norm is not that strong. These include conversations about

170  Research handbook on organisational integrity whether certain behaviour constitutes wrongdoing at all, or to what extent, and what words to use. This is not the upward or lateral control implied by whistleblowing channels. Rather, it suggests that organisations have integrity to the extent that they manage to create situations in which people feel comfortable to have a direct and exploring conversation with each other. In Kaptein’s construct it is the discussing dilemmas part of discussability. In addition, I will also distinguish a third form of organisational efforts for intersubjective integrity, which can be situated even more towards the inarticulate pole of moral norms. Whistleblowing Channels People blow the whistle. Not everyone, but many do. To give you some idea, a survey conducted in 2020 in 10 countries found that 33 per cent of respondents said they had observed misconduct at work during the preceding year (GBES, 2021). This is of course a global median and countries differ substantially on this measure. Of those who observe misconduct, the 2020 survey found that 81 per cent reported the unethical behaviour. That is a huge jump, up from 63 per cent in 2018 and 58 per cent in 2014. The GBES (2021) survey also has findings that suggest people are more willing to report if they believe the report will be handled effectively. It confirms earlier research that indicates there are two reasons why people will not report wrongdoing. One is because they are afraid, the other is because they believe it would be futile (Olsen, 2014). Hence, for intersubjective integrity, three things are closely connected: people need to speak, they must feel safe, and they must believe their speaking will make a difference. Intersubjective organisational integrity thus focuses on making the speaking safe and effective, or in other words, making whistleblowing successful (Vandekerckhove et al., 2014). This proves to be more difficult than it sounds for organisations. Whistleblowing legislation increasingly makes it mandatory for organisations to have channels for internal whistleblowing (e.g. first in the US and now also in the EU). But having a channel doesn’t mean the organisation is good at operating it. There have been important changes in what whistleblowing channels look like. The physical box for handwritten notes still exists, as does the telephone hotline. The innovation, however, consists of online and smartphone applications that allow two-way anonymous communication. People tend to see anonymous reporting as safer. Yet they often do not include enough information to start an investigation. Being able to go back to the whistleblower to ask further information can increase the effectiveness of reporting misconduct. Advances are not merely of a technical nature. An international multistakeholder initiative on good practice in handling whistleblowing reports developed ISO37002 (2021), the first international standard on whistleblowing management systems. It is packed with guidelines on how to increase an organisation’s effectiveness at receiving reports, doing the initial triage, investigating and other ways of addressing the reports, and what to do when closing a case. A whistleblowing channel is understood as a management system. Hence, the standard stipulates how handling reports needs to be supported by training, roles and mandates, documentation, and a review process. The ISO37002 standard also looks at making whistleblowing safe. It includes a number of sections on protection, giving examples of what protection might consist of, and considers protection for the whistleblower as well as for those associated with the whistleblower and with the reported wrongdoing. But overall, the standard urges organisations to concretely think through and plan the kind of protections they can offer and what

An intersubjective perspective on organisational integrity  171 the limitations are, given their structure, size, and work relationships. In general, organisations tend to overestimate themselves in what they actually do to make whistleblowing safe (Olsen & Brown, 2018). Open Conversations Reporting unethical behaviour through a whistleblowing channel is not all there is to IOI. If IOI denotes the organisational efforts that facilitate people to align personal and social discernments, then whistleblowing channels are perhaps not even the most important aspect to it. Whistleblowing channels are an upwards or lateral control mechanism (Kaptein, 2008). Thus, they work best when the moral norm is socially well delineated and articulated, but work less well to socially construct that consensus. At least, I believe that is what research in Australia and New Zealand suggests, in which 3,604 managers and governance professionals who handle whistleblowing reports responded to a survey (Brown et al., 2019). Analysis of that data suggests that not all reports can be classified neatly as reports of unethical behaviour breaching a clear norm. Only 28 per cent of reports fall within that. There are a number of personal grievances coming through those whistleblowing channels too. About 30 per cent can be neatly classified as such. The rest, a staggering 42 per cent, is what we might call ‘a mixed bag’. It turns out that it is precisely the ones that are hard to categorise – the mixed bag – which organisations find it most difficult to handle well. They lead significantly more to retaliation and inaction than either the clear ethics violation reports or the purely disgruntled employee complaints (Brown et al., 2019). It occurs to me that perhaps direct conversation could bring about some clarity, more so than a reporting channel. The direct conversation is also what the items in Kaptein’s (2008) discussability scale about discussing moral and personal dilemmas seem to suggest. There is indeed scope to believe people really want these conversations within their workplace, and that they only escalate higher up in the organisation or through a whistleblowing channel if their attempt to have a conversation is not welcomed. Vandekerckhove and Phillips (2019) analysed more than 800 whistleblowing cases to see to whom people blow the whistle. The finding is that whistleblowing is best perceived as a protracted process rather than a one-off event. The point is that whistleblowing does not start as whistleblowing. People either raise their concern directly with the person whose behaviour they question (7 per cent), or they talk to their line manager (52 per cent). The most popular person to talk to in a second attempt to raise a concern is higher management (33 per cent). Specialist channels, like HR, audit, or whistleblowing channels, peak at the third attempt, but even then only 14 per cent. IOI requires that organisations facilitate conversations in which organisational members can explore the alignment of personal and social discernment. We can call this ‘open conversations’ in the sense that the conversation is held ‘in the open’ rather than hidden and mediated through anonymous channels. But it is also ‘open’ in the sense that there does not need to be a specific agenda or predetermined end for these conversations. One must simply feel uninhibited to start such a conversation in the workplace. A relevant concept for this ‘inhibitedness’ is psychological safety. This concept has gained attention from human resource management scholars (for a review see Newman et al., 2017). Underpinning this scholarship is the work of Amy Edmondson (1999) on organisational learning. Her idea was to not focus on the direct learning activities and structures but rather see organisational learning ‘as an ongoing process of reflection and action, characterized by asking questions, seeking feedback, experimenting,

172  Research handbook on organisational integrity reflecting on results, and discussing errors or unexpected outcomes of actions’ (p. 353). This can only happen when people believe others will not reject them for saying what they think, that it is safe to experiment, and that others are interested in people as people. This leads people to voice their concerns and seek feedback. Thus, IOI is the extent to which organisations can establish psychological safety. However, just like Kaptein’s (2008) discussability, psychological safety is a cultural feature of an organisation. The question for IOI is: what kind of structures or interventions bring it about? I would like to mention what I believe are two candidates. The first is Mary Gentile’s Giving Voice to Values curriculum (Gentile, 2010). Gentile starts from the observation that people notice something is wrong – that there is an ethical lapse in the organisation – and would want to step in based on their personal value but lack the courage to do so. Gentile’s approach can teach people how to make that step and engage to express their intuition within an organisational setting. The second candidate to help organisations create psychological safety or generate discussability is, I believe, the work of Wendy Addison (n.d.). Based on insights from behavioural science, Addison runs workshops on what she calls ‘courageous conversations’. How do you get people to allow themselves to ask that difficult question or concern about conduct, products, decisions, communications, etc.? And, equally, how do you get people like managers to have the courage to hear that difficult question without avoiding it or without making the speaker shut up? These are the conversations that, to me, seem to be the gist of IOI. Negative Capabilities I want to distinguish a third type of speaking and listening that is part of IOI. It involves moments in which people sense something isn’t quite right but cannot put their finger on it. Except that is not what they say but it is what you as a listener need to sense. Indeed, quite the other side of the spectrum than the whistleblowing channel with its clearly delineated reports. Nevertheless, the importance of these instances of IOI daunted me when I was doing research on handling whistleblowing reports, together with a colleague. We had interviewed a human resources manager who had really impressed us with how he engaged with any signal from the work floor. We had interviewed plenty of managers who thought people claiming to be whistleblowers were mainly out to abuse the policy and always twisted reality anyway. But not this manager. He did not find it easy to handle whistleblowing reports, and part of that was because of what had led these people to use the whistleblowing channel. His view was that sometimes people didn’t get heard and then tried to reformulate as well as add things hoping their cry would have more gravitas and someone would pay attention to their initial point. But it was difficult to decipher that because they came with ‘a mixed bag’. He extrapolated that to the ‘silly’ reports, like someone saying the lights were on in the parking lot. His view was that sometimes people say one thing by saying another. His strategy had therefore become one of engaging with people, regardless of what they come with or how they phrase it. What this instance made us aware of, and what is relevant to our discussion here of IOI, is that whilst most attention goes to enhancing speaker skills and avenues, it is perhaps more important to enhance listener skills. In this regard, I believe the concept of ‘negative capabilities’ can be helpful. Simpson et al. (2002) introduced this notion to the management literature to discuss change leadership in the context of mergers. Negative capability is conceptualised by psychoanalysts Bion and Eisold, who define it as ‘the ability to tolerate anxiety and fear, to stay in the place of uncertainty in order to allow for the emergence of new thoughts or

An intersubjective perspective on organisational integrity  173 perceptions’ (Eisold, 2000, p. 65). Hence, the ‘negative’ is not a bad thing. Rather, it indicates ‘empty’ or not filled. So, it is the ability to keep a space empty and not immediately fill it with what we already believe to know about a situation. The notion resonates with deep-listening skills of consultants, who listen for the hidden story to emerge. For IOI, what is at stake is the listener’s ability to ‘hear the meanings that are often obscured as much as revealed by words’ (Simpson et al., 2002, p. 1217). This requires very different organisational efforts than the technology for handling whistleblower reports through two-way anonymous channels. Instead, it implies enhancing listening skills and emotional intelligence of team managers.

CONCLUSION This chapter discussed organisational integrity from an intersubjective lens. I have argued that intersubjective integrity involves a wholeness or alignment of personal and social discernments about what values matter and what actions and behaviours are consistent with those values. IOI, then, denotes interventions in organisational structures, policies, and processes that encourage the communication between members about their discernments, and thus enhances an alignment of personal with social discernments. I have suggested that intersubjective integrity entails a meta-ethical social constructionism, but have also cautioned that it is more plausible to take a critical realist view, thus acknowledging a realist ontology of moral norms, which are only accessible and knowable through social constructionist practices. This led me to present a range of concrete requirements for IOI, along a continuum of socially constructed consensus of moral norms: whistleblowing channels, open conversations, and listeners’ negative capabilities. Each of these could be further expanded upon. Whilst that would take us into three distinct streams of scholarly literature – which is beyond the scope of this chapter – the practice of IOI needs to connect these streams and pursue IOI in its entire spectrum.

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12. A practical reasoning perspective on corporate integrity Thomas Donaldson

Eyes roll when talk turns to “corporate integrity.” Corporate integrity? Seriously? A common assumption is that top management’s pitch for corporate integrity will die on its first encounter with hard facts. Yet the future of successful capitalism may lie with the unfulfilled promise that corporations take integrity seriously. High-minded talk about integrity should either be backed up or abandoned. Dealing seriously with integrity, however, means examining the idea from two distinct epistemic angles: knowing and doing. The language of deep values, home to the value of “integrity,” applies to acting, the domain of practical reason. The language of understanding, in contrast, applies to knowing, the domain of theoretical reason. Laying one on top of the other prompts an illusion, one that is wicked for corporate social responsibility. In corporate discourse, this illusion is animated by two specialised languages. One is the language of efficiency, whose terminology is centred on concepts of profit and optimisation, while the other is the language of deep values, whose terminology is centred on concepts of integrity, environmental sustainability, non-discrimination, and others. These two specialised languages are not inter-translatable. When juxtaposed, they are meant to depict the same phenomenon from different angles. This sameness is an illusion. Dispelling this illusion requires a shift in our conceptual vision from an object-centred to an agent-centred perspective. It requires moving from a perspective that is dominated by theoretical reasoning to one that is practical while at the same time integrating theoretical insights into practical guidance. As will be shown, accomplishing this shift can achieve integration between the languages of efficiency and values without straining for the impossible goal of full inter-translatability. The shift and the rationale for making it is spelled out below. By establishing practical reasoning as a rational substructure, the shift allows the language of corporate efficiency to retain its dominant role in corporate decision making, even as corporate choices are interpreted through deep values. Throughout the following discussion, the importance of practically wise decisions, of all-things-considered good choices, is emphasised. The discussion below breaks into three parts: the first shows why corporate executives faced with quandaries whose solutions require both the language of values and the language of efficiency encounter predictable confusion; the second describes the three major attempts at dispelling this confusion and explains why each falls short; the third describes the way in which the practical inference process can integrate the languages of efficiency with values into a single-flow model without requiring inter-translatability.

THE PRACTITIONER CONTEXT The financial backdrop for corporate claims about integrity, fairness, and sustainability is rapidly morphing. The rise of human capital-intensive firms has redrawn the corporate gov175

176  Research handbook on organisational integrity ernance map; it has reworked financing and governance choices for a firm by resetting the very boundaries of firms (Hansmann, 2013; Zingales, 2000). Values, not merely optimisation metrics, now motivate or demotivate firm stakeholders in unprecedented ways. Yet in order for deep values such as integrity to successfully motivate corporate activity, stakeholders must believe that the firm means what it says; they must believe that the language of values spoken by corporate leaders goes beyond rent-seeking camouflage. To illustrate the challenge of language and values, consider a hypothetical decision confronting an investment banker. Imagine that in 2005 prior to the financial crisis a banker plans to sell a package of the bank’s highly leveraged derivatives to a Greek municipality. Assume that the banker believes that the treasurer of the Greek municipality is insufficiently aware of the complex risks of the derivatives package. Moreover, assume that the banker and other top executives at the bank have recently discussed how systemic risks, ones that might trigger a financial crisis, could arise from ongoing patterns of highly leveraged derivative transactions in the banking industry. Under such circumstances, should the banker be given pause about selling the derivatives because doing so could compromise integrity? Should integrity considerations be allowed to block what otherwise would be a long-term financial gain for the bank? This challenge displays two aspects. The first is about integrity when disclosing risks to clients, the second is about whether the bank should participate in a pattern of behaviour that might damage the integrity of the global financial system. The crisis of 2007 taught painful lessons about the latter. Language fuels the banker’s dilemma. Assume that “integrity” is identified as a core value for the bank, one heralded in its credo or mission statement along, say, with “trust,” “respect for individuals,” “teamwork,” and “inclusiveness.” So far, so good. But the banker will certainly also call to mind a different set of concepts from the language of finance and accounting, e.g., “NPV,” “net profit,” and “return on equity.” The terms here are from the languages of “efficiency.” The banker is befuddled. The language of one set of concepts refuses translation into the other. “Integrity” and “respect” are drawn from the lexicon of basic values that identifies high standards of human behaviour, while terms such as “NPV” and “net profit” are drawn from the lexicon of finance and accounting. The problem is wicked because unlike translating a piece of language from Chinese into English, the problem is like translating Chinese into the language of mathematics. The firm has burdened the banker with a mission-impossible, and the banker knows it. Similar befuddlement now pervades the business world. Still worse, academics have been conspicuously unhelpful in attempts to resolve it. Language limits thought and action. Ludwig Wittgenstein (1953) and Alfred North Whitehead (1929, p. 9) are among those measuring the reach of language, especially the reach of specialised languages. Whitehead notes that “The field of a special science is confined to one genus of facts, in the sense that no statements are made respecting facts which lie outside that genus” (1929, chapter 1: Speculative philosophy). Theories themselves are language systems, whether cultural, mathematical, topological, biological, or other. “Our language can be seen as an ancient city,” writes Wittgenstein, “a maze of little streets and squares, of old and new houses, and of houses with additions from various periods; and this surrounded by a multitude of new boroughs with straight regular streets and uniform houses” (1953, Aphorism #18). Theories of organisation are also language systems. Theoretical languages utilising concepts of “efficiency” may be compared to new suburbs in the game of language, ones with attractions albeit limitations. Knowing one suburb of a large modern city does not imply knowing its downtown.

A practical reasoning perspective on corporate integrity  177 The language of “integrity” is pedestrian in one sense and sophisticated in another. It is pedestrian in the sense of being drawn from ordinary language and possessing relevance for many kinds of actors. People, nations, and corporations may be said to act with, or without, integrity. Further, “integrity” stands as a form of deep or “intrinsic” value, one lodged among other deep values such as fairness, health, and human dignity (Donaldson & Walsh, 2015; Dorsey, 2012). These top-drawer values are common subjects of sociological and psychological research (Dahlsgaard, Peterson, & Seligman, 2005; Rokeach, 1973). However, value terminology also displays an unusual property whose analysis has fallen traditionally to moral philosophers. Unlike standard nouns, e.g., “brick,” “house,” and “bird,” the nouns of deep values do not denote facts, per se. Rather, they are meant to play the role of idealised behaviour, behaviour meant to guide or prescribe. The terminology of deep values is meant to guide human reasoning towards better decisions. Perfect integrity is impossible, but “integrity’s prime role is ‘prescriptive’ not descriptive; it is ‘action-guiding,’ or, to use the more formal expression, ‘normative’” (Sunstein, 1994). T. M. Scanlon’s view echoes the dominant theme found in modern moral philosophy that “to call something valuable is to say that it has other properties that provide reasons for behaving in certain ways with respect to it” (Scanlon, 1998, p. 96). The concept of the deepest sort of value, thus, is the concept of a non-derivative, valid reason for acting. Such values are referred to as “intrinsic.” The ensuing value puzzle for corporate life is severe. Current attempts by corporate organisations to manage integrity dilemmas are riddled with conceptual contradictions that flow from the limitations of the bifurcated languages they use. Most large corporations utilise the language of deep values in their credo or mission statements and the language of efficiency in their measurement and financial reporting. Corporate credo or mission statements often call deep values “core values” or “basic beliefs.” One of the first and most famous of these is found in the US company J&J’s “Our Credo,” created by Robert Wood Johnson in 1943. Deep values in companies’ mission and credo statements are invariably accompanied by a more detailed list of “do’s” and “don’ts” found in the firm’s code of conduct, and these two elements of corporate governance unite to undergird the firm’s overall ethics and compliance programme. Notably, corporations understand the deep values with which they identify as independently powerful; that is, a firm’s deep values are meant to guide by themselves, without being fully reducible to black letter rules written in their codes of conduct. This is where the confusion begins. Which of two languages, the language of deep values or the language of efficiency, should a manager use when confronting an especially difficult dilemma? Which language should the investment banker in the above example apply to the possible sale of highly leveraged derivative products to a Greek municipality in the year, 2005? The answer, of course, is that she must use both. And this is the rub. The two languages themselves offer no clue about translatability between themselves. Still worse, they lack a second-order scheme for prioritisation. Befuddlement ensues. The puzzle is made yet more frustrating because of an auxiliary feature of the normative nature of values. “Agent-centeredness” is relevant for normative concepts in a way that it is not for denotative concepts. A deep value such as “integrity” is intended to guide, not denote, and it does its work by serving as the focus, i.e., the intentional purpose, of a particular agent. To echo Scanlon’s definition above, integrity and other deep or “intrinsic” values provide a “reason” for a particular agent behaving in a particular way. Reasons, in turn, require the rational agent’s active understanding insofar as the reason being appealed to serves both as the goal and the justification for the action. Such “agent-centeredness” is part and parcel of

178  Research handbook on organisational integrity the nature of practical reason, a topic discussed more fully below. In contrast, concepts such as NPV (Net Present Value), net profit, or even “optimised return on investment,” denote relationships that may exist with or without involving a particular agent’s intention. Hence, in light of this linguistic befuddlement, the need arises for an approach whose elements are conceptually synchronised with deep values and whose elements include the intentional focus of the acting agent.

CURRENT ATTEMPTS AT INTER-TRANSLATABILITY The puzzle remains unsolved, but not for want of trying. Worthy attempts at inter-translatability can be ordered into three tactical approaches: 1. Multilingual approaches; 2. Values-as-preferences approaches; and 3. Surrogacy approaches. Multilingual Approaches Multilingual approaches invite decisionmakers to juggle more than one linguistic ball. Corporate decisionmakers are asked to utilise both deep value languages and languages of efficiency. This attempt to use both languages simultaneously is the dominant strategy for modern corporations, and most managers are expected to juxtapose credo/mission language with the language of accounting and financial success. However, as we saw in the case of the investment banker servicing a Greek municipality, the application of two languages to one task can create wicked confusion. Mission and credo values are meant to add flavour and direction to financial measurement, and vice versa. But in this instance, the two languages offer separate games, not separate rules, with each of the two language games possessing its own rules. The rules for Tic-Tac-Toe do not translate to the game of cricket. This same problem is the Achilles heel of the popular, management-friendly “Creating Shared Value” (CSV) model offered by Porter and Kramer (2011). The promise of CSV is to season “social value” with “competitive ends” in order to serve up a mixed dish, yet the promise is debunked by the authors’ admission that in instances where tradeoffs are necessary, social values must be subordinated to competitive ends (Crane, Palazzo, Spence, & Matten, 2014). Thus, Porter and Kramer’s “shared values,” become lost in translation (Donaldson, 2014) because the corporate decision making needed in challenging cases—the cases that matter—is reduced to the language of optimised financial returns. For decisions that matter, there can be no sharing in Porter and Kramer’s model of “shared value.” A more sophisticated version of the multilingual approach is offered in Freeman, Martin, and Parmar’s book, The Power of And: Responsible Business without Trade-Offs (2020). Boldly multilingual, the book’s aim is to tell a new story of business, one that resists single narratives. The single narrative of profits and shareholders, they argue, must be retold to include profits AND purpose, shareholders AND stakeholders, markets AND society, economics AND humanity, and business AND ethics. The book represents a compelling endorsement of the importance of intermixing deep values with traditional concepts of financial measurement. For this reason it marks a big step forward. But as Naude (2022) and others (Donaldson, 2023) have observed, the model is additive, not integrative, and for this reason is less attractive than a model that might integrate relevant considerations into a single framework.1 The deep value language games of purpose, stakeholders, society, humanity, and ethics are not inter-translata-

A practical reasoning perspective on corporate integrity  179 ble with the efficiency languages used to measure profits, shareholders, markets, economics, and business. Values-as-Preferences Approaches A solution to these problems might lie in a third, more fundamental language that could be used to bridge values with efficiency concepts. Such a Rosetta Stone approach would translate values into “preferences” which, in turn, could be counted, optimised, and set as a guide for corporate action. The languages of efficiency and of deep values thus might become a single system interpreted through the common denominator of people’s preferences. Such a “values-as-preferences” approach is adopted in two current areas of research, corporate governance and stakeholder theory. In the field of corporate governance, articles written in 2017 by the economist, Oliver Hart, and the finance theorist, Luigi Zingales, offer a revision of the shareholder primacy model of corporate governance that emphasises the varied preferences of shareholders (2017a, 2017b). Shareholders may care most of all about financial returns, but they frequently also care about non-financial impacts. In instances where shareholders possess such “prosocial preferences” and where externalities are not perfectly separable from production decisions, Hart and Zingales write that “the maximization of shareholder welfare is not the same as maximization of market value” (2017a, p. 247). Many shareholders pay more for fair-trade coffee, or buy electric cars rather than cheaper gas guzzlers, because, using the current economic lingo, they are prosocial. They care, at least to some degree, about the health of society at large. Why would they not want the companies they invest in to behave similarly? (Hart & Zingales, 2017b, p. 1)

Hart and Zingales’ expansion of the shareholder primacy model to shareholder preferences about values stands as an insightful advance on Friedman’s simplistic assumption (1970) that owners’ preferences are always financial in nature. The advance on Friedman is well tuned to an age in which many powerful shareholders, such as the Norwegian Sovereign Wealth Fund, display strong prosocial preferences. But correcting Friedman’s omission cannot achieve the conceptual alchemy needed to translate owners’ preferences into deep values. In two notable papers, the theorist Santiago Mejia, explains why managers should manage more than financial shareholder preferences, but only ones that are ethically permissible. A tobacco corporation should disregard its shareholder preferences if shareholders happen to prefer to sell cigarettes to children (Mejia, 2019, 2021). Another notable “values-as-preferences” strategy is taken by stakeholder theorists who advance a new and promising concept of “value creation.” In 2010 Freeman briefly introduced the possibility of reconstruing the traditional model of value creation in a way attentive to the interests of all stakeholders who participate in the collaborative effort of value creation. A decade later, this insight was refined by Freeman, Phillips, and Sisodia (2020) to yield the formula: Total Value Created (TVC) = ​ f (Customer TVC, Employee TVC, Supplier TVC, Community TVC, Financier TVC)2

Just as Hart and Zingales make a significant advance on the shareholder primacy model, Freeman and colleagues advance the traditional notion of value creation beyond the con-

180  Research handbook on organisational integrity fusing array of current value creation attempts, most versions of which use a simplistic, exchange-based model referencing only two actors, the firm and the customer, in which “value” is denominated entirely in terms of financial benefit to the firm (Zott, Amit, & Massa, 2011). Freeman and colleagues’ promising strategy is also explored elsewhere (Donaldson, 2021, 2023). But just as in Hart and Zingales’ account, the TVC model utilises stakeholder preferences, and preferences defy reduction to deep values. As Freudenreich and others have noted, because different individuals have different needs and have different values, each recipient in the final distribution of benefits by the firm will have a different understanding of what constitutes value (Freudenreich, Lüdeke-Freund, & Schaltegger, 2020). Stakeholder preferences can contradict basic values and can even controvert financial commonsense. We only need recall the famous example described in Klein, Crawford, and Alchian (1978) in which Fisher Body held up General Motors when surging demand for cars forced GM to buy its car bodies from Fisher Body (Zingales, 2000, p. 1637). The difficulties of the above two “values-as-preferences” models lie deeper, buried under the complex mechanics of economic reasoning. We recall that even the basic axiom of economic welfare, Pareto optimality (Sen, 1985), cannot reach all the way to deep values such as “fairness.” Relying as it does on the aggregate efficiency of multi-party transactions, the values-as-preferences approach is stymied by the theoretical impossibility of converting preferences to true values without remainder. A situation in which nobody can be made better off without someone being made worse off (Pareto optimality) is an attractive state of affairs. Yet if a single person is the complete owner of an entire island upon which ninety-nine other people live, then that island economy may be Pareto optimal while being little better than a slave state (Donaldson, 2021, p. 14). Such a state is hardly fair. Nor can the values-as-preferences model accommodate an individual agent’s meaningful commitment to a deep value. As Sen has noted, “commitment,” the very essence of a person’s relation to a deep value such as fairness, destroys the crucial assumption in a Pareto optimum “that a chosen alternative must be better than (or at least as good as) the others for the person choosing it” (Sen, 1977, p. 328). Real commitment functions as a trump card. Commitment is more than a ranked preference. The same holds true for another key component in modern economics, namely, rational choice theory. Rational choice theory remains the favourite option for sophisticated normative guidance in economic theory, and has proven powerful in solving hard to resolve tradeoffs in decision making (Bernoulli, 1954 [1738]; von Neumann & Morgenstern, 1944). But its drawbacks extend beyond the obvious biases recounted by behavioural economics. The driving element of rational choice is preference. If an individual prefers A to B, then she values A more than B (Hausman, 2013). But one’s preference may easily be an immoral one; my preferring a thing doesn’t make it valuable in itself (Donaldson, 2021). It is worth recalling the succinct denunciation of the preferences-as-values claim by Charles Taylor, who writes, “in instances where we are moved by a higher good, we sense that we are moved to value it because of what is good in it, rather than its being valuable because of our reaction” (Taylor, 1989, p. 74). Real-world difficulties follow from confusing preferences with deep values in rational choice theory, difficulties precisely similar to those encountered by the Hart-Zingales model discussed above. A preference by a company’s shareholders that the company should sell cigarettes to children cannot warrant the correctness of selling cigarettes to children. The language of preferences and the language of deep values referee separate language games.

A practical reasoning perspective on corporate integrity  181 Surrogacy Approaches Surrogacy approaches might remedy these problems. Such approaches put the value dimension of corporate decision making on autopilot. They grant what was shown above, the non-inter-translatability of the two languages of values and efficiency, but propose that an enlightened version of one language might serve as a surrogate for the other. To be specific, they hold that an adapted efficiency language can serve as a surrogate for a value language. A key assumption is that the two languages of efficiency and values recommend equally valuable outcomes so long as the decision time horizon is sufficiently long. Surrogacy approaches, thus, rely on a convergence in practice between what the language of values demands and what the language of efficiency promotes. Thoughtful executives and MBA students tend to be mesmerised by this idea: how tempting it is to suppose that what follows from optimising profits over the long term converges with ethical behaviour. Ethics can fly on economic autopilot. Little wonder that executives are attracted to the surrogacy approach: it offers a rationale for allowing efficiency languages to dominate corporate decision making while at the same time anesthetising unpopular decisions. There is something to be said for this idea. Before concluding that surrogacy is merely a handy crutch, consider the idea’s strengths. The pursuit of long-term profits falls in remarkable alignment with real-world ethics, and substantial convergence between ethics and profit is well-documented. The well-trampled area of research asking whether better ethics make for better profits shows significant convergence between ethics and profits. At a minimum, existing research forces sceptics to abandon the assumption that stockholders and other stakeholders engage in zero-sum games, in which shareholders benefit only at the expense of other stakeholders. Researchers have shown that the fortunes of the three major classes of stakeholders, i.e., shareholders, employees and customers mostly rise and fall together (Preston & Sapienza, 1990). Most, but not all, studies-of-studies in the area of ethics and profit indicate a significant positive correlation between ethics and profits, despite the fact that the correlation is weak (Margolis & Walsh, 2001; Roman, Hayibor, & Agle, 1999). The inherent difficulties of measuring ethics alongside profit, i.e., difficulties in finding a reliable measurement of “ethics” and of ensuring a proper lag time to clarify the direction of the causal arrow (ethics should fuel profits, not vice versa), mean that one cannot say with confidence that higher ethics on average yields increased profits. Perhaps it does and perhaps not. Maybe even the reverse is true. But one thing is clear: a meaningful convergence exists between long-term profitability and ethics, and it is no surprise that a high percentage of unethical behaviours turn out to be unprofitable behaviours in the long run. In short, the surrogacy approach contains more than a grain of truth, a fact that should be taken seriously as we contemplate solutions to the linguistic puzzle. To the extent they profess to accommodate deep values, the prevailing models of agency theory (Jensen & Meckling, 1976) and transaction cost economic theory (O. Williamson, 1996; O. E. Williamson, 1985) can be seen as surrogacy approaches. Agency theory searches for corporate governance mechanisms that can govern interactions where principals and agents have conflicting goals and seeks to limit the agents’ self-serving behaviour (Eisenhardt, 1989). Corporate executives who love luxurious jets buy them at the expense of the firm’s overall profitability; they engage not only in inefficient behaviour but also unethical behaviour (Hillman & Dalziel, 2003). This addresses the classic moral problem of conflict of interest. In the same vein, agency relationships may need to be reconstituted in the face of “moral hazard,”

182  Research handbook on organisational integrity where recklessness ensues. The “moral” in the concept of moral hazard is not accidental. In instances of moral hazard, the “efficient” and the “moral” are well aligned. In a related vein, transaction cost economics serves as solicitor to the deep value of fairness by lowering the transaction costs of self-interested contractors (Donaldson, 2012a). Fairness to shareholders may mean reducing transaction costs by outsourcing a product even when employees prefer vertical integration. It is possible to extend the ethical power of transaction cost economics and its collective action framework directly to the realm of values, a move successfully undertaken by Blair and Stout in their well-known “Team Production” model of stakeholder theory. In the Team Production model, a critical element of corporate governance, the firm’s board of directors, plays an important role expanding fairness by resolving firm-specific resource quandaries (Blair, 1995; Blair & Stout, 1999). The board of directors can achieve both more fairness and more efficiency by ensuring special rewards to employees who make firm-specific investments and hone firm-specific skills. These and other issues of fairness in collective action contexts have been skilfully addressed by Mahoney and others (Asher, Mahoney, & Mahoney, 2005; Kim & Mahoney, 2010). However, closer inspection reveals fatal weaknesses in all surrogacy approaches. The convergence between ethics and efficiency is powerful but not perfect. A case in point is Merck & Co’s decision in the 1980s to develop the drug Ivermectin for application to humans suffering from the tragic disease of River Blindness, one of many corporate instances where efficiency in the long run may not be able to justify a value-driven decision. In 1978, Dr P. Roy Vagelos, then head of the Merck research labs, decided to move ahead with the development of Ivermectin even though he anticipated losing money in the long run. His brilliant decision resulted in the near-eradication of one of the planet’s worst diseases (Merck & Co., Inc. (A) and (B), [BET 9-991-021 and 9-991-022, 1991], 1991). Here values were needed to trump long-run financial optimisation. Another instance occurred during the Covid-19 crisis when Moderna and Pfizer both committed unconditionally to enhancing the availability of the vaccines to patients in developing countries (Donaldson, 2022) (“Moderna’s Updated Patent Pledge,” 2022; Pfizer, 2022). Not only outside observers but the companies themselves agreed that making this commitment to the planet’s health was the right thing to do (Donaldson, 2022; Santoro & Shanklin, 2020). (Even if disingenuous and poorly executed, the commitment seems the right one to make.) Still another case, this time tragic rather than heroic, involved the Japanese Chemical Company, Chiso. Since the early 1950s Chiso dumped mercury into the bay at Minamata, Japan. The mercury triggered a series of bizarre and crippling birth defects on a tragic scale. While the true cause of the epidemic, the mercury effluent, was well known to the company by 1959, the government did not act to prevent chemical dumping until 1968 (“Japan’s Minamata Bay Called Mercury Free,” 1997). Nonetheless, no reasonable executive can doubt that Chiso had the moral obligation to not dump mercury during the intervening years and to defend the deep value of health, even if it meant lowering long-run profits. (Chiso’s mercury emissions fell within Japanese government guidelines at the time of the dumping.) To be sure, law has an important role to play in defending deep values. But law cannot enforce imperfect duties in cases like those of Merck, or of Pfizer and Moderna, to reach above the threshold of minimum moral behaviour. Nor can it enforce moral minimums in instances such as Chiso. When legal institutions are weak, as happens especially in developing countries, or where technology races ahead of the law’s ability to regulate (as when the

A practical reasoning perspective on corporate integrity  183 dangers of asbestos or mercury poisoning are known by insiders before regulators), then only value-driven corporate decisions provide a remedy (Donaldson, 2012b). For these reasons the remarkable convergence between ethics and profits merits our attention. Perhaps the convergence can play a role in some final, workable solution to the values/ efficiency language problem. But, as shown above, surrogacy by itself is not a solution. Surrogacy relies upon an illusion that misinterprets the reach and limits of two kinds of language.

THE SHAPE OF A SOLUTION A full solution to the language problem exceeds the reach of the present analysis. However, the solution’s shape can be sketched. It is to integrate values and efficiency into a single-flow model that stops short of requiring inter-translatability between the two languages. This represents a meta-approach for achieving synchronicity but not full translatability between deep values and efficiency, which is the unfulfilled promise of the surrogacy approach. Such a meta-approach is agent-centred and action-guiding (i.e., prescriptive), and guides action by marshalling facts and deep values into a corporation’s choice of actions. Because it must be prescriptive, such an approach cannot be one that simply uses theoretical reason to reach conclusions expressed solely in the form of mathematical relations or states of affairs in the world (such as correlations, causes, desires, probabilities, dispositions, wants, preferences, past facts, i.e., historical claims, and future facts, i.e., predictions, and counterfactual conditionals). All such staples of theoretical reason lack the prescriptive power required of genuine values; they lack the imperatival “do this action because it is the right thing to do” prescriptive power that moral action requires. Theoretical reasoning is a powerful tool for rational decision making but stops short of providing an all-things-considered guide for action. Hence it is practical, not theoretical, reasoning that is needed. The topic of practical reason is gaining traction in management theory (Feldman & Orlikowski, 2011; Flyvbjerg, 2006; Nonaka & Toyama, 2007; Reinecke & Ansari, 2015; Sandberg & Tsoukas, 2011; Young, 2001) and has always been a staple in moral theory (Aristotle & Apostle, 1981; Neiman, 1999; O’Neill, 1998; Raz, 1999; Wallace, 1990). In a practical syllogism (Schreck, van Aaken, & Donaldson, 2013) the logical process moves from goals and facts to actions. The conclusion of a piece of practical reasoning is, surprisingly, not a proposition, but an action. Consider a hypothetical case: Firm Y’s act of creating diverse hiring pools. Why did Firm Y do so? Let us suppose that it is because Firm Y values fairness and believes that creating diverse hiring pools is the most efficient means to achieve the value of fairness. This simple piece of practical reasoning exemplifies how an action is inferred by facts that are in turn connected to an agent’s value. The inference, notably, is not a proposition, but an action justified by facts working in tandem with values. The agent (in this case the firm) reasons from an agent-centred perspective in a way that marshals both facts and values to produce diverse hiring pools (Donaldson, 2021). For our purposes, a simple, generic formula expressing practical inference will suffice: Focal value  +   Facts → Justified action

An “ideal” practical inference must meet special conditions. Ideal action entails ideal practical reasoning. An ideal inference means a fully justified action, one not only justified in light of

184  Research handbook on organisational integrity facts and a particular deep value, but by the full panoply of deep values. This flows from what has been called the “synoptic” character of deep values (Donaldson, 2023). The moral authority of a deep value must be compatible with other deep values in the specific context of the action. For example, the moral authority of the right to free speech must be adjusted sometimes for its compatibility with the right to physical security. The act of yelling “Fire!” in a crowded theatre is famously unwise. An ideal corporate leader engaged in making a practical inference under ideal conditions would need to possess not only omniscience about the full consequences of a given action for profit, shareholder financial gain, return on investment, etc., but about the compatibility of the action with the entire panoply of deep values. The ideal act is, as it were, the “all-things-considered” best action. It signifies the singular right thing to do under those particular circumstances after accounting for all relevant facts and deep values.3 In short, it is a perfectly wise piece of practical reasoning. Greeks referred to the ability to make all-things-considered wise decisions as “phronesis,” or “practical wisdom” (Aristotle, 1962). The perfectly wise action stands as a pure ideal, one impossible to achieve in actual practice. But knowledge often benefits from the guidance of ideals: frictionless planes in physics and perfect markets in economics are two well-known examples. In analysing the problem of value-based decision making, the concept of ideal practical inference proves to be especially helpful because of its synoptic condition, which implies that the aim of ideal action is not merely the satisfaction of a value, nor even the satisfaction of a deep value, but the satisfaction of the full panoply of values. If for example, the creation of diverse hiring pools in the service of the deep value of fairness involves search strategies that violate the right to privacy, the practical inference that led to their creation would not be “ideal.” This offers an important clue. The need to integrate all deep values into a single whole draws attention to the unique capacity of practical inference to integrate genuine deep values with that of efficiency. Surprisingly, in both their structural axioms and real-world consequences, efficiency languages ultimately rely upon deep values. This holds for all pedigreed efficiency languages, including economics, finance, and corporate governance. The validity of these languages rests ultimately upon a selective set of deep values. Hidden away and seldom mentioned is the truism that the act of contracting, for example, implies the value of keeping contracts. The implicit or explicit commitments that managers make to shareowners, for example, imply that breaking those commitments is normatively wrong. We saw above how agency theory pursues efficiency through ensuring that the commitments of agents are honoured for principals. Our disgust at C-suite managers who loot their corporations for self-interested reasons, using sweetheart relationships with outside remuneration consultants who build lavish pay packages, is a case in point. Whatever its failings, the principal-agent model of corporate governance gets one thing right about values: almost all shareholders invest in a company on the assumption that an implied contract or commitment exists between them and the company to advance the financial value of their shares. Conflicts of interest are akin to broken promises to shareholders. A company that fails to honour this key implicit promise to enhance shareholder welfare violates the deep value of contract and promise-keeping. We recall that the board of directors’ traditional role in governance is that of oversight, an oversight that guards shareholder financial interests (Hillman & Dalziel, 2003). Another bedrock value informing efficiency languages is property. If people lack the right to control and benefit from property (although property’s control rights are limited by law), the market economic system is meaningless. Markets, indeed, capitalism itself, assumes the right to own property, a right that is a deep value enshrined in global agreements such as the United

A practical reasoning perspective on corporate integrity  185 Nations’ Universal Declaration of Human Rights (United Nations, 1948). The same essential role is played by the right to freedom, especially that of exchange. Without the right to freely buy, sell, contract, and so on, markets dissolve. Without such deep values, the extrapolation from perfect markets to the goal of efficiency becomes impossible, as does the welfare concept of Pareto optimality itself. Social welfare is a deep value, whether expressed as Pareto optimality or some other measure such as Rawlsian justice (Rawls, 1999 [1971]), Sen’s capabilities approach (1997), or utilitarianism (Mill & Sher, 2001). Efficient markets bountifully lead directly to aggregate economic welfare, itself a deep value. While aggregate economic welfare may require synoptic adjustment alongside the values of justice or capabilities or happiness, few deny that it stands as a good in itself. Efficiency languages, then, entail deep value assumptions that are both axiomatic and consequential. Deep values such as property and freedom axiomatically underpin their meaning, while the value of aggregate economic welfare justifies their usage. The problem lies in the unfortunate size of the package of values underpinning efficiency languages, which is pitifully small. The deep values of property, contract, and free choice will not add up to the full panoply of human values; such a pittance of values will not add up to the expansive collection necessary for synopticity and, in turn, practically ideal decisions. The deep values of environmental sustainability, fairness, health, and integrity are missing from the selective set of deep values that are axiomatic and consequential for markets. These additional values are dead weight when animating efficient markets. Indeed, they are worse than dead weight; their inclusion is conceptually impossible. Yet these considerations suggest a solution. Because deep values underpin efficiency languages, the broader language of deep values might serve as a linguistic bridge between efficiency languages on the one hand, and the broader languages of deep values. Again, even efficiency languages require deep values and those deep values, however sparse, can serve as a common denominator for practical reasoning. Such a bridging approach would mean that comparing efficiency with deep values is no longer like comparing apples to oranges, but is more like comparing oranges to oranges. No longer like translating Chinese into mathematics, but more like translating Chinese into English. The deep value language for all choice is that of practical reason, instantiated by the model of ideal practical inference above. Practical reason is a bridging language that allows the full panoply of values to justify action. Adjusting the earlier flow diagram for practical inference by including the synoptic feature of value justification for wise practical reasoning can be expressed as in Table 12.1. Table 12.1

Synoptic feature of value justification for wise practical reasoning

Deep Values

↔

(Assumed synopticity)

Facts

↔

Action

In this expanded model of ideal practical inference, the output of an efficiency language can be assigned a deep value language designation, a move which allows the efficiency language to play an embedded role in the value-oriented process of practical reasoning. The deep values essential for efficiency in a for-profit corporation, those, for example, of contract keeping (honouring the implied contract of the firm to enhance its owners’ welfare) as well as the firm’s contribution to aggregate economic welfare, can now be integrated into the full panoply of values.

186  Research handbook on organisational integrity Consider an instance where Firm Y must decide about implementing a cost-reduction initiative. Again, to achieve a practically wise or “ideal” action using practical inference, Y should first possess as complete and accurate a factual picture as possible, and, next, incorporate a bundle of synoptically compatible deep values in order to act. Many facts could play a role in an ideal cost-reduction act, including historical costs encountered by similar initiatives at other firms, anticipated savings from staffing reductions, the initiative’s impact on product margins, the expected opportunity cost of management time spent on the initiative, relevant implications of competitive strategy theories, and so on. The wisdom of the action will be heavily determined by the accuracy of the corporation’s facts and how those facts affect long-term costs. But ideal action requires more than facts. Higher levels of justification are needed to secure the final justification of the cost-reduction initiative. Here is where deep values come in. Presumably, the net result of the initiative is to enhance shareholder welfare. If the initiative fails on this aim, the firm will concurrently fail to satisfy the higher-level deep value of keeping its promise to owners. Moreover, from a broader societal perspective, a firm’s action is only fully justified if it adds directly or indirectly to the aggregate economic welfare of society (Donaldson & Walsh, 2015). Finally, the action is fully justified only if it does not violate another deep value such as environmental sustainability, non-discrimination, or health. For example, if the firm’s cost-reduction strategy means using a cheaper industrial solvent in the production process, one that has deadly carcinogenic effects, then it could not qualify as an “ideal action.” This is true regardless of whether or not the solvent is banned by regulations. Consider, as shown in Table 12.2, the flow of practical reasoning for such a sample cost-reduction initiative at Firm Y. Table 12.2

Flow of practical reasoning for a sample cost-reduction initiative at Firm Y

Practical reasoning for a cost-reduction initiative at Firm Y Deep Values For example: ● Duty to owners. ● Aggregate economic welfare. ● Health, safety, environmental

 

↔

Facts For example: ● Anticipated profit. ● Effect on margins, revenues, and other

 

↔

Action ● Cost-reduction initiative.

financial measures.

sustainability, non-discrimina-

● Strategic insights.

tion, etc.

● Opportunity costs of initiative. ● Take-aways from other firms’ cost-reduction initiatives.

The hypothetical case illustrates the possibility of integrating efficiency languages with deep value languages in corporate practical reasoning. Of course, the practical inference above oversimplifies real-world decision making. But it demonstrates how facts can be bridged with deep societal values within a single-flow model. As noted at the beginning, business is at a crossroads. It must either become serious about corporate integrity and other deep values or abandon its high-minded pretence. As the above analysis shows, a serious answer to questions about values means first facing the stubborn problem of conflicting languages, languages with a vocabulary of deep values on the one hand, and languages with a vocabulary of efficiency on the other. For both practitioners and academics, the current approaches are ensnared by a language trap. The trap takes the form

A practical reasoning perspective on corporate integrity  187 of a language illusion. Attempts to escape the trap are themselves foiled by the very same illusion. A better approach involves shifting the locus of the problem to the acting agent, whose agency is subject to the constraints of practical reason idealised as practical wisdom. The practical inference process, as explained, can integrate the languages of efficiency and values into a single-flow model while at the same time avoiding the steep requirement of inter-translatability.

NOTES 1.

Freeman, Phillips, and Sisodia sketch a promising and more integrative model of stakeholder “value creation” that might resolve some of the multilingual difficulties (Freeman, Phillips, & Sisodia, 2020). This “value creation” approach, however, stands in need of further refinement owing to its reliance on stakeholder preferences, as discussed in this chapter. 2. Where the terms of “f” refer to the total value created for those stakeholders. 3. Left aside is the question of whether equifinalty is possible, i.e., whether alternative ideal decisions are possible under the same conditions.

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A practical reasoning perspective on corporate integrity  189 Pfizer. (2022). Pfizer to supply UNICEF up to 4 million treatment courses of novel COVID-19 oral treatment for low- and middle-income countries. Retrieved from www​.pfizer​.com/​news/​press​-release/​ press​-release​-detail/​pfizer​-supply​-unicef​-4​-million​-treatment​-courses​-novel. Porter, M. E., & Kramer, M. R. (2011). Creating shared value. Harvard Business Review, 89(1/2), 62–77. Preston, L., & Sapienza, J. (1990). Stakeholder management and corporate performance. Journal of Behavioral Economics, 19(4), 361–375. Rawls, J. (1999 [1971]). A Theory of Justice (revised ed.). Cambridge, MA: Harvard University Press. Raz, J. (1999). Practical Reason and Norms. Oxford: Oxford University Press. Reinecke, J., & Ansari, S. (2015). What is a “fair” price? ethics as sensemaking. Organization Science, 26(3), 867–888. doi: 10.1287/orsc.2015.0968. Rokeach, M. (1973). The Nature of Human Values. New York: The Free Press. Roman, R. M., Hayibor, S., & Agle, B. R. (1999). The relationship between social and financial performance. Business & Society, 38(1), 109–125. Sandberg, J., & Tsoukas, H. (2011). Grasping the logic of practice: Theorizing through practical rationality. Academy of Management Review, 36(2), 338–360. Santoro, M., & Shanklin, R. (2020). Human rights obligations of drug companies. Journal of Human Rights, 19(5), 557–567. doi: 10.1080/14754835.2020.1820315. Scanlon, T. M. (1998). What We Owe to Each Other. Cambridge, MA: Harvard University Press. Schreck, P., van Aaken, D., & Donaldson, T. (2013). Positive economics and the normativistic fallacy: Bridging the two sides of CSR. Business Ethics Quarterly, 23(2), 297–329. doi: 10.5840/ beq201323218. Sen, A. K. (1977). Rational fools: A critique of the behavioral foundations of economic theory. Philosophy and Public Affairs, 6, 317–344. Sen, A. K. (1985). The moral standing of the market. Social Philosophy & Policy, 1985(3), 1–19. Sen, A. K. (1997). Choice, Welfare, and Measurement. Cambridge, MA: Harvard University Press. Sunstein, C. R. (1994). Incommensurability and valuation in law. Michigan Law Review, 92(4), 779–861. Taylor, C. (1989). Sources of the Self: The Making of the Modern Identity. Cambridge, MA: Harvard University Press. United Nations. (1948). Universal Declaration of Human Rights. Von Neumann, J., & Morgenstern, O. (1944). Theory of Games and Economic Behavior. Princeton, NJ: Princeton University Press. Wallace, R. J. (1990). How to argue about practical reason. Mind, 99, 355–385. Whitehead, A. N. (1929). Process and Reality: An Essay in Cosmology. Cambridge: Cambridge University Press. Williamson, O. (1996). The Mechanisms of Governance. New York: Oxford University Press. Williamson, O. E. (1985). The Economic Institutions of Capitalism: Firms, Markets, Relational Contracting. New York: Free Press. Wittgenstein, L. (1953). Philosophical Investigations. Oxford: Basil Blackwell. Young, M. A. (2001). Rational Games: A Philosophy of Business Negotiation from Practical Reason. Westport, CT: Quorum Books. Zingales, L. (2000). In search of new foundations. The Journal of Finance, 55(4), 1623–1653. Zott, C., Amit, R., & Massa, L. (2011). The business model: Recent developments and future research. Journal of Management, 37(4), 1019–1042.

13. A discursive justification perspective on organisational integrity Dirk Ulrich Gilbert, Michael Behnam, and Maximilian J. L. Schormair

Designing business models and value chain activities to achieve organisational integrity (OI) is a key challenge for every organisation. In this context, OI refers to the ethical quality of the decision-making processes in an organisation; it depends on the structures, processes, and culture in which managers are embedded while making decisions and taking actions. Multinational corporations (MNCs) in particular must ensure their decisions sufficiently address urgent problems like climate change, corruption, child labour, and poor safety standards in global supply chains (Ballor & Yildirim, 2020; Gereffi, 2018; Gilbert & Huber, 2017) in ways that protect their license to operate and their legitimacy (Mena & Palazzo, 2012; Palazzo & Scherer, 2006; Suchman, 1995). Recent developments, including the war in Ukraine, protectionism, trade conflicts between the United States and China, and the COVID-19 pandemic, have intensified these challenges by imposing unprecedented burdens on the world economy, MNCs, and the ethical integrity of decisions with potentially global impacts (Contractor, 2022; Gereffi, 2020; Gok & Mehmetcik, 2021; Kano et al., 2020). In these fraught conditions, MNCs are critical to world trade: They control the vast majority of global production networks and are responsible for most foreign direct investment (Cohen, 2007). Through their political behaviours and connections with international policymakers and national governments, they also influence transnational governance frameworks (Ballor & Yildirim, 2020). We argue that such ever-increasing economic and political power of MNCs correlates with an increase of their ethical responsibilities for the consequences and side effects of their global operations. Unless MNCs increase their involvement in ethics management and pursue the utmost integrity, environmental and social problems and human rights violations appear likely to increase in severity (Buller & McEvoy, 1999; Donaldson, 2003; Sen, 1993; Ullah et al., 2021). In many cases, MNCs are becoming more transparent, due to a combination of trends. Digitalisation supports international expansions and sophisticated business models, while at the same time enabling corporate stakeholders to monitor corporate behaviour (Banalieva & Dhanaraj, 2019; Paine, 2003). In addition, MNCs like Nike, Exxon, Facebook, Volkswagen, and Deutsche Bank have discovered painfully how corporate misconduct and a failure to take stakeholder expectations seriously can undermine their legitimacy and customer acceptance of their products, services, and business models (Coglianese & Nash, 2021; Enrich, 2020; Ferrell & Ferrell, 2014; Gereffi, 2020; Unerman & Bennett, 2004). In this broader environment, OI offers a promising solution, because it can help firms avoid penalties for ethical failures and violations of the law, as well as protect MNCs from conflicts with stakeholders that may threaten their license to operate (Ete et al., 2022; Fuerst & Luetge, 2021; Schwartz, 2014). An integrity-oriented corporate environment also may encourage employees to adhere to espoused organisational values, increase their awareness of misconduct, and stimulate them to make better decisions (Tullberg, 2012). 190

A discursive justification perspective on organisational integrity  191 Researchers already have introduced several theoretical frameworks pertaining to business ethics that suggest ways to foster OI in international contexts (De George, 1993; Donaldson & Dunfee, 1999; Enderle, 2000; Gilbert & Behnam, 2006; Hoekstra & Kaptein, 2021; Timmermans, 2022; Watson & Weaver, 2003). At a more practical level, MNCs have implemented ethics management programmes that aim to create a culture of integrity, foster integrity behaviour, and discourage integrity violations (Hoekstra & Kaptein, 2021). Such programmes typically rely on compliance management systems to detect and prevent criminal misconduct, in line with existing laws and regulations, which are externally imposed rather than self-directed (Gilbert & Behnam, 2006). Substantial and recent research addresses the content, quality, and outcomes of ethics management programmes (Kaptein, 2009, 2015; Singh, 2011); rather than evaluate varied theoretical and practical approaches to business ethics, integrity, and compliance, in this chapter we accept an assumption underlying all these concepts, namely that no simple answer exists to determine whether any particular behaviour is ethical or unethical in international decision-making contexts, and no simple rule exists for how to achieve OI (Gilbert & Behnam, 2009; Gilbert & Rasche, 2007). Therefore, we seek to develop an adequate framework that can reveal the ethical integrity of decision-making procedures and their results for a given MNC. A key challenge in creating such a framework stems from the tension between relativism and universalism. A universalistic perspective implies that certain norms and values are universally correct and applicable to all societies (Donaldson & Dunfee, 1994). A relativistic perspective instead starts from the assumption that there are no universal moral principles or possible judgements of what is right or wrong; such decisions only can be made according to the context of the judgement. Because the lack of shared norms and values across MNCs and cultures increases the complexity of ethical decision-making and threatens OI, we attempt to devise a framework that can bridge the gap between universalism and relativism. Citing the concepts of discourse ethics, as developed by Jürgen Habermas, we present a discursive justification of OI, which we believe can handle the tension between a relativistic and a universalistic perspective (Gilbert & Behnam, 2006; Gilbert & Rasche, 2007; Schormair & Gilbert, 2021). Although we study MNCs herein, the proposed approach to OI also might be applied effectively to other organisations that operate across borders. This chapter starts with a definition of OI, before outlining differences between compliance and integrity as two key elements of every ethics management system. We propose that only a discursive understanding of OI can overcome the deficits of compliance strategies, which often dominate MNCs’ practices. That is, many MNCs adopt institutionalised ethics programmes, based on a culture of compliance, to detect and reduce unethical behaviour. But, as we show, more compliance and more regulations in MNCs do not automatically generate “better” decisions, nor do they motivate people to become “better” managers. What is needed instead is a culture of integrity, which can foster both compliance and a trusting environment within the organisation, allowing managers to reflect critically on what is right or wrong. Then, we offer preliminary suggestions for integrating discourse ethics into OI concepts. We also present a Habermasian approach to OI in MNCs, based on discursive justification, and describe some potential implementations in practice before drawing conclusions based on these insights.

192  Research handbook on organisational integrity

DEFINING ORGANISATIONAL INTEGRITY Integrity in organisations has been widely discussed, yet despite more than 70 years of research, the concept remains vague and ill-defined (Becker, 1998; Cox et al., 2021; Dodd & Dodd, 2014; Paine, 1994; Trevinyo-Rodriguez, 2007). Disagreement exists about the nature of integrity, its meaning, and its role in organisations (Barry & Stephens, 1998; Dodd & Dodd, 2014; Jacobs, 2004; Tullberg, 2012). We do not attempt to review existing literature on integrity; instead, we leverage prior studies to propose a definition of OI that aligns with a discursive justification perspective. Notably, an important distinction arises between integrity at the personal versus the organisational level. At the personal level, integrity refers to the quality of a person’s character; for example, a manager’s behaviour should be consistent with espoused values, and a person should be honest and trustworthy (Cox et al., 2021). A manager with integrity acts in accordance with a morally justifiable value system and is willing to change his or her opinion for good and well-justified reasons (Becker, 1998). Personal integrity also reflects moral courage and the ability to balance organisational loyalty with moral autonomy (Barry & Stephens, 1998). Empirical research affirms that personal integrity relates positively to trust in managers and a leader’s effectiveness (Ete et al., 2022; Palanski et al., 2015). In this chapter, though, our focus is on integrity at the organisational level. In this sense, OI goes well beyond integrity at a personal level; it requires much more than managers with good characters who display fairness and respect. “Good” managers with integrity may be a precondition of OI, but their decisions do not prevent organisations as a whole from producing unethical results (Palazzo, 2007). Individual decisions always are embedded in networks of cooperation at intra- and/or inter-organisational levels. Even individual decisions and activities that seem harmless might lead, in combination, to very negative results. Furthermore, good people can do evil things if they function in an evil context (Zimbardo, 2004). Being a person of integrity does not guarantee that a manager automatically behaves ethically when under pressure from the organisation (Verhezen, 2008). And as Kaptein (2022) shows, sometimes even good organisations can lead to unethical behaviour of employees. Therefore, OI depends on the structures, processes, and culture of the organisation in which the managers are embedded when making decisions and taking actions. In addition to being based on a concept of self-governance, such that it demands a critical reflection on the normative foundations of the organisation’s economic approaches, OI aims to create the structural preconditions for making decisions that will accord with ethically sound guiding principles (Paine, 1994; Ulrich, 2000). As a social phenomenon, OI also calls for adherence to certain ethical standards at both individual and organisational levels, and it facilitates moral reasoning and ethical conduct at both levels (Timmermans, 2022). In contrast with personal integrity, which largely reflects the ethos of the manager, OI establishes principles and values at the organisational level, which then function as both ideal goals and constraints on managers’ behaviours (Verhezen, 2008). To avoid subverting such principles and organisational values, OI requires their symbolic embrace and deep integration into the structures and processes of the organisation, such as in the form of ethics and compliance programmes, non-monetary reward systems, monitoring and risk management systems (Kaptein, 2009, 2015; Palazzo, 2007). With these distinctions in mind, a key question pertains to how firms can develop a comprehensive OI that includes normative, cultural, and structural preconditions of legitimacy and that also can serve as a moral grounding for the organisation. We propose that one way to develop a comprehensive view of OI is by drawing on Habermasian discourse ethics. This

A discursive justification perspective on organisational integrity  193 approach uses discursive justification to reflect critically on the normative foundations of an economic way of thinking to derive consensually validated moral standards about what is fair and just in an organisation. Such a discursively justified approach to OI may lead to consistency in organisations. It also implies that similar moral dilemmas get treated similarly, because all members adhere to generally accepted ethical standards, which are socially derived and consensually validated (Trevinyo-Rodriguez, 2007). Before we outline the Habermasian approach to OI though, we briefly discuss compliance and integrity as two key dimensions of every approach to OI. We do not accept the dramatic “compliance versus integrity” distinction, originally proposed by Paine (1994), and instead anticipate that compliance and integrity are not mutually exclusive. Still, their separate assessment can provide valuable insights for developing a comprehensive understanding of OI.

COMPLIANCE AND INTEGRITY IN ORGANISATIONS Compliance Rich conceptual and empirical research addresses compliance (Beeres et al., 2022; Driscoll et al., 1998; Eliason, 1999; McKendall et al., 2002; van Rooij & Sokol, 2021), and though we still lack full consensus, most authors agree that the goal of a compliance system in an organisation is to detect and prevent misconduct before harm occurs, by imposing a written set of standards formulated by a third party (Coglianese & Nash, 2021; Driscoll et al., 1998). The basic principle of compliance thus is reactive (Treviño et al., 1999). To prevent (criminal) misconduct, compliance efforts target meeting the demands of existing laws and regulations, which are externally imposed but also might be either soft or hard. They function as guidelines, though compliance standards also need to be company-specific and account for the work content, scale, and operational scope. Some standards focus exclusively on special content areas (e.g., insider trading, environmental protection, safety standards). Different stakeholders can function as norm-developing institutions that create compliance standards. Highly important stakeholders in this respect include legislative bodies, multi-stakeholder initiatives, management and other external institutions. For example, the Federal Sentencing Guidelines (FSG) that were compiled by the U.S. Sentencing Commission and came into effect in 1991 (Nagel & Swenson, 1993; Schwartz, 2014; Treviño & Brown, 2004) pioneered the creation of a legal framework for sentencing U.S. firms engaged in criminal activities. To encourage corporations to behave in a legally responsible way, the FSG significantly increased the costs of corporate misconduct while also providing monetary incentives for meeting compliance standards (Harrison & Freeman, 1999; Weaver et al., 1999). A compliance system also implies a zero-tolerance policy towards violations of principles. In turn, many managers try to avoid the burdens of decision-making, such as needing to reassess every single situation anew. Furthermore, it is not primarily the organisation itself that is supposed to stay out of trouble; most compliance programmes are designed to protect top management from blame and legal consequences (Rorie & Schell-Busey, 2021; Treviño et al., 1999). Different national legal incentives and duties for organisations have prompted MNCs to implement a wide range of compliance measures too, such as codes of conduct, compliance officers, ethics hotlines, information technology designs, whistle-blower protections, and training programmes (Coglianese & Nash, 2021; van Rooij & Sokol, 2021). Without any

194  Research handbook on organisational integrity “one-size-fits-all” approach to compliance, compliance programmes clearly must be customised to match the respective legal and cultural environments. Limits of Compliance Compliance regulations provide guidelines for economic action by MNCs and legal behaviour within organisational processes. But from a modern business ethics perspective, compliance strategies are limited endeavours that do not support real reflection on ethical norms (Gilbert & Behnam, 2006; Jacobs, 2004; Paine, 1994). Instead, they deprive people of the ability or right to clarify, intersubjectively, what they perceive as right or wrong. Compliance cannot inspire, because it focuses exclusively on what should not be done, rather than communicating values or rewarding moral self-governance. Moral self-governance in particular requires the absence of monitoring and sanctioning mechanisms, so that individual members can achieve moral autonomy in a trust-enhancing environment. Such a holistic orientation is unattainable with a compliance strategy, because no set of regulations is broad enough to encompass all relevant issues. Still, empirical evidence indicates that organisations with certain types of compliance programmes experience fewer compliance violations (Coglianese & Nash, 2021). The effects appear rather modest (Weaver, 2014). Top-level managers express scepticism about implementing international compliance procedures as a way to resolve or avoid ethical problems (Watson & Weaver, 2003). Other research also indicates that true compliance requires more than just a compliance system; it also demands a change in the organisational culture and managerial attitudes (Coglianese & Nash, 2021). Even if the norms created by a compliance programme are substantive, a key problem remains: The approach itself is non-discursive. It does not integrate stakeholders other than the norm-developing institution into norm-definition processes. As a result, the affected parties often view compliance programmes as window-dressing, implemented in response to external pressures (Weaver et al., 1999). As long as decision-making processes in the organisation remain unchanged and are not values-based, concerned stakeholders are unlikely to follow compliance standards willingly (Treviño et al., 1999). Instead, factors such as an organisational ethical culture are more important for ensuring ethical decision-making and reducing unethical conduct (Craft, 2013; Schwartz, 2014). Taking all these arguments into account, we predict that a compliance programme is of no value if it is not accompanied by personal commitment and a discourse-oriented integrity culture, which guides MNCs towards more socio-economically based value creation (Gilbert & Behnam, 2006; Weaver, 2014). Integrity Integrity, derived from the Latin term integer, implies a complete entity or wholeness. In an organisational context, wholeness can be understood as internal consistency among beliefs, words, and actions (Tullberg, 2012). A management system based on integrity follows a corporate value orientation as a guiding ideal and fosters consistency across the espoused values of an organisation and individual moral acts (Becker, 1998; Solomon, 1992; Tullberg, 2012). A basic principle of an integrity approach is reflected by changes to ethical governance mechanisms. That is, compliance assumes third-party governance; integrity instead defines a true ethical orientation based on self-commitment, self-governance, and careful reflections

A discursive justification perspective on organisational integrity  195 on business models (Gilbert & Behnam, 2006; Jacobs, 2004; Paine, 1994). The organisation embraces a voluntary orientation to higher principles, such as honesty, fairness, respect for the rights of others, and obedience to the law, which must align with and create an organisational environment that supports ethically sound behaviour (Ulrich, 2010). With regard to a discursive approach to OI by MNCs, as described in this chapter, the reference point for a justification of values must be a universal moral point of view that can bridge cultural differences (Donaldson, 1989; Donaldson & Dunfee, 1994; Gilbert & Behnam, 2009). But MNCs operate in multicultural environments, where different norms and values often lead to conflicts and no overarching moral authority exists. Disagreement in moral values is possible, and conflicting moral positions in different cultures can be equally valid (Donaldson & Dunfee, 1999). Thus, creating shared norms and values is necessary to establish foundational standards for desirable interactions with internal and external stakeholders (Gilbert & Rasche, 2007; Watson & Weaver, 2003). A strong integrity culture that fosters freedom of expression and open communication can provide opportunities for discourse among relevant stakeholders and facilitate the consistent development of values. The most important aspect in this context is to let management “walk its talk” and demonstrate that the advocated values are taken seriously throughout the organisation (Paine, 1994). Managers must show that they care about ethics, such that true ethical leadership provides consistency between organisational values and actions (Treviño et al., 1999). Therefore, the norm-definition process should support respective structures and systems in the organisation that allow for dialogical clarification and justification of norms and values. Whereas decisions based on responsibility are made for affected people, responsiveness supposes that these interested parties already have been included in the decision process (Ulrich, 2010). Thus, integrity-based concepts can define norms with affected stakeholders, not for them. Limits of Integrity An integrity approach is broader and more demanding than a simple compliance orientation (Gilbert & Behnam, 2006; Paine, 1994). Its holistic view on business ethics makes it both valuable and problematic at the same time. The depth and integrated nature of the integrity approach may hinder its applicability (Lozano, 2001; Ulrich, 2010). In addition, managing for integrity entails processes of cultural change within organisations, but culture is a “fuzzy” phenomenon, so discussions of managing culture tend to be generalising and based on unrealistic assumptions. In many cases, companies lack any practical ideas of how to initiate cultural change processes to implement guiding values in their organisation (Bussmann & Niemeczek, 2019; MacLean et al., 2015). Another obstacle arises due to the discourse-oriented character of an integrity strategy. It demands the inclusion of all relevant stakeholders in decision-making and communication processes, but organisations have far too many stakeholders to consult them all directly—and often only limited experience in designing stakeholder dialogues (Mitchell et al., 1997; Ulrich, 2010). The Need to Integrate Compliance and Integrity in Organisations The preceding analysis of both strategies suggests that limiting individuals with a compliance programme is just as risky as imposing exaggerated moral expectations on people by

196  Research handbook on organisational integrity embracing an integrity strategy. The latter leaves the moral reasoning process entirely up to the good character and intentions of the individual; the former can never define all areas of (mis)conduct. These shortcomings allow for opportunistic behaviour in response to both strategies. But a well-balanced combination of compliance and integrity measures might forestall such behaviour and shape awareness through complementary elements (Eliason, 1999; Jacobs, 2004; Treviño et al., 1999). A mediation between the abstract ethical principles of an integrity approach and the narrowness of compliance standards also requires a comprehensive concept of OI. From our perspective, this comprehensive concept should provide MNCs with opportunities to implement integrity and compliance simultaneously, such that they create both “discourse-opening” and “option-excluding” moments. That is, in its discourse-opening role, the concept should outline a framework for communication processes, in which MNCs and their stakeholders can discursively justify conflicting norms and values and further develop a normative basis of action within the company network (integrity). Then, with regard to the individual behaviours of economic actors, option-excluding moments must ensure that immoral opportunities are not taken into consideration by headquarters or subsidiaries (compliance). To merge such compliance and integrity notions, we introduce a Habermasian approach to organisational integrity in MNCs in detail next.

MERGING COMPLIANCE AND INTEGRITY: A HABERMASIAN APPROACH TO OI IN MNCs The Integration of Discourse Ethics Because MNCs operate across borders by definition, their pursuit of business regularly creates conflicts due to different cultural norms and values. In response, MNCs must constantly consider whether the norms and values promoted by headquarters, host countries, or both should act as the primary frame of reference for managing conflicts (Donaldson & Dunfee, 1999; Hendry, 1999; Kano et al., 2020). A classical problem involves whether to choose a relativistic or a universalistic perspective. Following lines of thought offered by most contemporary scholars (Donaldson & Dunfee, 1994; Habermas, 1990; Ulrich, 2010), we posit that if one deduces a normative ethical conclusion from an empirical “is” of norms and values (relativism), that person would be committing a logical mistake, called a “naturalistic fallacy” (Moore, 1903/1951). To avoid such relativism, the approach to OI we propose in this chapter reflects a universalistic perspective. For MNCs to be coherent and adaptable, it is categorically important for them to base their OI on universally valid convictions that can define a basis for a “moral point of view”. These principles would need no further discussion, because they meet the criteria for universal validity and thus must be reasonably accepted by all stakeholders. There are three approaches to derive such principles. First, we can find a number of (more or less) universally accepted norm catalogues, like the Universal Declaration of Human Rights by the UN, conventions published by the International Labour Organisation, the OECD Guidelines for Multinational Enterprises, or the UN’s Global Compact (Gilbert, 2010; Kell, 2005; Kell & Levin, 2003). Second, Donaldson and Dunfee (1994, 1999) propose integrated social contracts theory (ISCT) to conceptualise business ethics in an international context (Barry & Stephens, 1998; Boatright, 2000; Gilbert & Behnam, 2009). In their approach, Donaldson and Dunfee (1994,

A discursive justification perspective on organisational integrity  197 p. 254) follow the contract tradition of Locke (1690/1948) and Rawls (1971), such that they draw a distinction between two types of contracts: “The first is a normative and hypothetical [macro] contract among economic participants [which] defines the normative ground rules for creating the second kind of contract. The second is an existing [micro] contract that can occur among members of specific communities, including firms, departments within firms, national economic organizations … and so on”. In line with other authors (Buller & McEvoy, 1999; De George, 1993), Donaldson and Dunfee emphasise several universal hypernorms (e.g., human rights, respect for human dignity, good citizenship) that are ethical principles fundamental to human existence. These hypernorms then constitute the basis of macro contracts and act as overarching principles to limit the design and interpretation of micro contracts in specific local communities (e.g., local codes of conduct for subsidiaries of MNCs). Interesting and relevant for our approach to OI is that Donaldson and Dunfee (1999, p. 52) deliberately decline to provide a justification for hypernorms in ISCT. They admit hypernorms may be justified in different ways, but the particulars of these justifications are not relevant to their theory (Boatright, 2000). As a consequence, Donaldson and Dunfee (1999, p. 23) present ISCT as “independent from the truth of any particularly traditional ethical theory”. However, as Boatright (2000, pp. 454–456) asserts, this lack of moral justification represents a major deficit of ISCT. From our perspective, it must have a significant role in how hypernorms ultimately are justified. To develop a framework of OI in MNCs, we need particular ethical theories to provide justifications; it is not possible to make ethical judgements about the right or wrong of norms and values in MNCs without having some justifying ground on which to legitimise them. Third, we might adopt formalistic ethical theories, like Kantian moral philosophy (Kant, 1788) or the discourse ethics developed by the German philosopher Jürgen Habermas (1990, 1992, 1993, 1999). In this chapter, we draw on the central ideas of Habermasian discourse ethics and their adaptation to economic theory (Gilbert & Behnam, 2009; Gilbert & Rasche, 2008a; Schnebel & Bienert, 2004; Ulrich, 2010) for three reasons: (1)

This formalistic ethical approach refers to pluralistic societies that can no longer draw on a single moral authority. Discourse ethics proposes not predefined norm catalogues but rather a procedure of moral argumentation for arriving at a universally accepted consensus (Habermas, 1990). The discursive approach is universally valid, because reflexive justification facilitates self-contradictions of argumentative contestation, or so-called performative contradiction. This contradiction cannot be resolved without confronting the problem once again (Finlayson, 2000; Habermas, 1990). For our approach to OI, the clarification that discourse ethics does not claim to provide an ultimate justification for norms and values is critical. That is, it describes practically existing possibilities and prerequisites to achieve an argumentative understanding among human beings. In this sense, discourse ethics can avoid the naturalistic fallacy while also providing a necessary justification of norms and values in MNCs to bridge the gap between a relativistic and a universalistic perspective. (2) Habermas attempts to bring moral philosophy into the realm of political and social science, which in turn can be applied easily to organisations and MNCs. His approach seeks to develop a system of morally justified procedures to validate moral choices, particularly related to how society and institutions should be organised (e.g., companies, social standards). In this context, the theory comprises both a well-founded basis for

198  Research handbook on organisational integrity justifying norms and facilitating voluntary self-governance (integrity) and a conceptual example of how to critically examine and implement everyday norms (compliance). (3) Discourse ethics is a well-developed philosophical approach that can apply to business ethics in general and OI in particular (Atif, 2019; Ruebottom, 2018; Schultz & Seele, 2020). Habermas (1984, 2007) outlines a normative theory of communication, which suggests how people (stakeholders) should interact and communicate to coordinate their actions. As we show, discourse ethics provides concrete guidelines for firms to create pluralistic stakeholder value through the discursive justification of diverging stakeholder perspectives, particularly in situations in which value pluralism leads to conflicts among them (Schormair & Gilbert, 2021). In this regard, discourse ethics can provide a solid theoretical framework for critically analysing business-related problems (e.g., stakeholder management, international accountability standards, political corporate social responsibility, designs of OI approaches) (Atif, 2019; Gilbert et al., 2011; Gilbert & Behnam, 2009; Gilbert & Rasche, 2007; Scherer et al., 2016; Scherer & Palazzo, 2007; Unerman & Bennett, 2004). In the following, we briefly outline the basic principles of discourse ethics necessary to develop a comprehensive approach to OI from a discursive justification perspective. Habermasian Discourse Ethics With discourse ethics, Habermas (1990, pp. 196–198) extends Kant’s categorical imperative beyond its “monological” reflection and introduces a moral argumentation procedure that is based on intersubjectivity. Habermas argues that only norms that meet with the consent of all stakeholders, in their role as participants in a practical discourse, can be considered valid. In its simplest form, discourse ethics provides MNCs with a “principle of universalisation”, which constitutes a fundamental guideline for moral reasoning. The principle states: “For a norm to be valid, the consequences and side-effects that its general observance can be expected to have for the satisfaction of the particular interests of each person affected must be such that all affected can accept them freely” (Habermas, 1990, p. 120). Notably, discourse ethics takes the consequences of actions seriously into account; they represent the core of the validity of moral norms. The principle of universalisation also enables consensus on generalisable norms, while rejecting the basic assumption of ethical relativism (Habermas, 1990). Discourse ethics is universalistic in this sense, and applicable to MNCs, in that Habermas (1990) avoids proposing substantive normative guidelines for actions and instead refers exclusively to a procedure that allows for the redemption of normative claims to occur. An ethics approach can be termed “universalistic” only if it proposes a moral principle that does not reflect the norms or values of a particular culture, group, or epoch. In every discourse, participants must prove that their moral principles are not just reflections of their own mental attitudes, prejudices, and values but instead reflect the group as a whole. In turn, Habermas (1990, p. 121) proposes the principle of discourse ethics, which establishes the procedure for testing the universal validity of norms and values. This principle states: “Only those norms can claim to be valid that meet (or could meet) with the approval of all affected in their capacity as participants in a practical discourse” (Habermas, 1990, p. 66). It is precisely this proceduralism that sets discourse ethics in opposition with the fundamental assumptions of concepts like ISCT and also highlights the need to distinguish the procedure

A discursive justification perspective on organisational integrity  199 of discourse from the substantive content of argumentation. Habermas (1990, p. 122) states further that “Any content, no matter how fundamental the action norms in question may be, must be made subject to real discourse (or advocatory discourse undertaken in their place)”. For norms to gain acceptance, all people need to question their own subjective opinions and freely consent to the discussed issues. The group also must verify that the principles are reciprocal. Accordingly, the parties involved should acknowledge that their positions remain valid when reversed (Forst, 2014; Habermas, 1990; Hendry, 1999; Schormair & Gilbert, 2021). Norms are applicable universally only if they are approved within a process of argumentation. In other words, norms are not deduced from existing guidelines but rather are brought into being through consensus in a practical discourse. Drawing on the principle of discourse ethics, Habermas (1990, pp. 86–94) also derives discourse guidelines, collectively termed the “ideal speech situation”, to meet demands for a more advanced concept of communication, which is a prerequisite for both a critical reflection (integrity) and an implementation of norms and values (compliance). Habermas claims that anyone who tries to participate in argumentation, by that very undertaking, implicitly accepts general pragmatic presuppositions, which have a certain normative content. In brief, the argumentation carried out in a discourse ensures that all those concerned in principle take part, are treated equally, and search for truth in a cooperative way. Discourses should be free from both constraint and structural forms of power. In a discourse, nothing coerces anyone, except the force of the better argument. Finally, Habermas introduces the postulate of seriousness or authenticity. A discourse must be free of deception or even illusion when expressing intentions and performing speech acts. We presume these principles counterfactually, even if people do not usually act that way (Habermas, 1993, pp. 54–60). Criticisms assert that Habermas has not been able to provide a sufficient justification for discourse ethics, and in particular the principle of universalisation (Finlayson, 2000; Spaemann, 2000). Finlayson (2000) even proposes that neither Habermas nor his followers have succeeded in providing a formal derivation. However, as a crucial point, Habermas (1999, p. 42) does not claim to provide a formal or ultimate derivation of the principle of universalisation. The concept instead outlines existing, practical possibilities and prerequisites to achieve an argumentative understanding among human beings by abduction (Habermas, 1999, pp. 41–43). In this context, abduction describes an informal process by which researchers come up with “an inference to the best explanation in which a range of different pragmatic criteria fill out the relevant superlative” (Finlayson, 2000, p. 331). The recent advancements of Habermasian ethics by Forst (2012, 2014), as well as current developments in deliberative democracy by Habermas (1996) and authors like Dryzek (2000), shift focus towards macro-level institutional actors, such as governments, firms, and non-governmental organisations. The guiding idea remains intact, though: free, independent participants in a process of discursive justification, guided by several criteria, exchange reasons and defend their points of view in accordance with what Habermas (1996) calls “the force of the better argument”. Outlining a Habermasian Approach to OI in MNCs We have argued that OI aims to create normative, cultural, and structural preconditions for making decisions in accordance with a set of ethically sound guiding principles. Our approach to OI takes this claim seriously and relies on the conscious integration of compliance and integrity through discourse ethics and its basic moral principles. The approach to OI assumes

200  Research handbook on organisational integrity a reasonable, analytical decision-making process at the organisational level and draws on the principles of discourse ethics that function as ideal goals, as well as a constraint on managers’ behaviour. Our approach to OI takes the universal moral point of view of an integrity strategy as a basis for giving instructions for individual compliance programmes and local adaptations of specific guidelines in MNCs. In the tradition of classical and social contracts theory (Gauthier, 1986; Keeley, 1988; Locke, 1690/1948; Rawls, 1971), and analogous to ISCT (Donaldson & Dunfee, 1999), we propose designing a decision-making process for the justification and implementation of norms and values in MNCs in a two-stage manner, comprising the macro and micro level. As we have outlined elsewhere (Gilbert & Behnam, 2006), the two stages represent distinct, closely related types of contracts: a theoretical macro-contract that defines the normative basis to appeal to all MNC stakeholders and a micro-contract that assigns practical ethical obligations to members in particular host countries. Both stages are based on Habermas’s discourse ethics, so we call this concept a Habermasian approach to OI in MNCs (Figure 13.1).

Figure 13.1

A Habermasian approach to organisational integrity in MNCs

At the macro level, the principle of universalisation, the principle of discourse ethics, and discourse guidelines together define the normative basis of the Habermasian approach to OI in MNCs, communicated to and shared among different stakeholders within the organisation. These principles are complemented by existing norm catalogues (e.g., codes of ethics) and compliance programmes. Whereas ISCT and other deductive approaches in business ethics directly derive norms, the Habermasian approach only prescribes how discourses for norm justification should be designed, without imposing specific norms in terms of content. A practical discourse thus is a process that follows the discourse guidelines, according to

A discursive justification perspective on organisational integrity  201 which a rationally motivated agreement about conflicting norms is achieved by creating an intersubjective understanding among, and thus approval from, all affected parties. (Habermas, 1990). Assuming such consent, the integrity approach becomes operational, simply because existing norm catalogues and existing compliance programmes with MNC-wide validity, both located at the macro level, are not simply imposed on affected stakeholders but can be subject to discursive verification. To ensure the legitimacy of norms, all stakeholder groups also must have the right to participate in practical discourses at the micro level, where the discourse guidelines outline a certain procedure of argumentation. Affected stakeholders at the micro level then introduce conflicting contents of norms into the process of justification. During this process, the norms get tested in terms of their universal applicability, whether they are intersubjectively accepted as consensus-capable or rejected as not acceptable for consensus (Habermas, 1990, p. 103). The outcomes of practical discourses then may range from consensus to dissensus between stakeholders (Schormair & Gilbert, 2021). If a successful agreement on a norm is not easy to achieve or not an immediate option, an OI based on the idea of discursive justification offers three options for stakeholders, who might (1) foster discourse and promote institutions and structural preconditions in an organisation to support deliberation; (2) enter into bargaining processes and try to find a compromise; and (3) accept dissent but at least agree to disagree after a process of discursive justification (Gilbert & Behnam, 2009; Habermas, 1999). A Habermasian approach to OI requires that managers of headquarters and host countries, as well as all employees, create a mutual understanding of the content and meaning of norms, values, and compliance regulations through argumentation to identify the correct course of action in any specific situation. Such a procedure is critical; no general guidelines proposed at the macro level can provide guidance for every possible individual act. The opportunity to specify, adapt, and reject norms ensures that there are not only option-excluding but also discourse-opening moments in the decision-making process of the MNC. The willingness to engage in practical discourses at the micro level is an expression of a basic attitude to reach an understanding of, and thus meaningfully justify, the legitimacy of corporate decisions. Consequently, norms and compliance programmes not accepted in an unconstrained manner need to be reformulated or eliminated at the macro level. Practical discourses lead to continuous assessments and improvements of the normative contract proposed at the macro level, and they also provide affected stakeholders at the micro level with guidance in their specific actions. The implementation of the Habermasian approach to OI in MNCs clearly is challenging. Practical discourse in MNCs is never free of domination and constraints (Spaemann, 2000), and the ideal speech situation that Habermas proposes relies on idealised assumptions. Real-world discourses differ substantially from this ideal. But, in line with other scholars (Power & Laughlin, 1996; Ruebottom, 2018; Schnebel, 2000; Ulrich, 2010; Unerman & Bennett, 2004), we believe in the counterfactual potential of discourse ethics to be (at least) partially achieved in MNCs. A debate based only on a simple dichotomy between fully implementing the theoretical ideal of discourse ethics in organisations and implementing no elements of the concept is nonsensical. As Unerman and Bennett (2004, 688, 692) conclude, “there is a continuum of possible positions between these two extremes, with the counterfactual potential of the ideal speech situation [which] might have the potential to introduce a greater degree of equity into the determination of corporate responsibilities, and the morality of corporate behaviour, than would be the case in the absence of debate informed by these procedures”. With this

202  Research handbook on organisational integrity background, our approach to OI can enable MNCs to deal with values-based conflicts, as well as gain and maintain legitimacy, through a process of rational discourse. By drawing on Habermasian discourse ethics, MNCs have a normative point of reference to overcome the dualism between compliance and integrity and increase their chances to cope with the tension between universalism and relativism.

ORGANISATIONAL INTEGRITY IN PRACTICE: A DUALITY OF COMPLIANCE AND INTEGRITY IN MNCs Drawing on our findings, and the proposed Habermasian approach to OI in MNCs (Figure 13.1), we can describe how the dualism between compliance and integrity might be overcome in practice and a duality between compliance and integrity can be achieved. As described by Giddens (1984), duality in this context means that the structural properties of OI are both the medium and the outcome of on-going compliance and integrity practices that constitute the system of OI. The Habermasian approach to OI in MNCs describes a recursive relationship between compliance and integrity. Its compliance character entails written sets of principles (e.g., child labour standards), implemented at the macro level, to provide employees in headquarters and host countries at the micro level with a framework of option-excluding regulations. At the same time, it features integrity, because the initiative exposes MNCs to value orientation and discursive clarification of the normative bases for moral reasoning. Managers and employees in headquarters and host countries become actively involved in practical discourses with affected stakeholders, the organisation opens itself for self-governance and a thorough dialogical implementation of predefined standards may be possible. The underlying culture involved in the Habermasian approach to OI in MNCs also ensures that the concept fosters discourse-opening moments, through the freedom of expression it provides in practical discourses in headquarters and host countries. It allows for option-excluding moments, because stakeholders at the micro level are limited in their actions by the macro-contract. To ensure economic efficiency in management and production processes at the micro level, affected stakeholders can be exempt from time-consuming discourses, as long as macro regulations are based on a consensus. It is important to emphasise that practical discourses only take place when one or more stakeholder groups questions the validity of certain norms and values. As a consequence, the most critical points in establishing an integrity culture in MNCs for high-level management are to demonstrate that they really care about local needs and circumstances and that they show consistency between the norms and values derived out of the discourses and their actions at the macro level. When managers keep promises, inspire trust, and exhibit a heightened sense of ethical awareness, firm misconduct is much lower than when employees perceive that managers behave unethically (Craft, 2013; Palanski et al., 2015; Treviño & Brown, 2004). The Habermasian approach to OI in MNCs also demands compliance with (consensus-based) predefined requirements at the macro level. Headquarters communicates the MNC’s policies for moral behaviour (e.g., codes of conduct, selected International Labour Organization principles) and compliance to local units, though they still must be adapted to local economic practices. The possibility of applying guidelines to the geographic location, industry sector, and size of production facilities in host countries represents a discourse-opening moment if the MNC clarifies the points of modification with stakeholders. Affected stakeholders need to

A discursive justification perspective on organisational integrity  203 be involved actively in the justification of company-specific regulations instead of just reproducing them. The dialogical justification of norms, not just their plain application, therefore is central to the Habermasian approach to OI discussed in this chapter. We argue that sustainable ethical reasoning at a local level can be accentuated through discursive justification. It is not enough to apply predefined standards; rather, it is necessary to justify actions by arguments, where they occur in the first place, in the local context. Only by referring to the local economic context can stakeholders gain reasons for or against certain regulations within discourses. In line with the idea of responsiveness, local discourses at the micro level offer a means to maintain affected stakeholders’ freedom to issue specific interpretations of what they consider morally correct or not in a particular conflict situation. Norms that are dialogically justified and locally specified in such a way lead to a higher degree of stakeholder acceptance; the integrity approach thus is taken fully into consideration (Ulrich, 2010). With a comprehensive approach to OI, the development of an integrity culture is equally as important as the enforcement of requirements proposed at the macro level by existing monitoring and sanctioning systems (e.g., reporting, reward systems). Managers in home and host countries take a leading role in installing and implementing these mechanisms. However, option-excluding moments (compliance) need to be limited to a certain extent. According to a Habermasian approach to OI, employees, suppliers, and other stakeholders have the power to question norms and compliance regulations, as well as to monitor and sanction systems in practical discourses. The discourse-opening nature of the Habermasian model also explicitly does not ignore the pragmatic restrictions that exist within decision-making processes (e.g., limited time for discourse, the need to monitor employees), which can limit opportunities to reflect on conflicting norms and values. However, from a business ethics perspective, economic reasons are not superior to moral reasons per se (Ulrich, 2010). Implementing the Habermasian approach to OI should make decision-making processes fairer and alter the existing situation in many MNCs, which continues to be characterised by a hierarchical structure and a traditional assignment of roles between headquarters and stakeholders in host countries. Stakeholder engagement is at the core of our Habermasian approach to OI. By drawing on the previously outlined discourse guidelines, we offer precise procedures for how to design and maintain dialogues among people from different cultural backgrounds. Nevertheless, the identification of relevant stakeholders and their integration into decision-making processes remains one of the key challenges of MNCs when trying to foster OI. The Habermasian approach to OI presented in this chapter may benefit from recent findings related to how to design comprehensive procedural frameworks to manage stakeholder value conflicts (Schormair & Gilbert, 2021). Such frameworks provide step-by-step guidance for organisations, such as how to determine which stakeholders are affected by a conflict, what they want to change and how mutual learning about compliance and integrity can be fostered. A key measure to solve stakeholder conflicts and push OI, often mentioned in these procedural frameworks, is the participation of MNCs in international accountability standards (IAS) such as the UN Global Compact, SA 8000, or Global Reporting Initiative (Gilbert & Rasche, 2008b). Such IAS “are voluntary predefined rules, procedures, and methods to systematically assess, measure, audit, and/or communicate the social and environmental behavior and/or performance of firms” (Gilbert et al., 2011, p. 24). These standards may help MNCs foster OI in practice because they provide a normative basis for socially responsible actions and are designed according to deliberative criteria to bring together a variety of stakeholders (de Bakker et al., 2019).

204  Research handbook on organisational integrity

CONCLUSION It was the objective of this chapter to advance an approach to OI from a discursive justification perspective. We cite compliance and integrity as different strategies for ethics management in MNCs and introduce an integrated approach to OI, combining both approaches. Because it draws on Habermas’s discourse ethics, the presented approach to OI cannot be dismissed as cultural imperialism; it provides a sound theoretical justification of norms and values in an international context. Against this background, a Habermasian approach can contribute to advancing the field of OI and better managing the tension between a relativistic and a universalistic perspective. Although there is some criticism of the idealistic orientation of discourse ethics, it is widely accepted that discourse guidelines can be applied successfully to the business environment of MNCs (Atif, 2019; Froomkin, 2003; Gilbert & Behnam, 2009; Gilbert & Rasche, 2007; Lozano, 2001; Ruebottom, 2018; Schnebel & Bienert, 2004). The principle of universalisation, the principle of discourse ethics, and the discourse guidelines provide MNCs and their stakeholders with a communicative framework in which moral conflicts can be solved. The conditions of real-world communication might be affected by unequal power distributions between MNCs and fringe stakeholders, which weakens the applicability of basic discourse principles (Schormair & Gilbert, 2021). However, the regulative idea of discourse ethics does not demand compliance with all aspects at each point in time. Rather, the idea is to take institutional precautions to neutralise the restrictions placed on practical discourses. Within empirical conditions, the goal of a discursively oriented approach to OI is to realise the principles to the extent possible. To address this criticism and provide scholars and managers with more applicable knowledge about how to implement the presented approach to OI, we also suggest some research extensions. First, the Habermasian approach to OI is thus far a normative theory; it would benefit from empirical investigations into the practicality of the concept. Empirical insights would be especially helpful for learning about how to apply discourse guidelines to local contexts and how to integrate fringe stakeholders into practical discourses. Second, more research seems necessary to address cultural differences in compliance and integrity approaches. Compliance procedures in particular differ strongly across countries, which can exert an impact on MNCs’ business ethics approaches (Coglianese & Nash, 2021). Third, every effort in management theory to avoid relativism must take care to avoid falling into ethnocentrism. Each theoretical concept is inevitably influenced by the author’s own cultural background; we welcome critical discussions of whether the presented concept is universalistic. Although a broad research agenda is opening up, we consider our Habermasian approach to OI a useful, pragmatic theoretical framework to provide managers with a normative guidance for their organisational decision-making processes.

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14. A virtue ethics perspective on organisational integrity Ignacio Ferrero, Maria Clara Ames, and Mauricio C. Serafim

Integrity is essential in organisations. Organisations with a strong reputation of integrity can more easily attract customers, employees, and investors, thereby maintaining lasting relationships. Since integrity is often described as external coherence between words and actions and internal coherence to maintain deeper commitments (Kristjánsson, 2017), for organisations to maintain integrity, they must fulfil promises and commitments to stakeholders while maintaining consistency between values and purpose (Moore, 2015). In the organisational context, integrity is visible both in human actions and in governance structures and practices (Fuerst & Luetge, 2021). Therefore, integrity can be seen as a human attribute (MacIntyre, 1999; Moore, 2005a; Nguyen & Crossan, 2022; Robson, 2015; Sison & Ferrero, 2015; Solomon, 1992); as an organisational attribute (Cameron et al., 2004; Fuerst & Luetge, 2021; Moore, 2005a); or even as a team capability (Palanski et al., 2011; Rego et al., 2015). At this point, the moral agency of individuals and the organisation differs. While integrity in the individual sphere refers to the realm of managers, employees, or leaders, integrity in the organisational sphere refers to collective decision-making and deliberation in groups, committees, and boards. Given this, how can an organisation be led with integrity? We believe that virtue ethics can make a valuable contribution in this regard. It allows us to comprehend how integrity can be implemented, both at the individual and organisational levels. The purpose of this chapter is two-fold. Firstly, we aim to introduce the fundamental concepts of individual and organisational integrity from a virtue ethics perspective. To achieve this, we will explore key assumptions of virtue ethics, such as the teleological notion of flourishing and the role of practical wisdom in cultivating integrity. Secondly, we will examine the evolution of the concept of integrity by conducting a literature review that analyses the citation context (Anderson & Lemken, 2023) of articles on integrity from a virtue ethics standpoint. This review will enable us to present the various approaches to studying integrity, the key themes that emerge, and the categories attributed to this concept. Although some authors do not explicitly discuss the ethical role of integrity and instead associate organisational integrity with corporate citizenship (Maak, 2008; Rendtorff, 2011) or organisational strategy, structure, and culture (Kaptein, 2017), virtue ethics suggests that organisational integrity may be an ethical aspect of the common good that people in organisations can only achieve through collaborative efforts.

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A virtue ethics perspective on organisational integrity  211

INDIVIDUAL AND ORGANISATIONAL INTEGRITY IN VIRTUE ETHICS In the neo-Aristotelian virtue ethics perspective, integrity is an attribute of character, which provides enough stability to human beings to allow them to be consistent in their lifestyle, and to avoid compartmentalisation, giving unity and coherence to their lives. When the organisation also lives integrity, it facilitates individual integrity, contributing to their flourishing. We contend that, in virtue ethics, organisational integrity necessitates the development of the moral character of organisations over time. Furthermore, it requires the application of practical wisdom in management. With the aid of practical wisdom, managers and employees can learn how to be virtuous and act with integrity in their work while simultaneously striving towards the common good of their organisation. Virtue ethics is an agent-centred ethical approach that emphasises the relationship between an individual’s actions and the development of their character through the cultivation of virtues (Ferrero et al., 2021). In this tradition, virtue can be defined as a “freely acquired habitual disposition or character trait that enables individuals to perceive, experience emotions, deliberate, decide, and act in a proper way. It is also the controlling factor for eudaimonia or flourishing, which is considered the ultimate goal of human life” (Ferrero & Sison, 2014: 386). This definition of virtue and its relation to flourishing can be traced back to the ancient Greek philosophers Plato and Aristotle. Later, Thomas Aquinas integrated Aristotelian teachings into the Christian worldview, and more recently, MacIntyre revisited the Aristotelian-Thomistic tradition, emphasising the social and historical conditions of the political community in which the virtues and flourishing are realised (Ferrero & Sison, 2014). The role of organisations in virtue ethics is important since organisations are social contexts where individuals can cultivate virtues. As mentioned above, to Aristotle, the supreme good of the human being is happiness (eudaimonia), but this flourishing must be reached within the political community (Aristotle, 1985: 1095a), and in collaboration with others. For that reason, the political community represents the fully developed stage of human existence (Aristotle, 1990: 1252b). This stresses the need for community, with its relationships in a variety of spheres (familial, educational, religious, economic, civic, political, and so forth). Recovering main assumptions from Aristotelian and Thomistic traditions, MacIntyre gives an important role to integrity for individuals and organisations to flourish. Organisations are communities composed of two levels of integrity: that of the individual and that of the organisation as a whole. It is important that organisations when acting as morally and socially responsible agents do not compromise the ultimate importance of the responsibility and integrity of the individuals who work within it (Solomon, 2004). MacIntyre (1999) emphasises the importance of integrity as a triple prerequisite for moral agency. Firstly, individuals must acknowledge themselves as moral agents with unique identities and personal dispositions shaped by their life history, independent of their social roles. Secondly, they must possess the confidence to rationally defend their judgements and propose actions that differ from social norms. Lastly, individuals must recognise their accountability not only for their roles but also as rational human beings. These three requirements are directly related to character since they speak of autonomy, coherence, and responsibility in decisions and actions in the different scenarios that individuals face in their daily life. From a virtue ethics perspective, character is the proper locus of individual integrity, understood as a stable disposition that is harder to change than habits

212  Research handbook on organisational integrity and reflects an individual’s way of being in terms of virtue, encompassing the whole person (MacIntyre, 1999; Solomon, 1992). The relation between virtues and character and individual integrity can be described as follows. Virtues are multi-track dispositions (Hursthouse & Pettigrove, 2022), including actions, habits, character, and lifestyle (Sison & Ferrero, 2015). Voluntary actions, when repeated and reiterated, become habits; every action leaves a trace or mark. This by-product is called “habit”: a stable disposition or manner of being, doing, acting, or behaving. Habits, as reiterated actions, are exercised frequently until they become consolidated, and this process of “becoming good through consistent practice” (Kaptein, 2017: 2) is crucial to developing virtuous character. Character is constituted by various habits, displaying greater permanence than habits and providing a more accurate and complete picture of an individual. To have a steady and reliable character, integrity and constancy are essential prerequisites (MacIntyre, 1999). Integrity is the virtue that sets limits to the agents’ adaptation to their social roles, while constancy sets limits to the character’s flexibility over time. In this context, integrity is essential for individuals to be internally consistent to manifest the same self, regardless of their roles or social spheres, and to reflect on their engagement with established roles and structures. Integrity and constancy are interdependent virtues that allow individuals to pursue their goals and values while remaining true to their character. Integrity requires individuals to manifest the same character in different social contexts, while constancy requires individuals to pursue the same goods over extended periods without allowing the demands of the social context to distract them from their commitments (Akgün et al., 2022). These virtues compose a narrative unity of life or lifestyle, enabling individuals to perform practices that lead to the acquisition of virtues or internal goods regardless of the roles they assume (MacIntyre, 1999; Robson, 2015). A person’s lifestyle gives unity and texture to everything, including feelings, actions, habits, and character, lending structure and meaning to existence. The ultimate goal that human beings pursue is expressed best in their lifestyles (Sison & Ferrero, 2015). However, social structures can compromise integrity, creating tension or conflict, promoting the compartmentalisation of life into different spheres with distinct requirements and roles. Individuals must deliberate and judge how far they can adapt or flex their actions while maintaining their character, considering their biographies and experiences, and maintaining their narratives or unitary vision of their own life (MacIntyre, 1999). In his analysis of moral agency in the context of social structures and order, MacIntyre’s framework rests on the relationship between practices and institutions, i.e., organisations. Practices are “any coherent and complex form of socially established cooperative human activity” (MacIntyre, 2007: 187) whose development allows the achievement of external goods such as money, power, and status. Simultaneously, agents can perfect themselves achieving internal goods while enhancing the standards of excellence by which the performance of the activity can be judged and thereby improving the traditions (Ferrero et al., 2021). Internal goods, such as flourishing, loving relationships, and knowledge, are inherently valuable and neither rival nor excludable. Institutions host practices, putting in place the structure for the practice to develop, but they can also constitute a risk insofar as they can privilege the achievement of external goods over internal goods. If the practice-institution relationship develops in a way that the institution

A virtue ethics perspective on organisational integrity  213 actually protects the practice, agents can live a virtuous life more easily than in an environment where the logic of the institution prevails over the original spirit of the practice. While institutions are necessary for the sustenance of practices and their internal goods, they can foster individuals to seek external goods for their own sake, then practices are distorted, and institutions invade rather than support them (MacIntyre, 1994). This distortion results in the loss of integrity or the corruption of practices, which can lead to a context that is not conducive to virtues, and provokes compartmentalisation, a chameleon-like self, passivity, or even inter-agency conflict (MacIntyre, 1999). Therefore, individuals must exercise judgement in determining how far they can adapt or flex their actions while maintaining their character. In the same vein, Solomon (1992: 328) considers integrity “as the linchpin of all of the virtues, the key to their unity or, in conflict and disunity, an anchor against personal disintegration”. He defines integrity as the integration of one’s roles and responsibilities, along with the virtues defined by them. In situations where there may be conflicting interests or values, integrity, like every virtue, seeks a balance between two extremes, or the “golden mean”, which is defined in relation to the individual’s subjective condition and established through practical wisdom or prudence (Solomon, 1992). This requires agents to deliberate and judge the extent to which they can act while considering their biographies, experiences, and maintaining their narratives or unitary vision of their own life (MacIntyre, 1999). Integrity is not just about applying principles in practical matters (Hartman, 2020), but about judging and deliberating about the means of action according to the particular context in which the agent acts to behave coherently. Since practical wisdom is the ability to make rational choices applying general ethical principles and theoretical knowledge to specific situations in a manner that leads to the best possible outcome, considering the context, motivations, and emotions involved (Sison & Ferrero, 2015), this virtue turns into a necessary element to act with integrity in a personal level. Prudence or practical wisdom is typically developed through age and experience, enabling individuals to perceive what is most significant in different contexts (Hursthouse & Pettigrove, 2022). Virtuous actions consist of doing what is right, for the right reasons, and in the right way, towards the right people, and at the right time and duration. Similarly, Arjoon et al. (2018: 149) states that integrity of character implies “conformity of right thinking (promoted by intellectual virtues), and right willing and feeling (promoted by the moral virtues)”. However, it is crucial that one’s intention is oriented toward the good. For example, a person may strive to exhibit integrity in their conduct because it is the right thing to do and because it contributes to their growth in virtue, thereby strengthening their character. On the other hand, if someone seeks integrity solely for the sake of social acceptance or reputation, their motivations do not stem from integrity but rather from a desire to fit in or conform to external pressures, which does not directly contribute to their flourishing as a human being. In this context, the virtue of practical wisdom appears to be a crucial virtue in promoting integrity, as it operates based on reasons for action that surpass the obligations of a given social role. The possession of practical wisdom enables individuals to engage in actions that are consistent with their values, thereby aligning their conduct with notions of right and wrong that are pertinent to the particulars of a given situation. In essence, practical wisdom serves as a means of reflection for individuals to contemplate the demands of their roles and life circumstances and determine appropriate courses of action that are in keeping with their character, thereby promoting integrity.

214  Research handbook on organisational integrity Aristotle, and the authors in the tradition of virtue ethics, identified the supreme good of the human being, what we ultimately seek in our life, as “eudaimonia”, which means happiness or flourishing (Aristotle, 1985). Eudaimonia coincides with a life of virtues, lived and shared with others in the community. Flourishing involves “living well and doing well” (Aristotle, 1990), and since “flourishing represents the definitive form of virtue or moral excellence, it is human nature in its perfect state” (Sison et al., 2018: 6). Hence, virtues are necessary for and partially constitutive of flourishing, but they have to be lived in community. A flourishing and virtuous life shared in the community can be seen as the subjective dimension of the common good. Common good also involves external goods, but they are complementary to those internal. For Aristotle, eudaimonia is the common good of the polis (Arjoon et al., 2018), because it is the sharing of what is beneficial for all citizens of a given political community (Albareda & Sison, 2020). Moreover, the common good is not the sum of individual goods, but the conditions for and a result of a eudaemonist life (O’Brien, 2009). In this sense, the purpose of an organisation as a social system is a common good, which “could only be achieved insofar as everyone else achieves his or her own good in harmony with others” (Sison et al., 2018: xxiii). The common good keeps a teleological dimension representing the human ongoing process of striving to achieve its telos or final end (Albareda & Sison, 2020). Common good may involve some broader conditions such as sociocultural values and economic, organisational, and environmental conditions (Arjoon et al., 2018; Melé, 2009). The “common” implies dialogue, deliberation, and participation for reaching a flourishing community life. Moral agents and communities reciprocally interact while learning and sharing moral goods. If this social system supports manifestations of integrity, it can offer a supportive moral environment for building trust, which may intensify social cohesion, for example. Otherwise, if it legitimates vicious or corruptive practices, it can trigger a process of reinforcement of unethical practices (Moore, 2015). Since we are considering the organisational integrity of a social community – the organisation – we can consider organisational integrity as part of the moral good (common good) of that community. As previously mentioned, the neo-Aristotelian and Thomistic traditions define integrity as a disposition of human character. However, other perspectives, such as Positive Organisational Scholarship, have adopted different theoretical and methodological frameworks to investigate organisational integrity and which dimensions or components of organisational integrity are the most important ones (Kaptein, 2008). To explore these issues, we reviewed recent literature on virtue ethics in business and management journals to provide updated definitions and findings related to organisational integrity.

A LITERATURE REVIEW ON INTEGRITY IN VIRTUE ETHICS The field of virtue ethics comprises various perspectives that offer diverse frameworks to comprehend integrity. This literature review aims to examine the most recent studies on virtue ethics and their conceptions of individual and organisational integrity. The method used for the selection and analysis of the articles is explained in Table 14.1. After the analysis, we collected the articles in the following categories: (1) virtue ethics traditions, including Aristotelian, Eclectic Virtue Ethics, Empirical Organisational Psychology, and MacIntyrean; (2) article type, distinguishing between theoretical and empirical articles;

A virtue ethics perspective on organisational integrity  215 Table 14.1

Method of selection and analysis of the articles

Step

Description

#articles

Research

● Research question: how has the concept of integrity evolved in virtue ethics perspectives in

 

design

business and management? ● Information sources: three internal databases of EBSCO: Academic Search Premier, Business Source Complete, and MLA International Bibliography research database. ● Status of the references: only peer-reviewed articles published in business ethics and management journals listed in the Journal Citation Report (JCR®).

Search strategy 1.

Articles on virtue ethics reviewed by Ferrero and Sison (2014) from 1980 to November

132

2011; 2.

Query: TITLE-ABS-KEY (“virtue ethics” OR “virtue theory” or “virtuousness”) AND

135

ALL (“business*” OR “management”), from December 2011 until December 2022; 3.

Total of articles (1+2).

267

Eligibility

a.

Peer-reviewed articles published in journals listed at JCR.

 

criteria

b.

Language: English.

c.

Articles characteristics: virtue ethics articles related to business or management.

d.

Years considered: 1980–2022.

Articles

e.

Articles citing “integrity” at least 10 times or “organisational integrity”.

4.

Articles on integrity selected after applying the eligibility criteria.

38

included Analysis

● References organisation: Mendeley and exported to NVivo.

 

● Method: citation content analysis (Anderson & Lemken, 2023). ● Unit of analysis; citation context or “citance”. ● Categories of analysis: (1) virtue ethics tradition; (2) article type - theoretical or empirical; (3) level of conceptual analysis for integrity - individual or organisational; (4) degrees of engagement with the concept of integrity, categorised as limited, intermediate, and comprehensive; (5) article’s main themes. ● Tools: Mendeley, NVivo, and Excel. ● Methodological procedures: first reading of the title, abstract, keywords, and citation context to specify the number of citances of “integrity” and “organisational integrity” (Table 14.2). Codification of articles’ content in NVivo, using a codebook with the categories, validated between two authors.

(3) level of conceptual analysis, whether the concept of integrity is applied at the individual or group/organisational level; and (4) degrees of engagement with the concept of integrity, categorised as limited, intermediate, and comprehensive. We categorised comprehensive approaches as articles that advance the concept of integrity at both individual and organisational levels. Table 14.2 presents these 38 articles along with the respective number of citation contexts for each virtue ethics perspective. The articles listed in Table 14.2 reveal that the most prolific traditions in addressing integrity from the perspective of virtue ethics studies are Aristotelian, Eclectic, Empirical Organisational Psychology (EOP), and MacIntyrean. The findings of this literature review are presented in the next sections. Main Themes, Definitions, and Implications of Integrity in Virtue Ethics Traditions When analysing the type of article according to the virtue ethics tradition, Aristotelian perspective has seven theoretical articles. EOP stands out with the highest number of empirical

216  Research handbook on organisational integrity Table 14.2

Integrity’s citation contexts per article by virtue ethics perspectives #Citances of Organisational

#Citances of Integrity

Integrity (%)

(% in the article)

Solomon (1992)

–

9 (8.9%)

Solomon (2004)

–

6 (11.9%)

Murphy et al. (2007)

–

5 (5.7%)

Segon and Both (2015)

–

7 (9.8%)

Sison and Ferrero (2015)

1 (1.27%)

2 (2.4%)

Newstead et al. (2018)

1 (1.90%)

1 (1.7%)

Akrivou and Scalzo (2020) Hacket and Wang (2012)

– –

6 (9%) 10 (11.4%)

Crossman and Doshi (2015)

–

5 (10.7%)

Ananthram and Chan (2016)

1 (1.02%)

9 (7.6%)

Lemoine et al. (2019)

–

6 (3%)

Adewale (2020)

–

7 (7.1%)

Nguyen and Crossan (2022)

–

11 (9.7%)

Empirical

Fuerst and Luetge (2021) Shanahan and Hyman (2003)

15 (22.70%) –

7 (8.5%) 5 (12.5%)

Organisational

Cameron et al. (2004)

1 (1.65%)

6 (7%)

Psychology

Chun (2005)

–

10 (13.5%)

Bright, Cameron and Caza (2006)

–

5 (6.3%)

Wright and Goodstein (2007)

1 (1.05%)

6 (6.4%)

Rego et al. (2010)

1 (1.71%)

4 (6%)

Payne et al. (2011)

–

10 (10.2%)

Palanski et al. (2011)

–

22 (24.2%)

Rego et al. (2013)

1 (1.49%)

7 (6%)

Sadler-Smith (2013)

–

7 (10.6%)

Rego, Reis, and Pina e Cunha (2015)

–

10 (10.1%)

Chun (2017)

–

12 (14.9%)

Hur et al. (2017)

3 (4.83%)

6 (7.7%)

Arjoon et al. (2018)

–

5 (4.8%)

Meyer (2018) Moore (2005a)

2 (1.59%) –

4 (3.9%) 10 (21.3%)

Moore (2005b)

–

5 (6.6%)

Graafland and Ven (2011)

–

4 (8.8%)

Marsh (2013)

–

8 (8.5%)

Moore (2015)

–

5 (8.9%)

Robson (2015)

–

16 (18.3%)

West (2018)

–

13 (16%)

Chan and Ananthram (2019)

–

14 (13.4%)

Asher and Wilcox (2022) 38 articles

– 27

7 (10.2%)

Virtue ethics

Articles

perspective Aristotelian

Eclectic

MacIntyrean

Total

292

studies, nine, using survey methods and six theoretical articles. Eclectic virtue ethics has four theoretical and three empirical articles using qualitative research approaches. MacIntyrean perspective presents five theoretical and four empirical studies. Regarding the number of articles over the years, there is a noticeable prevalence of limited conceptualisation articles. However, the number of articles discussing integrity has been

A virtue ethics perspective on organisational integrity  217 growing steadily over time. Figure 14.1 depicts the number of articles every five years, based on the degree of conceptualisation of integrity.

Figure 14.1

Number of articles and level of conceptualisation of integrity

The analysis reveals that most of the articles (n=23, 60.5 per cent) have a limited conceptualisation of integrity. Meanwhile, eight articles (21.0 per cent) offer an intermediate conceptualisation, and seven studies (18.4 per cent) make comprehensive contributions to the concept of integrity. The comprehensive contributions are from different perspectives, including two from an Aristotelian perspective, three from a MacIntyrean perspective, one from the Eclectic, and one from Positive Organisational Scholarship. It is worth noting that articles classified as limited do not necessarily indicate a lack of quality, as they may explore other concepts or list virtues or virtuousness. Notably, the recent work of Fuerst and Luetge (2021) presents a robust conceptualisation of organisational integrity, which is unique in this sample. Each perspective also develops unique concepts, such as the corporate character from the MacIntyrean perspective and organisational virtuousness from the EOP perspective. The neo-Aristotelian perspective remains primarily focused on integrity as a human attribute. Despite the different perspectives, the articles on integrity have not had much communication and articulation between them. Authors search for coherence with main assumptions from a virtue ethics perspective, such as the Aristotelian or MacIntyrean, because some assumptions are not shared by all the perspectives. Neo-Aristotelianism considers the crucial role of practical wisdom or phronesis (Sison & Ferrero, 2015). Inside the MacIntyrean school, authors propose new concepts in line with MacIntyre’s main concepts, such as corporate character (Moore, 2005a, 2015). Theoretical-methodological assumptions from POS support articles on integrity as an organisational virtuousness (Meyer, 2018). Few works articulate different

218  Research handbook on organisational integrity perspectives, such as the case of eclectic articles (Nguyen & Crossan, 2022; Fuerst & Luetge, 2021). Articles’ Main Themes and Scope of Analysis of Integrity The articles on virtue ethics investigate the concept of integrity across three distinct yet complementary domains: individual, organisational, and group/team levels. Kaptein and Wempe (2002) were the first to mention the concept of organisational or corporate integrity in the context of virtue ethics. Since then, it has been widely discussed in the field of business ethics (e.g., Maak, 2008; Paine, 1994; Rendtorff, 2011), from different perspectives and methods: (1) Organisational virtuousness, as developed in the field of Positive Organisational Scholarship (Arjoon et al., 2018; Bright, Cameron, & Caza, 2006; Cameron et al., 2004; Hur et al., 2017; Meyer, 2018; Rego et al., 2010; Sadler-Smith, 2013; Wright & Goodstein, 2007); (2) Organisational virtue, which emphasises the moral character of organisations (Chun, 2005; 2017; Payne et al., 2011); (3) Organisational culture as a driver of virtuousness, which makes up the corporate ethical virtues (Huhtala et al., 2018; Kaptein, 2017); (4) Corporate character based on MacIntyre’s ideas (Moore, 2005b, 2015; West, 2018); and (5) Eclectic perspective studies that draw on a range of theoretical and empirical approaches (Ananthram & Chan, 2016; Fuerst & Luetge, 2021). Consequently, there are various themes and management functions being explored. Leadership, for instance, is discussed from different virtue ethics perspectives and through different scopes (Hacket & Wang, 2012; Crossman & Doshi, 2015; Lemoine et al., 2019; Marsh, 2013; Adewale, 2020; Nguyen & Crossan, 2022), as highlighted in Table 14.3. Leadership is recognised as a crucial factor associated with integrity in organisations. Table 14.3

Articles’ main themes by virtue ethics perspective and scope for integrity

Virtue ethics perspectives Aristotelian

Articles’ main themes by conceptual scopes on integrity Individual Integrity

Organisational Integrity

● Aristotelian virtue ethics (Solomon, 1992)

● Corporations as communities (Solomon,

● Relational marketing (Murphy et al., 2007)

2004)

● Emotional intelligence (Segon & Both, 2015) ● Neo-Aristotelianism & virtuousness’ differences (Sison & Ferrero, 2015) ● Virtue’s concepts (Newstead et al., 2018) ● Practical wisdom and relational selves (Akrivou & Scalzo, 2020) Eclectic

● Leadership styles and virtue (Hacket & Wang, ● Ethical decision-making (Ananthram & 2012) ● Not-knowing (Crossman & Doshi, 2015) ● Moral approaches to leadership (Lemoine et al., 2019) ● Virtuous leadership (Adewale, 2020) ● Character-infused ethical decision-making (Nguyen & Crossan, 2022)

Chan, 2016) ● Organisational integrity’s concept (Fuerst & Luetge, 2021)

A virtue ethics perspective on organisational integrity  219 Virtue ethics perspectives Empirical Organisational Psychology

Articles’ main themes by conceptual scopes on integrity Individual Integrity

Organisational Integrity

● Virtues ethics’ scale development (Shanahan

● Organisational virtuousness and perfor-

& Hyman, 2003)

mance (Cameron et al., 2004) ● Virtuousness’ effects in downsizing organisations (Bright et al., 2006) ● Organisational virtue’s scale (Chun, 2005) ● Character and organisational virtue (Wright & Goodstein, 2007) ● Organisational virtuousness (Rego et al., 2010) ● Organisational virtue orientation (Payne et al., 2011) ● Group-level integrity (Palanski et al., 2011) ● Organisational environment virtuousness (Sadler-Smith, 2013) ● Authentic leadership and group-level virtuousness (Rego et al., 2013; 2015) ● Organisational virtue and stakeholders’ outcomes (Chun, 2017) ● Organisational virtuousness, work engagement (Hur et al., 2017) ● Virtuousness, common good (Arjoon et al., 2018) ● Organisational virtuousness’ concepts

MacIntyrean

● MacIntyrean virtue ethics, craftsmanship (Moore, 2005a) ● Financial sector professionals’ virtues (Graafland & Ven, 2011) ● Integrity and constancy (Robson, 2015) ● Religion-based decision-making (Chan & Ananthram, 2019)

(Meyer, 2018) ● Corporate’s character-virtue, culture-values (Moore, 2005b) ● Ethical leadership, learning (Marsh, 2013) ● Corporate character, corporate virtues (Moore, 2015) ● Accounting ethics, MacIntyrean ethics (West, 2018) ● Virtues in risk management (Asher & Wilcox, 2022)

The need for leaders, managers, and professionals to express virtues is often discussed in articles exploring integrity at the individual scope, which mostly adopt an Aristotelian, MacIntyrean, or Eclectic virtue ethics perspective. On the other hand, EOP predominantly explores integrity at the organisational scope, as demonstrated in Table 14.3. We found resonance of Solomon’s (1992) treatment of virtues in articles that discuss lists of virtues, such as Shanahan and Hyman (2003). However, the concept of integrity at the individual scope has received limited in-depth conceptual development, except for Robson (2015) and Akrivou and Scalzo (2020). Some studies address integrity at the team or group scope (Palanski et al., 2011; Rego et al., 2013, 2015), describing it as “the consistency of an acting entity’s words and actions” (Palanski et al., 2011: 204). These studies relate virtuousness to team behavioural integrity concepts (Palanski et al., 2011) and authentic leadership (Rego et al., 2013, 2015), with authentic leadership being a predictive factor of group virtuousness (Rego et al., 2013).

220  Research handbook on organisational integrity Integrity Conceptions In this section, we will discuss the conceptions of integrity presented in the articles that comprehensively engage with integrity, as outlined in the previous section. Regarding the individual scope, Akrivou and Scalzo (2020) present the Inter-Processual Self (IPS) paradigm, which seeks to overcome the reductionist view of the self, human agency, and action by associating practical wisdom with a more comprehensive perspective of moral psychology based on neo-Aristotelian virtue ethics. In this paradigm, integrity plays a prominent role as the basis for practical wisdom. According to Akrivou and Scalzo (2020: 8), “The IPS paradigm … acknowledges moral integrity as a basis for practical wisdom; it integrates cognitive, ethical, affective, and practical aspects and is a precondition for good action in business and management”. Furthermore, the IPS considers integrity an ongoing challenge in relation to how to be a good person and help others grow. The IPS also prioritises virtues that orient toward integrity or wholeness in one’s life, with continuity and unity in the agent’s personal identity being crucial. The IPS links past, present, and future action in relation to the agent’s ongoing moral search for “who I am” and how to become more fully and essentially human, including exposure to the self and the other (Akrivou & Scalzo, 2020). On the inter-relational level of integrity, the authors note that one’s agency is affected by the agency of others. “Acting in ways that bolster people’s agency vis-a-vis others increases or decreases relational integrity; yet excessive agency may also make others passive” (Akrivou & Scalzo, 2020: 6). Therefore, individuals should be able to exercise a measure of autonomy in living a good life while being subject to laws and other restrictions of liberty that benefit all members of the community or organisation (Hartman, 2020). Moving to the group-level scope, Palanski et al. (2011: 204) define integrity as “the integrity of the team as a separate, autonomous entity that is irreducible to the individual level of analysis”. They use a behavioural approach to integrity at the individual level and expand the concept to the team level, considering that virtues have isomorphic characteristics common to different levels of analysis. This methodological approach serves as a reference for Fuerst and Luetge’s (2021) conceptualisation of organisational integrity. Fuerst and Luetge (2021) transfer the concept of integrity from the individual and group level to the organisational scope, considering philosophical and positive social science contributions to the conception of virtues and integrity. They argue that organisational integrity is conceivable only if organisations can have agency in a non-metaphorical manner. They adopt the same methodological justification of Palanski et al. (2011) that virtues are fundamentally isomorphic and apply it to the internal decision structures of organisations. Fuerst and Luetge (2021) propose that organisational integrity is not the sum of the integrity of the organisation’s members but an intrinsic virtuousness (Bright et al., 2014) that includes self-evaluation and awareness of both its strengths and weaknesses. Finally, they suggest the following definition of organisational integrity: Organizational integrity is the integral ability of a company to practice self-fidelity in the sense that its activities are based upon an internally consistent framework of principles and reflects to which extent self-legislated norms and legal standards in force are implemented into organizational actions. A certain maturity is required regarding the company’s infrastructure, and its corporate internal decision structures. Organizational integrity includes the ability to self-evaluate and incorporates awareness of both its own organizational strengths and weaknesses, resulting in the ability to further

A virtue ethics perspective on organisational integrity  221 mature (in the sense of further development). Finally, organizational integrity is in need of desirable moral principles like legal compliance, honesty, and respect. (Fuerst & Luetge, 2021: 6)

Some scholars, such as Moore (2005b, 2015), West (2018), and Asher and Wilcox (2022), explore the role of the corporation as a moral agent from certain MacIntyrean assumptions. Moore (2005b) states that corporate character may play a critical role in determining the behaviour of the corporation and influencing the behaviour and character of individuals within the organisation. When an organisation or corporation shows a stable character over time, helps individuals to be consistent in their characters, living with integrity. Moore (2015) revises his definition of corporate character and suggests that corporations should have a virtuous purpose (telos) and an orientation towards excellence. Corporate integrity enables the pursuit of a good purpose across all activities or practices (the consistency component), and constancy enables the pursuit of a good purpose over time (the narrative component). The purpose of an organisation conforms to practices, narratives, and the tradition of the society to which it belongs. Together, these works point to some key assumptions, such as the inter-relational level of integrity and the relationship between individual and organisational integrity. These assumptions suggest that organisational integrity, from a virtue ethics perspective, involves the codependent and collaborative social dynamics that support life in a community. Organisational integrity is intrinsically linked to the notion of a flourishing community life and the role of institutions that support practices. Together with the notion of the common good, the role of organisational integrity in a broader virtue ethics worldview could enhance future theoretical and practical explorations of integrity. In summary, virtuous organisational integrity supports current management and practices by effectively handling past (commitments, narratives, traditions, reputation, culture) and future (purpose, goals, existence) aspects in a coherent, fair, and wise manner. Organisations face various factors that can enhance or diminish their integrity (Fuerst & Luetge, 2021). It is important to recognise that integrity goes beyond visible manifestations for the public and includes intangible and subjective elements within the organisation. Organisational integrity is influenced by individual integrity, which means organisations may need to take responsibility for their members’ actions, expanding their scope of responsibility. It is a lifelong journey towards the common good rather than a static measure of integrity at a given moment.

CONCLUSIONS Virtue ethics has been explored through various theoretical traditions, such as the eclectic perspective of Fuerst and Luetge (2021), the neo-Aristotelian approach of Akrivou and Scalzo (2020), and the MacIntyrean-based approaches of Moore (2015) and Robson (2015). These traditions have led to comprehensive discussions on integrity at the individual, group, and organisational levels (Akrivou & Scalzo, 2020; Fuerst & Luetge, 2021; Moore, 2005b; Moore, 2015; Palanski et al., 2011; Robson, 2015; Solomon, 1992, 2004). Work in the field has been devoted to gaining a deeper understanding of existing concepts such as organisational virtuousness (Meyer, 2018), integrity and constancy (Robson, 2015), and ethical leadership (Lemoine et al., 2019). Themes related to organisational integrity include leadership, decision-making, and the role of corporations. Managing these factors wisely can help an organisation maintain its identity

222  Research handbook on organisational integrity while pursuing its purpose. Future studies could explore how practical wisdom, through deliberation and counselling, can contribute to organisational integrity and highlight the complementarity of individual and organisational integrity. However, there are methodological limitations when transferring integrity from the individual to the organisational or group scope based on isomorphic attributes of virtues (Fuerst & Luetge, 2021; Palanski et al., 2011). For instance, voluntary actions of a free agent are necessary for virtuous behaviour, which an organisation lacks. Additionally, organisations are not entirely autonomous and rely on the moral agency of their members. Furthermore, measuring the perception of virtue through surveys may not fully capture the complex nature of virtue ethics. Our argument is that organisational integrity in virtue ethics requires the gradual development of the moral character of organisations, as well as the use of practical wisdom in management. By applying practical wisdom, managers and employees can acquire virtuous behaviour and act with integrity while pursuing the common good of society and their organisations. This literature review reveals few studies addressing integrity from virtue ethics. This is curious because integrity is such a valued aspect in leaders and organisations, but there are still few theoretical bases on its relationship with the common good, for human flourishing, and virtuous practices that are consolidated through habits. Organisational integrity from virtue ethics is extremely relevant, because the identity or purpose of the organisation are aspects achieved in the long term, not in a single action, and articulating individuals, groups, organisations, and communities. This includes acquiring coherence (“walking the talk”) and responsibility for commitments and purposes. In addition, the Aristotelian and MacIntyrean frameworks provide a basis for understanding integrity in its subjective and sociological dimensions. Although there may be conceptual debate regarding the notion of organisational integrity being based solely on individual integrity, there is room to broaden the scope of analysis to include larger spheres. It would be worth asking which dimensions of integrity are yet to be explored, such as the inter-relational (Akrivou & Scalzo, 2020) and the spiritual/transcendent element (Arjoon et al., 2018). Future studies could explore the role of integrity within a production chain, as well as integrity within specific industries such as cosmetics or automotive manufacturing. Furthermore, investigations could delve into the integrity of geographic regions, such as municipalities or countries, to gain a deeper understanding of the factors that contribute to a culture of integrity. From the organisation, one could further explore integrity in relation not only to organisational identity and purpose, but also by considering the organisation’s path, narrative, or history (long-term perspective). Furthermore, the mutual influences between different agents suggest aspects of organisational integrity that could be better understood. The concept of organisational integrity could draw on organisational theories such as the systems approach, institutional theory, or social network theory to understand the relationships between actors. This could contribute to a better understanding of the interactions between the organisation and its macro environment. The interrelationship between the different components of the virtue ethics framework and integrity could be better understood through a systems methodological approach to this model, focusing on understanding the process of reinforcement or learning of the virtue of integrity by different moral agents. Additionally, one could investigate how the approach to organisational integrity from the perspective of virtue ethics could contribute to studies and practices on compliance, and in what way a focus on the gradual development of the moral character of organisations could complement compliance practices and programmes.

A virtue ethics perspective on organisational integrity  223

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15. A contractual perspective on organisational integrity Ben Wempe and Johan Wempe

Integrity theories and social contract theories are two distinct groups of ethical theories that have been developed within the field of business ethics. While the general ethical theories upon which these applied theories are based continue to engage in a robust debate with each other (see, e.g., MacIntyre, 1984; Rawls, 1971/1999, 1993; Sandel, 1982; Taylor, 1989; Walzer, 1973, 1983), the discourse within the field of business ethics on this matter remains somewhat limited. Social contract theory, a political and ethical mode of argumentation that originated during the Enlightenment, was reintroduced in the 1970s and 1980s as a response to the prevailing utilitarian neo-liberal and libertarian ideologies focused on prosperity that emerged after World War II. A substantive part of the integrity paradigm consists in classical virtue ethics. This was already prevalent in classical antiquity and the Middle Ages, but rediscovered during the 1980s and 1990s under the label of communitarianism. This can be seen as a response to the neo-liberal and libertarian thinking as well as to the liberal social contract thinking of that time. Social contract philosophers were in those years engaged in intense debates with the neo-liberals and libertarians (Nozick, 1974) on the one hand and with communitarians at the other. An important debate between social contract thinking and communitarianism centred around the question about the priority of the right over the good. In this debate, the core of social contract thinking, that prioritises individual rights and individual freedom, is directly opposed to the communitarian approach, in which views on the good life and a well-functioning society are relevant and sometimes more important than respect for individual rights and freedom (Sandel, 2010: 248). In this chapter, we will explore the principles of social contract theory as applied to business ethics, examine the commonalities between the social contract theory and the integrity theory applied in business organisations, and discuss how they differ.1

THE DEVELOPMENT OF BUSINESS ETHICS Business ethics emerged in the 1980s and 1990s. All three schools of political and ethical philosophy current at the time—utilitarianism, liberal egalitarianism and virtue ethics/ communitarianism—were represented in the debates on business ethics. The focus was on the application of these theories. The primary debate centred around the implementation of moral principles in the context of business organisations: Is it meaningful to hold corporations morally accountable? Gradually, there was more attention given to the questions of what distinguishes the business domain from other sectors of society, what is the difference between 226

A contractual perspective on organisational integrity  227 ethics applied to individuals and collectives such as businesses and what norms ought to be applied. This led to the development of theories more attuned to the business context. The social contract argument (SCA) was an obvious theory to use as a starting point for an applied theory for business ethics. In the 1980s, it became necessary to justify the assessment of companies’ performance in moral terms. From a neo-liberal point of view, Milton Friedman opposed the notion of morally evaluating companies. SCxB therefore primarily challenged the adage of Friedman (1970), that businesses have no social responsibility at all. Any sound notion of corporate responsibility should be sought in making profits for the owners of companies. The concept of the ‘social contract’ between consumers and producers, between the company and its stakeholders or between society and the business sector, provided a basis for the social responsibility of companies. The idea of a multi-party contract fitted well with companies and markets. It was also suitable for application to collectives (Kaptein & Wempe, 2002). IxB is founded on a single virtue among the many acknowledged by virtue ethics, and has evolved into a comprehensive set of theories. As an approach originating mainly in the practice of business and public organisations, it now also received a solid theoretical foundation. IxB seeks to answer the question of how coordination and coherence can be achieved amidst a multitude of interests and perspectives, even in competitive conditions. The theory emphasises the qualities that a company should possess in striving towards wholeness without sacrificing diversity. The integrity theory is sometimes seen as (also) based on a Kantian-deontological perspective, especially because integrity is understood as ‘standing for something’ or being ‘principled,’ i.e., being driven by values or principles (DeGeorge, 1993; van Willigenburg, 2000; Calhoun, 1995; McFall, 1987). We consider the integrity approach as a virtue ethics that is valuable for persons as well as for organisations. Being value-driven or principled primarily focusses on the attitude of people or organisations and is therefore more a characteristic or quality that people or organisations should possess rather than a norm for behaviour. Integrity theory heavily relies on virtue ethics, which emphasises virtues as desirable intrinsic qualities of individuals and communities (Brown, 2005; Rendtorff, 2011), and on communitarianism, which values the historically grown and dynamic culture and structure of communities. The focus on communities, in particular, leads to the transition from virtues of people in general to virtues of people who function in organisations (Becker, 1998), making it obvious to translate this concept into the organisational context, resulting in the emergence of IxB (Badaracco, 1997; Brown, 2005). As the name already indicates, IxB centres on the concept of integrity. This concept has demonstrated to be valuable for understanding ethical behaviour within and among business organisations. It focusses on the dynamic between and within organisations due to role conflicts, tensions between the stakeholders and the conflict between the societal and the commercial goals of the corporation.

THE HISTORY OF THE SOCIAL CONTRACT ARGUMENT The social contract argument (SCA) boasts a long tradition. In a well-known survey of the history of political theory, the subject is even introduced with an essay on ‘the rise and extraordinary persistence of the theory of the social contract’ (McClelland, 1996: 171). A version

228  Research handbook on organisational integrity of SCA can already be found in Plato’s dialogue Republic, arguably the first text in political philosophy (Plato, 2007). In book II of that work (369b–375a), Socrates explains the origin of society as a result of individuals becoming specialised in certain fields. In this way potential inhabitants of a community aim to better meet certain basic needs and thus hope to better ensure their maintenance. For that purpose, specialised professions such as farming, building, weaving and shoemaking will emerge. If everyone focuses on their own specialism, this will result in increased efficiency. But it also creates interdependencies that did not exist before. The new collaboration also creates a distribution issue because you need to know to value the output of each profession. How many pairs of shoes will you exchange for a house? As we will see, SCA is extremely useful for conceptualising distribution issues such as these. But apart from being invoked as a device for settling problems of distribution, SCA was used as a fruitful model to theorise the legitimacy of political authority by specifying the conditions under which national states could operate legitimately. In this manner Johannes Althusius (1563–1638) used SCA in the seventeenth century to justify the revolt of the Republic of the United Netherlands against Phillip II of Spain. In the context of the great wars of religion fought in that same seventeenth century in England, Thomas Hobbes (1588–1679) and John Locke (1632–1704) used SCA to reason out the conditions under which a monarch can legitimately exercise his sovereignty. In Hobbes’ version of SCA (Hobbes, 1651), the Sovereign is in a very strong position. Hobbes argues that rational individuals will agree to a contract whereby they will give up various natural rights in exchange for a strong authority that guarantees political order. With Locke, the SCA works out much less favourably for the incumbent ruler. Locke’s political writing was therefore an excellent argument to justify the Glorious Revolution, which deposed James II by his son-in-law and daughter, William and Mary. In the eighteenth century, SCA was also invoked by Jean-Jacques Rousseau (1712–1778) and Immanuel Kant (1724–1804). Rousseau’s Du Contrat Social inspired the Jacobins in the great French Revolution of 1789. Kant employed the concept of a social contract as an ‘Idea of Reason,’ a regulatory idea necessary for the formation of an ordered society. After these impactful versions of the doctrine in the seventeenth and eighteenth centuries, SCA fell somewhat into disuse until it made a spectacular reappearance in the second half of the twentieth century in the work of American political thinker John Rawls (1921–2001), who used the SCA to reason the terms of a theory of social justice. In the relatively young history of business ethics, several authors have contributed to the development of a social contract theory for business (SCxB). In this respect, by far the most outstanding contribution was made by the American business ethicist Thomas Donaldson, who has developed no less than three variants of such a theory (1982, 1989, 1999). The first version (Donaldson, 1982) starts from a brief overview of three classic political social contract theories so as to develop an analogous elaboration for the field of business ethics. The 1982 SCxB is concluded between the contracting parties ‘business’ and ‘society’ whereby business is operationalised at the aggregate level as ‘the class of productive organizations,’ while society is operationalised at the level of consumers and workers considered as individual persons (1982: 42). Donaldson subsequently presents his argument by proposing a hypothetical contract between these entities, illustrated through a thought experiment that analogously to the state of nature in SCA explores a ‘state of individual production.’ He defines this as a world in which productive organisations do not exist (Ibid.: 44). According to Donaldson, in this negotiating

A contractual perspective on organisational integrity  229 situation it would be rational for the contracting parties involved to agree upon establishing the following set of rights. Firstly, productive organisations should be acknowledged as authorised agents with the capacity to make legally valid decisions, including the authority to utilise land and natural resources and employ workers. Secondly, the benefits of SCxB for society as consumers encompass the following: ● Enhanced efficiency achieved through maximising the advantages of specialisation, improving decision-making quality and optimising the utilisation of technology and resources. ● Greater stability in the production and distribution of manufactured goods. ● Enhanced accountability. For their part, employees have an interest in creating the institution of productive organisations because they can earn more income that way. Collaboration in the context of productive organisations also offers greater dispersion of personal responsibility, and the ability to better align livelihood resources with the needs of individual employees over a lifetime. These are all prima facie advantages that must be weighed against prima facie disadvantages that can be foreseen in the creation of the new class of productive organisations. Among the expected disadvantages for people as consumers, we should think of pollution and depletion of natural resources, reduction of personal liability and abuse of political power. Seen from the point of view of workers, he mentions worker alienation, lack of control over working conditions, and dehumanisation of workers (Ibid.: 51–52). All these different advantages and drawbacks must ultimately be weighed against each other in an overarching trade-off. In this way, the balance of expected prima facie advantages and disadvantages for people as workers must be weighed against the corresponding balance for people as consumers. As long as the final balance is positive, one can derive a moral foundation for corporations from it: ‘Corporations considered as productive organizations exist to enhance the welfare of society through the satisfaction of consumer and worker interests, which relies on exploiting corporations’ special advantages and minimizing disadvantages’ (Ibid.: 54). One of the more remarkable features of Donaldson’s first straightforward attempt to apply the SCA to the business domain is that in setting up his SCxB, he does not invoke Rawls. He discusses Rawls only in the context of a criticism of what he labels teleological arguments (Ibid.: 90–106) and not in the actual set up of SCxB (Ibid.: 42–57). Nor did he take into account the later revision that Rawls (1993) made in response to the communitarian criticism of his big project. The main reason for this revision in Rawls’ later position was a lack of stability in the original project—Rawls saw that the original version of his social contract was itself a comprehensive doctrine as it depends for its justification on an appeal to values and deeply held convictions and beliefs. This makes it impossible to come to a consensus as a basis for the social contract. Rawls therefore considered that what was needed for a stable conception of justice was a political doctrine, i.e., a social contract argument that could be agreed upon by the contracting parties without appealing to fundamental values, such as religious beliefs about omnipotence etc. To get to a stable conception of justice, Rawls saw that he had to relax his doctrine and to address all citizens under conditions of public reason. In other words, the social contract should be based only on arguments that are persuasive for all citizens and not just for adherents to particular comprehensive beliefs. In order to cope with this challenge, he intro-

230  Research handbook on organisational integrity duced the ideas of reasonable pluralism, overlapping consensus, and a political conception of justice. Donaldson’s second version of SCxB shifts the perspective from corporations working within a national economy and political system to multinational companies operating across borders. In this second version the human rights perspective was added as a criterion more explicitly than in his 1982 SCxB. Moreover, this version was inspired by the work of David Gauthier (1986) rather than Rawls, which means that it was based on more specifically Hobbesian assumptions about the motivations of the contractors in the state of individual production. Donaldson’s third version of SCxB is based on a collaboration with Tom Dunfee in their book on Integrative Social Contracts Theory (Donaldson & Dunfee, 1999). This framework seeks to integrate two opposing modes of reasoning: on the one hand, this is the inductive approach that generalises the community consent of existing social contracts into more general rules of corporate morals. On the other hand, that community consent is again tested against a set of hypernorms that deductively set universal limits on locally grown community norms. These hypernorms fall into three classes. Structural hypernorms support essential background institutions in society; procedural hypernorms facilitate consensus building in microsocial contracts; substantive hypernorms guide the formation of moral consensus through the formulation of fundamental concepts of the right and the good (Donaldson & Dunfee, 1999: 52). With the benefit of hindsight, we can conclude that of the three versions of SCxB developed by Donaldson, the 1982 version has been by far his purest application of the social contract model to the field of business ethics. As he progressed through the development of later versions, the SCA seemed to become more infused with other ideas.

ADJUSTING RAWLS’ DOMESTIC JUSTICE TO THE LOCAL JUSTICE OF BUSINESS ETHICS Rawls has made his ideas known to the world in a number of works, gradually elucidating and specifying the scope of his message. But the central message of his work was already expressed in A Theory of Justice, his magnum opus, originally published in 1971 and revised in 1999. To understand how Rawls’ work might inform a theory of business ethics, we need to consider a number of theoretical simplifications Rawls used in developing his theory, as well as a number of domain constraints he makes to keep his theory manageable. Rawls’ design can then be modified so as to serve as the basis for a theory of business ethics. We will consider in particular Rawls’ construct of a Basic Structure of Society; his stipulation of society as a closed, national system (the so-called ‘domestic case’); as well as the manner in which he deals with the problem of collective action. The Basic Structure of Society Rawls (1971/1999) proposes a holistic argument with regard to the organisation of society. He sets out to derive two principles by which it is possible to judge the justice of society as a whole. It is emphatically not his ambition to establish principles for individual institutions— he merely looks at the effect of the interplay of all major institutions in society as a whole. To

A contractual perspective on organisational integrity  231 operationalise this holistic perspective, he introduces a construct specially equipped for this task, which he calls the Basic Structure of Society (BSS). This is defined as ‘the way in which the main political and social institutions of society fit together into one system of social cooperation, and the way they assign basic rights and duties and regulate the division of advantages that arises from social cooperation over time’ (2001: 10). The types of institutions he thinks of making up the BSS include ‘[t]he political constitution with an independent judiciary, the legally recognised forms of property, and the structure of the economy (for example, as a system of competitive markets with private property in the means of production), as well as the family in some form’ (Ibid.). Rawls defends the simplification of focusing his theory on the concept of a BSS in two ways. On the one hand, he claims that ‘[t]he significance of this special case is obvious and needs no explanation.’ On the other hand, he points to the natural follow-up research his project will lead to: ‘once we have a sound theory for this case, the remaining problems of justice will prove more tractable in the light of it. With suitable modifications such a theory should provide the key for some of these other questions’ (1999: 7). There is an extensive discussion about which institutions are and which are not part of the BSS as envisaged by Rawls, but for our purposes this is less relevant than underlining the holistic nature of Rawls’ (1971/1999) project. It is essential that the two principles he argues are merely intended for the way in which society as a whole functions. It follows that if you wanted to apply Rawls’ framework to the domain of business ethics, some sort of translation would need to be made from Rawls’ holistic level to the context of individual institutions such as the Western system of enterprise production and the free market. A number of authors have attempted this translation, including Donaldson (1982) and Freeman and Evan (1990). Before looking at how precisely they attempted this transition, it is useful to note that, while Rawls’ version of the SCA is not directly applicable to individual institutions such as business, his thinking has obvious indirect implications for individual institutions. Rawls is most clear about this in the elaboration of his lecture notes as edited by his student assistant, Erin Kelly. In these notes Rawls points out that ‘firms and labor unions, churches, universities, and the family are bound by constraints arising from the principles of justice, but these constraints arise indirectly from just background institutions within which associations and groups exist, and by which the conduct of their members are restricted’ (2001: 10). He then elaborates this conclusion on the basis of a number of striking examples of the (indirect) effects of his argument regarding the BSS on individual institutions. For example, he points out that whereas religious institutions are free to excommunicate heretics, they may not then burn those persons—after all, that would be a direct violation of the first principle (equal basic liberties). Similarly, universities must not discriminate when recruiting staff and admitting students. Certain forms of selection would conflict with the principle of fair equal opportunities. Another example Rawls gives with respect to this latter principle is that whereas parents are always free to send their children to a school with a philosophy of life of their own choice, they are not allowed to keep their children at home and raise their kids themselves. This would violate the principle of equal (educational) opportunity (Gutmann, 1999: 128–139).

232  Research handbook on organisational integrity Society as a National, Closed System of Mutually Advantageous Cooperation A second inevitable adjustment to apply Rawls’ theoretical framework to issues of business and business ethics concerns the assumption that society is a closed system (2001: 55). That is to say, with Rawls you can enter a society only by being born into it, and leave society only by dying. As Rawls explains the scope of society in his project: ‘we view citizens as born into society: it is there that they will lead a complete life. They enter that social world only by birth, leave it only by death’ (2001: §16). The whole idea that people could become members through immigration, political asylum and/or naturalisation therefore falls outside the assumptions Rawls makes to keep his theory workable (1971/1999: 7). On the other hand, Rawls’ conception of society is much broader than the activities within organisations and firms. For Rawls characterises society as ‘a cooperative venture for mutual advantage.’ While entities such as the corporation and the world of business, the natural subject of a theory of business ethics, can also be characterised as ‘cooperative ventures for mutual advantage,’ Rawls’ characterisation is much broader than just the Western system of enterprise production. Within society, people contribute to the creation of mutual benefit in a much more general way than in the case of entrepreneurial production alone. For example, the fact that more people live together in cities than in the countryside makes it feasible to provide products and services in a big city that would not be profitable in rural areas. The crucial question Rawls asks in choosing the BSS as the subject of his theory is: To whom does the mutual benefit thus created belong? This naturally leads to the question of what would be a fair distribution of the added value created in this way. Thus, if one chooses Rawls’ project as the basis for a theory of business ethics, one must somehow translate Rawls’ level of social justice into the question of justice of the system of entrepreneurial production of goods and services. The Problem of Collective Action (PCA) In addition to the theoretical simplifications and domain restrictions discussed above, which Rawls uses to keep his theory manageable and at the same time sufficiently general, there are also types of concerns that play no role for him precisely because he limits himself to the special case of the BSS of a national economy. He refers to his own version of the theory of justice designed for national, closed societies as the ‘domestic case,’ as distinguished from international justice on the one hand and local justice, the level of individual institutions, on the other. Moving from Rawls’ (1971/1999) level of the domestic case to the question of ‘local justice’ consisting of the problem of the fairness of the Western system of enterprise production and free markets, we are faced with what is referred to in standard economics literature as the problem of ‘external effects.’ This effect is often also discussed under the heading of ‘the problem of collective action’ (PCA). This topic can be explained as follows. Most actual agreements between specific interested parties, or ‘stakeholders,’ such as entrepreneurs, employees, suppliers and customers, as evidenced by actual transactions between these parties (i.e., when a customer actually buys a product or service, or a supplier actually provides the necessary raw materials or semi-finished products) there remains an external dimension to be identified, i.e., parties or stakeholders who are not part of the transaction, but who are nevertheless effectively

A contractual perspective on organisational integrity  233 disadvantaged by such an agreement or form of mutually advantageous cooperation. The classic economic solution to this PCA is to incorporate all effects of the activity considered so that the economic system will take all effects into account. Within Rawls’ domestic case, the PCA is actually resolved by the domain focus of a national economy. But it is clear that this restriction does not apply to the kinds of problems defining the domain of business ethics. We firmly believe that the development of SCxB can be achieved by building on Rawls. By translating Rawls’ principles into the necessary requirements for the corporate world, it is imperative to consider the three themes we have outlined in this paragraph.

COMMONALITIES AND DIFFERENCES BETWEEN IXB AND SCXB IxB and SCxB represent two fundamentally different approaches within the field of business ethics. Table 15.1 compares these two approaches along several dimensions. In this paragraph, we will delve deeper into this comparison. Table 15.1

Comparison of the two frameworks for analysing business ethical issues

Aspect

Social Contract Theory for Business (SCxB)

Integrity Theory for Business (IxB)

Object of

● Institutional framework for action

● Patterns of cooperation between people

● Consent by parties to the contract

● Wholeness:

assessment Normative basis

● Purposeful organisation ● Constituent elements stand for something Goal

● Actions that align with the fundamental principles that underpin the BSS

● Balance between constituent elements ● Excellence, and flourishing of participating individuals, organisations and society

● Fair cooperation, i.e., fair distribution of the ben- ● Teleological: intrinsic efits and burdens of ‘cooperative ventures’ (such as the corporation) ● CSR: inclusions of external effects, i.e., interests outside the contracting parties Method

● Rational decisions

● Emergent processes

Context

● Theorising abstracted from context

● Context taken into account

SCxB and IxB are both ethical theories. SCxB applies the general framework of social contract theory to the business context, allowing for the development of a host of new applied theories. IxB is an evolving theory that stems from the notion of ‘integrity’ as one of the numerous virtues exhibited by individuals operating within the realm of businesses. In the early applications of virtue ethics in the business context, ‘integrity’ was just one of many concepts used to indicate important qualities of people within businesses (Solomon, 1992). In Solomon’s book from 1999, the concept of ‘integrity’ has grown into a key attribute of individuals shaping the organisation (Solomon, 1999). The concept has primarily been developed in practice since the 1990s. The developments surrounding governance and compliance and the attention that was given to non-compliance with rules by employees provided an impulse for the use of the concept of ‘integrity’ and the development of the ‘Integrity approach’ (Sharp Paine, 1994). Integrity theory developed in this way into a theory of corporate integrity.

234  Research handbook on organisational integrity Object of Moral Assessment Both groups of theories establish standards for collectives, particularly moral standards for organisations. This was a key topic during the early stages of business ethics debates. In the beginning, SCxB theories assumed that corporations are nothing more than a collection of contracts between different parties, and the corporation was viewed as a nexus of contracts (Jensen & Meckling, 1976). Business ethicists built on the ideas of Rawls, Gauthier and economists such as Jensen and Meckling, and used the concept of the social contract for the institutional principles formulated by individuals that underpin a just business sector. Later business ethicists perceived business as a sector of society that is defined by the underlying principles of the enterprise that is defined by a social contract between stakeholders, or between a company and society. Some business ethicists perceive the corporation as a social entity in itself created by the social contract between stakeholders (Kaptein & Wempe, 2002). In all these cases the corporation was recognised as a cooperation between stakeholders and the norms that were formulated based upon the social contract to address the corporation and the business sector. IxB theories adopt a direct approach by examining the patterns of collaboration among individuals both within and surrounding corporations. These cooperation patterns serve as the focal point for normative evaluation of IxB. This assessment encompasses various aspects, including the organisational structure and culture of business entities, as well as the individuals who influence them, such as leaders, supervisors, human resource managers and accountants. Normative Basis Both approaches provide a normative basis for businesses and the individuals shaping them. However, the normative basis for the two groups of theories differs. SCxB upholds the liberal principle of consent, which asserts that individuals’ agreement is necessary for the binding force of the principles based upon the social contract. This consent ensures that the principles are fair, legitimate and accepted by all parties involved in the social contract, providing a solid foundation for a just society. IxB does not solely concern itself with individuals as rational actors, but also acknowledges the impact of various instincts, social factors, upbringing, and historical context on their behaviour. IxB recognises that individuals are embedded within social structures and processes that influence their decisions and actions. Therefore, it considers the interplay between individuals and their social environments, including various institutions, organisations and cultural norms that shape and are shaped by their behaviour. This broader perspective enables a deeper understanding of the complexities of human behaviour and the social world. The normative dimension of IxB resides in the notions of wholeness and balance. Within the multitude of influences and behaviours, emerges a sense of unity and growth for individuals, organisations, and society as a whole. This wholeness and balance are not achieved solely through rational choices, but rather through the interplay of various forces, urging employees, companies and society to contribute to human flourishing and collective well-being. Goal Social contract theory presupposes that individuals willingly consent to fundamental principles that underlie the organisation of society and provide a basis for evaluating behaviour in

A contractual perspective on organisational integrity  235 moral terms. Rawls perceives society as a ‘cooperative venture for mutual advantage,’ whose members acknowledge ‘certain rules of conduct as binding,’ rules that ‘specify a system of cooperation designed to advance the good of those taking part in it’ (Rawls, 1971/1999: 4). Corporations play an important role in that cooperative venture. Basically, SCxB is neutral with regard to the purpose of the corporation as long as it is in line with the principles that individuals would choose to realise mutual benefit. SCxB recognises that in a society, everyone must contribute to collective provisions that make a well-organised society possible. We pay taxes to the government to provide for safety, roads, good education and health care. Businesses contribute to this by producing products and goods that society needs, providing income for employees, as well as attracting a diverse workforce so that everyone can contribute to society and no one is excluded from it, and offer equal opportunity for women to pursue their career. SCxB formulates the rules that we follow to create the conditions under which businesses can and may function and the way in which businesses contribute to a fair distribution of benefits and burdens to bring about this well-organised society. In a free society, one must assume that there are different opinions about what that well-organised society looks like. The concept of a social contract aims to provide a basis for agreement. SCxB assumes the agreement of all involved parties. As it is assumed that everyone agrees to the social contract underlying the principles on which business is founded, business is authorised to use the means available to society to produce goods and services that society needs. In this regard, the term ‘licence to operate’ is often used with regard to businesses. IxB does not reason in terms of the rights of corporations to use resources that society possesses (‘licence to operate’) and obligations to contribute to society, nor does it reason in terms of rights and obligations towards stakeholders, like SCxB does. Instead, IxB has an organic vision of businesses, recognising that management, employees, shareholders, consumers and other involved parties all have a role to play in making the organisation successful and fulfilling its societal role. IxB acknowledges that communities have diverse values and interests, which can result in conflicting expectations and abuse of power. IxB recognises the importance of alignment and preventing corruption, but does not assume that alignment can be achieved through rational decision-making alone. Instead, IxB emphasises the need to seek wholeness and balance in daily practice, allowing for tensions to exist, which can lead to healthy debates and create resilient organisations (Badaracco, 1997). IxB primarily aims to bridge tensions and mobilise all forces to achieve excellence at an individual, organisational, and societal level. This pursuit of excellence revolves around realising happiness by becoming a better person, organisation or community. The purpose of IxB is intrinsic; it is not tied to an external objective but rather embedded within the activity itself. Method SCxB aim to identify principles that govern the behaviour of individuals within and around organisations, as well as the behaviour of organisations themselves. Specifically, the endorsement of these principles requires the active involvement of as many parties as possible, who consciously and willingly choose to adhere to them. SCxB often takes the form of voluntary codes or covenants that are supported by those who are engaged. IxB is built upon emergent processes that serve an often implicit purpose and can be influenced by the understanding of that purpose by the involved people. A key concept utilised by

236  Research handbook on organisational integrity MacIntyre (1984) in this context is the notion of practice. It encompasses a complex set of actions aimed at achieving an intrinsic goal, and implicitly involves the expectation of striving for continuous improvement. Context There is a significant distinction between SCxB and IxB regarding the role of context in the development of norms. In SCxB, the context is considered irrelevant or, at most, indirectly influential. For that reason, Rawls’ social contract is formulated ‘behind a veil of ignorance.’ This device ensures impartiality and serves as the foundation for the justice of the principles derived from it. On the other hand, IxB recognises the importance of context. Norms and values within a community have evolved and have a meaning within that specific context. What matters is the community’s appreciation and understanding of the facts and circumstances surrounding these norms and values.

PRACTICAL APPLICATIONS OF THE RIVAL APPROACHES SCxB and IxB present distinct viewpoints on the functioning of businesses. SCxB approach focuses mainly on the institutional foundation of the corporation and formulates norms for the behaviour of companies and people acting on behalf of the companies towards society (what is the company’s licence to operate) and towards its stakeholders (which rights must be respected). Specifically, SCxB is often translated into codes and covenants. This ranges over a broad spectrum of codes, from the UN Sustainable Development Goals (which mandate governments, companies and civil society organisations) and the Global Compact to codes with regard to privacy protection, the use of Artificial Intelligence, company codes and professional codes. Debates are taking place in countless places about what responsible conduct means in this organisation or within this profession. The codes formulate general principles that are (implicitly) agreed upon that guide the actions of companies and people within those companies. The UN Global Compact is a case in point. The former Secretary General of the UN, Kofi Annan, introduced the UN Global Compact during a speech at the World Economic Forum as a compact between the United Nations and the private sector. Several authors have interpreted this agreement as a social contract (Bäumlisberger, 2019). The UN Global Compact is a voluntary initiative. The UN Global Compact encourages companies to align their strategies and operations with the ten universally accepted principles in the areas of human rights, labour, environment, and anti-corruption. These principles are derived from four generally accepted declarations and codes: the Universal Declaration of Human Rights, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, the Rio Declaration on Environment and Development, and the United Nations Convention Against Corruption. Examples of these principles are: Principle 4: ‘Businesses should uphold the elimination of all forms of forced and compulsory labour’; Principle 6: ‘Businesses should uphold the elimination of discrimination in respect of employment and occupation’; Principle 7: ‘Businesses should support a precautionary approach to environmental challenges’; and

A contractual perspective on organisational integrity  237 finally, Principle 10: ‘Businesses should work against corruption in all its forms, including extortion and bribery.’ The UN Global Compact is seen as a positive step towards promoting corporate responsibility. This compact is particularly compelling because it provides a clear set of principles for companies to follow. With just ten concise guidelines, it offers a straightforward framework for ethical decision-making. However, there is also fundamental criticism (Hess, 2008; Williams, 2004). This concerns the voluntary nature of the Global Compact. There is no enforcement mechanism to ensure that companies comply with these principles. The idea of consent as basis for the social contract leads to this voluntary character and at the same time leads to undermining its credibility. Another point of criticism concerns the generic nature of the Compact. Due to the very broad description of the principles, it is possible to limit the contract to ten principles. However, this has the consequence of not providing sufficient guidance on how companies should implement them. What is meant by ‘Businesses should uphold the elimination of all forms of forced and compulsory labour’? Does that imply a responsibility for the labour conditions of the business partners or customers of the company? It makes it difficult for companies to know what is exactly expected of them. This also holds for the stakeholders of these companies. It is not clear for them what they can expect from the companies that subscribe to these principles (Williams, 2004). Another issue concerns the representative character of the Compact. The Global Compact is primarily driven by large multinational corporations. There are hardly any smaller companies, civil society groups, or other stakeholders in the initiative. That would not be practically possible. However, on what grounds will these parties feel bound by the agreements laid out in this social contract? These ten principles focus primarily on the behaviour of companies and do not address broader issues related to the economic and political systems in which these companies operate. The principles do not address crucial societal issues such as income distribution, gender and race inequality, discrimination, and corporate influence on government policies (Donaldson, 2003). IxB pays particular attention to the (often implicit and informal) regulative mechanisms in organisations, which stem from culture, leadership, tradition, and mechanisms such as bonuses and remuneration systems. It aims to help individuals to become aware of this implicit and informal steering of and within the corporation and correct them if necessary. IxB focuses on inspiring goals, leadership and power positions, pride in successes, ingrained customs that sometimes hinder progress, roles and role conflicts within companies, and conflicting expectations towards the company. Does the corporation contribute to the well-being of the stakeholders, and does the organisation contribute to a thriving society? Tensions often arise in these informal processes. When are these tensions healthy and contribute to the proper functioning of the organisation, and when do they become destructive, preventing the organisation from fulfilling its role in creating a well-functioning entity and contributing to a flourishing society? Corruption as a Moral Issue for Business Organisations An issue that both SCxB and IxB pay attention to concerns corruption. The definition of corruption, according to the World Bank, is the abuse of public office for personal gain (World Bank, 2020). This encompasses various forms of wrongdoing, including bribery, embezzlement, fraud, extortion, nepotism, and other illicit practices. Corruption has a significant detrimental impact on societies, as it undermines economic development, erodes public trust in government institutions and diverts resources away from public goods and services. It is

238  Research handbook on organisational integrity a major obstacle to achieving sustainable and inclusive growth, and poses a serious challenge to the promotion of good governance and the rule of law. When SCxB is translated as a statement in a corporate code, it often involves strong statements: corruption in any form is prohibited and fought against. In virtually all national laws, corruption is criminalised. The United Nations Convention against Corruption (UNCAC) is the primary international legal instrument formulated to combat corruption. It was adopted by the United Nations General Assembly in October 2003 and came into force in December 2005. Currently, 187 countries have endorsed the UNCAC. The UNCAC also forms the basis for the Global Compact voluntarily endorsed by companies. There are plenty of institutional frameworks. The social contract underlying these frameworks is clear. It is actually surprising that, in addition to enforceable legal frameworks, various corporate codes and international codes are still needed to condemn and prevent corruption. This is where IxB approach comes in. Corruption is a persistent problem within companies, government organisations, and civil society organisations such as FIFA. IxB draws attention to the temptation faced by those who represent companies, civil society organisations, or public organisations. IxB also accounts for conflicting interests and the culture within an organisation or sector of society. Employees feel pressure to use methods that conflict with codes and legal frameworks in order to generate revenue. IxB will point out the different contexts. When does a tip become a form of bribery? Can a business relationship still be combined with a friendly relationship? The whole economy depends significantly on building relationships and networks. In addition to straightforward corruption, there are many unclear situations. This means that the phenomenon of corruption is portrayed as too simplistic by the codes based upon a SCxB approach. Michael Sandel formulates an interesting and even more fundamental vision of the phenomenon of corruption. He discusses numerous examples that illustrate how the logic of the market economy leads to corruption. Corruption is much more than ‘the abuse of public office for personal gain.’ It is about undermining the essence of the value at stake: Markets in refugee quotas, procreation permits, and the right to shoot a walrus, however efficient in economic terms, are questionable policy to the extent that they erode the attitudes and norms that should govern the treatment of refugees, children, and endangered species. The problem I am emphasizing here is not that such markets are unfair to those who can’t afford the goods being sold (although this may well be true), but that selling such things can be corrupting. Standard economic reasoning assumes that commodifying a good—putting it up for sale—does not alter its character; market exchanges increase economic efficiency without changing the goods themselves. But this assumption is open to doubt. As markets reach into spheres of life traditionally governed by nonmarket norms, the notion that markets never touch or taint the goods they exchange becomes increasingly implausible. (Sandel, 2013: 132)

The way in which the issue of corruption is analysed is interesting. It shows that corruption is a problem that involves multiple layers. Clear principles are needed that are established in codes and an institutional framework. Here, SCxB proves its worth. However, principles can conflict and lead to dilemmas. The tension between these principles then becomes a reason for debate and leads to adjustments of the codes and legal frameworks. There is often also a culture where people feel pressure to use inappropriate methods to serve the interests of the company. Organisations should also be aware of incentives, such as bonuses, that promote corruption. But also, the market economy drives people to see everything as a product on a market. Here, IxB complements the norms based on SCxB.

A contractual perspective on organisational integrity  239 The corruption issue involves multiple layers. Both theoretical approaches address a different dimension of the problem. It is, as it were, two sides of the same coin.

CONCLUSION SCxB has developed as an application of the established model of social contract theory to the corporate context. IxB originated mainly from the need of practitioners to ensure compliance with legislation and codes, as well as in the field of governance to fulfil the board’s responsibility for the entire organisation. Since the 1990s, IxB has evolved into a variant of virtue ethics. SCxB is a powerful theoretical framework that can be used to establish standards for corporate impact, particularly in situations where overarching principles are needed to guide behaviour and set boundaries. When used alongside stakeholder theory, it can effectively address tensions between conflicting stakeholder interests and establish principles to balance those interests. By providing direction for individuals and organisations to follow, SCxB can help ensure that actions are aligned with the more fundamental standards and objectives. In our perspective, the development of SCxB should predominantly occur by translating Rawls’ principles into the requirements that the system of corporate production ought to fulfil. Within this chapter, we have recognised several themes that this translation from Rawls to the corporate context should consider. IxB proves particularly valuable in situations where there are frequent implicit conflicts among values. It can effectively uncover and address these conflicts, seeking solutions for the competing values involved and contribute to a more balanced consideration of the qualities that employees, the organisation, and society need to master to contribute to a meaningful organisation at all levels. While SCxB provides overarching principles to guide decision-making, IxB can help contextualise the decision by considering consequences and weighing different interests against one another. The criteria for assessment are based on the desirability of achieving a goal that aligns with the decision made regarding the dilemma. One of the main strengths of IxB is its ability to navigate conflicts between values that can lead to practical challenges. In summary, both perspectives have their strengths and complement each other well. IxB focuses on the motives behind actions and supports decision-making, while SCxB provides a framework for guiding behaviour and establishing principles. Together, they provide a more comprehensive approach to corporate impact and decision-making, helping organisations achieve their purpose while considering the interests of all stakeholders involved. Suggestions for Future Research We started this chapter by expressing our surprise that in the present state of business ethics, there is hardly any debate between IxB and SCxB, while the debate between each of the three general ethical theories is quite fierce. For the further development of IxB and SCxB as theories of business ethics, it is desirable to explore the strengths of each approach, where they complement and reinforce each other, but also where they contradict each other. The peaceful coexistence between SCxB and IxB seems attractive. In particular, where IxB is supportive of compliance with rules and the search for unity and alignment in the organisa-

240  Research handbook on organisational integrity tion, this pragmatic stance is positively appreciated. However, there are also areas where the two approaches conflict. Breaking through the glass ceiling for women and minorities will not be achieved through a code or legislating quotas. Such rules might even backfire. Doubts may arise about the qualities of women or minorities appointed on the basis of such a policy. IxB seems to be more appropriate. Respecting people’s rights, for example safe working conditions or a ban on child labour, should not be relativised by referring to local customs or by pointing out that these children are relatively better off. Here, a social contract approach is more obvious. Fundamental rights of children cannot be balanced against economic considerations or tradition. Where the two approaches conflict with each other, it is desirable to examine how the application of both approaches should take place. The discussion that social contract theorists had with communitarians revolves largely around the question of the ‘priority of the right over the good’ versus the ‘priority of the good over the right.’ It would seem that this debate corresponds to the distinction between the compliance and the integrity approach (Sharp Paine, 1994). It would be interesting, therefore, to investigate to what extent this distinction can be seen as a translation of the aforementioned discussion between communitarians and the social contract approach. Another highly relevant question for further research is why it is that the major tension between general ethical theories, virtue ethics and communitarianism on the one hand and social contract theory on the other, more or less disappears when applied in the business context. Is this because this translation to the business context entails preconditions that remove the sharp edges of the debate? Or is it because the translation to the business context automatically forces us to think in terms of acting in partnerships or acting by collectives? Future research should delve into the dynamics of the coexistence between integrity-based theories for business ethics (IxB) and social contract theories for business ethics (SCxB), exploring their strengths, complementarity, contradictions, and areas of conflict. Investigation into how the application of both approaches should occur when they clash, would contribute to a more comprehensive understanding of their interplay. This discourse taking place within the domain of business ethics has the potential to transcend its boundaries, igniting fresh perspectives and forging new insights in the longstanding debate between communitarians and social contract philosophers.

NOTE 1. In this chapter, we will discuss the application of social contract theories for business (SCxB) and integrity theories for business (IxB). We realise that much of it can be applied one-to-one in other types of organisations.

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242  Research handbook on organisational integrity Williams, O. F. (2004). The UN Global Compact: The challenge and the promise. Business Ethics Quarterly, 14(4), 755–774. World Bank (2020). Anticorruption Fact Sheet. www​.worldbank​.org/​en/​news/​factsheet/​2020/​02/​19/​ anticorruption​-fact​-sheet.

16. A regulatory perspective on organisational integrity Martin de Bree and Annemiek Stoopendaal

In this chapter we explore organisational integrity from a public regulator’s perspective. Obviously, regulators observe regulated organisations through the specific lens of legal requirements. In the traditional command-and-control regulatory approach, regulators check whether regulated organisations are in compliance with legal requirements. Their first interest may not be in how compliance or non-compliance is produced. The most important problem is probably that the regulator may only observe problems when they have already been manifested in actual incidents. This implies that a regulator is often too late to prevent harm to public interests. As a response to these disadvantages, regulators are searching for more proactive strategies that will allow them to intervene before harm has been done. Consequently, regulators are experimenting with shifting the focus of their attention to the inside of the black box, so within the regulated organisation. Logically, regulators end up looking at organisational aspects like culture, governance, quality and management systems, ethics programmes, etc. Organisational integrity is clearly a relevant aspect as it is positively related to the reliability of the organisation. Also, organisational integrity is a key element for trust and thus essential to build effective collaborative interpersonal relationships (Werbel & Paulo, 2009). Integrity is also a determining factor in overall approval or disapproval of an organisation, whether it be a for profit (Somera & Holt, 2015) or a non-for-profit organisation (Feldheim & Wang, 2004). Public regulators intend to prevent organisations from behaving in a way that is harmful for society and to correct or punish illegal conduct with sanctions. As organisational integrity is an important predictor for the actual or future behaviour of a regulated organisation, it should be considered relevant for public regulators. When a regulator would differentiate between regulated organisations with high and poor integrity, she may be able to customise her strategy and be more effective in preventing incidents and other manifestations of harmful conduct. Furthermore, the organisational integrity of the regulatory body itself may not be such an important issue if the regulator uses a traditional command-and-control based approach. In that case, there may be little discussion about whether a certain output is compliant or non-compliant with rules and if there is, there is always the judge to go to. However, in regulatory approaches that are based on a cooperative model rather than a deterrence-based model, the relationship between regulator and regulatee becomes more important. Then the integrity of the regulator turns into a factor that may help shape trustful relationships that are needed to make such an approach successful. First of all, because of the intrinsic value of organisational integrity, but also as a functional characteristic in more advanced strategies. As integrity supports trust in a relationship, integrity can be a productive element of regulator–regulatee relationships (De Bree & Ruessink, 2015). This chapter starts by defining regulation and organisational integrity. Second, as academic research about the direct relationship between regulation and organisational integrity is close 243

244  Research handbook on organisational integrity to non-existent, we explore the relevant aspects of organisational integrity in order to facilitate a connection with academic work on regulation. Third, we discuss relevant academic work on a regulator’s perspective of organisational integrity, again looking at the different aspects of organisational integrity. Fourth, we discuss the importance of integrity of the regulators’ own organisation in the light of specific regulatory strategies. We end this chapter with conclusions and suggestions for future research.

REGULATION There are several different definitions for the concept of regulation. Selznick (1985) proposes to understand regulation as a sustained and focused control exercised by a public agency over activities that are valued by the community. Baldwin et al. (1998) recognise that regulation is a specific form of governance often including some administrative agency for monitoring and enforcing compliance with authoritative rules. We follow the definition of Selznick with the additional remark that regulation is usually operationalised into three activities: ● the collection of information about whether an action or case meets the requirements set, ● then forming an opinion about it and ● possibly intervening as a result. However, this view of regulation as a formal top-down oriented process has been challenged by new insights. Black (2001) describes a shift form a hierarchical state-society relationship to a heterarchical relationship, which implies a different role for the state: one of mediator, facilitator, enabler. Quoting Murphy (1997) Black (p. 146) states: “The question is not whether law can survive without hierarchy but rather how law can learn to understand itself in a world of horizontally rather than hierarchically configured relations”. Black defines regulation as a process involving a focused and sustained attempt to alter the behaviour of others according to defined standards or purposes with the intention of producing a broadly defined outcome or outcomes. Also, Murphy perceives regulation as an ever expanding concept not only in terms of what it is, but also who or what the regulator is, what form it takes, what actors or area of life it affects and what instruments and techniques are used. Following the de-apexing of the state she describes, and unlike the notions of Selznick (1985) and Baldwin et al. (1998), Black assumes that regulation can be seen as a concept not exclusively attached to government. Being aware of the assumed broad concept of regulation as proposed by Black (2001), we choose to focus this chapter on public regulation and the perspective of the public regulator including also parties that are involved in public prosecution of criminal conduct. Having said that, Black convincingly makes the point that non-public regulation is existent. As we may safely assume that non-public regulation may regularly seek to influence elements of organisational integrity, we consider non-public regulation as an obvious part of the public regulator’s scope. The traditional framing of regulation as a top-down process of making rules and enforcing compliance with these rules has been criticised as societies become more complex and dynamic. Consequently, regulators are put in a position to cope with rules that increasingly do not fit on specific situations. They experience a substantial and growing drifting apart of what is regulated and what is harmful (Kasdorp, 2022; Sparrow, 2020). In other words, regulators are facing a serious challenge as they face situations of legal but harmful behaviour and, the

A regulatory perspective on organisational integrity  245 other way around, unharmful but illegal conduct. Not surprisingly, more and more regulators tend to focus on the underlying goal of the rules, often referred to as the spirit of the law. On a more general level, Ruhl (1997) proposes that law-making systems should be transformed to complex adaptive systems if they are to keep up with the complex and dynamic outside world they aim to regulate. Regulators are in the midst of the heat of this gap between the relative static world of laws and regulations and the dynamic complexity of day-to-day society. Therefore, they are attempting to find effective strategies to cope. One of these strategies is to create more freedom of space by not holding on too strictly to detailed rules and focus on the situational risks for the public interests those rules aim to serve and how these are controlled by regulated organisations. An example of such a strategy is system-based regulation, where the regulator focuses on the effectiveness of the management system of regulated organisations to assure the public interest in question (De Bree & Stoopendaal, 2020; Gilad, 2011; Wengle, 2016). In the case of system-based regulation, also organisational integrity comes into play. The reason for this is that the effectiveness of management systems in assuring public interests depends heavily on the adequate operationalisation of public goals into the management system and the adequate implementation of the management system in day-to-day practice.

ORGANISATIONAL INTEGRITY FROM A REGULATORY PERSPECTIVE There are several definitions of organisational integrity. The main question appears to be whether integrity is seen as consistency of an acting entity’s words and actions (Palanski & Yammarino, 2007), which can be perceived as one of many virtues, or an overarching concept that includes this consistency in combination with other, moral, virtues. Kaptein (2005) describes integrity as the strict adherence to a moral code leading to transparent honesty and complete harmony in what one thinks, says and does. Acting with integrity mainly has to do with consistency. Bauman (2013) argues that there are three reasons why a definition of integrity should include a moral component. First, the general use supports that integrity has a moral element. Second, books and scholarly publications consistently demonstrate an ethical meaning of integrity. Third, moral integrity is used in important research about ethical commitments. For the regulator, it is quite clear that organisational integrity should include a moral component as from a regulatory point of view, ethics and public interests are undoubtedly interlinked. The regulator does expect, and does so more and more, that the leadership of an organisation installs and designs specific elements to assure integrity rather than await whether its members have integrity. On top of external regulations, a regulated organisation should have internal rules and procedures as tools to guide members of the organisation about the decisions to make sure individual conduct is aligned with ethical codes. Sanctions also may serve to underline the importance to adhere to rules, procedures and moral codes. Internal audits may be organised to check whether rules and procedures are complied with. Furthermore, culture training programmes may be organised to train individuals in behaving in line with ethical codes, rules and procedures. Organisational integrity can be organised to a certain extent, by developing and implementing specific elements of organisation. Or, as Paine (1994, p. 106) puts it: “Ethics has everything to do with management”. Consequently and borrowing from Kaptein (2005),

246  Research handbook on organisational integrity in this chapter we use the following definition for organisational integrity from a regulatory perspective: The organised commitment to public interests and preventing harmful conduct demonstrated by harmony in what is thought, said and done by that organisation. The definition of integrity we have chosen to use allows us to explore the different aspects of organisation integrity: ● adherence to a moral code (leading to) and ● harmony in what is thought, said and done by that organisation. In the next sections, we dive deeper into these two elements. This will help us to explain their importance for public regulators.

ADHERENCE TO MORAL CODES Generally speaking, a code of business ethics is a document that expresses what a corporation considers as its moral norms and values (Kaptein & Wempe, 2002). For the regulator, moral codes are important in the sense that they express the formal intentions of an organisation with regard to ethical issues, such as how they address topics of public interest. Kaptein and Wempe propose that five behavioural principles should be addressed in a moral code: openness, empathy, fairness, solidarity and reliability. Codes of ethics are widely used by companies and should be comprehensive, authentic, morally justifiable and manageable (Kaptein, 2008). A code must not necessarily be put on paper to be effective. Tacit moral values and norms which are consistently present in the hearts and minds of the members of the organisation expressed in the real practices an organisation develops may be just as effective and can also be considered a code of ethics. Codes of ethics are meant to regulate the behaviour of people in such a way that they comply. Kaptein distinguishes four levels of morality regarding codes: law and regulations, other codes for business, legitimate expectations of stakeholders and ethical progressive standards. Furthermore, an excellent code is also morally progressive, meaning that the company is an example for other companies in setting new principles and standards. As moral codes give some information to the regulator about the formal stand of an organisation regarding issues of public interests, having a code put on paper is not sufficient to regulate behaviour. Several authors (Collier & Esteban, 2007; Kaptein, 2008) argue that the code’s effectiveness depends not only on the content of the code, but also on its embeddedness in the organisation. In other words, the code should be implemented in the organisation to be effective. Following the definition, the actual result of the implementation of the code should be harmony in what is thought, said and done by that organisation and transparent honesty. Collier and Esteban (2007) following Weaver et al. (1999) argue that codes of ethics may be decoupled from daily organisational activities under the influence of institutional pressures in which case employees may know little about the ethics policy of their employer. Clearly, the notion that a moral code on paper is necessary but not sufficient is relevant for regulators. This means that regulators should not be satisfied without collecting information about the level of implementation of the code.

A regulatory perspective on organisational integrity  247

HARMONY IN THINKING, SAYING AND DOING Harmony in thinking, saying and doing is a subject poorly found in academic research. As such, the term “harmony in thinking, saying and doing” produces zero hits when used in Google Scholar. However, institutional theory provides notions that are relevant for understanding harmony in thinking, saying and doing within organisations. This information sends a clear message to regulators. As we have seen, having a management system or an ethics code on paper is clearly not enough to be certain that public interests are effectively assured. We explain what relevant research on this topic has revealed. Meyer and Rowan (1977) argue that organisations tend to formally adopt a policy that is consistent with its institutional environment, but fail or decide not to align their actual behaviour with this policy. This gap between formal and actual behaviour is referred to as decoupling. This phenomenon has received much attention in academic research since. One of the main reasons for decoupling is that organisations reflect the desires of their institutional environment in their formal policy, hoping to gain advantage of this in terms of legitimacy, without the burden of having to implement the policy in practice. Therefore, decoupling is a phenomenon that regulators should take seriously notice of. Where Meyer and Rowan (1977) describe the gap between policy and practice, Bromley and Powell (2012) introduce an extended model, proposing potential gaps between formal policy, daily practice and intended outcome. Building on this work, De Bree and Stoopendaal (2020) derive a four-level model of decoupling from empirical work based on a system-based regulation strategy. De Bree and Stoopendaal found that when applying a system-based regulation approach, the Dutch Healthcare Inspectorate could recognise different forms of decoupling within healthcare organisations, namely decoupling between goals and management system, between management system and daily practice and between daily practice and real outcome. Other authors demonstrate decoupling between ethics programme and individual-level perceptions and behaviour (MacClean et al., 2015) and decoupling of environmental management systems from actual practice (Sandholtz, 2012). An interesting aspect of decoupling is that it may be deliberate and undeliberate. Deliberate decoupling occurs when the management is aware that adopting the formal policy symbolically brings about advantages while not having the attention to actually implement it. An advantage of deliberate decoupling may be more legitimacy from their stakeholders or the opportunity to mitigate conflicts (George et al., 2006). However, not all organisational decoupling is intentional in such a way that the leadership consciously decides to decouple to gain legitimacy from the environment including regulators. Undeliberate decoupling may occur if the management has the intention to implement the policy, but experiences unexpected difficulties in implementation like resistance at lower levels of the organisation (Crilly et al., 2012). As the possibility of decoupling should be of great interest to the regulator, the reverse process is maybe just as interesting. If goals, management system, daily practice and real outcome recouple, this actually means that the harmony in thinking, doing and saying benefits from this. For the regulator this implies that the organisation is more reliable in terms of walking their talk. Therefore, we explain the process of recoupling. As an organisation decouples daily activities from formal policies like a code of ethics, employees may become cynical and forces may develop recoupling (Tilcsik, 2010). Tilcsik argues that recoupling occurs as a consequence of a number of events. First, the decoupled organisation becomes aware of the

248  Research handbook on organisational integrity need for specialised skills and knowledge for the symbolic implementation of the policy. This leads to hiring new staff with these skills and knowledge and thus the entry of new organisational members into the organisation. As a result, the practices of implementing the policy professionalise and new members of the organisation attempt to spread their vision. As the new members gain political resources by, for example alliances and achieving key positions, the new vision triumphs and the rationale for decoupling resolves. This process eventually results in recoupling of the formal decoupled policy.

RESUMING Decoupling, conceptualised as the gap between the management system and actual practice, therefore is a serious threat to the harmony in thinking, saying and doing. More specifically, deliberate decoupling of an ethical code is a form of disharmony between thinking and saying and between saying and doing. Furthermore, deliberate decoupling conflicts with transparent honesty as the real intention of the management differs from what they promise to do as expressed in the formal policy. Undeliberate decoupling of an ethical code is a form of disharmony between saying and doing and could be conflicting with honest transparency when the management is not openly communicating about the setbacks and their consequences. The reverse process of recoupling provides notions for strategies to restore harmony in thinking, saying and doing by making use of the forces involved in the recoupling process.

A REGULATOR PERSPECTIVE ON ORGANISATIONAL INTEGRITY We present two lines of reasoning that lead regulators to show interest in organisational integrity: ● The first line of reasoning originates from criminal law practices to engage in organisational root causes of criminal breaches. ● The second line of reasoning arises from attempts of regulators to follow a proactive policy rather than reacting on incidents and countering challenges related to the complex and dynamic reality of today’s societies. Criminal Breaches Committed by Organisations From a regulatory perspective, the recognition of an organisation as a potential perpetrator of criminal act – as opposed to an individual human being – is different per country. In some countries, such as The Netherlands, an organisation can be criminally prosecuted as perpetrator of criminal conduct. In other countries, such as the United States, organisations can be held responsible vicariously by prosecution of their agents (Weissman & Weissman, 2007). The notion that an organisation can be held liable as an organisation implies that regulators should try to understand how the conduct of an organisation is shaped. More specifically, the reason for this is that the culpability is determined by – amongst other elements – what the organisation has done to prevent the violation from occurring. This line of thinking has

A regulatory perspective on organisational integrity  249 led in the United States to a provision in the Federal Sentencing Guidelines that a penalty is reduced if a company has an effective compliance programme. A compliance programme is a management system specifically designed and implemented to prevent misconduct, detect deviations from the organisation’s policy and align the activities of the organisation with regulation (Soltes, 2018). Interestingly, this reasoning leads the regulator into the inside world of organisations, their codes of conduct, their management systems, their governance and their organisational culture. Another, more proactive application of the concept of a compliance programme is to make it a part of a penalty or a settlement between the public prosecutor and the organisation as a consequence of a breach. The United States has been a frontrunner with compliance programmes as a part of prosecution policies (Braam et al., 2022). Here, the idea is that forcing an organisation to establish a compliance programme will help prevent criminal breaches from reoccurring. To assure that the organisation implements an effective compliance programme, external gatekeepers may be imposed to assist organisations to set up a compliance programme that is fit for dealing with the challenging and demanding regulatory environment they are facing (Root, 2016).1 The Netherlands has followed this development by creating the possibility to demand a compliance programme as part of a settlement and has recently also included the option of installing an external monitor (Braam et al., 2022). So, in criminal law practice, efforts of organisation to prevent criminal conduct may be recognised, both as a factor that may reduce the penalty and as a means to prevent criminal conduct from happening again. The latter development, however logical it may seem, appears to be going somewhat beyond the core goal of criminal prosecution, which is commonly perceived as the punishment of misconduct. With a measure to implement an effective compliance programme, the prosecutor stretches the goal towards prevention of criminal conduct. Proactive Regulatory Strategies A second development within the field of regulation worth noticing is that regulators in various fields attempt to design policies based on leading indicators for misconduct. Furthermore, regulators are more and more faced with general regulations that do not fully cover potential harmful behaviour (Kasdorp, 2022). The question we attempt to answer in this section is how academic research on public regulation addresses this opportunity of engaging in the integrity of regulated organisations. We first discuss the general idea of shifting part of the rulemaking to the regulated community, also indicated as self-regulation. Then we focus on system-based regulation as a concept that is clearly related to organisational integrity. Several scholars in the field of regulation refer to aspects of organisational integrity. McGrath and Walker (2022), for example, posit that ethical behaviour in banking may be supported when meta-regulation is designed to stimulate the development of professional identity and using the professional group as a moral anchor. Bardach and Kagan (1982) use the term management-based regulation as a form of meta-regulation. Management-based regulation does not specify the technologies to achieve desirable behaviour, nor does it prescribe specific results in terms of social goals. A management-based approach requires firms to maintain their own planning and internal rulemaking aimed toward the achievement of certain public goals. Coglianese and Lazer (2003) posit managers and employers are more likely to view their own organisation’s rules as reasonable when they are allowed to make their own decisions. As a result of this the degree of compliance may be higher than in the case of

250  Research handbook on organisational integrity government-imposed rules. This may be a valid reason to give firms the flexibility to create their own privately induced regulatory approaches, enabling them to experiment and arrive at more innovative, and better solutions, as long as these rules are functional to achieving the public goals defined by government. This can be perceived as partial self-regulation where the government sets the overall framework (the “what” in terms of output or outcome) and the regulated organisations are left the liberty to choose the detailed rules they internally see as effective (the “how” in terms of throughput). In practical terms, if companies are willing and able to design rules for their own situation that serve safe labour conditions, the public regulator should seriously consider to let them do so. First, because the support for own rules is bigger than for externally imposed rules. Second, because professional companies may be better positioned in terms of knowledge about the situational risks than the external public regulator. Third, not all harmful behaviour is regulated and not all regulated behaviour is potentially harmful (Kasdorp, 2022; Sparrow, 2020). This notion opens the door for regulators to an interesting alternative for sticking to the rules, namely to focus on situational risks that may threaten public interests and try to influence potentially harmful behaviour. Kasdorp demonstrates that regulators can and actually do attempt to prevent harmful but legal regulatee conduct. Both Kasdorp and Sparrow argue that in individual cases (a) there is harmful behaviour that is not covered by formal external rules and (b) there are rules that are not relevant in terms of the public interest. Therefore, Sparrow advocates that public regulators should focus on harmful behaviour whether or not this behaviour is legal. Although the relevance of self-regulation by regulated organisations has been noticed by several authors (Coglianese & Lazer, 2003; Coglianese & Mendelson 2010; Gunningham & Sinclair 2009; Short & Toffel, 2010) academic attention for the dynamics within regulated organisations from the perspective of public regulators is poor. Some authors (Gilad, 2011; Wengle, 2016) have studied the role of the management system as a vehicle to operationalise self-regulation by regulated companies. De Bree and Stoopendaal (2020) have linked regulation theory and institutional theory in a study focusing on the ability of public regulators to identify decoupling and influence the process of recoupling within regulated healthcare organisations by applying system-based regulation. System-based regulation is a form of regulatory supervision that takes the management system of the regulated organisation as a focal point in an attempt to (a) better understand the root causes of potential harmful behaviour within the regulated organisation and (b) influence these organisational root causes for the better, leading to improved assurance of public interests. The underlying assumption of system-based regulation is that by focusing on the design and implementation of the management system, which can be perceived as the operating system of the organisation, the regulated organisation can be stimulated to assure a more desirable public outcome. Paine (1994) emphasises the managerial responsibility for ethical organisational behaviour. Paine stresses the importance to incorporated integrity in day-to-day operations of an organisation. With two examples from the car and food industry the author illustrates how important the own quality management system of the organisation is, holding the system accountable. Ethical conduct goes beyond legal conduct. According to Paine, organisational integrity is

A regulatory perspective on organisational integrity  251 based on self-governance engaging managers in the process. Also, deterrence and punishment is not deemed sufficient, referring to the work of Tyler (2006) on compliance: obeying the law is strongly influenced by its legitimacy and moral correctness. There are several reasons why public regulators may take on the management system of the regulated organisation as a focal point (De Bree & Stoopendaal, 2020): ● A management system is the operating system of an organisation; ● A management system is the intermediate stage between the organisations’ goals and its actual behaviour; ● Management systems typically include a requirement for self-evaluation; ● A management system is the blue print for organisational behaviour and as such a suitable point to engage in double-loop learning (Argyris, 1976).

Source: De Bree and Stoopendaal (2020).

Figure 16.1

Regulation may stimulate recoupling

De Bree and Stoopendaal (2020) found that a regulator can actually identify forms of decoupling which are related to management systems, namely decoupling between goals and management system, between management system and daily practice and between daily practice and actual outcome. Furthermore, these authors found that by giving feedback about the

252  Research handbook on organisational integrity identified forms of decoupling, the process of recoupling was supported. More specifically, by confronting the regulated organisation with decoupling between goals and system, recoupling was observed to improve the operationalisation of goals into practical procedures and instructions. Furthermore, an analogue stimulus for recoupling was observed between management system and practice by confronting the organisation with examples of poor implementation of procedures. Figure 16.1 shows how system-based regulation may support forces aimed at recoupling.

THE REFLECTIVE ROLE OF REGULATORS Not only can regulators focus on the organisational integrity of regulated organisations, they may also point the attention to the integrity of the regulatory agency itself. The integrity of public officials is said to be a key determinant of public trust in government and a central concept in good governance (Eccleston, 2011). Many countries have put in place integrity systems or ethical frameworks to support and enhance the integrity of public officials. These ethical frameworks include regulatory measures such as codes of conduct, anti-corruption agencies or risk assessment strategies. Such frameworks are implemented alongside existing institutions such as audit bodies, Ombudsmen and Attorney Generals. All of these together constitute an integrity system. However, we currently know very little about the effectiveness of these systems in achieving high integrity, let alone whether public trust in government is increased. Baldwin and Black (2008) make the point that really responsive regulators have to be responsive not only to the compliance performance of the regulated organisations and the agency’s own operating and cognitive frameworks. They should also be responsive to the broader institutional environment of the regulatory regime, to the various logics of regulatory tools and strategies, to the regime’s own performance and finally to changes in each of these elements. Referring to the work of Tyler (2006) we see that compliance is strongly influenced by its legitimacy and moral correctness. This implies that the regulator as an organisation not only has to be reflective, but morally correct too. Reflective regulation is characterised by learning, by applying a continuous process of self-observation and self-critique in order to generate options for improvement (Rutz, 2017). Six and Lawton (2013) argue that the integrity of the regulator is key to trust in the regulatory system by regulatees and by the public in general. A system of strong values-based ethics policies, practices and leadership will strengthen integrity of an organisation, even as ethical codes and dialogues about ethical dilemmas do. Six and Lawton argue that the internal integrity system of the regulator should be strong enough that correctional interventions from external bodies are not necessary. Like corporate managers of regulated organisations, the regulators are expected to “walk their talk”, meaning that they should ensure consistency between organisational values and actions. There is a logical symmetry in this statement; a regulator who is holding regulated organisations responsible for maintaining organisational integrity cannot afford to demonstrate poor organisational integrity itself. When a regulatory body fosters critical reflections from both inspectors and regulatees, this will open the organisation for discourse and enables a consistent development of values (Rasche & Esser, 2007). As governance and regulation are intertwined, regulation shapes the governance of the regulatees and is simultaneously

A regulatory perspective on organisational integrity  253 influenced by changes in the meaning of governance (Stoopendaal & Van de Bovenkamp, 2015). Therefore it is important to emphasise the mutual development of the concept of integrity between regulatees and the public regulator. In establishing trust in the relational process between regulator, regulatees and public, reciprocity plays an important role. The behaviour of one party influences that of the other. The sociologist Simmel already described in 1900 how exchange and interaction form the basic mechanism on which all trusting social relationships are based (Witteveen, 2009). Reciprocity creates a continuous, iterative process by which eventually stable, reliable institutions are created. This can contribute to social trust. This is especially true in more modern regulation strategies like system-based regulation. In this approach the relationship between regulators and regulatees becomes less formal and more cooperative and informal. Obviously, this approach benefits from a trustful regulator– regulatee relationship where both parties can be open about their internal challenges and dilemmas in a safe space that the two seek to maintain (Perezts & Picard, 2014). If regulators want to meaningfully interfere with the integrity of regulated companies, as is often the case in management- and system-based regulatory strategies, then it is necessary to also reflect on their own organisational integrity. Only a regulator that is trustworthy has the legitimacy to ask the regulatees to be trustworthy. Where trust relies heavily on integrity, the relationship between regulator and regulatee becomes more generative if there is more mutual trust. Without (reflection on their own) integrity, the regulator may well become its own limitation (De Bree & Ruessink, 2015).

CONCLUSIONS AND SUGGESTIONS FOR FUTURE RESEARCH Academic work about regulators directly engaging in the integrity of regulated organisation is close to non-existent, although practitioners are experimenting with various aspects relevant for organisational integrity like culture, governance and management systems. We have demonstrated two important lines of reasoning that point regulators toward clearing up the black box of regulated organisations and attempt to understand its dynamics in relation to organisational integrity. First, in some countries criminal law practice recognises organisational integrity expressed in effective compliance programmes as a reason to lower the penalty and a possible measure to prevent criminal conduct from reoccurring. Second, regulators in different domains recognise organisational integrity as a focal point central to more proactive and preventive regulatory strategies. Regulators may identify decoupling within regulated organisations and stimulate recoupling of formerly decoupled goals from management systems and management systems from daily practices. A last point of eminent importance concerns the integrity of the regulatory agency itself. If a regulator wants to credibly hold regulated organisations responsible for maintaining integrity, it is essential to demonstrate the integrity of her own organisation. Ignoring this notion may well mean that the regulatory body becomes its own limitation. This study clearly reveals a gap in academic research regarding the direct engagement of public regulators with organisational integrity. This is surprising as organisational integrity can be considered a valuable conception for (a) understanding how and predicting whether organisations actually live up to their requirements and (b) developing regulatory strategies that are targeted at improving organisational integrity in order to serve societally desirable behaviour of regulated organisations, maybe even beyond compliance. So clearly, future

254  Research handbook on organisational integrity research may be aimed at closing this gap by studying how public regulators may engage in organisational integrity, both within their own organisation, as well as in the organisation of regulated parties. Mostly, regulatory requirements for organisational integrity are absent. As a consequence, future research may well further explore the dynamics of regulator–regulatee interactions regarding organisational integrity in a setting that is relatively new for regulators, namely a space that is relevant from a public interest perspective, although not formally regulated. A promising approach may be to include the conduct of the regulator in this research, as shaping a productive regulator–regulatee relationship depends on the behaviour of the regulator as well.

NOTE 1. U.S. Department of Justice Criminal Division Evaluation of Corporate Compliance Programs (updated June 2020).

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17. An institutional perspective on organisational integrity Timo Fiorito and Michel Ehrenhard

Organisational integrity is commonly understood as organisational actions that are in accordance with embraced moral or socially accepted values. Empirical studies suggest that an adherence to core values has a positive effect on employee commitment (Ostroff et al., 2005), the relationship with external constituents (Voss et al., 2000), and long-term firm profitability (Collins & Porras, 1996). In contrast, integrity failures that constitute a glaring disregard for accepted ethical, regulatory, and normative principles damage reputations, harm employee morale, increase regulatory costs, and evoke investor divestment (Bundy et al., 2021; Connelly et al., 2016; Paruchuri et al., 2021), as exemplified by Wells Fargo’s cross-selling practices, the Volkswagen emission scandal, and the BP Deepwater Horizon oil spill. While modern organisations tend to portray themselves as internally consistent and integrated wholes (Bromley & Sharkey, 2017; King et al., 2010), scholars have highlighted how the increasingly pluralistic institutional environment has led many organisations to have multiple, and sometimes conflicting, goals, interests, values, and identities (Greenwood et al., 2011; Kraatz & Block, 2008). Consequently, the inner life of many of these organisations has become characterised by a great many internal complexities and inconsistencies (Ashforth & Reingen, 2014; Battilana & Dorado, 2010; Smith & Besharov, 2019), “sometimes involving conflict, sometimes simple decoupling and hypocrisy” (Bromley & Meyer, 2015: 23). These internal tensions, if maintained unchecked, may lead to value subversion or mission drift (Grimes et al., 2019), may disrupt organisational institutions (Kraatz, 2009), and can thus make an enduring commitment to organisational integrity difficult to sustain (Besharov & Khurana, 2015; Gallagher & Goodstein, 2002). Despite significant scholarly attention to individual integrity in relation to employee and leadership behaviour (see Palanski & Yammarino, 2007; Simons et al., 2015), the concept of organisational integrity has largely been ignored in the organisational and management literature (Dacin et al., 2002; Goodstein, 2015; Selznick, 2000). Notably, the literature is not clear what integrity entails when organisations are confronted with heterogeneous institutional demands and, consequently, have selves that comprise multiple distinct goals, interests, values, and identities. As scholars tend to view organisational values as unitary and collectively shared, we lack a conceptual understanding of how the increasingly complex environment may manifest itself in internal incoherence, which in turn can undermine a sustained commitment to organisational integrity. This research gap is troubling, considering that organisations as unique social actors are increasingly becoming the subject of moral scrutiny. To better grasp the profound complexity of modern organisations, we suggest that research should explore how competing institutional pressures may impact a sustained commitment to organisational integrity. Accordingly, we pose the following research question: How is the integrity of organisations affected when they operate under institutional pluralism? We develop a conceptual model that allows us to better understand how field-level forces interact 257

258  Research handbook on organisational integrity with intra-organisational dynamics in either strengthening or weakening organisational integrity. To do this, we move beyond the “view of organizations as unitary and tightly integrated entities making univocal decisions” (Pache & Santos, 2010: 456) and recognise the complexity of intra-organisational arrangements and social structures. Such an approach is based on the notion that organisations are deeply affected by their environments. This chapter offers two theoretical insights. First, we offer renewed attention to the notion of organisational integrity. We believe that a theoretical endeavour to better understand this concept and its challenges is needed because organisational integrity as a “unified, cross disciplinary research subject is only beginning to come of age” (Breakey et al., 2015: 37). By integrating the recently reinvigorated organisational scholarship on values (Gehman et al., 2013; Kraatz et al., 2020) with that of identity (Haslam et al., 2017; Whetten & Mackey, 2002) in our conceptualisation of integrity, we acknowledge the potential dangers of normative fragmentation within organisations. By conceptualising integrity at the organisational level, we attempt to answer the recent calls by organisational scholars who underscore the need for “understanding, explicating and researching the enduring, noun-like qualities of the organization” (King et al., 2010: 290). Second, while institutional pluralism has become a vibrant research area (Kraatz & Block, 2017; Radoynovska et al., 2020; Yu, 2013), institutional plurality has seldom been explicitly discussed in research related to organisational morality and values (Heugens & Scherer, 2010). Therefore, we contribute to institutional theory by theorising about how the increasingly pluralistic societal landscape may challenge a sustained commitment to organisational integrity.

INTEGRITY AND THE ORGANISATIONAL ACTOR In the following, we put forward the notion of “organisational actorhood” (Bromley & Sharkey, 2017; King et al., 2010) and tease out some of the central tenets of organisational integrity. Organisational scholars portray the modern institutional landscape as one in which organisations are socially constructed as actors in their own right, denoting bounded autonomy, decision-making capacity and sovereignty (Meyer & Bromley 2013; Scott, 2014). That is, organisations are increasingly treated as “human-like entities authorized to engage in social intercourse as a collective and possessing rights, obligations and responsibilities as if the collective were a single individual” (Whetten & Mackey, 2002: 395). Perhaps the most elaborative interpretation of this social actor perspective of organisations is that proposed by King, Felin and Whetten (2010). According to these scholars, the social actor perspective incorporates two central assumptions. First, the external attribution of action assumption delineates how the properties that grant organisations actorhood – such as sovereignty, the capability for autonomous actions, and ascribed responsibility – are attributed to them by their principal constituents. We treat the organisations we interact with as capable of deliberate and goal-orientated actions, while also holding them accountable for their behaviours. In other words, organisations are social actors because “society, not only legally but also practically and linguistically, grants them that status” (King et al., 2010: 292). Second, the internal attribution of intentionality assumption presumes that organisations have goals and intentions that are quasi-independent of the values, beliefs, and desires of their members and constituents. Organisations are not mere social aggregates of the members that comprise them, but possess unique properties, including distinct histories, cultures and decision-making

An institutional perspective on organisational integrity  259 structures, that guide members’ behaviours and thus convey collective responsibility and agency (Steele & King, 2011). Notably, both assumptions emphasise the centrality of identity in the treatment of organisations as social actors. Scholars have come to understand organisational identity as those self-defining characteristics that describe what is central, enduring, and distinctive about the organisation (Albert & Whetten, 1985; Haslam et al., 2017). The social actor perspective of organisational identity is connected with the notion of organisational actorhood and broadly asserts that “organizational identity is a set of external legitimizing claims and behavioral commitments, which are path dependent and binding, and therefore provide organizations with central, enduring, and distinctive characteristics” (Haslam et al., 2017: 324). The identity of an organisational actor is essentially a collection of identity claims that explicitly articulate who the organisation is, what it represents and how it will behave (Haslam et al., 2017; Whetten & Mackey, 2002) providing meaning for collective sensemaking, prioritisation and interpretation among members and stakeholders, and thus binding the organisation to a particular course of action. Importantly, the two assumptions underlying the notion of organisational actorhood reflect the view of organisations as agentic as well as constrained by environmental opportunities, pressures and prescriptions. That is, the organisation is both “real, semi-autonomous, and independent of individual actors” who constitute it, and “legally and institutionally endowed with agency, rights and responsibilities” (Haslam et al., 2017: 325; Steele & King 2011). Such internal and external attribution also recognises that the identity of organisations is an institutionalised accomplishment. Because the identities that constitute the organisational self comprise a blend of an organisation’s unique beliefs, values and traits, as well as its distinct connection with and obligations to the society in which it is embedded, they are profoundly “value-based” (Kraatz & Block, 2017: 548; Selznick, 1992). Consequently, the identity claims of organisations provide moral agency, purpose and justification for action (Kraatz et al., 2020; Steele & King, 2011) as well as a reference point for judgement and evaluation by key constituents (Love & Kraatz, 2009; Mishina et al., 2012). Thus, organisations are considered to be not only social, but indeed also moral actors. Defining Organisational Integrity Having described the underlying assumptions for the treatment of organisations as both social and moral actors, in the following we present some of the commonly used definitions of organisational integrity. Selznick defined organisational integrity as “fidelity to self-defining principles” (1992: 322). Similarly to the notion of organisational actorhood, Selznick saw organisations as moral entities capable of purposive actions and asserted that integrity arises from their consistent commitment to moral values and purpose. Organisational integrity, in this view, presumes at least “a core of morally justifiable commitments” and is associated with moral coherence, both between actions and self-defining values and in terms of its connection to the external environment (Selznick, 1992: 322). The central features Selznick attributed to integrity are reflected in the various conceptualisations provided in organisation and management literature, including (1) wholeness and integration; (2) behavioural consistency and authenticity; and (3) morality. Organisational integrity as wholeness and integration. Applied to organisations, integrity as “wholeness” relates to “a unity that makes a differentiated constellation of parts held

260  Research handbook on organisational integrity together as one” (Srivastra & Cooperrider, 1988: 5). To the extent that an organisation has integrity, it is a complete, rather than fragmented, whole in and of itself (Archer, 2017; Maak, 2008; Waddock et al., 2002). The maintenance of organisational integrity, in this sense, is expressed in the efforts localised in organisational policies and structures that lead to wholeness and integration of the various values, norms, and ideals that motivate action, so that no part of the organisational self has an absolute primacy over the others (Bakker, 2007; Besharov & Khurana, 2015; Pratt & Kraatz, 2009). Such view is consistent with the Corporate Integrity Theory developed by Kaptein and Wempe (2002); according to these authors integrity denotes that the organisation is predominately unfragmented and remains whole as members in their behaviour are loyal to the multivalency of values that are constitutive of the identity of their organisation. Organisational integrity as behavioural consistency and authenticity. Others have extended the writings of Simons (2002) and Simons et al. (2015) on behavioural integrity and have applied their notion of behavioural consistency to the analysis of organisations. Such a perspective is consistent with the view of authenticity on the organisational level (Cording et al., 2014; Ibarra & Barbulescu, 2010). These studies consistently advance the idea that an organisation that displays authenticity is one that is willing to take action based on the values it espouses (Paine, 1994). In this view, organisations are perceived as acting with integrity when their articulated values and commitments are followed through in organisational actions and decision-making (Colquitt & Rodell, 2011; Eberl et al., 2015). For example, Cording et al. (2014: 38) defined organisational authenticity as “consistency between a firm’s espoused values and realized practices” and showed that a lack thereof reduces an organisation’s trustworthiness and can consequently leads to lower productivity. Likewise, in their study of trust repair following organisational-level integrity violations, Eberl et al. (2015: 1206) argue that “integrity is attributed if a party is consistent with its past actions and if these actions comply with preceding promises”. Organisational integrity as morality. Scholars have emphasised that integrity requires the organisation to engage in value-attuned responsiveness towards the external environment (Selznick, 1992; Swanson, 1999). Such responsiveness is morally bounded and constrained through taking into account community and institutional values that are grounded in the organisation’s implicit contract with society and the roles, duties and responsibilities the particular society confers on the organisation (Gallagher & Goodstein, 2002; Heugens et al., 2008). As such, organisational integrity demands moral legitimacy (Goodstein, 2015; Selznick, 1992; Suchman, 1995). This moral responsiveness and integration of the self with the external environment precludes morally illegitimate values and mission as a base for organisational integrity. Only if the values of an organisation are morally or socially acceptable will integrity be attributed. Thus, this integrated organisational self encompasses the coherence in “the sense of mission, its various stakeholder obligations and interests and its sense of social responsibility and social values” (Solomon, 2004: 1035). Organisational Integrity and Values Organisational integrity assumes that consistent lines of action are reasonably aligned with accepted moral or socially prevalent values. This understanding of organisational integrity fits well with the growing number of studies that examine values within and surrounding organisations (Besharov, 2014; Gehman et al., 2013; Kraatz et al., 2020). Scholars have commonly

An institutional perspective on organisational integrity  261 referred to values as “conceptions of the good – ideals about what is worth having, doing, and being” (Kraatz & Block, 2017: 20). By virtue of their normative weight, values play an important role in the context of organising in that they constitute, in part, the identities of organisations, provide direction, meaning, and purpose for members, and function as reference points for social evaluation. Within the context of organisations, values can take various forms. Organisational values may refer to the values explicitly and formally espoused by the leadership (Bourne et al., 2019; Kabanoff et al., 1995), attributed to the organisation or that it aspires for (Bourne & Jenkins, 2013), shared among organisational members (Parsons, 1956; Schwartz, 1999), or reflected in strategic decision-making (Gehman et al., 2013; Gruys et al., 2008). In this section, we discuss the three forms of organisational values that we consider central to our conceptualisation of organisational integrity. Espoused organisational values. Organisations increasingly make normative commitments and claims regarding their beliefs, intentions and responsibilities (Bourne et al., 2019; Kraatz & Block, 2017; Meyer & Bromley, 2013). Espoused values can be understood as the values determined and sanctioned by top management (Bansal, 2003), often communicated verbally or written down in mission statements (Blair-Loy et al., 2011) and formal corporate documents, such as codes of conduct and corporate ethics statements (Bartkus & Glassman, 2007). Consequently, the espoused values embodied in such claims are what the organisation, as a distinct social and moral actor, professes to stand for. Internally, espoused values are intended to guide individual and organisational actions, to help employees make sense of and justify everyday interactions and behaviour, and to ensure that alternative choices are on the basis of the organisation’s value system. Externally, because “organizations enhance their legitimacy by espousing values that are in fact congruent with their cultural milieu” (Kabanoff & Daly, 2000: 286), espoused values play an important role in delineating the intentions, goals and purpose of the organisation, communicating its identity, and thus for impression management, fostering reputation, legitimacy and image (Ashforth & Gibbs, 1990). While scholars have questioned whether espoused values are actually shared by members (Bourne & Jenkins, 2013), these values make salient the organisation’s embraced ethical commitments, obligations and responsibilities. Because of their explicit nature, espoused values are more costly to ignore, irreversible and are thus more likely to be perceived by audiences as characterising the organisation’s true self (King et al., 2010; Steele & King, 2011). Despite much cynicism concerning mission statements, the articulation of values has become commonplace in organisations (Bourne & Jenkins, 2013; Gehman et al., 2013; Kraatz et al., 2020). By espousing their values and principles, organisations create implicit contracts with key constituents (Cording et al., 2014; Heugens et al., 2008), and such claims thus become normative standards against which their subsequent actions are evaluated (Love & Kraatz, 2009; Mishina et al., 2012). Embedded organisational values. The challenge for any organisation attempting to stay true to their values is to find meaningful ways to embed their principles into the “driving systems” of the organisation (Gruys et al., 2008; Paine, 1994). Organisational values are embedded when they are “expressed in the operational structures and systems of organisations, or when they are shared to the extent that that members are able to anticipate other members’ actions, behaviors and expectations” (Bourne & Jenkins, 2013: 502). Once values have been embedded, they tend to guide, motivate and steer organisational agents to act in accordance with such commitments and to restrain actions that might violate them (Goodstein, 2015;

262  Research handbook on organisational integrity King, 2015; Selznick, 2000). With regard to our conceptualisation of organisational integrity, we distinguish between those values that are embedded in organisational design and those in organisational culture. First, values are formally embedded when they are reflected in substantive organisational systems and structures more typically associated with organisational design, such as reward and incentive systems; practices of recruitment, promotion, and removal; and decision-making processes and control mechanisms (Schein, 1985). Scholars suggest that the values embedded in these formal organisational structures, such as socialisation and hiring policies (Battilana & Dorado, 2010) and governance mechanisms (Ebrahim et al., 2014) can determine who is admitted to and dismissed from the organisation, control the behaviour of members through rules, rewards and sanctions, and, consequently, shape the organisation’s behaviour towards their external environment. As organisational actors hold sovereignty and intentionality, the values embodied in organisational structures and systems are important drivers and predictors of organisational actions (Amis et al., 2002; Hinings et al., 1996; Perkmann & Spicer, 2014). Second, values are informally embedded when they are shared among organisational members and reflected in beliefs, routines, symbols, and ideals. Shared values are the aggregation of the values of the organisation’s members and constitute an organisational value system (Parsons, 1956). In this view, shared values are closely aligned with what many would describe as organisational culture (Rokeach, 1973; Schwartz, 1999), such that, when meaningfully internalised by the actors in a social system, shared values “should ensure that each actor wants what it should want, and acts as it should [wish to act]” (Nohria & Ghoshal, 1994: 493). Shared values may therefore function as a source of social control within organisational boundaries (Ouchi, 1980). Enacted organisational values. Although espoused values denote the values that are formally communicated by the organisation and its leadership, the enacted values are the values reflected in organisational actions and strategic decision-making (Bourne & Jenkins, 2013; Ostroff et al., 2005; Schein, 1985). Specifically, enacted values are understood as “the values and norms actually converted into employee, managerial and organizational behavior” (Howell et al., 2012: 734) and involve a “theory-in-use that explains behavior, which neither the institution nor the individuals may explicitly understand” (Schuh & Miller, 2006: 721). Variation in values enactment therefore depends on how closely an organisation’s specific actions align with a particular set of explicitly espoused organisational values (Gruys et al., 2008). In summary, organisational integrity then hinges on the extent to which the organisation holds true to and enacts the values it has espoused.

AN INSTITUTIONAL PERSPECTIVE ON ORGANISATIONAL INTEGRITY In the previous section, we established that organisations are more likely to maintain their integrity when the values espoused by leadership and the values embedded in formal structures and shared among members are congruent. Research has suggested that a variety of institutional changes, such as corporate expansions, acquisitions and mergers (Marquis & Lounsbury, 2007), employee turnover (Morrell et al., 2004), changes in leadership (Kraatz & Moore, 2002), or shifts in the regulatory or competitive environments (Armanios & Eesley, 2021) are likely to affect the internal cohesion, composition and relative salience of values

An institutional perspective on organisational integrity  263 within organisational boundaries (Greenwood & Hinings, 1996; Oliver, 1991). Our focus on these complexities is consistent with recent theorising by institutional scholars who highlight that external pressures may give rise to persistent intra-organisational contradictions (Ashforth & Reingen, 2014; Smith & Besharov, 2019), which in turn can lead to uncertainty, contestation and conflict (Fiol et al., 2009; Glynn, 2000). Figure 17.1 depicts how such institutional pressures impact the wholeness of different organisational values.

Figure 17.1

An institutional perspective on organisational integrity

When institutional prescriptions lead organisations to adopt commitments, practices or structures that are seemingly incompatible with the dominant values, this may result in the loss of normative consensus or agreement among members. This may subsequently challenge the alignment between the values formally espoused and communicated by the organisation as a whole and the embedded values that motivate managerial and strategic decision-making (Amis et al., 2002; Bourne & Jenkins, 2013). In the following, we explain that when organisations are confronted by institutional pluralism, they often hold multiple value-based identities, and theorise about their implications for a sustained commitment to organisational integrity.

264  Research handbook on organisational integrity Institutional Pluralism and Organisational Identities The main premise of institutional theory is that organisations are fundamentally dependent on and affected by the social institutions in their environment. Institutional scholars have highlighted the degree to which organisational commitments, structures, processes and behaviours are driven by sets of socially constructed beliefs, norms, and rules negotiated and enforced by institutional forces, including normative, regulative, and cultural-cognitive elements (DiMaggio & Powell, 1983; Scott, 2014). Consequently, organisations and their members are understood to be working to secure status, legitimacy and access to resources which requires their conformity to social rules, norms, and regulations established in fields, communities and societies (Meyer & Rowan, 1977; Suchman, 1995). Notably, this environment is constitutive of organisations and thus provides organisations with various prescriptions about what organisations should say (i.e. espouse), how they should be structured (i.e. embed) and what they should do (i.e. enact). Institutional pluralism. The institutional environment has traditionally been characterised as homogeneous, yet recent institutional studies have noted how the societal field has become increasingly heterogeneous with multiple – often mutually incompatible – prescriptions that result in competing pressures for conformity (Greenwood et al., 2011; Kraatz & Block, 2008). This environment is characterised by multiple institutional demands and stakeholder expectations, which requires organisations to pursue diverse and often conflicting goals, roles, commitments and responsibilities (Ashforth & Reingen, 2014; Pache & Santos, 2010; Smith & Besharov, 2019). Scholars have come to examine this phenomenon of multiple institutional pressures under the label of institutional pluralism, understood as the situation in which organisations “are subject to multiple regulatory regimes, embedded within multiple normative orders, and/or constituted by more than one cultural logic … [they] thus possess multiple, institutionally derived identities which are conferred upon it by different segments of its pluralistic environment” (Kraatz & Block, 2008: 243). Recent efforts to infuse institutional theory with organisational identity processes have popularised the idea that identities are in part derived from this increasingly pluralistic environment. The social actor perspective of organisational identity corresponds directly to the institutional literature in this regard, as it generally assumes that the normative, regulative and cognitive forces present in the institutional environment serve as identity templates, constraints or prescriptions. Institutions thus enable identity construction by “supplying organizations and their leaders [with] a set of possible legitimate identity elements with which to construct, give meaning to, and legitimize identity claims and symbols” (Glynn, 2008: 413). Therefore, an organisation’s identity is seen as formed through the process of “institutional bricolage”, in which an organisation’s members, and in particular its leaders, actively draw on institutional material to construct organisational identity (Besharov & Brickson, 2016; Raffaelli & Glynn, 2015). Consequently, institutionally informed studies on organisational identity have elaborated on how organisations construct their identity through the adoption of commitments, public statements, and legitimising claims to constituents within the external environment (Glynn, 2008; Haslam et al., 2017; Kraatz et al., 2016). Multiple organisational identities. Acknowledging the basic idea that organisations are shaped in part by the institutions in their field, scholars have empirically demonstrated that institutional pluralism has the effect of imposing multiple identities on an organisation

An institutional perspective on organisational integrity  265 and requiring it “to be multiple things to multiple people” (Kraatz & Block, 2008: 21). Consequently, identity scholars have gone on to emphasise that, as a result of such pluralism, organisational identities tend to include multiple, and sometimes incompatible, identity attributes, including “the values, goals, beliefs, traits, abilities that constitute an organization’s central, enduring, and distinct features” (Besharov, 2014: 1485). When we acknowledge the moral dimension of the institutional landscape, it becomes evident that institutionally derived identities are not just representative of group membership or attachment. The various identities that society ascribes to organisations do not only direct them to demonstrate symbolic conformity to external prescriptions or adopt culturally appropriate practices and structures. Because these identities are profoundly value-based (Kraatz et al., 2020; Selznick, 1992), when an “organization admits a new member into its coalition of identities” (Kraatz & Block, 2017: 545), it also accepts new responsibilities, new obligations, and new objectives. Consequently, these role identities compel organisations to declare commitments to normative values and ideals, take on various new duties, and are expected to deliver upon these embraced ends in a meaningful way. Extant scholarship has indicated how many modern organisations have hybrid identities that are “composed of two or more types that would not normally be expected to go together” (Albert & Whetten, 1985: 270). Empirical examples of such “multiple identity” organisations abound. In the not-for-profit sector, many organisations have identities that combine societal values that emphasise cultural or ideological principles with economic values. In recent decades, identities that combine divergent values have also become common in the for-profit sector, with the rise of business organisations that explicitly address social and environmental concerns (Margolis & Walsh, 2003; Smith et al., 2013). Even traditional corporations increasingly have identities that include multiple and potentially contradictory values, as they operate in global markets, have a diverse employee population, and engage in ongoing efforts to win the support of diverse constituents (Smith & Lewis, 2011). Importantly, these disparate identities “are all present inside the organization” in the form of distinct subgroups, departments or divisions (Pratt & Kraatz, 2009: 394). Although there will be much overlap in these identity attributes within the same organisation, contradictory interests, desires and (social) norms anchored in these identities are bound to prescribe diverging courses of action. Most leaders are capable of finding common ground, yet organisations will always experience some incoherence in these identities and their associated goals (Radoynovska et al., 2020; Raffaelli & Glynn, 2015; Selznick, 1957). The Complexities of Organisational Integrity Organisations that have adopted multiple identities are likely to face values-based complexity within their boundaries, characterised by “the prevalence of multiple, independent, yet interacting and continuously changing values” (Grimes et al., 2019: 821). Such values-based complexity tends to evoke diverse modes of action and thus complicates consistent organisational behaviour, problematising the “wholeness” of multiple selves as the central feature of organisational integrity (Kraatz, 2009; Raffaelli & Glynn, 2015). Although social values can function as a “cohesive force” within formal collectives (Kraatz et al., 2020: 491), scholars have embraced the study of this complexity and also the ensuing conflicts and ethical dilemmas (Grimes et al., 2019; Kraatz & Block, 2017; Smith et al., 2013).

266  Research handbook on organisational integrity Organisations are likely to strengthen organisational identification when they are able to adequately integrate their various identities so that associated values and beliefs “are widely shared and densely articulated among members” (Ashforth et al., 2008: 328). Such strong identification with core identity attributes has been shown to guide, orientate, and unify members in engaging in collective actions consistent with espoused values, and provides the means to interpret and prioritise competing institutional pressures (Besharov & Brickson, 2016; Greenwood et al., 2011). In contrast, when uncertainty and ambiguity are pervasive over which value-based identity and associated commitments to prioritise, this can cause conflict between internal subgroups that hold contradictory values, norms, and interests (Glynn, 2000), precipitate or derail strategic change (Dutton & Dukerich, 1991), and challenge the sustained adherence to accepted ethical, regulatory, and normative principles (Connelly et al., 2016). Organisations with multiple identities must fulfil the expectations, responsibilities, and obligations associated with each adopted identity in its entirety, as “anything less will be viewed as compromising [their] integrity” (Whetten et al., 2014: 487). When the mismanagement of multiple value-based identities causes actions that diverge from previously observable patterns of commitments and promises, organisations are likely to be perceived as having compromised their integrity (Bundy et al., 2021; Connelly et al., 2016; Paruchuri et al., 2021). Given that “obvious disconnects between rhetoric and subsequent actions is often regarded as the very antithesis of organizational integrity” (Kraatz & Block, 2008: 322), organisations that make identity claims to which their own behaviour does not conform may be perceived as hypocritical in the eyes of stakeholders. Audiences are likely to perceive actions that are incongruent with stated missions as inauthentic, dishonest, and morally illegitimate and to question the trustworthiness and integrity of such organisations (Love & Kraatz, 2009; Mishina et al., 2012). Organisational Leaders and Pluralism of Values The content of organisations’ espoused values tends to reflect the dual influence of both institutional pressures for conformity and the historical patterns of prior commitments, promises, and actions that make each organisation distinctive (Bartkus & Glassman, 2007; Blair-Loy et al., 2011; Suchman, 1995). The congruence between the espoused values and the broader social system in which the organisation operates can help in acquiring support, status, and access to resources (Ashforth & Gibbs, 1990; Deephouse & Suchman, 2008). From this perspective, the espousal of values is primarily a matter of gaining legitimacy. Scholars have suggested that organisational leaders are of particular importance in securing legitimacy, as they are seen as symbolising the organisation in that they function “as key carriers of organizational actorhood” (Bromley & Sharkey, 2017: 24) and embody the strategic and normative stance of their organisation (Selznick, 1957; Solinger et al., 2020). Yet, organisational leaders are also subject to institutional pluralism and may therefore hold contradicting values, which help in representing different value sets but may potentially weaken wholeness. Leaders espousing contradicting values. For their organisation to gain legitimacy, leaders must be responsive to the needs, expectations, and pressures of both their members and other stakeholders. Such leaders often engage in symbolic and rhetorical work to attain and maintain support from investors, employees, customers, and regulators (Ashforth & Gibbs, 1990; Kraatz, 2009). For instance, organisations face increased societal pressures for environmental responsibility, transparency and ethical behaviour. These normative pressures from the insti-

An institutional perspective on organisational integrity  267 tutional environment have compelled many leaders to publicly espouse their commitment to engage on a wide range of societal issues. In this vein, pressures by activist groups to adopt sustainability principles and standards (Carlos & Lewis, 2018) and demands by regulators to demonstrate substantive compliance with requirements regarding environmental pollution (Armanios & Eesley, 2021) have led many corporations to make enduring commitments in these areas. However, the adoption of such external mandated social rules, norms and principles tend to restrict managers’ discretion in organisations where economic values predominate. The pluralistic environment causes, at least on the surface, organisations to espouse values that are likely to contain elements of both compatibility and conflict (Bourne et al., 2019; Kabanoff et al., 1995). The coexistence of contradictory espoused values is bound to cause much confusion over which value claims to prioritise and, consequently, what constitutes legitimate behaviour in the eyes of key audiences. The degree to which such values-based complexity is successfully managed and consistent organisational action is ensured, is to a large degree dependent on the individuals within the organisation who have normative and motivational affinity for such embraced values (Battilana & Dorado, 2010; Pache & Santos, 2010). For instance, Almandoz (2014) shows that financial firms with founding teams that prioritise economic values were associated with the higher use of risky financial instruments in comparison with teams that had internalised community values. Because organisations are said to be in part a reflection of their leadership, including their beliefs, traits and assumptions (Hambrick & Mason, 1984; Kraatz & Moore, 2002; Raffaelli & Glynn, 2015), the values internalised by top management and decision-makers are likely to be mirrored in the social structures of the organisation. Leaders embedding contradicting values. Leaders have the responsibility to recognise the external demands and to integrate multiple roles, responsibilities and obligations within the same collective entity. Such leaders are generally in the best position to manage conflicts between various social roles and find ways to redirect tensions between values to more productive ends (Besharov & Khurana, 2015; Kraatz, 2009; Raffaelli & Glynn, 2015; Selznick, 1957). Specifically, leaders must embed the multivalency of values within the social structures of their organisation, so that members are provided with clear meaning, orientation and guidance to navigate critical decision-making situations (Besharov & Khurana, 2015; Smith & Besharov, 2019). In this vein, Pratt and Kraatz (2009) emphasise leaders’ role in portraying the organisation as a consistent, coherent entity through blending competing values in speech, symbols and narratives to secure support from competing subgroups. By granting the various identity groups sufficient influence and resources, leaders are able to construct a “constitutional system of checks and balances” (Kraatz, 2009: 76), while simultaneously preventing any subgroup from gaining control over the whole organisation. This requires certain governance mechanisms that ensure that “representatives of each side of competing demands can keep one side from dominating” (Besharov & Smith, 2014: 28). Such boundary-defining work is an ongoing and evolutionary process, with leaders having to adapt to the ever-changing moral landscape and remodel governance arrangements accordingly as they take on new social roles and consider constituents’ demands. This integrative and responsive leadership, Solinger et al. (2020) suggest, involves continuously updating and adjusting the moral course of the organisation as it espouses new values, adopts new commitments, and takes on new responsibilities. In contrast, when leaders do not identify with the values of the organisation, they may be reluctant to embed espoused values in the social structures of the organisation. Such decoupling may especially be the case in situations of changes in leadership or board composition. In

268  Research handbook on organisational integrity their study of executive migration, for instance, Kraatz and Moore (2002: 139) show that new leadership may forcefully advocate alternative values that “promote and facilitate the adoption of illegitimate, contra-normative changes” when their personal values are antithetical to those formally espoused or when they come from organisations with a history of nonconformity. The reluctance to embed may thus be a cynical ploy used by an unethical leadership to give off a false appearance of conformity to societal prescriptions or to “corrupt” the internal character of the organisation by illegitimately prioritising the demands of constituents at the expense of others. Notably, some elements of organisational value statements are the product of firms’ need to secure external legitimacy but then only loosely couple these statements to their formal operations (Bartkus & Glassman, 2007; Bromley & Powell, 2012). While leaders may adopt values to appease specific stakeholders, the symbolic espousal of social values without corresponding embedding of these values in organisational structures is often perceived by audiences as window dressing (Carlos & Lewis, 2018; Weaver et al., 1999). While Wells Fargo’s espoused values statement included “what is right for customers” and “ethics”, the 2016 cross-selling scandal revealed that management had implemented a compensation system that promoted cross-selling as a performance metric and thus rewarded behaviours that were incongruent with the bank’s espoused values. Moreover, even if leadership is representative of such espoused values, leaders will still need to resolve tensions arising from organisational members’ pluralistic interpretation of the embedded structures of the organisation. The Effect of Pluralism on Organisational Culture and Design Ensuring consistent organisational action requires that embraced values are embedded into both the culture and formal design of the organisation. However, the pluralistic institutional environment has the tendency to create contradictions between the values espoused by leadership and those embedded in operational structures and shared by organisational members. As illustrated by Lencioni’s (2002) analysis of the “empty” values statements used by the US energy conglomerate Enron, the espousal of values that are not shared among members nor supported by policies and procedures, have potentially destructive implications for the integrity of organisations. An organisation’s identity filters perceptions about the relevance and appropriateness of practices (Raffaelli & Glynn, 2014). That is, practices and structures that align with the organisation’s identity are perceived to be more appealing and legitimate and, in turn, more likely to be adopted. Consequently, when members identify with values espoused by their organisations, they are more likely to adopt institutional practices and structures that reinforce these commitments. In contrast, disidentification or normative fragmentation are likely to lead to behaviour that deviates from espoused values. In the following, we discuss how pluralism can both lead to resistance by identity subgroups with respect to organisational culture and to organisational members’ decoupling with respect to organisational design. Resistance by identity subgroups. The distinctive feature of the modern organisation is that it is often composed of multiple identity groups that hold different values, beliefs and ideals (Battilana & Dorado, 2010; Pache & Santos, 2010; Smith & Besharov, 2019). Such internal groups tend to reflect both the distinct values of organisational membership as well as external concerns, resulting in a “multiplicity of values” (Hinings et al., 1996: 888). Existing research suggests that goal disagreement, power struggles and competition over scarce

An institutional perspective on organisational integrity  269 resources between identity groups is the normal state of affairs in most organisations (Huy et al., 2014; King et al., 2010), yet their very integrity depends on members’ collective ability to resolve conflicts between values and mitigate the destructive tensions inherent in pursuing competing goals. Because the diverse roles, needs, and interests of these subgroups are likely to elicit markedly different modes of behaviour, the maintenance of integrity, in the sense of wholeness in disparate values, requires the socialisation of organisational members (Battilana & Dorado, 2010; Besharov & Khurana, 2015) or finding common ground among the groups who hold potentially competing values (Ashforth & Reingen, 2014; Pratt & Kraatz, 2009). The creation of such “political compromise” is necessary if leaders are to establish social cohesion and come to a semi-common view among members of what is distinct, central and enduring about their organisations. Studies have highlighted that members’ identification increases their attention to and responsiveness toward matters related to the organisation’s espoused values. In their study of reinsurance trading in Lloyd’s of London, for instance, Smets et al. (2015: 933) observed overt competition between brokers who held community values and those who prioritised market values, yet also discovered various balancing practices within the organisation that led members to “show ‘gentlemanliness’ among competitors and prioritise long-term relationships over short-term profits”. Similarly, Dutton and Dukerich’s (1991) study of the Port Authority of New York and New Jersey revealed that organisational actors were more likely to respond to external pressures to address social concerns relating to the homeless when they identified with their organisation’s espoused social commitments. In contrast, when internal subgroups do not identify with subsets of espoused values or hold radically contrasting values to be important, tension is likely to be pervasive. Extant research suggests that such misalignment between the espoused values and the values shared by specific segments of the organisation can signal an explicit lack of belonging (Smith & Lewis, 2011; Tracey & Phillips, 2016) or disidentification with specific features of an organisational identity (Ashforth et al., 2008; Besharov, 2014). When such intractable conflicts run rampant (Fiol et al., 2009; Glynn, 2000), powerful subgroups that do not identify with some subsets of their organisation’s espoused values may purposefully resist their enactment in practice. Subgroups that hold sufficient power, status and authority may unobtrusively enact values that are antagonistic towards those espoused by their leadership. For instance, in their study of middle managers’ reactions to the implementation of a radical change programme initiated by a recently appointed top management team, Huy et al. (2014) show how shifting legitimacy judgement of the change agents elicited emotional responses that fuelled mounting resistance to change efforts. Although leaders can embed the values they envision for the organisation in operational structures and processes to encourage or coerce members to enact the espoused values, they do not have complete control over all social processes and interactions within the organisation. Organisational leadership is “reliant upon key members who possess the knowledge, skills or professional qualifications” to enact these embraced values in organisational actions (Bourne & Jenkins, 2013: 508). In contrast, when the espoused values are not sufficiently shared among members and leadership is unable to establish a shared purpose within the organisation through finding common ground among internal subgroups that hold divergent values, organisational integrity is likely to be significantly at risk. Decoupled organisational design. The institutional environment conveys to organisations specific prescriptions regarding the appropriate processes to enact espoused values, such as

270  Research handbook on organisational integrity hiring procedures, incentive systems, and decision-making processes. These institutionally derived structures, and the values embedded therein, have important implications for everyday organisational life in that they guide behaviour and strategic decision-making. Existing research suggests that as these organisational structures become institutionalised and taken for granted among members, they have the propensity to override individual perception of what constitutes appropriate behaviour. For instance, while governance practices and incentive systems may reinforce an ethical culture by stimulating behaviours that are congruent with an organisation’s self-defining principles (Gallagher & Goodstein, 2002; Paine, 1994), incentives can also work in opposition to culture, especially when they “reward employees for achieving a metric without regard to the actions they took to achieve that metric” (Graham et al., 2016: 19). The burgeoning literature on organisational misconduct has suggested that when unethical norms and values are embedded in formal routines, structures, and systems, boundedly rational members are likely to take them for granted and assume that misconduct provides an appropriate way to reach organisational goals (Greve et al., 2010). When organisational decision-makers do not identify with their organisation’s espoused values and, consequently, the associated duties, responsibilities and obligations, they are more likely to resist institutional pressures or the adoption of practices, processes and structures. This is illustrated by Kraatz et al. (2010), who demonstrate that the adoption of enrolment management systems in liberal arts colleges undermines the autonomy of organisational members charged with maintaining specific organisational values. Importantly, the systems’ adoption exposed the colleges to market values, which clashed with long-standing values associated with academic instruction and support. This example illustrates how the adoption of “mundane administrative arrangements” (Selznick, 1957: 14) that are ostensibly incongruent with espoused values have the potential to “override” individual behaviour. While many organisations adopt formal processes and policies to secure legitimacy, avoid sanctions and ensure that behaviour is in accordance with espoused values, studies have suggested that such structures are often not fully implemented in day-to-day, task-related operations (Boxenbaum & Jonsson, 2017; Bromley & Powell, 2012). Since pressures to adopt externally legitimated structures and policies may be in direct conflict with their core goals, organisations often resort to decoupling by adopting visible structures that show attentiveness to constituents’ demands and values but avoid full implementation to protect the technical requirements of the organisation. Such decoupling is ubiquitous in organisations and has been traditionally theorised as an important instrument to communicate adherence to institutional prescriptions. However, in contrast to earlier depictions that decoupling has external legitimacy benefits, scholars have gone on to characterise decoupling between policy and practice as “a moral and operational failure” (Bromley and Powell, 2012: 498), especially when organisations have decoupled those structures that are externally imposed by important constituents (Deephouse & Suchman, 2008; Tilcsik, 2010). MacLean and Behnam (2010) provide an example of such illegitimate decoupling. In their study of widespread deceptive sales practices at a large financial services firm, the authors demonstrate how the decoupling between the organisation’s formal compliance programme and core business activities created a “legitimacy façade” towards key constituents. Such decoupling eventually enabled the institutionalisation of misconduct within the organisation. Decoupling is not an inevitable response to institutional pressures that conflict with core goals. Indeed, studies have suggested how decoupling behaviour is more likely when there

An institutional perspective on organisational integrity  271 is a lack of external monitoring and enforcement or when institutional norms, rules, and laws are ambiguous. Important for our argument, the degree of decoupling is also influenced by the views, interests, and values of powerful organisational members (Crilly et al., 2012; Westphal & Zajac, 2001). In other words, decoupling behaviour is more likely when “adopted policies conflict with or are not central to the interests or beliefs of internal parties” (Bromley & Powell, 2012: 496). Interaction between identity subgroups and decoupling. What is implied here is that for organisational members the integration of multiple identities, and thus shared values, may function as compensation for holding a decoupled system together and is likely to both resolve uncertainty and facilitate coordination among organisational insiders in soundly implementing policies and structures (Orton & Weick, 1990). Moreover, the degree to which members identify with their organisation’s identity influences whether processes and policies are actually enacted in practice. Research suggests that a coherent organisational identity, and consequently greater identification, is an important factor in determining members’ responsiveness to institutional pressures (Greenwood et al., 2011; Pache & Santos, 2010; Schilke, 2018). For instance, organisations are less likely to adopt controversial governance practices that are incongruent with an organisation’s espoused values when members do not identify with specific subsets of espoused values (Bednar et al., 2015). In contrast, a fractured organisational identity is likely to create normative fragmentation and weakened identification. Since internal power dynamics have been shown to be an important determinant in decoupling behaviour (Boxenbaum & Jonsson, 2017; Westphal & Zajac, 2001), decoupling is more likely when powerful internal subgroups do not identify with a subset of espoused values. For example, Weaver et al. (1999) found that while corporations may experience external pressures for socially responsible business processes, formal corporate ethics programmes may become decoupled from daily practices if there is a lack of management commitment. Similarly, in his study of a post-Communist government agency, Tilcsik (2010) observed that inconsistencies between the values embedded in formal structures and the values and ideological beliefs of powerful decision-makers about how the organisation should be run may result in decoupling behaviour. While leaders may embed values in formal structures, in the absence of shared values among organisational members then competing institutional pressures may result in decoupling behaviour.

DISCUSSION AND CONCLUSION Corporate scandals tend to cause society to question the integrity of the involved organisations, which in turn can lead to a range of negative consequences, including loss of reputation, sanctions, lawsuits and even the demise of the organisation (Connelly et al., 2016; Greve et al., 2010; Heugens et al., 2008). In contrast, there are numerous positive outcomes for organisations that live up to their embraced social values and commitments (Henderson, 2020; Mackey & Sisodia, 2014). However, there is still a lot of ambiguity and inconsistency surrounding the notion of organisational integrity. Organisation and management scholars have not yet settled upon the meaning, determinants and processes of integrity in a unified and sustained way (Dacin et al., 2002; Goodstein, 2015). Notably, we observed that most studies on organisational integrity have treated the focal actor as isolated from its institutional context,

272  Research handbook on organisational integrity while this increasingly complex and ever-changing environment creates unique challenges for organisations and their ability to consistently adhere to their self-defining principles. In this chapter, we have re-visited the important concept of organisational integrity by proposing an institutional perspective. We defined integrity as the “wholeness” of espoused, embedded, and enacted values. In our social actor approach to organisational analysis (King et al., 2010; Whetten & Mackey, 2002), we turned to the literature on values and identity to theorise about the complexities and challenges to maintaining integrity when organisations face institutional pluralism. We have developed a theoretical model that suggests the possible dynamics between competing institutional pressures and intra-organisational influences that may cause tension between the espoused, embedded and enacted values. In doing so, this chapter makes two primary contributions to the understand of integrity as it relates to existing scholarship on organisational values and identity (Gioia et al., 2013; Kraatz et al., 2020; Whetten & Mackey, 2002) and institutional pluralism (Kraatz & Block, 2008; Radoynovska et al., 2020; Yu, 2013). The topic of organisational integrity is key not only because it draws attention to questions about the overlap or gaps between organisations’ espoused, embedded and enacted values, but also because this construct reflects scholars’ growing interest in how organisations behave, function, mature, and are evaluated as unique social actors in their own right (Bromley & Sharkey, 2017; King et al., 2010). As we theorise on the integrity of organisational actors, we answer the recent calls by organisational scholars to better “understand, explicate and research the enduring, noun-like qualities of organizations” (King et al., 2010). The model we proposed resembles what scholars have termed behavioural integrity (Leroy et al., 2012; Simons, 2002). We have taken this definition of integrity as our point of departure because integrity as consistency between talk and action has received the most scholarly attention at the individual level (Palanski & Yammarino, 2007; Simons et al., 2015). However, we are also consciously responsive to some alternative conceptions of integrity, including wholeness and soundness. The very idea of integrity implies the wholeness of values, desires and actions. Although organisations increasingly portray themselves as integrated wholes, institutional scholars have shown that organisations are rarely unitary or tightly integrated entities, but rather consist of subgroups that hold competing needs, beliefs and interests. By incorporating the degree of fragmentation versus integration of organisations’ multiple identities in our conceptualisation of integrity (Besharov & Brickson, 2016), we highlight the importance of understanding the degree to which important identity attributes, such as values, are actually embedded within the design and culture of organisations. While lofty mission statements may accrue organisations legitimacy and status benefits (Ehrenhard & Fiorito, 2018), when leaders are unable to manage and integrate a fractured organisational identity, they are unlikely to achieve consistent organisational actions that are in line with espoused values. This sensitivity to intra-organisational processes is an answer to the call for organisational theorists to “dig into the inner workings of organizations” (Greenwood et al., 2014: 1211). When we consider how organisational values systematically affect how organisations adapt to external stimuli (Bansal, 2003; Perkmann & Spicer, 2014; Schilke, 2018), it becomes clear that their degree of embeddedness influences the nature of responsiveness to institutional pressures. Specifically, external demands to respond to environmental and social concerns are more likely to result in substantive actions when such demands are congruent with the principles already embedded in the organisation’s formal design and culture (Amis et al., 2002; Besharov & Khurana, 2015; Hinings et al., 1996). In contrast, due to much of the ceremonial

An institutional perspective on organisational integrity  273 symbolism inherent in the formal espousal of values (Bromley & Powell, 2012; Bourne et al., 2019), we propose that these are less likely to predict organisational responses to institutional pressures than are the values embedded in an integrated organisational identity. Alternatively, when the values held by top management or among powerful internal subgroups advocate interests or goals that are diametrically opposed to external pressures in relation to a specific social concern, these “values may serve as anchors that bind the entity to its past and prevent needed change from occurring” (Kraatz et al., 2020: 500). In other words, profound changes in normative standards or governmental regulations that are incongruent with core organisational goals are likely to elicit a great deal of resistance and symbolic responsiveness (Bromley & Powell, 2012; Huy et al., 2014; Oliver, 1991). Finally, our model suggests that when internal groups do not identify with or share the values that leadership has espoused for the organisation, the sustained commitment to organisational integrity is at risk. This problem will be particularly salient when organisational subgroups are distanced from the corporate centre, challenging direct steering or control, and holding values that differ significantly from the values espoused by the organisational collective (Bourne et al., 2019). For instance, as organisations increasingly operate cross-border, cultural distance between subunits, functions, and divisions and the corporate centre has increased dramatically. Similarly, the growth or expansion of organisations through corporate acquisitions or mergers may result in a situation in which the acquired members hold radically different values than those espoused for the organisation as a whole. When leaders are reluctant or unable to integrate multiple identities into a coherent whole, members will not be guided, orientated, and unified to engage in collective action or have the normative means to interpret and prioritise institutional pressures that are inconsistent with espoused values (Besharov & Brickson, 2016; Dutton & Dukerich, 1991; Greenwood et al., 2011). Because organisational identities and values are in part institutionally derived, we are also attentive to the important moral component of integrity (Archer, 2017; Selznick, 1992). By building on the idea that organisations are capable of purposive, intentional and autonomous actions, the commitments organisations adopt when they take on a new role identity imbues them with moral agency. Since these institutionally derived identities are profoundly value-based, the roles, responsibilities and obligations that organisations espouse are likely to create normative expectations that stakeholders will hold them to (Mishina et al., 2012; Love & Kraatz, 2009). Obvious departures from these moral duties are likely to be perceived by key constituents as failures of integrity and evoke distrust and disengagement. Although we have argued that organisation-specific expectations surface as organisations engage in values espousal to secure legitimacy, such expectations are also shaped by an organisation’s historical pattern of previous actions and commitments. Indeed, organisational integrity is closely related to the notion of character, often understood as an organisation’s clear commitments and distinctive approaches to meeting those commitments (King, 2015). Such organisational character tends to function as a normative backdrop, both internally, as a selection and deliberation device for managerial behaviour, and externally, via audiences’ assessment of an organisation’s actions. Importantly, constituents evaluate organisational actions as an indicator of the character of the organisation. Consequently, when behaviours are profoundly inconsistent with an organisation’s history of past commitments and actions, audiences are likely to perceive the organisation as lacking integrity and trustworthiness in its interaction with stakeholders, and they may come to question its character (Bundy et al., 2021; Love & Kraatz, 2009). Flagrant integrity failures that signal a discrepancy between espoused,

274  Research handbook on organisational integrity embedded and enacted organisational values have the potential to “blemish” the character of an organisation (Connelly et al., 2016; Paruchuri et al., 2021: 565). Importantly, obvious dissonance between espoused and enacted values is likely to lead members to dissociate themselves from the tainted organisation and no longer identify with its espoused values (Ashforth et al., 2008; Besharov, 2014).

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18. A corporate governance perspective on organisational integrity Peter Verhezen

Corporate governance is about foreseeing and effectively assessing an uncertain and occasionally volatile future. Corporate governance is about directing and creating a meaningful future. It is about the way power is exercised by a board of directors over corporate entities (Tricker, 2023). The notion of corporate governance finds its etymological meaning in the Latin gubernare: steering the ship away from rocks into open waters. Corporate governance inherently implies a pragmatic, formal legal and institutional view of the use of power by the board of directors to enable real progress and effective implementation of decisions. In addition of a formal approach of installing an ethical infrastructure in organisations, an organisation also relies on more informal infrastructures that constitute ethical behaviour (Tenbrunsel, Smith-Crowe & Umphress, 2003). One of these informal factors is the notion of integrity which finds is origin in the feeling of empathy for the other. That feeling of compassionate empathy initiates a conscience which distinguishes right from wrong, and can be seen as the basis for the notion of integrity (Carter, 1996; Hume, 1739, 1751; Smith, 1759; Timmons, 1999). This interpretation assumes that morality and the informal notion of integrity in particular involve a reference to feeling or sentiment that is completely absent in the formal corporate governance practices, especially the dominant agency theory that presupposes a selfish rational agent (Berle & Means, 1932; Fama, 1980; Friedman, 1970; Jensen & Meckling, 1976). For corporate governance to be effective, I argue that these formal practices need to be infused by the notion of integrity – which need to be assessed in further research. Indeed, these preliminary thoughts claim that both corporate governance and integrity need to be aligned to be effective. Institutional governance without virtuous integrity won’t go beyond mere legal compliance, whereas the good intention of integrity without the implementation of proper governance structures, processes and practices would likely remain an ethical ideal without influence or formal power. In the first section of this chapter, I assess the strengths and weaknesses of the prevailing agency theory within corporate governance as applied in most listed but also non-listed organisations. The current prevailing agency theory needs to be revised or enriched in order to allow a stronger alignment between a legal interpretation of fiduciary duties within governance and a normative view of what organisational integrity could mean for the organisation. In other words, legality and compliance need to be aligned with legitimacy and socio-ethical reasoning in business. As consequence, the fiduciary duties of care, loyalty and prudence may need to be reinterpreted to facilitate this much needed legal-legitimacy alignment. In the second section of this chapter, I explain why integrity at boards is necessary to make wise or responsible decisions. My argument is that both formal governance structures and informal integrity will reinforce each other to install a more ethical infrastructure in organisations. The required organisational integrity of the board and its CEO exemplifies a beacon for employees, investors, customers and the community at large (Gardner et al., 2005; 280

A corporate governance perspective on organisational integrity  281 George, 2004; George & Sims, 2007; Ilies, Morgeson & Nahrgang, 2005). Only by embracing a clear meaningful purpose, a clear link can be established between cognitive institutional governance practices and ethical individual normative values, making those organisations more than money-making machines, but places to thrive (Kennedy-Glans & Schulz, 2005). Organisations may then fulfil that promise of creating value while also providing meaningful purpose and sense to all those involved in the organisation. This alignment between legal or legalistic governance practices and the legitimacy of socio-ethical objectives underpinned by integrity aims at a transition from smart to wise decision-making – an extremely relevant and timely topic in business today that is not yet enough explored in academic management decisions or leadership research (Clarke, 2004; Macey, 2013; Schanzenbach & Sitkoff, 2020; Verhezen, 2023).

COMPLYING WITH INSTITUTIONAL CORPORATE GOVERNANCE ENHANCES SMART DECISION-MAKING The main function of an effective board is to safeguard the organisation from negative threatening risks and to provide the resources to exploit current assets to their fullest potential while exploring and therefore investing in new ventures or business opportunities. Corporate governance establishes the identity of the legal power within the organisation and how it can be used to direct and control. Currently, the debate is raging whether organisational value refers to optimising a risk-adjusted return only, or whether other non-financial objectives should become a mandatory board duty as well (Freeman, 2010; Rose, 2007; Stout, 2012, 2013; Schanzenbach & Sitkoff, 2020). If corporate governance is interpreted in a legalistic manner only, as the dominant agency theory does, boards won’t see the relevance of normative decision-making, let alone enhance desired socio-ethical behaviour. The board is seen to be only accounted for complying with the legality interpretation of their fiduciary duties of sole interest to optimise the capital provided. Today, external pressure on boards is demanding more socio-ethical responsibility beyond mere accountability of these fiduciary obligations. In other words, the primacy of shareholders’ power is under scrutiny. I attempt to align the formal agency theory with an ethical notion of integrity – opening up to a more normative perspective. Such alignment would hopefully result in a practical win-win situation. But to succeed, more research will need to be undertaken to see the benefits of such a holistic approach. Such empirical research will potentially convince mainstream financial economists and corporate governance experts to align the theory of agency with an increased necessity of ecological-ethical organisational objectives. The Agency Theory – Aligning Shareholders’ and Management Claims – To be Revised? The traditional agency theory of corporate governance sees the firm as a nexus of contracts between free and rational individuals optimising their own interests (Fama & Jensen, 1983; Friedman, 1970; Jensen & Meckling, 1976; Jensen, 1986; Lorsch & Clark, 2008). Corporate governance is about how a set of promises to investors, workers, suppliers, customers, local communities can be institutionalised, whether by legal forms or more informal arrangements (Macey, 2008; Tenbrunsel, Smith-Crowe & Umphress, 2003). Governance may not prevent

282  Research handbook on organisational integrity all misconduct or misdeeds, but it can actually improve the way an organisation is governed and managed to deploy assets and resources in the most efficient and effective way, and possibly prevent some excessive threatening risks on the downside (Agrawal & Chadha, 2005; Aguilera & Cuervo-Cazurra, 2004; Carver, 2010; Charan, 2005; 2009; Chew & Gillan, 2009; Clarke, 2007; Monks & Minow, 2004, Rezaee, 2007). From an agency theoretical perspective (Bebchuk, Cohen & Ferrell, 2004; Beiner, Drobetz, Schmid & Zimmermann, 2004; Fama, 1980; Fama & Jensen, 1983; Jensen, 1986, 2002; Schleifer & Vishny, 1997), effective governance should aim to increase the equity value by better aligning incentives between management and equity holders and between minority and majority shareholders. A notion like integrity does hardly have a place in this agency theory in which rational selfishness is assumed to be regulated by legal compliance to codes. Other governance theories emphasise an empathy for those who have a stake in the organisation like employees and the community. Integrity as an expression of such a feeling of empathy directly connects with those other stakeholders. Moreover, the function of a board as a guardian or steward requires that normative individual characteristic of integrity. From a stakeholder perspective (Freeman, 2010), resource-based theory (Hillman, Cannella & Paetzold, 2000; Hillman & Dalziel, 2003; Pfeffer, 1972; Pfeffer & Salancik, 1978) or network perspective (Peng, 2003; Peng & Zhou, 2005), effective governance provides policies that produce stable and safe employment, provide an acceptable standard of living to workers, mitigate risks for debt holders, provide reliable products and services to customers, improve the community and acknowledge the importance of ethical and ecological objectives or constraints. Although those different perspectives may partially overlap, and although they hardly can be maximised at once according to Jensen (2002), it may be argued that there is no fundamental contradiction between such views in the longer term (Khanna, Kogan & Palepu, 2006). Despite the theoretical differences between these governance perspectives, they can be assumed to be complementary (Donaldson & Preston, 1995; Freeman, 2010; Porter & Kramer, 2006 & 2011; Verhezen, Notowidigdo & Hardjapamekas, 2012; Vogel, 2005). This complementary aspect potentially allows a possible alignment. The influential agency theory – in contrast with the other corporate governance perspectives – emphasises the discrepancy between owners and management. In an initial entrepreneurial and growth phase, organisations were run by their founders. With banks and capital markets providing the funds to finance the growth of some of those organisations, professionals were subsequently hired to manage those big corporations on behalf of the owners. More often than not, the objectives of these professional managers and the firm’s owners’ goals differ, creating an alignment or agency problem. That is where corporate governance fulfils its traditional regulating and check-and-balance role (Dimma, 2002; Huse, 2007; Wallace & Zinkin, 2005). Those professional managers and board members achieve considerable power due to access to asymmetric information a potential agency–principal problem. The prevailing agency theory claims – as implemented in almost all major financial markets in the world – that there exists a contractual agreement between the principal or owner and an agent – or executive, top manager. “Agency theory involves a contract under which one or more persons (shareholders) engage other persons (the directors) to perform a service on their behalf which delegates some decision-making authority to the agent. If both parties to the relationship are utility maximisers there is good reason to believe that the agent will not always act in the best interest of the principal” (Jensen & Meckling, 1976: 307).

A corporate governance perspective on organisational integrity  283 How to align the objectives of the professional management experts who aim to optimise their own remuneration package with the goal of providers of capital who want to maximise the best return on the invested capital? A possible solution to align the objectives of owners and executives is conceptually bridged by making those professional executives owners themselves through the provision of stock options (Farinha & de Foronda, 2005; Jensen, 1986, 2002). The stock options for top management are thought to be an incentive to align their own interests with those of their shareholders. Nonetheless, this presumed alignment creates an additional potential challenge: short-term stock performance is now the overarching objective that is used to calculate the financial value of these bonuses and stock options (Bebchuk, 2009, 2021; Bebchuk, Kraakman & Triantis, 2000), potentially undermining long-term sustainable value that safeguards the economic competitive sustainability of the organisation (Gillan & Starks, 2003; Krznaric, 2020; Salter, 2012; Serafeim & Grewal, 2019). How then to reconcile or align this conundrum of short-term versus longer-term perspectives? And when reference shareholders need to be distinguished from activist shareholders or even short-term speculators, it complicates the discussion of which shareholders’ perspective to take. Adding to the complexity is the distinctive and often unique governance structures and ownership at state-owned enterprises and family-based enterprises (Claessens et al., 2002; Claessens & Yurtoglu, 2013; Demsetz & Villalonga, 2001; Gompers et al., 2003; Lozano et al., 2016; Verhezen & Martin, 2017). At the International Finance Corporation, one argues that the board’s fiduciary duty is aimed at the organisation (and not just to the shareholders), guaranteeing the implementation of the generic governance principles of transparency, fairness, accountability and responsibility (Verhezen, 2015). Without understanding, contextualising and reinterpreting those four generic principles and without integrity, the governance principles will remain a complianceand-tick-the-box-exercise without being able to exercise a more holistic perspective. Research has proven that an institutional and especially legal context – a common law judicial versus civic legal system – determines how corporate governance is implemented and protects individual (shareholders’) property rights (La Porta et al., 1999, 2000, 2002). Governance, indeed, will not prevent all misconduct or misdeeds, but it can actually improve the way a corporation is governed and run (Kurtzman & Yago, 2007; Kurtzman, Yago & Phumiwasana, 2004; Lawler, Finegold, Benson, & Gonger, 2002). I would argue that successful companies applying good international corporate governance practices are those who have diligently incorporated and integrated (1) the protection of basic shareholder rights, (2) the prohibition of insider trading, (3) disclosure of board and top managers’ interests and adherence to international disclosure standards, (4) a respect for the legal rights of main stakeholders of the company while acting responsibly within a wider community context, (5) an independent audit committee that regularly meets, (6) the norm that all shareholders should be treated fairly by the board, (7) the expected disclosure of capital structures that enabled certain shareholders to obtain disproportionate control, (8) providing good access to information by the board members, and (9) the allowance of fair and timely dissemination of information to all relevant parties involved (Bhagat & Bolton, 2008; Carter & Lorsch, 2004; Dimma, 2002; Doidge, Karolyi & Stulz, 2007; Gelter, 2009; Huse, 2005, 2007; Yadong, 2005). In other words, smart boards who aim to optimise shareholders’ value according to the agency theory do not have to ignore the legitimate concerns of committed stakeholders. But that may require some reinterpretation of the legal approach of this agency theory.

284  Research handbook on organisational integrity Reinterpreting the Fiduciary Duties of Care, Loyalty and Prudence The formal legal interpretation of the agency theory does not seem to suffice to guarantee the expected outcomes – which I attribute to a conceptual misconception of powerful “rational” utility maximising board members, who may not really value integrity in such a powerful unforgiving competitive world. If the board’s main first task is to monitor, control and oversee the performance of and the way decisions are made by top management securing the continuity of the organisation, why do we still have so many cases of outright failure due to non-functioning corporate governance (Lin & Wang, 2008; Lorsch & Clark, 2008; Verhezen & Abeng, 2022)? There are plenty of cases in both the Anglo-Saxon as well as in Continental Europe and Asia of malfunctioning boards: Enron, WorldCom, Parmalat, VW Dieselgate, and the list is long. Too long... Secondly, the non-executive directors at boards provide valuable advice and mentoring to top management (Chew & Gillan, 2009; Huse, 2005, 2007; Larcker & Tayan, 2011). In this advisory capacity, the board pays attention to guide top management’s decision that balance risk and reward, whereas in its oversight capacity, the board aims to monitor management and ensure that it is acting in the best interest of the company’s long-term goals. The board is a governing body elected to represent the interest of shareholders and the company at large (Charan, 2005; Charan, Carey & Useem, 2014). But should the board ignore the legitimate concerns of potential ecological risks in the far future and close eyes for legally acceptable but most probably rather slippery ethical behaviour? A third role of a board is to secure leadership succession within the organisation by developing and maintaining a leadership and managerial talent pool within the organisation. Focusing too much on short-term self-interest may preclude boards to prepare for their own but inevitable succession. Admittedly, corporate power is crucial in governing an organisation. And it’s psychologically hard to let go, especially in an environment where you can be easily pushed aside by potential competitors (Pfeffer, 2015) – complicating the CEO’s succession. Fiduciary duties of a board are an attempt to codify and institutionalise these tasks and to implement the major principles. The fiduciary duty of any board member usually includes a duty of care that requires directors to make decisions with due deliberation, a duty of loyalty that addresses conflicts of interest whereby the interest of shareholders should prevail over the interest of a director, and a duty of candour that requires that management and the board inform shareholders of all information that is important in their evaluation of the company and its management (Bainbridge, 2008; Bebchuk, Cohen & Ferrell, 2004; Charan, 2005 & 2009; Macey, 2008, 2013). Primarily, a board as a trustee is assumed to create trust by guaranteeing a form of honesty or trustworthiness that includes the disclosure of financial and non-financial information and being transparent about processes behind achieving (audited) performance. Yet, boards should also be focused to the future, taking an active role in discussing overall strategy with top leadership while at the same time coaching them in preparing the execution of the strategy. Obviously, their traditional main function of avoiding agency problems by monitoring the CEO and the top leadership team is still a major part of their fiduciary duties. That supervision includes hiring the appropriate CEO for the firm hic et nunc. Equally, it also involves firing the CEO if deemed necessary in case of ethical and or legal violations, or consistent underperformance of the firm vis-à-vis the industry average.

A corporate governance perspective on organisational integrity  285 This may sound straightforward and rather easy. In reality, however, more than 70 per cent of the board’s time is focused on auditing and compliance issues (Leapen et al., 2021; Ramani & Saltman, 2019; Wong, 2011). In other words, boards spend a lot of their valuable time verifying past activities, be it in terms of complying with the international and national accepted accounting standards, or other legislative and legal requirements – especially when it concerns a public listed company. Aside from the banking industry which always has been heavily regulated in comparison with other sectors, we believe that compliance remains a crucial part of good corporate governance, but the real contributions of an experienced board is to prepare the organisation to remain competitive in the future, to a futureproof organisation. In essence, corporate governance is meant to reduce risks and to optimise opportunities. Both are forward looking. Auditing, on the other hand, is meant to “verify” the annual historical financials according to the GAAP and increasingly also non-financial ecological, socio-ethical and governance (ESG) metrics. The strategic foresight beyond mere compliance and auditing should be part of the focus of a board indeed. Currently, one of the hotly debated topics within fiduciary duties is the increasing demand to disclose sustainability ESG goals and metrics. The origin of this ESG-investing is found in ethics and ecological risk assessment. Within a US-based common law context, one could argue that the shareholders’ perspective could be slightly amended to include an ESG-investing view as long as it is formulated as a risk-adjusted approach. A survey indicates that 22 per cent of the corporate boards believe that ESG may violate their primary fiduciary duties, whereas 47 per cent see potential conflicts between their main fiduciary duty to protect shareholders’ interest versus – may I add legitimate – stakeholders’ concerns (Schanzenbach & Sitkoff, 2020: 385). As long as the materiality impact of this ESG-investing can be proven to generate risk-return ESG metrics, a board can slightly broaden the shareholders’ perspective, benefiting both shareholders and stakeholders (Porter & Kramer, 2006, 2011; Serafeim & Grewal, 2019). In Europe, the regulator takes a more stakeholder-orientated approach, potentially protecting external stakeholders, which is in line with the civic law system context. The debate between IASB (focusing on financial accounting standards) and the ISSB (emphasising the materiality of non-financial risks and objectives) is ongoing, aiming to come up with a minimal integrated and globally acceptable approach that hopes to standardise this shareholder versus stakeholder debate. In other words, I argue that the traditional agency model based on rational selfish agents is not well prepared for a futureproof organisation. Do We Need a Different Leadership and an Amended Governance Model? What kind of leadership do these boards need in this new reality of digitisation and demand for more sustainability? The argument put forward is that this kind of new leadership is supposed to make smart but above all also wise decisions – directly linked to a high level of integrity that is often associated with a broader perspective in which negative externalities caused by firms are taken seriously by their board (Lorsch & Clark, 2008; Margolis & Walsh, 2001; Porter & Kramer, 2011; Schanzenbach & Sitkoff, 2020; Serafeim & Grewal, 2019; Rose, 2007; Verhezen, 2023). The argument goes that boards should not just focus on the legal compliance and auditing disclosure requirements, but should also address the steering of the organisation toward a promising and meaningful future. That will require an amended strategic vision, infused by socio-ethical values. It is also an indication for board members to remain vigilantly humble.

286  Research handbook on organisational integrity Important for this discussion is that cognitive intelligence and socio-ethical consciousness should be clearly distinguished (Tomasello, 2019; Verhezen, 2023; Vogel, 2005; Young 2007). Due to the increased complexity of global and integrated supply chains in business, non-financial variables are affecting the competitiveness and legitimacy of the firm. Hence the importance of boards to prepare and maintain a narrative that also provides meaning and purpose to the DNA of the organisation, and this is directly linked to normative ecological and socio-ethical goals to reduce some of those negative externalities or take advantage of new socio-ecological inspired trends. By embracing this socio-ethical pathway, boards show a clear organisation’s direction – without necessarily forgoing the risk-adjusted return optimisation (Schanzenbach & Sitkoff, 2020). Despite the prevailing agency theory within (Anglo-Saxon-orientated) boards to maximise the return on capital, some institutional US- and UK-based investors that matter clearly identify this sustainable competitive advantage as a key factor in making decisions to hold, increase or disinvest in a company. In other words, those investors understand that a holistic thinking board may provide a higher chance to create value over a longer term (Gelb, McCarthy, Rehm & Voronin, 2023). Aligning short-term with a longer-term perspective also inspires wise leaders to acknowledge the importance of (1) ethical and ecological normative values – i.e., broadening to both stake- as well as shareholders, and/or (2) an explicit long-term perspective that is added in the decision-process. These values often express external socio-ethical relations about respect for engaged people and a planet in harmony – aspects that can be brought back in essence to the feeling of empathy, resulting in a higher level of integrity, as David Hume (1751) and Adam Smith (1759) have indicated. This also implies a sense of intergenerational justice (Krznaric, 2020; Raworth, 2017). Wising up – engrained in the notion of virtuous integrity – contains (1) the ability to simultaneously think in terms of short-term results and long-term vision and (2) to optimise the shareholders’ value while extending the fairness principle to those who have a real stake in the organisation such as employees, customers, suppliers and potentially the community in which it operates, all relevant and concerned stakeholders. Most likely, this capability to hold two-time perspectives at the same “time” and keeping different and sometimes opposing goals of different “stake”-holders in mind may be one of the more challenging paradoxes for any board member who is accounted for to optimise the annual performance while being also responsible for an eco-social sustainable organisational future (Freeman, Martin & Parmar, 2020; Strebel, Cossin & Khan, 2020;). These “informal” ecological and socio-ethical goals should be aligned with and integrated into more formal strategic financial performance objectives. Corporate governance would enormously benefit from including the informal power of integrity among boards. Let’s turn to the notion of integrity that most probably determines the informal ethical culture at boards and firms.

LEGITIMACY OF THE BOARD’S BEHAVIOUR THROUGH INDIVIDUAL AND ORGANISATIONAL INTEGRITY Corporate governance is about institutionalised formal structures, processes and power positions. In that sense, governance also formulates codes of conduct to distinguish ethical from unethical and or illegal behaviour. The ethical infrastructure of an organisation is based on documented and standardised procedures and codes (Tenbrunsel, Smith-Crowe & Umphress,

A corporate governance perspective on organisational integrity  287 2003). It is the function of corporate governance to institutionalise those formal structures. For codes of conduct and ethical training to have a real impact on the behaviour of its agents, they must be consistent with more systemic ethical elements, such as the organisation’s informal organisational climate and in particular integrity at the highest level (Aguilera & Cuervo-Cazurra, 2004; Roe, 2002). If such congruence is missing between the formal and informal elements, then employees likely receive a mixed message, substantially reducing the impact of these formal codes of conduct. Without an informal ethical organisational culture – underpinned by the principles of integrity and honesty – these formal structures would not be effective or could even be counterproductive (Tenbrunsel, Smith-Crowe & Umphress, 2003). Or differently stated, without (informal) integrity, wise leadership is impossible to be effective at any board, despite the implementation of formal governance structures (Rezaee, 2009; Roberts et al., 2005; Stout & Li, 2004; Tenbrunsel, Smith-Crowe & Umphress, 2003; Verhezen, 2023). How to infuse formal structures with some vitality that stimulates ethical behaviour? Corporate governance without integrity is soulless or occasionally counterproductive. Integrity without the foundational structures and processes of corporate governance may be vitally ethical, but likely ineffective. I will argue that the notion of integrity provides such vital legitimacy. Organisational Integrity Aligning Legal Compliance and Organisational Culture? In the first section of this chapter, I argued that corporate governance is a formal way to steer the organisation and their agents away from unethical and illegal behaviour. In particular, complying with a formal ethical code of conduct has been interpreted as a way to reduce that agency problem by specifying the ethical conduct of its organisational members (Weaver, 1993; Weaver, Treviño & Cochran, 1995 & 1999). Such rules-based or even principle-based code provides some guidelines to the agents and probably legitimatises the discussion of ethical behaviour (McDonald, 2000). But these formal codes need to be infused by actual informal examples of virtuous behaviour to build genuine trust in these organisations (Rouiller & Goldstein, 1993; Tracey, Tannenbaum & Kavanagh, 1995; Treviño et al., 1999). The glue at any boardroom functioning is the trust among the board members, exemplified by the chair. That person is assumed to feature a high level of integrity, be knowledgeable of and experienced in the industry, and to have the empathy and social or emotional intelligence to unify the board’s diversity and differences. The chair installs an atmosphere of critical dialogue and discussion, avoiding group-thinking. The litmus test at such a board is being trustworthy as a group and showing individual virtuous or courageous integrity, especially in times of crises and adversity. Integrity literally means to have the quality of being whole and complete. Integrity is often defined as the practice of being honest and showing a consistent and uncompromising adherence to strong moral and ethical principles and values that you refuse to change. In ethics, integrity is regarded as the honesty and truthfulness of one’s actions. Organisational integrity implies that the entire organisation is held to standards of integrity. Integrity discerns what is morally appropriate and what is not, implicitly implying consideration of others with whom one lives in a community or works in an organisation (Carter, 1996; Paine, 1994; Srivastva & Barrett, 1988). Personal integrity can be expanded into the social domain, perceived as “organisational” integrity (Trevinyo-Rodriguez, 2007) becoming a social virtue which empha-

288  Research handbook on organisational integrity sises a connectedness with a larger purpose, especially in “defining moments” (Badaracco, 1997). Organisational integrity creates informal standards to be aligned with formal corporate governance foundations that can provide the cultural cohesion for continued and committed organisational life (Verhezen, 2008a, 2010). In that sense, integrity reflects a certain professional responsibility and competence, emphasising a right attitude to approaching a dilemma, rather than specific moral characteristics. Such an attitude may lead to behaviour which complies with what one can expect of a virtuous and trustworthy board member, but who is also able to communicate and demonstrate these ethical values superbly. Traditionally, integrity requires a perceived degree of congruence between the values expressed by words and those expressed through action (Simons, 2002). A divergence between words and praxis potentially renders corporate leaders untrustworthy which undermines their credibility and their ability to use words to influence actions of their subordinates in an organisation. Most multinational organisations combine a compliance and integrity-based strategy to address the issue of unethical behaviour (Rose, 2007). It should not surprise us that there seems to be a consensus that integrity-based rather than compliance-orientated strategies may provide superior results in tackling moral dilemmas (Cloud, 2006; Paine, 1994; Treviño et al., 1999). Integrity functions as an internal moral compass – i.e., internalised rules and regulations overviewed by one’s personal conscience – that constitutes moral understanding of what needs to be done (Paine, 2003: 37–61). A moral compass directly affects the goals that drive behaviour. The normative Aristotelian interpretation of integrity as aretè, however, does not provide managers or board members a clear codex or decision tool (Verhezen, 2008a). That is where codes of conduct as part of corporate governance come in: providing a formal structure that aligns it with organisational integrity. In addition, a pragmatic reinterpretation of integrity allows corporate leaders to manoeuvre in an increasingly complex and ambiguous business context to “honour their word”, even if they cannot keep it to its fullest sense (Erhard, Jensen & Zaffron, 2010). Being honest and wise is a social praxis; it is also part of a discursive structure (Habermas, 1998, 2005). Managerial wisdom is an ability that enables us to minimise our cognitive limitations of our bounded rational capabilities by relying on an intuitive process based on values as in integrity. Practical managerial wisdom is not a tick-the-box-compliance exercise or an ideology, but a continuous search by trial and error to improve leadership that seeks operational effectiveness to produce great products and services at competitive prices. Wisdom is here defined as the praxis to act rightly, depending on our ability to perceive the situation accurately, to have the appropriate feelings or desires about such a situation, to discern and reflect about what is appropriate in this particular situational context, and to act upon it (Hays, 2003; Schwartz, 2011). Moreover, such wisdom is fuelled by a continuous learning process that acts, re-acts and pro-acts in particular situations, based on the experience gained, the knowledge acquired in the process and the integrity needed to guide it. Hence why McKenna, Rooney and Boal (2009) ascertain that managerial knowledge without integrity can be dangerous and dreadful while integrity without managerial knowledge is rather weak and not focused. Similarly, my argument is that corporate governance without integrity is a mere procedural process, whereas integrity without being strongly embedded in corporate governance practices remains fuzzy and without any form of formal institutionalisation.

A corporate governance perspective on organisational integrity  289 Indeed, the argument boils down to the proposition that organisations and their leaders will need to adhere to best corporate governance practices, infused by a sense of trustworthiness generated by virtuous integrity. Board members and their top executives need to become guardians, stewards and custodians of the organisation, whose reputation and foresight could benefit the organisation they are mandated to steer and to lead. It is about relationship-building between the firms and loyal customers, suppliers, and committed employees, and following the ethical compass that keeps boards and executives from going astray. Organisations whose strategy aligns economic objectives with ethical and environmental goals may be able to foster organisational integrity. In the pursuit of non-financial objectives, integrity adds societal value to the institution, while increasing its overall standing within and thus relevance for society (Margolis & Walsh, 2003; Neves & Story, 2015; Nonaka & Takeuchi, 2019 & 2021; Reddy, Locke & Scimgeour, 2010; Roberts & Summerville, 2016; Trevinyo-Rodriguez, 2007; Verhezen, 2008b). Some may even argue that boards, characterised by a high level of integrity, may foster a competitive edge (Crossan, Furlong & Austin, 2023). Wise Leadership with Integrity Transcends Mere Legal Compliance Integrity is “not so much a character trait as a sophisticated, reflective, constant state of awareness that results in an attitude that encompasses moral creativity. It refers to a reasonable and analytical decision-making process based on envisaged organisational values and principles that simultaneously function as an ideal and a constraint” (Verhezen, 2008b: 137). The integrity of executives and board members – having a broader or more holistic perspective – is expressed in making wise(r) decisions (Nonaka & Takeuchi, 2019; Thiele, 2006; Verhezen, 2023). Integrity belongs to a very distinctive learning process beyond the intellectual and risk component that one teaches at Business Schools. Organisations create value – monitored and supervised by the board of the organisation – by reducing the errors and uncertainty within the organisation, by being insightful and pursuing innovative (technology) solutions, and finally by being resilient in case of unavoidable failures or in case of adversity or a crisis. Infusing values into the organisation, however, enables the board to embrace trustworthiness whereby integrity provides a more holistic vision of what the organisation stands for (Calhoun, 1995; Koehn, 2005; Van Liedekerke, 2005). Wise decision-making, therefore, brings an additional set of critical variables into the equation of decision-making. Wising up enables managers to be commercially savvy, to make reasonable smart decisions for which boards are accounted for by the shareholders, but also to commit to responsible behaviour. Non-financial criteria appealing to the responsibility of board members need to become part of such a new mindset – beyond the legal interpretation of their fiduciary accountability. Values and responsibilities are part of the decision-making process. They count not only in optimising stockholders’ value, but also in satisfying legitimate stakeholders’ concerns. Smartness is linked to various forms of intelligence and knowledge. It is constituted by the cognitive element, as well as the ability to look forward and to see the often still fuzzy trends in the future, requiring a minimum level of risk intelligence. Board members are expected to assess specific risk-orientated activities. Indeed, they should have a broad enough knowledge and expertise to contribute to the bigger picture of entangled problems and challenges at the

290  Research handbook on organisational integrity board, but this member has also a specific “deep” capability or competence in a particular area (Moyo, 2021). To a certain extent, a smart leader will be emotionally attuned to have a minimal self-control and a positive affective attitude to the other members of the group. Emotional regulation helps us to focus on what is important, essential in any smart judgement. Responsible leaders emphasise the important notion of relationship-building based on empathy and by extension integrity – on top of securing a proper return on investment – to survive over a longer period. The cognitive process to intellectually understand something is to be supported and complemented by a form of societal understanding (Tomasello, 2019). Similarly, foundational corporate governance practices at the institutional process level need to be supported and energised by a socio-ethical phenomenological notion of virtuous integrity. Humans can only really thrive in a moral community. The ontogeny of uniquely human cognition is fundamentally relational. It is this relational component that has led to forms of collaboration and cooperation without which humans would not have survived (Nowak, 2006). Being mindful of those relational and cognitive components helps to make or improve our judgements. Integrity implies the notion of empathy (Shell, 2021; Thompson, 2007, 2017) that often results in a form of caring for those involved in the business. Organisational integrity refers to the way executives and top leadership at boards (un)consciously deal with ethical values in a particular business context – that admittedly can change over time and space. Any judgement by a board member can be seen as the result of the interaction between the unconscious intuitive powers and our rational conscious mind (Siegel, 2017, 2018; Thompson, 2007, 2017). Indeed, any fair judgement is a balancing act: reason is a co-participant, not the only or final arbiter of good judgement (Thiele, 2006). By being conscious and becoming more mindful, we develop a more sensitive “conscience”. This conscience underpins integrity. Wise decision-making encompasses various forms of intelligence combined with conscience. Being more conscious – enhancing the capability of heightened conscience – underpins integrity, standing by the accepted moral practices and individual principles. We can therefore interpret integrity as (1) feeling concern for others, as well as (2) concern for justice and fairness. The notion of integrity is able to “regulate” and harmonise those intentions in a way that benefits the organisation over a longer period. However, following ethical values requires effort and energy, especially in ambiguous unclear situations. Responsible leaders need to help their teams, managers, peers and board members to broaden their perspective, giving them the tools to become more mindful and the courage to address the difficult grey areas that require a commercially viable (Oberholzer-Gee, 2021) but also a fair and responsible decision (Badaracco, 2016; Koehn, 2005; Lennick & Kiel, 2005; Simons, Leroy, Collewaert & Masschelein, 2015). These leaders need to think as human socio-relational beings whose decisions may affect not only themselves, their organisation and their subordinates but also the communities in which they operate. In a certain way, making responsible or wise decisions as a board member also implies that one is more mindful and conscious about the consequences and stakes involved, and caring for their stakeholders (Gössling & Van Liedekerke, 2014; Van Liedekerke, de Moor, Vanwalleghem, 2007). In a nutshell, smart leaders turn into wise leaders when they can help themselves and others to resolve the difficult socio-ethical dilemmas we all face in business. Over a longer period, the “return on responsible behaviour” can be significant, because customers and other stakeholders would trust such an organisation (Lennick & Kiel, 2005; Margolis & Walsh, 2003). “Doing good” is not necessarily or automatically resulting in higher profitability, both short and long

A corporate governance perspective on organisational integrity  291 term. Business is much more complex and difficult than adding or deducting some variables or notions into the economic equation or in the business model. Doing good can result in doing well – if the strategy is well thought through and executed – but there is no guarantee at all (Hansen, Ibarra & Peyer, 2013). It is now common sense that holders of shares should be rewarded for taking significant financial risks in providing capital without any guarantee. However, the legal community has awarded ownership in return for taking such risks, with allegedly full legal voting and cash flow rights in the company. A debatable decision, nonetheless, according to several legal scholars (Stout, 2012, 2013). Today, the shareholders are perceived to be the legal and legitimate owners of a business entity. It has been different before, and it may be again ... And although stockholders may be seen as legitimate owners of a business today, they and their boards definitely won’t automatically provide legitimacy to their business without including the informal power of integrity and organisational normative culture in general. Providing Legitimacy through Aligning Formal Accountability with Informal Responsibility In particular situations where unethical behaviour is overlooked when it is in the interest of the organisation or when it is in the interest of top management to remain ignorant, motivated ethical blindness may get engrained (Badaracco, 2003b; Bazerman & Tenbrunsel, 2011; Calhoun, 1995; McFall, 1987; Simons, Hannes & Nishi, 2022; Timmons, 1999; Waddock, 2009). Another potential barrier is the slippery slope or indirect blindness which allows unethical behaviour to be carried out when it develops gradually or when it is carried out through third parties respectively. And one of the most dangerous situations, according to Bazerman and Tenbrunsel (2011), is where unethical behaviour is accepted because the outcome is “good” and thus overvalued; in such a case it is recommendable that the firm rewards solid decision processes and not just good outcomes. A frequent quite subtle ethical fallacy is setting goals and incentives to promote a desired behaviour while in fact encouraging a negative one, as in ill-conceived goals (Paine, 1994, 2003). The pressure to maximise billable hours in accounting, consulting and law firms which focus on the financial short-term rewards instead of the long-term credibility of the firm is such an example of ill-conceived goals. The corporate governance mechanism of complying with codes of conduct have attempted to steer behaviour away from illegal or immoral behaviour. Studies indicate that mere codification of ethical behaviour can be quite counterproductive (Tenbrunsel, Smith-Crowe & Umphress, 2003). One cannot fully legalise or codify the notion of integrity. The best that can be hoped for is to align formal corporate governance with informal values, constituting an organisational culture of high integrity. Defining ethics in terms of legal compliance only rather than in ethical aspirations, would imply a “code of moral mediocrity”. Non-executive directors at a board need to assist organisations to move beyond legality while embracing it all along instead of just moving away from it. By creating mindful awareness and interiorisation of values, ethics could “limit” certain behaviour and enable certain feelings of empathy to unfold and evolve. Especially when those values are engrained in the daily life of the organisation, tacit awareness will emerge. Ethical behaviour can strengthen the legal stance within the organisation. Ethics does not teach us to become a hero (Badaracco, 2013, 2016). On the contrary, a culture of integrity teaches us to stick to our principles while being pragmatic and trying to adapt with small trial-and-error

292  Research handbook on organisational integrity piecemeal engineering. Call it an internal ethical compass guided by integrity! And boards play a crucial role to set the tone on the top (George, 2004, 2009). Without being exemplary, employees won’t practise or implement those ethical values. If pushed too hard to “achieve results at any cost”, they may even resort to cutting corners, undermining any form of principled integrity. An organisational culture that encourages ethical conduct and is committed to complying with rules and regulations is usually not emphasising the fear for punishment but rather a focus on fairness. Procedural fairness is more important than outcome fairness in promoting employee commitment and compliance (Fehr & Falk, 2002; Fehr & Gächter, 1998) which in combination with a high level of integrity among board members provides legitimacy to business. It is the commitment to values which is the key to explaining and influencing employee rule-orientated behaviour to motivate them to voluntarily adopt company values as their own. In organisations where ethical values are engrained and where procedures are perceived as fair, employees will almost automatically be motivated to comply with rules and regulations. One needs to move beyond merely insisting upon rigid conformity and compliance to rules with little understanding because one knows this puts people at greater risk of not being able to figure out what to do when presented with complex problems or a new context where the rules are different. Understanding the answers to the most elusive and complex of ethical dilemmas that arise are dependent upon the moral fibre of the individual who has to make the decision, their wisdom and their understanding not only of the issue itself, but also of their responsibility, their role and what is at stake in the decision-making process. People with self-esteem on the job – and not just complying with the rules – are usually more productive and creative (Simons et al., 2015; Tracey et al., 1995; Tyler, 2001). One should want the values of the organisation to enable the appropriate behaviours. Instead of people being too afraid to speak up even if they do see something illegal happening, one should want them to come forward because they value doing the right thing more than they fear retaliation. A culture of silence (Gentile, 2010a; Verhezen, 2010, 2013) is often at the roots of causes of document theft and conflict of interest scandals that can cost an organisation billions of dollars in fines and upheaval at the leadership level. Conceptually, people are morally mute or silent when they fail to voice moral concern in situations which normally can be expected to evoke moral sentiments of empathy and integrity (Verhezen, 2010). Strict and rigid compliance just builds in more fear. Organisational integrity only survives when people speak their conscience (Gentile, 2010b). Ingraining ethical values is a never-ending process and one should never let up. The minimum one can expect from any responsible board member is that they do not harm, be fully accountable for their decisions and actions, and that they take their social and moral responsibility seriously toward relevant constituencies of the firm within the boundaries of reasonableness, with the ultimate objective to optimise sustainable organisational value. An organisation can easily lose sight of its strategy and focus singlehandedly on one or two preferred metrics like a return on equity as the agency model does for instance, instead of understanding what the metrics really represent. There are many unfortunate cases – often the result of surrogating metrics for strategy and cutting corners to achieve those desired metric objectives or measurements. The Wells Fargo saga some years ago, or the more recent Theranos corporate debacle (Shell, 2021) are the antipode of virtuous integrity – despite their well-established codes and governance guidelines. Any company should guard against surrogation of strategy by financial short-term metrics (Harris & Taylor, 2019) – as advocated

A corporate governance perspective on organisational integrity  293 by the prevailing agency theory. The danger of an investor surrogating a strategy by focusing on quarterly accounting results (i.e., net operating income) is real. Hence why I argued to align legal fiduciary duties to optimise financial performance with installing an organisational culture based on integrity of all members that provides a certain level of legitimacy to its business and its members steering the organisation.

FUTURE RESEARCH AND CONCLUSION Despite the enormous efforts in the field of corporate governance, business ethics, and organisational studies and decision-making, I believe that several questions remain that need to be further analysed by more detailed academic research. Although a lot of research on the practices of good corporate governance has been established, it is less clear whether these “universal governance principles” are showing a converging or diverging trend across the different national borders or legal clusters. Research has indicated how legal judicial ruling impacts the protection of legal shareholders’ rights; new research may assess how legitimacy and legality correlate in the valuation of firms. In addition, it could be useful to study the impact of the current geopolitical climate on those governance practices across borders, whether a diverging trend is emerging or not. Will the Anglo-Saxon Western governance standards as found in the prevailing agency theory be seen as rather hegemonic by emerging Asian – in particular Chinese – regulators and or politicians? How do Chinese and Southeast Asians look upon the assumptions of rational independent individuals in the agency theory that currently determines global corporate governance? A second field of research to be further explored in international business ethics and organisational studies is a similar question around the diverging or converging trends around the notion of integrity across borders: to what extent is the Confucian notion of integrity similar to the Aristotelian virtue of integrity? To what extent will the cultural context impact the interpretation of integrity? This chapter took a phenomenological Aristotelian view on the virtue of individual and organisational integrity. Would other philosophical perspectives – e.g., Kantian, or a Utilitarian view, Buddhist or Confucian perspective – lead to distinctively different interpretations of integrity? And would such different ethical perspectives loosen the assumed link between institutional governance practices and the individual virtue of integrity? Moreover, how is the notion of integrity directly linked or related to the notion of consciousness and conscience? How is neuroscience affecting business ethics and the notion of integrity? And should the philosophy of mind and ethics around the notion of responsibility and integrity be de-constructed in a complete different way as result of new neuroscientific findings? Finally, a third area of possible further research in the field of organisational and leadership studies concerns the emergence of a different kind of leadership. One could question whether the constraints of traditional leadership within the prevailing agency model would equip them in ambiguous situations or in ethical dilemmas. Future research should assess a potential direct causal link between the mainstream good governance practices (an institutional framework) on the one hand and an authentic self as expressed in the notion of integrity (an individual ethical feature) on the other hand that positively affect these leadership requirements. How does power at boards affect behaviour and is there a negative correlation between formal corporate power and informal integrity? In other words, some more research is needed to assess

294  Research handbook on organisational integrity a potential causal link between an evolving notion of leadership and the effect of integrity and governance – without falling in the trap of wishful idealistic thinking. This chapter has argued that only when corporate governance processes and practices are implemented by executives with a reputation of high integrity, organisations will thrive. The opposite is also true: organisations without an individual moral compass or without proper institutional governance structures and processes will fail one way or another. Integrity at boards is a necessity, not a luxury. To paraphrase and condone the 18th-century philosopher Immanuel Kant in his seminal essay on Enlightenment: Sapere Aude (dare to think clearly and to know rationally), cum integritatis (but underpinned by integrity). Dare to make smart decisions but with a scent of wisdom in them. Those board members with a high level of integrity aligned with proper good governance practices will reduce reputational and ethical risks and continue to make smart decisions that optimise a risk-adjusted return. Both institutional corporate governance practices energised by the beacon of virtuous integrity of these board members and top executives can steer an organisation toward a meaningful and prosperous future, a more futureproof organisation. Boards have learned to live with ambiguities, paradoxes and complexities that often require a level of smart pragmatism but also managerial wisdom in executing certain ideals and objectives. Governance without integrity remains purposeless or soulless, but it is also true that such attempts to align informal organisational integrity with more formal corporate governance practices remains a work-in-progress.

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19. A critical perspective on organisational integrity Marcel Becker and Edgar Karssing

When abuses like this begin to surface in the corporate world, it is time to reaffirm the basic principles and rules that make capitalism work: truthful books and honest people, and well-enforced laws against fraud and corruption. All investment is an act of faith, and faith is earned by integrity. In the long run there’s no capitalism without conscience; there is no wealth without character.

These words were spoken on July 9, 2002 on Wall Street by George W. Bush, then President of the United States, in response to the accounting crises at Enron and WorldCom, among others. The speech stands in a long tradition in which the importance and meaning of integrity for business has been emphasised in various ways. While initially the emphasis was on personal concern (taking good care of yourself), over time the concept, as is visible in Bush’s words, referred to concern for the interests of others and society (cf. Bauman, 2013). In recent decades, the debate has seen an important disciplinary shift: in addition to being a matter for philosophers, integrity and integrity management are increasingly a matter for practitioners and empirical researchers. This ‘empirical turn’ is a good thing. Clarity is emerging about where integrity risks lie, and about what approaches do and do not work. At the same time, for several reasons, philosophical reflection remains necessary. First, because of conceptual clarification. There is no consensus about the definition of integrity (cf. Audi & Murphy, 2006; Bauman, 2013; Breakey, Cadman, & Sampford, 2015; Huberts, 2018; Mikuzis, Mills, & O’Gorman, 2022; Palanski & Yammarino, 2007; Robinson, Cadzow, & Kirby, 2018; Schöttl, 2015). Some see integrity as synonymous with ethics, others as antonymous of corruption, with the definition of corruption not always clear (Huberts, 2018, p. 24). The debate about integrity involves notions of personal development, such as self-governance, integration, self-constitution, and authenticity, but it often remains unclear how they relate to the moral dimension. This problem is even more pronounced as these concepts play a role in everyday language in organisations and HRM approaches (cf. Musschenga, 2001). Partly because of these ambiguities, we see that the notion of ‘integrity’ is used in many ways – by CEOs, as a core value, in codes (cf. Loughran, McDonald, & Otteson, 2023), and by critical media – without much explanation. This does not benefit the moral discussion, ‘By leaving people too free to decide for themselves what counts as conduct that expresses integrity, we can also make it too easy to pay lip service to moral commitment’ (Audi & Murphy, 2006, p. 10). In that case policy prescriptions are likely to be mere rhetorical tools (Robinson, Cadzow, & Kirby, 2018, p. 3). Moreover, integrity provides little guidance in day-to-day practice (Breakey et al., 2015). Conceptual vagueness also makes it difficult to compare the results of empirical research. It remains unclear what exactly was measured, and it goes unnoticed that ‘some measures of integrity collapse into proxy measurements of other, related concepts’ (Robinson et al., 2018, p. 5). The questions philosophers ask differ from the questions that empirical scientists ask. The latter explore questions such as ‘how do things work, why do people do what they do’? For 301

302  Research handbook on organisational integrity example: ‘why do people commit fraud, and how can you prevent it’? Rather, philosophers inquire the meaning and normative dimension of a concept by asking questions like: ‘why is this action right, why is fraud morally wrong’? We should not confuse these questions – how does it work versus how should it be – and recognise that they all have their merits. Philosophical reflection will ultimately improve the quality of empirical research. Otherwise, a certain moral blindness and even moral self-indulgence are just around the corner. The debate also benefits if reflection takes explicitly critical forms. Integrity now seems to be a magic word for tackling problems, and for most people integrity programmes are a good thing in advance. A critical perspective is mindful of limitations in the scope of the concept. In recent years, there have been many discussions about social duties and moral responsibilities of organisations, raising the question of whether they fit into the focus on integrity programmes. Are we not due for a broader and more critical focus on organisational actions? Questions of this kind have strongly resounded in the disciplines of ‘critical studies’. Our contribution aims at a first exploration of ‘critical integrity studies’. The contribution consists of four sections. In the first section, we give our definition of organisational integrity (OI) and endorse the usefulness and necessity of an empirical turn in OI research. We then show how philosophical analysis thematises tensions that are lost by reducing integrity to a single measurable concept. In the third section, we elaborate on how critical studies perspectives raise new questions regarding OI research. In the fourth section, we summarise our journey and look ahead.

OI AND THE NEED FOR AN EMPIRICAL TURN Following Vandekerckhove (2010), organisational integrity (OI) refers to organisational efforts and policies to support individual integrity (cf. Bowie, 2010; Breakey et al., 2015; Schöttl, 2015). Individual integrity (II) refers to an individual who acts with integrity or possesses integrity. Thus, OI does not equal the sum of the integrity of the individual members. Of course, ‘integrity in the organisation’ is also important, but OI refers primarily to ‘integrity of the organisation which concerns the processes and structures a company is formed of’ (Schöttl, 2015, p. 7). It is tempting to define OI using the central characteristics of individual integrity, but then there is a danger of anthropomorphising organisations (Breakey et al., 2015, p. 36). After all, organisations are not people. ‘An organisation with integrity must have certain kinds of organisational structures or organisational incentives. This language does not apply to individuals with integrity’ (Bowie, 2010, p. 702). Moreover, OI must take into account the legal and regulatory environment that hardly plays a role in discussions about II (cf. Breakey et al., 2015, p. 15). Efforts and policies supporting II effectively would earn an organisation the ascription of OI (Vandekerckhove, 2010, p. 134) (see Table 19.1). Table 19.1

Definitions of organisational and individual integrity

OI

Organisational integrity refers to organisational efforts and policies to support individual integrity.

II

Individual integrity refers to an individual who acts with integrity or possesses integrity.

Because OI emphasises policies and measures, the pressing question naturally becomes: what works and what hurts? In what way can an organisation cultivate II? What causes integrity

A critical perspective on organisational integrity  303 violations? What is the role of leadership? How could an organisation balance the ideal, the practical, and the possible? These are questions that necessitate empirical research: an ‘empirical turn’ in OI research is needed (cf. Huberts, 2018). We cannot answer questions about effectiveness with philosophical housekeeping alone. ‘Since organisations are composed of people, we need to take the findings of psychology, sociology, and economics into account in order to achieve organisational integrity’ (Bowie, 2010, p. 710). However, empirical research needs a clear definition of integrity. That requires conceptual analysis, and philosophers can certainly lend a helping hand. De George (1993, pp. 5–6) defines integrity as a synonym: ‘Acting with integrity is the same as acting ethically or morally. Yet the word integrity does not have the same negative connotations that ethics does for many people; nor does it have the overtones of moralising that the term morality often carries with it’ (cf. Bowie, 2010). But if integrity merely means ‘acting ethically or morally’, then debate and research are not helped by another word for concepts that already stand on their own. If special concerns and themes are expressed by the word integrity, one should not obscure those themes and concerns by making them invisible. The same problem occurs with integrity as an antonym of corruption. The way many use II and OI refers to much more than the mere absence of corruption, ‘it also may mean that an organisation and its members strive to maintain a commitment to the organisation’s legitimate purpose. In such instances, if an organisation possesses integrity, it possesses more than the mere absence of corruption’ (Robinson et al., 2018, pp. 16–17). In an influential paper, Palanski and Yammarino (2007) broke down integrity into several concepts, indicating that many issues that practitioners and scholars address with the concept of integrity are better described by other concepts such as authenticity, courage, honesty, trustworthiness, fairness, and compassion. Their own definition is a variant of behavioural integrity as proposed by Simons (2002, p. 19): ‘Behavioural integrity (BI) is the perceived pattern of alignment between an actor’s words and deeds.’ The advantage of this containment is that, in accordance with the principle of parsimony, integrity becomes unequivocally researchable (cf. Simons, Tomlinson & Leroy, 2012). It does not sound unwise to treat related concepts as related concepts and not as building blocks of a definition of integrity. This prevents the definition of integrity from becoming too broad. On the other hand, there is a reductionist move here: the moral connotation of integrity disappears from the picture, no moral demands are made of words and deeds (Simons, 2002, p. 19; cf. Simons, Palanski & Treviño, 2013). Thus, integrity is portrayed far too narrowly and it is questionable whether this actually helps practitioners. In organisational life integrity has a much broader meaning, in which a normative ideal resounds. As a counterbalance to the reductionist move, we prefer the attempt by Breakey et al. (2015, p. 9) to preserve the richness of the notion of integrity. They developed a framework for both II and OI in which they combine the different themes put forward by scholars, ‘because each distinct theory furnishes evidence for the existence of its particular element’ (Breakey et al., 2015, p. 9). This approach does not lead to an unequivocal definition, but by characterising integrity it articulates in the best possible way what meanings and functions integrity has in an organisational context (cf. Karssing, 2006). We lack the space to develop a framework. However, we would like to show through an example how some philosophical housekeeping can contribute to understanding II and thus contribute to empirical research on OI.

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SOME PHILOSOPHICAL HOUSEKEEPING: PERSONAL AND MORAL INTEGRITY The counterpart of a reductionist move is to show integrity in all its richness. In order to cultivate II using OI, we must know what is at stake. What are the concerns we address with II? What is a person who tries to have integrity, who tries to act with integrity, trying to do? To answer these questions, it is helpful to distinguish between personal integrity and moral integrity as two dimensions of individual integrity (cf. McFall, 1987). Some scholars elaborate this distinction according to the character of values at stake: personal integrity (PI) is about authentic and highly cherished values and principles, and moral integrity (MI) is about social roles and expectations (cf. Benjamin, 1990; Van Luijk, 2004). In that case MI merely adds moral constraints to the cherished values and principles of PI. One can also make the distinction between PI and MI more colourful by linking them to different themes and concerns (cf. Karssing, 2006). PI is about self-governance and self-respect. It is about the proper relation to yourself (Calhoun, 1995). With MI, the focus is on the maintenance of the moral order and the social system. At stake are trust and vulnerability in dependency relationships. In other words, the proper relation to others. With Benjamin (1990, p. 52) we can distinguish between the ‘internal and external importance of integrity’: ‘Internally, it provides the structure for a unified, whole and unalienated life … Viewed from the outside, individual integrity provides the basis for reliance, trust, friendship, and love’. By distinguishing functions and meanings of integrity in this way, we see two conceptualisations of II that are both relevant to OI (see Table 19.2). It shows why BI is too narrowly defined and points to an important tension between PI and MI that OI as organisational efforts and policies to support II must consider. First, we will briefly elaborate on PI and MI. Table 19.2

Definitions of behavioural, personal, and moral integrity

BI

Behavioural integrity is the perceived pattern of alignment between an actor’s words and deeds.

PI

Personal integrity refers to the proper relation to yourself.

MI

Moral integrity refers to the proper relation to others.

Personal Integrity PI revolves around the challenges posed by self-governance and concern for moral selfhood. It starts with the classic question: how to live a good life? At stake is self-respect, in the double sense of the word (cf. Darwall, 1977). On the one hand, as the recognition of oneself as a person capable of living an independent life through self-direction (respect as self-recognition), on the other hand, as a form of appreciation for what you do and achieve, for the choices you make (respect as self-appraisal). PI refers to protecting oneself from unwanted infringements that threaten one’s moral self-image (cf. Williams, 1981a, 1981b). For many whistle-blowers, for example, in addition to preventing social damage, protecting their own moral self-image is an important reason to denounce wrongdoing. In this way, integrity fulfils a protective function, setting limits on what can reasonably be expected of people. The price of a breach of integrity is self-denial. PI therefore implies critical evaluation of one’s own values, commitments and views and the appropriation of these personal standards. In other words, ‘the person of integrity is … auton-

A critical perspective on organisational integrity  305 omous and takes responsibility for her choices and actions. What she does or chooses is truly hers’ (Taylor, 1985, p. 109). Because personal standards can conflict with each other, PI also requires balancing: how do you deal with those conflicts? Various authors emphasise the search and not the result, because otherwise no justice is done to moral self-direction: ‘In order to be true to oneself, one must be willing to explore commitments and change them when necessary. This is what it means to acknowledge ourselves as the changing beings that we are’ (Davion, 1991, p. 183; cf. Conly, 1983; May, 1996). PI is thus a dynamic commitment to yourself; it is not present in advance but is something we strive for and demands that we personally grow and continue to develop. Integrity is work in progress. PI articulates several guidelines for self-governance (cf. Benjamin, 1990; Cox, LaCraze & Levine, 2003) by which one must make an active effort, again and again, under changing circumstances. Moral Integrity PI does not sufficiently clarify why the term ‘integrity’ is ‘widely used in praising, evaluating, remembering and recommending people’ (Musschenga, 2001, p. 219). PI is about caring for oneself, and does not necessarily refer to caring for others, to one’s contribution to the maintenance of the moral order and the social system. Bush refers to this in the quote at the beginning of this chapter. He mentions stricter rules, higher penalties, and an investment in market institutions as a remedy for abuses. But that cannot be a panacea, because, Bush said, ultimately, the ethics of American business depend on the conscience of America’s business leaders. We need men and women of character, who know the difference between ambition and destructive greed, between justified risk and irresponsibility, between enterprise and fraud.

For Bush, the connection between integrity and economics is through the word trust: trust is indispensable for economic transactions, and trust is based on the integrity of the players in the marketplace. Why is trust so important? Because, as Warnock (1971) points out, there is a human deficit: people will not always take each other’s interest into account. That is particularly difficult in dependency relationships in which we are vulnerable to the behaviour of others. ‘People in modern, highly differentiated societies are dependent on all kinds of often anonymous officials, experts, producers and retailers for getting goods, benefits, services, treatments and so on. Therefore they have, especially when the relations are asymmetrical, an interest in the trustworthiness and reliability of persons acting in such roles or capacities’ (Musschenga, 2001, p. 222). The human deficit, as Bush also understood, can only partly be overcome with rules, contracts, and supervision. Ultimately, market participants will have to trust each other. Brien (1998) notes that the concept of trust is a proximus of integrity. A proximus is a term that is closely related in its meaning to another term without being a synonym. Brien argues that a discussion of trust automatically includes integrity: the integrity of the other person is a good reason to trust that other person. This reference to trust and trustworthiness is also reflected in the definition of BI: alignment between an actor’s words and deeds. In other words, practice what you preach, walk the talk. However, BI is a very formal definition of integrity that is not yet linked to morality, whereas ‘the use of integrity in the business area refers to a moral understanding of the term’ (Schöttl, 2015, p. 3). Therefore, Brenkert (2004, p. 4) speaks of a ‘moral

306  Research handbook on organisational integrity filter’: ‘integrity involves more than simply doing what one says; what one says and does must also pass through some moral filter. As such, integrity is closely bound up with business ethics and forms of social responsibility’. In short, II classifies as MI if it can pass a moral test. In the search for moral standards, Becker (1998) indicates that without an objective standard to determine MI, integrity remains an arbitrary matter: ‘This is a problem because it leaves researchers and practitioners with no rational, objective way to evaluate individuals’ integrity’. Calhoun (1995) and Walker (1998) also emphasise the importance of moral standards, but believe that an objective standard, a ‘God’s-eye point of view’, is not possible (cf. McLeod, 2004). They stress that integrity is precisely important in social relationships and that this relational aspect should not be forgotten in the elaboration of integrity. Walker believes that PI is only valuable as long as it contributes to trust in relationships. Calhoun even goes so far as to state that the themes that become visible from the personal perspective have little to do with integrity. From her relational perspective, she offers points of departure to concretise the moral test, so that we can further enrich MI as a concept: we determine together our moral standards, and MI requires you to make an active contribution to this debate. Calhoun (1995, p. 254) therefore sees integrity as a social virtue: integrity is ‘tightly connected to viewing oneself as a member of an evaluating community and to caring about what that community endorses’. Vandekerckhove (2007) indicates that talk the walk is more important for integrity than walk the talk. In talking to each other we link personal values to social values. ‘Acting with integrity is interacting in the sense that by speaking openly about our discernment and our action in a given situation, we invite others to reflect on the extent to which our discernments and actions divert or are in contradiction with collectively held values’ (Vandekerckhove, 2007, p. 164; cf. Carter, 1996). Walker (2014, p. 48–49) calls integrity ‘the virtue of accountability relations’: ‘In accountability relations, we keep each other responsive to moral (and other normative) demands and responsive to each other as rightful judges of our conduct … Integrity is the firm habit in thought, feeling, and action of being appropriately responsive to demands for accountability’. In this way you contribute to the maintenance of the moral order and the social system. In social relations and cases of trust, MI also refers to steadfastness: keeping your back straight in the face of temptations and threats (cf. Kekes, 1983; McFall, 1987; Halfon, 1989). Both internal and external obstacles can undermine integrity. These include internal obstacles such as self-deception, hypocrisy, weakness of will, arrogance and insecurity, and external obstacles such as contempt, ostracism, penal sanctions, job loss, and relationship breakdowns (Calhoun, 1995; Burrow, 2012). Pandering to these comes at the expense of trust. Taken together, these themes make clear how integrity provides the basis for trust and how MI is as a moral duty in professional life an answer to the human deficit. PI and MI Together: Fields of Tension How to conceptualise II in such a way that we can empirically research efforts and policies to support individual integrity? We have distinguished between PI and MI. They offer two angles to characterise integrity in all its richness and which empirical research should consider. Without MI, integrity is morally blind. For example, Taylor, who limits herself to PI, must acknowledge that ‘the person of integrity need not be a morally good person’ and Halfon (1989) fails to indicate that a Nazi fails from the point of view of integrity. This sounds counterintuitive; few would say that ‘a tyrant’ such as Hitler, Pol Pot or Stalin is an example of

A critical perspective on organisational integrity  307 a person of integrity (cf. Cox, LaCraze & Levine, 2003). Integrity without MI degenerates into a form of moral self-indulgence (Williams, 1981b). It doesn’t sound very laudable that people only act with self-respect in mind and have no respect for the vulnerability of others. We subscribe to a relational view of integrity as emphasised by Calhoun (1995) and Walker (1998), especially in a business context, but that is no reason to overlook PI. Without attention to PI, the members of an organisation only appear as objects, OI ignores their self-understanding and the opportunity to use people’s intrinsic motivation is missed. We shouldn’t make the contrast too great either. Aristotle already knew that you cannot be virtuous outside of society: ‘one must be true to the self, but the self is always part of a community’ (Vandekerckhove, 2007, p. 157). PI requires the appropriation of standards, MI refers to accepting responsibility for moral standards. So, by an act of appropriation ‘you seal the standards with your personal hallmark and make them an intrinsic part of your moral identity’ (van Luijk, 2004). In this way PI makes MI stronger: you embrace by self-governance the moral duty associated with your position. Lessons for OI What do we learn from this characterisation of II for OI? We can name some pitfalls and challenges for OI as organisational efforts and policies to support II. This is helpful in empirical research that requires clear and unambiguous concepts. But we must also guard against reductionism. After all, it is becoming clear that BI – the perceived pattern of alignment between an actor’s words and deeds – touches the essence of integrity only to a very limited extent, as it does not involve a moral filter and barely addresses self-governance. For the members of an organisation who interpret a call to integrity from PI, the trap of moral self-indulgence looms. The main pitfall for OI is a moralistic approach to cultivate integrity with an emphasis on compliance, docility, and conformity. In practice, we often see that instruments such as rules, procedures, codes, e-learnings, and the remuneration policy are used to influence people’s behaviour. That may be one way to cultivate MI – although it remains to be seen whether this will be very effective – it does not do justice to concerns that are identified with PI. With a moralising approach of OI, the members of the organisation only come into the picture as objects with no room for self-governance. This has an alienating effect. By also doing justice to PI, OI becomes richer and more powerful. Richer, because more justice is done to the self-understanding of individuals. More powerful, because from the personal perspective, individuals find an important motivation to do what they ought to do when an appeal is made to self-esteem, professional pride, and self-respect. Then OI can be a search and learning process, where through reflection and dialogue the members of the organisation understand that ethics and integrity are an essential part of their work, and they explore with each other the moral frameworks within the context of their work. We see the famous distinction Paine already made in 1994 between what she described as an ‘integrity strategy’ and a ‘compliance strategy’ to give substance to OI. Paine (1994, 2005) defines integrity as ‘the quality of moral self-governance’. An integrity strategy aims at stimulating responsible behaviour and makes this possible by formulating a moral purpose and core values that the members of the organisation can appropriate from intrinsic motivation. A compliance strategy aims at preventing irresponsible behaviour by emphasising rules and supervision, and will soon be perceived as moralistic.

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‘CRITICAL INTEGRITY STUDIES’ The conceptual clarifications have in common that they work with the presupposition that integrity is a good thing. This cannot be taken for granted. The discussion about integrity benefits from a more critical problematisation of the importance attached to the concept. Inspiration for this can be drawn from the tradition of critical theory. The roots of critical theory go back to the work of Kant, who explored three activities of the human mind in his Critiques (Kant, 1997, 2000, 2005). Kant’s use of the word ‘criticism’ refers to the Greek word krinoo, meaning ‘to discern’. ‘Criticism’ acquired a normative connotation with the work of the Frankfurt School. This group of philosophers and social scientists were disappointed by the failure of the Marxist revolution and dismayed by events in Germany in the 1930s, from which some of them had to flee. In particular, Adorno, Horkheimer, and Marcuse elaborated a radical social critique: Western thought may be successful in many respects, but it is incapable of dealing properly with the ultimate goals of human life and action (Adorno & Horkheimer, 2002; Marcuse, 2002/1964). Enlightenment thinking promised freedom and equality but created new forms of bondage and inequality. The Frankfurters also thematised that the short-term successes of the economic system led to excessive domination over nature, which would destroy it in the long run (Adorno & Horkheimer, 2002, preface). The increasingly positivistic sciences were unable to thematise these problems: ‘A human science which is committed to “the positive” is in danger of losing all critical consciousness whatsoever’, Adorno lamented (Reeves & Sinnicks, 2021). In a broad social critique, the Frankfurters targeted the political, social, and cultural systems, and that required an interdisciplinary, even holistic scientific practice. This lost its appeal in the 1980s, but that does not mean that the need for fundamental criticism disappeared. In recent decades, it has mainly expressed itself in the more segmented practice of ‘critical studies’. ‘Critical legal studies’, ‘critical data studies’, ‘critical race studies’, ‘critical management studies’ (CMS), and even recently ‘critical finance studies’ (Borch & Wosnitzer, 2021) penetrated academia and societal practices. The colourful amalgam has cross connections, but there are also tensions. On the one hand, more than mainstream approaches, they purport to connect directly to living experiences (e.g., of experienced injustice). For example, Akella (2008, p. 101) states: ‘the essence of CMS is to situate management and its disciplines in the real world’. On the other hand, some critical studies excel in heavily theoretical (meta) reflections. On the one hand, ‘critical studies’ provide provocative system criticism that calls for structural changes, on the other hand they address themes in which they seek short-term success. The use of grand moral concepts is not shunned, but ‘critical studies’ also have strong resistance to moralising. Critical studies often criticise the positivist model of science, which is said to work with a too narrow conception of knowledge (Prasad & Mills, 2010, pp. 228–229). But they rely on ‘hard’ findings from social sciences that expose existing wrongs. These contrasts do not always make it easy to discern the common features. We name some common characteristics, on the basis of which we develop an impetus for a ‘critical studies approach’ to integrity. The ‘critical studies’ have a strong philosophical bent. They seek to expose underlying problems and structures, in contrast to mainstream discourses, which too rarely questions their starting points. But it is never a non-committal philosophical exercise, ‘critical studies’ are normative from the outset. There exist major problems, like inequality, marginalisation, and blindness to discrimination, that are seen too little. Mainstream approaches ignore the

A critical perspective on organisational integrity  309 operation of the often implicit and invisible oppressive structures. Exposing, putting into perspective, and even deconstructing these structures is a necessary objective. Thus, ‘critical studies’ have a strong emancipatory commitment. Directly related to this, critical studies pay a lot of attention to language. Language is not a neutral medium for conveying messages. The meanings and connotations of words indicate how people shape the organisation and exercise their own power (Fish, 1988). The obfuscating effect of concepts conceals abuses. The critical view of the usual patterns of thought also led to a fundamental critique of rationality. For example, CMS, particularly relevant to our topic, revert to the distinction already thematised by Weber between value rationality, which determines the highest goals, and instrumental rationality, which determines the means to achieve goals set by the subject (Weber, 2019, pp. 24–25). In mainstream management discourse, the second predominates: it indicates well how goals and interests can be achieved but is unable to think meaningfully about the highest values (Scherer, 2009; Reeves & Sinnicks, 2021). Critical studies are influential, both within and outside the academic walls. The influence is not undisputed. Critical studies are sometimes dismissed as fads that lack academic robustness (Pluckrose & Lindsay, 2021). In the discussion about their status a dichotomy looms that is regrettable. One need not be a committed supporter of critical studies to recognise that they shake up established patterns of academic discourse, especially on the larger emancipatory and sustainability issues. As far as we have been able to ascertain, the notion of ‘integrity’ does not play a prominent role within ‘critical studies’. This is regrettable for both critical studies and the discourse on integrity. Integrity as a normative concept, which is aimed at abuses in the organisation, could surely be an excellent starting point for critical reflection. Integrity studies in turn are also likely to benefit from the critical perspectives. They often touch on fundamental abuses that require further exploration. From these assumptions about mutual benefit, we examine some of the central themes within critical studies to see how they can feed into the integrity debate. Thus, we give a first impetus to ‘critical integrity studies’. Naivety and the Question of Power Critical studies question the distribution of power and knowledge in organisations. To what end and for what purpose do certain people have privileges? Is that justified? What voices are unheard by systems of power? These questions combine two important sources of inspiration. First, of course, there is the emancipatory commitment of the Marxist tradition, with its eye on oppressive social structures. In addition, contemporary philosophers of which Foucault is the most important, have pointed out that power has many faces. Besides the visible authority that usually punishes with coercion and violence, power is present in language and customs (Foucault, 2020). They have a force that influences actions and thinking. Power thus operates in many ways. In power structures that use coercion and violence, people initially conform out of fear, but over time they internalise the norms. With the more subtle mechanisms of exercising power like language and customs, there is often immediate internalisation. People take it for granted and no longer recognise it as such. An essential role in all these mechanisms is played by ‘surveillance’, the continuous monitoring and recording of behaviour. People who know they are being observed are more likely to conform to the norms associated with their role and function. In Minima Moralia, Adorno already wrote about employees: ‘All these nervous people … believe that only by … assiduity,

310  Research handbook on organisational integrity serviceability, arts and dodges, by tradesmen’s qualities, can they ingratiate themselves with the executive they imagine omnipresent, and soon there is no relationship that is not seen as a “connection”, no impulse not first censored as to whether it deviates from the acceptable’ (Adorno, 1974, p. 23). This line of thought has been systematically elaborated by Foucault: knowledge also involves a form of exercise of power (Foucault, 1977). An important way to resist these forms of power is to constantly question existing structures. How justified is the threat of violence? What power emanates from central concepts? Aren’t we too quick to accept the obvious? Constant reflection on how we see ourselves and others is liberating (Ten Bos & Painter, 2012, Introduction). Not only philosophical reflection, but empirical research also plays an important role in uncovering power mechanisms, for example research on implicit bias (Payne & Vuletich, 2017) or research on the emergence of adapted preferences (Elster, 1983). In the latter, people have adapted their preferences to the bad situation they find themselves in. They are no longer critical, and the exercise of power is accepted. Power analyses lead to a critical perspective on the use of ethical concepts. Traditionally, there has been a huge difference between the language of power and ethical categories. Power analyses assume a zero-sum game, with winners and losers, but the perspective of ethics involves widely shared values. ‘Critical studies’ puts this difference in a challenging perspective: values ​​may be generally shared, but they exercise power. They can be used to get things done from people or to accept things that they are not spontaneously inclined to do. In this way, the norm that approves or disapproves behaviour quickly becomes an instrument of power. Ten Bos and Painter cite as an example the idea that high rewards are necessary and just (2012, chapter 7). Such a line of thought is grounded in a societal image of equal and free opportunities, in which everyone is fairly rewarded according to merit. This view of society is far removed from the raw reality of inequality of opportunity, but when it is taken for granted, it is a challenge to question the fixed structures and perspectives (cf. Sandel, 2001). Another example are surveillance practices in the context of integrity programmes. As measures against corruption and fraud, they are introduced as a self-evident necessity, but they are intrusions of people’s freedom. Breaking through the obvious, critical studies also address the claim so often inherent in ethical concepts that they represent values ​​that are good and valuable in themselves. A critical perspective looks ‘behind’ and ‘beneath’ ethical concepts, looking for the motives that inspired them. Like all concepts, they are social constructs that arise from interests. Take for example the pre-eminent agreement on the concept of ‘integrity’; there is no doubt that an organisation and its employees must have integrity. It is precisely this general acceptance that makes integrity rules a power factor, to which people unquestioningly conform. The rules are adopted without critical reflection and tempt slavish obedience. Who reflects on the image of the organisation implied in the rules? Are the general truths contained in the rules not motivated by particular interests, thereby overriding others (Eastman, 2013)? The problematic power of the word integrity is strongly reflected in so-called ‘integritism’, a phenomenon on which a language-critical approach can shed light. The notion of integrity literally means ‘purity’, ‘incorruptibility’. It suggests that the bar is high; you can’t have a little integrity. At the same time, integrity is an umbrella term that covers a multitude of actions. It often happens that people who make a small mistake in a relatively unimportant area suddenly find themselves burdened with an ‘integrity issue’, with all the weight attached to the concept. Thus arises integritism, the tendency to place all actions under the magnifying

A critical perspective on organisational integrity  311 glass perspective of integrity (Huberts, 2018; Maesschalck, 2019). The necessary sense of gradation is lost. Of course, incorrect claiming of expenses is not allowed, but it makes a lot of difference whether it concerns an overpriced bottle or a transatlantic flight. In integritism, ‘integrity conflicts’ arise around smaller, trivial administrative problems, that can be resolved with a good conversation. There is also confusion about the penalty. Due to the weight of the concept, we often hear that the violator of the integrity rules has ‘gnawed at the foundations of the administrative apparatus’ and that ‘his credibility is at stake’. However, the call for a firm punishment is not justified by the seriousness of the offence. Poor Procedure and Rich Experience The obfuscation of power mechanisms by the integrity discourse plays a special role in procedural interpretations of integrity. Rules lay down how and to which authority a request can be submitted, or a report or a complaint must be made, and how the matter should be handled. Particularly in larger and more bureaucratic organisations, extensive procedures are indispensable. Bureaucracy theories teach that procedures have great ethical value: without expressing to a specific content, they establish a route that everyone can understand and follow, and that applies to everyone without exception. Procedures guarantee (legal) equality par excellence (Du Gay, 2000). However, the strength of procedures is also their weakness. They reflect only part of the ethical reality. The neutral procedure juxtaposes the divergent perspectives in an orderly manner by distancing themselves from these. Opposed to this, inspired by hermeneutics and phenomenology, critical studies have highlighted the importance of ‘living experience’ (Dallmayr, 1976). People stand in the world first and foremost as meaning-giving beings; from their embeddedness in concrete situations, they shape their life. Personal stories reveal great diversity and uniqueness in backgrounds and motivations. Due to its neutral, detached language, the procedure obstructs the view on the deepest human motivation. Like (the caricature of) the bureaucrat who complacently follows the rules without knowing what he has at his disposal, the rules-fixated integrity officer threatens to become alienated from everyday reality. In the words of Adorno and Horkheimer (2002, chapter 1), rational language itself becomes a myth and relieves the functionary of the effort to think for himself. This was clearly expressed by an integrity officer of the Dutch Public Prosecution Office when she denounced the formalistic culture in the organisation: ‘If someone does not function properly or if there are complaints about certain behaviour, people often think they can solve it by drawing up a report file. What now file? Step up to someone. Talk to him’ (Nooy, 2018, p. 3). This is of course not a plea to abolish procedures. However, the critical analyses have made it clear how much the language of the procedures differs from that of the living experience. It is a considerable challenge to deal with procedures in such a way that the background story emerges. Formal equal treatment should go hand in hand with openness to the individual case and an approach tailored to the individual. Moreover, the neutrality of the procedure should not lead us to overlook the fact that the procedure always lands in a context in which it exercises power. The concrete application of the rule, even if it is done ‘without regard to persons’, results in some actors gaining something, and others losing something. Do we pay sufficient attention to the actual consequences of the neutral procedure? Procedures also interfere, almost invisibly, with power because they confirm the status quo. When procedures apply equally to everyone, existing power inequal-

312  Research handbook on organisational integrity ities are confirmed and reinforced. This applies to procedures in organisations as much as to larger rules systems. Thus, ‘critical legal studies’ have worked out that common positive law approaches tend to have a preservative rather than a changing effect. Substantial conflict is not always resolved when a formal law calculus is applied to the problem (Eastman, 2013). Integrity as an Opiate Many forms of behaviour fall under the heading of integrity, but the larger issues do not always come into the picture. Critics even argue that the focus on the integrity dilemmas obscures the view on the really big ethical challenges. Slovenian philosopher Žižek, who brings Marxist and postmodern thought together in original ways, writes about ethical ‘feel good’ concepts such as sustainability and integrity as an ideology that obscures the destructive effects of the capitalist system. Ethical language is an ‘opiate for the masses’, encouraging us to (marginally) change our behaviour so that real change is not required (Žižek, 1997/2007). Does society benefit from a company with perfectly functioning internal integrity processes that engages in heavily polluting activities and contributes to socially disruptive structures? Once again, procedures play a role in the concealment of the major issues. They use a clear language that everyone agrees with, and about which no discussion is possible. Procedures create a unified discourse. In the discussions about major issues, however, it is important that the harsh social realities come to the fore, where hard conflict is not shunned. Only in confrontation do people speak freely. The procedure that pacifies can stand in the way of this. The most important narcotic effect of integrity is that integrity processes usually concern good conduct within organisational frameworks. Must the concept of integrity be stretched? There are indeed good reasons not to separate the internal integrity processes from the discussion about the social function of the company. First, because the line is difficult to draw. For example, it is generally accepted that workplace bullying and discrimination fall under integrity violations. Why not broader emancipatory themes, and the socially disruptive structures that lie behind them? There is a more fundamental reason for an interpretation of integrity that addresses social themes. The legitimacy of integrity regulations is ultimately embedded in the position organisations have in society. Public officials have an absolute ban on corruption because they work with public resources and public power and corruption disrupts the rule of law. As the generally accepted definition of the OECD states, public integrity is ‘the consistent alignment of, and adherence to, shared ethical values, principles and norms for upholding and prioritising the public interest over private interests in the public sector’ (OECD, 2017, p. 6). In commercial organisations, corruption is reprehensible for a different reason: it disrupts the level playing field. As Transparency International states: ‘We work to create a level playing field and the highest possible standard of business ethics and good practice’ (Transparency International, 2023). In public administration, we are critical of ancillary positions because they lead to decisions that are not in the public interest. In business, ancillary positions contribute often to achieving the corporate objectives. Dealing with confidential data is particularly sensitive for a healthcare institution because it manages a special type of data. Because of the direct relationship between integrity issues and embedding of the organisation in society, it is not exaggerated to say that an organisation that has its ethical affairs in order ‘internally’ but violates people’s rights in its actions towards the outside world, shows ‘moral schizophrenia’. The question arises why people would be motivated to stay ethical within the lines when they

A critical perspective on organisational integrity  313 work in an organisation that in its behaviour towards the outside world violates all kinds of standards (Pirson, 2012). Can Integrity Be Managed? Mainstream management literature focuses on efficiency: achieving maximum output with minimum input (Prasad & Mills, 2010). Particularly within CMS, a strong tradition of criticism of efficiency thinking has developed (Tadajewski, Maclaran, Parsons & Parker, 2011), which is relevant to integrity issues. Efficiency-centred approaches focus only on what are useful given fixed goals. The narrowing of focus to means quickly leads to pictures and diagrams that promise outcomes, but they describe human actions only to a limited extent. This applies especially to moral behaviour. First, because moral duties elude calculation. A moral dilemma arises precisely because the calculation-based schemes fail. Solving the dilemma requires an approach in which not strategies and calculations but qualities are central. In finding a solution, a person is thrown back on his values-priorities. How little moral language has to do with calculation is readily apparent in people who take a strong moral stand, such as whistle-blowers. The duty experienced by persons that leads them into the thrilling trajectory of whistleblowing overcomes them, rather than them choosing it. Following the moral impulse is difficult, and the outcome is highly uncertain. Is the person who decides to do this right, and will he be right? (Ten Bos & Painter, 2012, chapter 9; Park, Vandekerckhove, Lee, & Jeong, 2020). In such matters it is precisely this uncertainty that makes an action moral, and that cannot be captured in calculating schemes. Another reason why morality is impossible to manage refers to a trait that runs like a red thread through the long tradition of ethics. Moral motivation is expressed in very different ways, but always it concerns the highest and ultimate motivation for action. Aristotle (2002) opens his Ethics with the statement that, if human action is not to be in vain, it must ultimately be aimed at the highest goal, which is happiness. Utilitarianism works with a completely different conception of happiness, but Bentham (2000) also states in Principles of Morals and Legislation that the ultimate human motivation lies in the pursuit of happiness. Kant (2019) opens his account of the foundations of ethics with the search for an ethical anchor that is unconditionally good, so that it cannot be used for bad purposes. We have seen before that from a power perspective, this characteristic of morality can be questioned. But it does not alter the fact that someone who instrumentalises moral motivation does not do justice to it. The manager who is only interested in doing good because that serves the company’s profitability puts morality in a ‘frame’ in which it does not belong. He runs the risk of ‘window-dressing’; people try their best to appear good when they are not. Sooner or later, this avenges itself. Motivation slackens; when the outside world is not watching, the temptation to cross the line is immense. Recognising that integrity is the highest motivation presents the manager with a major challenge. He can facilitate, stimulate, give instructions, and enforce standards with sanctions. But in the end, it is up to people themselves to develop the right motivation. This implies a management paradox: integrity policy only works when it offers people the freedom to develop their own motivation.

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CONCLUSION We are in dire need of empirical OI research to know what works and what hurts. At the same time, we have to recognise that integrity has many faces and therefore that everyone who is involved with integrity should first clarify which definition of integrity is being used (Audi & Murphy, 2006). Otherwise, integrity is mainly a source of confusion that provides little guidance in everyday practice. It also is unclear what exactly is being measured and the results of empirical research cannot be compared. We have shown that integrity often remains undefined in debate and research, or put down as a synonym of ethics or as an antonym of corruption. A related danger is a reductionist move that limits integrity to BI: consistency between words and deeds. It may help to operationalise integrity into an unambiguously measurable concept, but that goes at the expense of important themes and concerns in organisational life that thereby become invisible. Here too, it’s better to be vaguely right than precisely wrong. In other words, we must be careful that the requirements of empirical research with Occam’s razor – the principle of parsimony – do not come at the expense of relevance to practice. We have shown how, with some philosophical housekeeping, pre-theoretical meanings of integrity, as we encounter them in ordinary language, can be articulated clearly. Philosophical reflection can tell us more about these themes and concerns, how to evaluate them and how they are related to each other. We have distinguished between PI and MI, indicated how they are intrinsically tied, how they are both lacking in some way but also can correct each other’s shortcomings. Empirical research on OI will fall short if it ignores this. Philosophical reflection is not only a cure for the fallacy of misplaced parsimony, but it can also raise more subversive questions. Using ‘critical studies’ as a source of inspiration, we have indicated how critical questions can enrich OI research. It leads to broadening and deepening the research focus. Research is not only carried out within the given system, but there is also room for system critique. Common assumptions regarding the distribution of power and knowledge are questioned. Empirical research confirms the status quo, and therefore falls short from an emancipatory point of view. The supposed neutrality of procedures that must guarantee integrity must be corrected by making the normative perspective explicit. In this way, philosophy can provide a counterweight to possible naivety in OI research. We are convinced that more collaboration between philosophers and empirical scientists benefits the debate on integrity. However, ‘normative and social science researchers acknowledge each other and sometimes focus on issues of mutual interest, but they interact little and rarely collaborate’ (Kish-Gephart, Treviño, Chen, & Tilton, 2019, p. 19). That’s disconcerting; they could learn from each other, so that philosophical reflections are empirically informed, and the empirical sciences have their research agenda determined in part by normative issues. A next step could be an integrative approach that ‘tries to bridge the normative-empirical chasm and rejects the very idea of ​​distinguishing between purely normative and purely empirical claims’ (Molewijk, Stiggelbout, Otten, Dupuis, & Kievit, 2004, p. 58). A truly integrated approach might be a possibility in the future (Kish-Gephart et al., 2019); now the main challenge is not to draw a philosophical and an empirical approach to OI too far apart. An ‘empirical turn’ helps us move forwards, as long as it goes hand in hand with sound philosophical housekeeping.

A critical perspective on organisational integrity  315

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PART III DIMENSIONS OF ORGANISATIONAL INTEGRITY

20. Organisational integrity as social coherence Marvin T. Brown

Whether a sailboat has integrity or not depends in part on the waters in which it operates. Like a sailboat built for sailing, the integrity of organisations is conditional. There are inherent conditions that have intrinsic value and should not be violated and there are coherent social conditions that do not have intrinsic value but are necessary for corporate integrity. The inherent conditions include the Earth, our humanity, and the civic sphere because the Earth and our humanity are integrated living organisms, and the civic sphere is based, when not violated, on our shared humanity. The coherence of social worlds, on the other hand, depends on our collective will. We could remake incoherent social worlds into coherent social worlds, which would make corporate integrity possible. In this chapter, I first describe the identity of corporations and lay out the challenge of social coherence, and then focus on the three necessary conditions for corporate integrity: respect for the integrity of the Earth, our humanity, and for the integrity of the civic realm. To demonstrate how we might aim for coherent integrity, I propose developing “civic systems of provision” that offer possibilities for social coherence and corporate integrity and then I give an example of such a system: a civic system of providing food that presents an alternative understanding of the relationship between food and money: an understanding that could open a path to a sustainable future. Given our current climate and social crisis, talk about corporate integrity may seem rather utopian, but I hope it’s a utopian vision that offers an alternative to the current destructive trends. If a corporation blindly operates in incoherent social worlds and fails to recognise and respect the intrinsic conditions in which it operates, the chance for corporate integrity evaporates. If corporations at least have a plan for coherent social relations, and recognise the inherent conditions of their context, their chances for integrity vastly improve. To understand these possibilities, we need to first understand the relationship between integrity and coherence.

INTEGRITY AND COHERENCE There’s probably no better place to begin thinking about integrity than with the motto on the United States seal: E pluribus Unum “out of many, one.” Given the European American practices of enslaving Africans and killing or dispossessing Indigenous Americans, there is also no better place to examine an organisation’s social conditions. As I documented in A Climate of Justice: An Ethical Foundation for Environmentalism, the “unity” of elite white people has always been accompanied by the denial or disavowal of others (2022). As a white American, I was brought up to see myself as belonging to this “Union,” which was not possible for many other Americans. If integrity means inclusion (“out of many, one”), and if we want to use the term to guide organisational design, then we need to take a step back and think about: “What goes with what?” and “How can and should these parts be related?” 319

320  Research handbook on organisational integrity To this end I want to introduce what I call the hermeneutical principle of coherence. I call it a hermeneutical principle because the notion of coherence can enable us to understand “what belongs to what” and “how the parts are related.” Here is the principle: If you cannot understand A without understanding B, then you cannot understand B without understanding A. The principle invites us to draw such conclusions as the following: ● If you cannot understand African Americans without understanding European Americans, then you cannot understand European Americans without understanding African Americans. ● If you cannot understand Africa without understanding Europe, then you cannot understand Europe without understanding Africa. ● Or, if you cannot understand our climate crisis without understanding capitalism, then you cannot understand capitalism without understanding our climate crisis. Much of European American economic writing, if you think about it, violates this principle of coherence. No better example than Adam Smith’s The Wealth of Nations. Smith writes the following about the causes of colonial prosperity: “Plenty of good land and liberty to manage their own affairs their own way, seem to be the two great causes of the prosperity of the colonies” (1994). What he omits to say is that the main source of European wealth was the slave-based tobacco trade that not only enriched the colonies, but Smith’s Glasgow as well. Smith knew this; he just didn’t tell us (Brown, 2010). As the historian Arthur Herman tells us, Smith was closely associated with the wealthy tobacco lords of Glasgow, Scotland: It was by watching the city’s tobacco trade that Adam Smith, professor at the University of Glasgow from 1751 to 1764, made his first real acquaintance with large-scale business enterprise, and with the businessmen who run it. Smith struck up a close acquaintance with John Glassford, who kept him informed of events in America and also took a keen interest in Smith’s progress with his Wealth of Nations. Glasgow Provost Andrew Cochrane organized a Political Economy Club, whose members included Smith, Glassford, and another wealthy tobacco merchant, Richard Oswald. Cochrane even presided over a special session of the Glasgow Town Council on May 3, 1762, when Professor Smith was made an honorary burgess of the city. (2001, pp. 162–163).

The consequences of the incoherence of the Wealth of Nations are hard to overestimate. Instead of most leaders in Western economics focusing on the actual history of “wealth creation,” they imagined an “invisible hand” or “the market dynamics of supply and demand.” Smith is not alone. Most of us probably know a bunch of European and American economists whose theories omit the exploitation of people and land, which, in fact, are essential components of Western prosperity. We now live in the 21st century, of course, and the world has changed, but have we moved beyond the social incoherence that emerged from the Atlantic trade of people and land over four hundred years ago? I don’t think so. Achieving “oneness” for white people, of course, has not been that difficult because many of us live in a social world that makes it easy. Not so for most people of colour. This difficulty was aptly described by W.E.B. Du Bois in his book, The Souls of Black Folk:

Organisational integrity as social coherence  321 It is a peculiar sensation, this double consciousness, this sense of always looking at oneself through the eyes of others, of measuring one’s soul by the tape of a world that looks on in amused contempt and pity. One ever feels his twoness – an American, a Negro; two souls, two thoughts, two unreconciled strivings; two warring ideals in one dark body, whose dogged strength alone keeps it from being torn asunder … He simply wishes to make it possible for a man to be both a Negro and an American, without being cursed and spit upon by his fellows, without having the doors of Opportunity closed roughly in his face. (1996, p. 5)

The principle of coherence – connecting separated things necessary for self-understanding – would seem to imply that white people will also experience “double consciousness,” when they understand that whiteness is as related to Blackness as Blackness is related to whiteness. The difference, of course, is that the social world in which we live maintains a racial hierarchy that privileges whiteness. We continue to live, in other words, in an incoherent social world, which gives us a couple of options. We can deny the social context of corporations, and focus on a corporation’s internal integrity, a kind of incoherent integrity, or we can imagine a coherent social world in which corporations could operate, which would make coherent corporate integrity possible. This chapter takes the second option, which makes a lot of sense once we understand what corporations are for. To that end, four dimensions of corporations should be considered.

FOUR DIMENSIONS OF CORPORATE IDENTITY I used to ask my students what they would show their family when they came to see the university. They could show their parents the campus and the buildings, but is that the university? What about going to a sports event? Well, if the university had become a sports centre, then that could be the university. On the other hand, you could delete sport teams and still have a university. What you cannot delete is the people studying and learning, not only in the present moment, but also in the past. These ongoing conversations constitute the university, and that’s true of any organisation. Organisations, like other social entities, are constituted by ongoing conversations and communication patterns that exist and participate in larger social worlds. When individual persons join organisations, they participate in these ongoing conversations. They may change the conversations – and the university – by adding their voice, disrupting existing patterns, and proposing different imaginary futures. There are, of course, different kinds of organisations. This chapter focuses on business corporations that are state chartered. People who want to have a corporation – called a C corporation – must fill out incorporation papers and have them approved by a state agency. From the very beginning, in other words, corporations are legal creations. And what does the state create? It creates property. Corporations, however, are not only pieces of property, but also work communities, moral actors, and providers of goods and services (Brown, 2005). Corporation as Legal Property Perhaps the clearest indication that corporations are properties is that we can buy and sell them, watch their market value increase and decrease, and use them for collateral. For something to become property, it must have a title or in this case: incorporation papers. Something becomes property, in other words, by the action of a civic or political community. Without

322  Research handbook on organisational integrity laws, you may have possessions, but not property. The institution of private property, in other words, depends on the existence of a civic community. Although it is seldom mentioned, a corporation cannot be understood without an understanding of its civic charter and its grounding in civic law. It may look like Elon Musk controls Twitter [X], for example, but Twitter’s Board of Directors could fire him or, theoretically, Twitter’s charter could be revoked by the state. If you do not like what a corporation is doing, you can buy it – if the Board of Directors agree – change the conversations and make it do what you want. When the US Supreme Court in the famous Citizens United case said that corporations can speak and therefore are protected by the First Amendment, it’s fair to say that they were not talking about the corporation as legal property. As property, corporations are dummies for ventriloquists. Corporations are more than dummies, of course. They are, as was noted previously, also social entities constituted by ongoing conversations. This means that they are not only property, but also communities. Corporation as Community Much like a university, a corporation “lives” in its ongoing conversations; conversations about its work, its people, its purpose and performance, and its impact. While corporations depend on the participation of biological humans, they are not “natural groups” like families or tribes. The human relationships are usually based on contract and designed for effectiveness and efficiency. The task, for the most part, is to get the job done. One would imagine that corporations would try to hire the most qualified persons to help do the work, but until recently, white men were often hired instead of the most qualified. Various factors, including government intervention, have moved most corporations to develop a more diverse work force and a more pluralistic community. The quality of the community, of course, depends not only on the participants, but also on the corporate managers. Overall, managers try to encourage productive activities and prevent deviant behaviours. Some corporations have enlisted “Corporate Integrity Agreements” as a means of preventing or mediating deviant behaviours. In the health care field, for example, the US Office of Inspector General now negotiates “corporate integrity agreements” with health care providers to prevent wrongdoing or when it has happened, to ensure that it does not happen again. The agreements entail a list of activities, such as developing standards, implementing training programmes, independent reviews, and annual reports. Managers appear to use these agreements as means to prevent harm to others and to the corporation, but this approach does not give much attention to the notion of the corporation as a community. Corporate communities are not only bound by rules and regulations, but also by their “organisational culture.” In his classic, Organizational Culture and Leadership, Edgar Schein defines an organisation’s culture as its shared “artifacts, values, and basic assumptions” (1985, p. 14). Instead of focusing on compliance, an organisational culture approach focuses on shared values and assumptions. The approach focuses more on developing a shared meaning of working together than on monitoring employee behaviour. One could imagine a balancing of both approaches, which would not only protect corporate integrity, but also promote it. Good managers, I assume, will do both. How managers balance promoting and protecting corporate integrity depends in part on the design of a corporation’s decision-making process, which brings us to the third dimension of corporate identity: their moral agency.

Organisational integrity as social coherence  323 Corporation as Moral Actor Action, of course, is quite different than behaviour. You can train people to behave well, but action requires a decision-making process. To qualify as a moral actor, one must have serious choices to make, have the capacity to do otherwise, and be able to provide a moral (value-based) justification for one’s choice. A moral actor is not one who is always moral, but rather one that faces moral choices and can be judged by moral standards. Corporate decisions are made by persons who are responsible for making the best decision for the corporation, from their position or role in the organisational structure, not from their personal feelings. The best decision, of course, is usually not immediately clear. Corporate decisions usually go through a process that includes various participants in the corporate structure exploring alternative options and selecting the best one based on corporate values and principles. The choice of who participates in the process, the selection of the corporate values and principles, as well as how to apply them in concrete situations, give corporations the status of moral actors. When I write about what corporations should do, I am referring to this dimension of corporate identity. In this regard, corporate integrity depends on both the choice of corporate values, and on developing policies that match the values. Different corporations, of course, have different values and assumptions, and therefore, different policies. This variety is possible because corporations are not “inherent” entities – they are not grounded in nature like human beings and other animals. They are social constructions that can be de-structured and re-structured. An oil company, for example, could become a wind turbine company, if that would be a good answer to the questions: “What is the corporation good for?” If one sees the oil company in the business of producing fuel for cars and trucks, and if automobile companies are making electric cars and trucks, then managers could transform the company to produce electricity rather than gas. Managers could also resist such a transformation and try to block the production of electric vehicles. Does acting with integrity mean affirming the company’s identity as an “oil company,” or changing one’s identity to a “turbine company?” To put it another way, is corporate integrity based on being-true-to-oneself or on “transforming oneself”? And if the latter, what are the guidelines for making the right decision? The answers to these questions are contained in the fourth identity of corporations: corporations as providers. Corporation as Provider Some of the first corporations licensed to operate in the United States were corporations with the purpose of building railroads. They had a social function. Today, many see corporations as instruments of “wealth creation” or with the purpose of making a good return on investment. That may make sense from a financial or economic perspective. It doesn’t from a civic perspective, because the civic is the place where citizens care about protecting and providing for citizens. Why would a civic government give a bread-making corporation a charter to operate if the corporation was not going to provide people bread? That’s what the corporation is for! In pre-modern societies, one could go to the river, for example, to catch fish for dinner. Today, most of us go to a grocery store, select the fish we want, pay with a credit card, and take it home. In our modern economy, corporations do not operate by themselves but rather in social systems in which they play their role with others in the process of making provisions.

324  Research handbook on organisational integrity From an investor’s perspective, identifying the corporation as property may be paramount. From a manager’s perspective, it may be the community, and from a stakeholder perspective, the corporation as a moral agent. A civic perspective does not exclude these corporate identities, but focuses on a corporation’s function as a provider, which allows us to judge its integrity by examining its part in a larger social system of provision in which it operates. If these social systems are incoherent, corporate integrity will be severely truncated, at least until we re-design the systems.

THE CHALLENGE OF SOCIAL COHERENCE Corporations exist in larger and other social worlds. This is not new. For those of us in the field of business ethics, we have talked about corporate social responsibility or CSR for years. Many of these conversations have included such notions as a corporation’s responsibilities to “people, profit, and planet,” or to multiple stakeholders. In general, the conversations have focused on corporate character and performance – what are the responsibilities of corporations? – not on the issue of the coherence or incoherence of the social worlds in which the corporations operate, which is the focus here. As was noted before, social worlds are composed by ongoing conversations and behavioural patterns. The conversations include several different types of discourse: storytelling, sharing images, interpreting situations, reflecting, and deliberating, which can be seen as a cyclical pattern. Figure 20.1 lays out the key elements of the construction of social worlds, and how the elements are related to each other.

Figure 20.1

Making social worlds

Organisational integrity as social coherence  325 The construction of social worlds could be said to “begin” with events, but in most cases, we encounter and participate in ongoing cycles that began long ago. We listen to the stories about what happened and use shared images and concepts to interpret situations. When we encounter different stories and images, and therefore different interpretations of situations, we also encounter different ideas about what we should do. These differences are usually resolved either through debate or by some authority, resulting in a slightly different view of the world that we use to interpret the next event, and so the cycle continues. For the most part, this cycle makes sense to those of us who live in it. It has, for us, a kind of wholeness or integrity. It’s also a world that gives us guidance for our behaviour. As they say, “Most people do what they think is right, considering the world in which they think they live.” That does not mean they are right; only that they think they are. If we imagined living in their world, we would probably agree with them. Most social worlds have a sort of internal integrity – the selected parts fit together to make a whole – but they may also suffer from incoherent integrity – their understanding of themselves omits other parts that make their social world possible. We need to ask if their ongoing conversations have dismissed other events or other stories that are necessary for a full understanding of themselves? No better example of such incoherence than the story of liberal capitalism.

THE INCOHERENCE OF LIBERAL CAPITALISM One way to assess the coherence of any social world is to examine whether its ongoing conversations leave out topics or patterns of behaviour that are necessary for a factual understanding

Figure 20.2

Early liberal capitalism

326  Research handbook on organisational integrity of itself. Early liberal capitalism is a good example. Figure 20.2 shows the ongoing conversations that created and maintains its social world. The events of Atlantic exploration, colonisation, and trade certainly brought forth a new social world. The dominant story to make these events tolerable, if not understandable, was the story of freedom and prosperity. The story took different forms, but the image of relationships was clear: the strong individual and leader forged ahead, and others followed. Another key image was that America was the land of opportunity for those who would seize it, which led to the interpretation of the situation as one of unlimited resources. These narratives, of course, left out the story of the Atlantic slave trade, the destruction of Native American cultures, and the role of slavery in the production of American prosperity. The Liberal/Capitalism story exhibits what Kevin Bruyneel has called “settler memory.” A quintessential feature of white settler mythologies is, therefore, the disavowal of conquest, genocide, slavery, and the exploitation of the labour of peoples of colour. In North America, it is still the case that European conquest and colonization are often denied, largely through the fantasy that North America was peacefully settled and not colonized. (2021, Kindle, location 353)

Can corporations have integrity in the incoherent social world of “settler memory”? I don’t think so. This memory is not only socially incoherent, but it also splits off from consciousness violations of the integrity of the Earth, our humanity, and the civic sphere. Can we create a coherent social world based on the recognition and restitution of these violations? That’s the task at hand. It’s a task that involves designing coherent social systems that show respect for the inherent conditions of corporate integrity.

INHERENT CONDITIONS OF CORPORATE INTEGRITY As providers, corporations can achieve integrity by finding their fit with other parts of the systems of provision to which they belong, if, and this is a big if, they respect the inherent conditions in which they operate: the Earth, our humanity, and the civic. They are inherent conditions because they have a vital core that can be discarded or abused. These three conditions should be respected as a given and a gift that provides substance and meaning to our social lives. When their integrity is violated, so is the integrity of the violators. If corporations violate a condition of their integrity, they sabotage their chance for having integrity. Corporate integrity, in other words, is conditional. The first condition is to respect the integrity of the Earth. Respecting the Earth’s Integrity Western patriarchy has a long tradition of dominating the Earth. As Western settlers, we treated the Earth as property, as real-estate. What was incomprehensible to Indigenous people seemed normal to settlers. Who would pay money for land and then exclude others from enjoying it? Instead of seeing the Earth as a commons to be shared, it was treated as a commodity for profit, investment, and speculation. It’s clear today that the Earth is a living system and has systemic patterns that maintain its equilibrium (Capra, 1997). Perhaps the best known is the process of photosynthesis, which maintains a balance between oxygen and carbon dioxide. Carbon emissions have upset this balance, and we now face its consequences through droughts, floods, hurricanes, and other

Organisational integrity as social coherence  327 violent storms. Our expoitative relationship with the Earth has now put many communities at risk of elimination. This “dis-integrity” waits to be corrected by a proper respect for the Earth’s need for a reciprocal relationship with human communities. As Robin Wall Kimmerer writes in Braiding Sweetgrass: One of our responsibilities as human people is to find ways to enter into reciprocity with the more-than-human world. We can do it through gratitude, through ceremony, through land stewardship, science, art, and in everyday acts of practical reverence. (2015, p. 90)

The current climate crisis has pressured governments and corporations to make some changes to avoid an increase in global warming over 1.5 Celsius. A necessary goal, but does it reflect respect for the Earth’s integrity or only worry about human survival? We can certainly try to keep the Earth “liveable” for humans by technological and behavioural changes, but will we be successful without a substantial change in our relationship with it? Does it make sense to aim for a future that continues to dismiss the Earth’s inherent value? One could ask a similar question about our treatment of our shared humanity. Respecting Human Integrity The Earth deserves our respect because it is an inherent system. Its value is integral to itself. That’s not true of corporations, but it is true of humans. We are beings with inherent value. From a religious perspective, one could say that the inherent value of humans or human dignity is derived from God. We are part of God’s creation. While a civic perspective is not atheistic, it does not ground human dignity in God’s creation but in human existence itself. Humans as such have inherent value. That’s the conclusion one could draw from the neurobiologist Antonio Damasio’s research on the evolution of the self. Damasio shows that the wordless, primitive self is already a witness to and conscious of living purposefully. He writes: It is the feeling that my own body exists, and it is present, independently of any object with which it interacts, as a rock solid, wordless affirmation that I am alive. (2020, p. 185)

The primal consciousnesses of ourselves as living beings can be seen as the site of human worthwhileness or dignity. Other primates also experience “being alive,” but only humans, it seems, have a social autobiography that holds it. While our social stories exhibit social differences – class, race, nationality, wealth, and cultural differences – none of these differences should be allowed to violate the integrity of our shared humanity (Brown, 2022). None of us like to live in, and usually cannot tolerate, incoherent social worlds, and yet, social incoherence epitomises our Western social context. We may carve out smaller social worlds that give us a feeling of integrity, but this may be a false and even dangerous feeling, if the integrity relies on our dismissing the humanity of others. While the principle of coherence leads us to recognise our social polarisation, and the desire for integrity pulls us toward unification, it’s easy to remain trapped in our own social worlds. One place that allows us to recognise the humanity contained in different social worlds – others and our own – and to acknowledge and respect the integrity of our shared humanity, is the realm of the civic. The civic realm reminds us to protect our shared humanity and habitat. This is a different memory than Bruyneel’s “settler memory” that was described above. It is a remembering – a re-membering – of us as members of a shared humanity that deserves respect.

328  Research handbook on organisational integrity Respecting Civilian Power There are two kinds of civic power: civilian and military. One might think that the military controls the civic ethos. There is the national pledge of allegiance, the flag, the war memorials and monuments, and veteran holidays, plus the military budget. Still, there are times and places, such as the civil rights movements in the 1960s, when the power of the civic emerged from civilian unrest. We could also recall the debates in town hall meetings and legislative sessions, where deliberations among citizens were guided by the rule of law. Remember that even though Martin Luther King Jr. was a Christian pastor, instead of a religious movement, he supported a civil rights movement that demanded that officials enforce the rule of law. Civic spaces are not sacred – there are no gods in the civic – but they are solemn. I first experienced this solemnity in a high school visit to a local court proceeding. We sat in total silence, rose when the judge arrived, and paid attention to the judge’s words. It was a solemn moment. I knew that this was not an auction, or any kind of “social event.” It was a civic event ruled by the rule of law. Rulers have also used laws, of course, to disempower civilians, justify slavery and other crimes against humanity. As the January 6 attack on the US Congress revealed, the rule of law is only as powerful as the people who uphold it. It might seem tempting to use military or even commercial power to protect the civic, but my guess is that will violate the foundation of the civic – our shared humanity – rather than protect it. A visit to the National Museum of African American History and Culture provides a good alternative. People whose humanity has been denied have risen and reminded others of a shared humanity, and in so doing, have reminded us of the power of civilians. To protect the integrity of the civic space, corporations must do more than respect the integrity of our shared humanity – the basis for the civic space – they must also not violate the integrity of the civic realm itself where civilian empowerment is possible. This principle is like Michael Walzer’s view of different spheres of justice. Walzer argued that the just distribution of goods depends on the sphere in which they are distributed and their meaning in that sphere. College funds might be distributed differently in a family, for example, than in a public institution. In terms of political offices, Walzer writes: “These offices are not commodities, sold to the highest bidder, but rather go to those qualified – those who have the qualifications for the particular office” (1983, p. 133). Walzer’s argument seems particularly relevant today following the US Supreme Court’s decision in the Citizens United case that opened the door to corporate money dominating much of American politics. The Courts reasoned that since spending money is a form of speech, corporations can now spend as much money as they wish for the candidates of their choice through “public action committees” or PACs. The use of PACs has turned public offices into commodities and who will hold them largely depends on the amount of money corporate and individual donors will spend on their campaign. Robert Reich’s advice for business leaders about corporate lobbyists would appear even more applicable to the corporate financing of political campaigns: The most effective thing reformers can do is to reduce the effects of corporate money on politics, and enhance the voices of citizens. No other avenue of reform is as important. Corporate executives who sincerely wish to do good can make no better contribution than keeping their company out of politics. If corporate social responsibility has any meaning at all, it is to refrain from corrupting democracy. (2018, p. 2016)

Organisational integrity as social coherence  329 A retreat of corporate lobbyists and corporate donations from the halls of government would allow elected representatives to have time and space to consider how to restore the integrity of the Earth and our shared humanity through the design of social systems that meet the needs of their citizens. The civic realm, in other words, could be a place for designing coherent social worlds in which corporations as providers could act with integrity.

THE COHERENCE OF CIVIC SYSTEMS OF PROVISION If we remember that corporations are creations of the state – their existence depends on a state charter – we have already made space for looking at corporations from a civic perspective. When we focus on the identity of corporations as providers, and we consider the complexity of modern social worlds, it makes sense to see corporations belonging to civic systems of provision. Furthermore, if we can imagine a coherent civic system of provision then it’s not that difficult to design corporations so they fit in such a system and fit with the other agents that also operate in the system. Say I manage a bread-making company. I may intend to bake good bread. But in our modern world, everything from the source of the ingredients I use, the infrastructure that connects my suppliers, to the government’s subsidy for farmers and consumers, and so much more, compose a system of providing bread. For my company to have integrity, it must fit in a system of provision that includes all the agencies involved in bringing my product to the table. When all are included, it raises the possibility of a just social system. A sure sign of a coherent social world is when its ongoing conversations not only include the experiences of all groups, but it also has a place for the voice of all groups. Especially from a civic perspective, the relationships among the parts of any system of provision should be based on fairness or reciprocity so all participants in the system join by choice, not by force. Whether justice emerges from this condition depends on whether those who have been harmed have the power to make justice a reality by having their voices heard and their requests implemented. Thinking about making provisions is different than thinking about making money or profit. Instead of thinking in the language of capitalism or socialism, it is thinking in a civic language guided by a vision of providing the necessary provisions for all. It’s a language of “civicism” that rests on an assumption of our shared humanity and from this perspective, engages in “civic conversations” on how to design coherent systems of production and provision. These conversations could occur on various levels including local, regional, federal, and even global levels, and in various institutions, including corporate board rooms, civil society organisations, and government. In Civilizing the Economy, I drew Figure 20.3 to help us think about civic systems of provision (2010, p. 175). In the inner circle, citizens engage in conversations about how to make provisions for all. They would aim to design systems of provision that would respect the Earth’s integrity in the use of natural provisions and the integrity of our humanity by providing families and communities with what they need to flourish. This is the middle circle. The outer circle includes the primary needs of human communities from food to entertainment. Each one of the entries in the outer circle represents a system of provision, such as providing housing or health care, and each of these systems would include all the social organisations and institutions that facilitate providing what families and communities need and deserve.

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Figure 20.3

Civic systems of provision

One might think of these systems of provision as an orchestra. The players of different instruments all contribute to the whole, and the conductor doesn’t so much tell the players what to do but rather facilitates all the participants in playing their part to compose the larger whole. So, who will be the conductor? I think we should look for potential conductors in the civic space, since the civic is the platform for envisioning coherent systems. It turns out that the United States Executive Branch already has institutions that could be seen as places for many of these “civic conductors” – the cabinet secretaries. The Department of Housing and Urban Development, for example, now addresses the housing needs of those who do not own property. If it were to address the design of the whole housing system, it would recognise and perhaps correct the systemic trend that increases the land values for some and decreases affordable housing for others. Other cabinet secretaries could also expand their portfolio to become conductors of civic systems of provision: ● The Department of the Interior could broaden its focus on the management of public lands to the management of the commons, as a Department of the Commons. ● The Department of Agriculture would become concerned with the whole process of providing food for all. Perhaps we should name it the Department of the Food System. ● The Department of Health and Human Services would continue its movement towards providing health care for all as the Department of the Health Care System. ● The Department of Housing and Urban Development would broaden its mandate to provide housing for all, as the Department of the Housing System.

Organisational integrity as social coherence  331 ● The Department of Transportation would broaden its vision to design transportation systems that provide access for all to the provisions they need, as the Department of the Transportation System. ● The Department of Energy would continue to develop an energy future that is sustainable and just, as the Department of the Energy System. One could imagine that with some re-design, these government agencies could ensure that these systems of provision would be coherent – all key parts would be included – so corporate managers could design their organisations so that they would contribute to the larger whole. The real challenge resides in the inner circle of the system of provision: the realm of civic conversations where participants decide how humans transform nature into provisions for families and communities. This is the place where corporations could act with integrity, provided they respect the integrity of the sources of the inner circle: the Earth, our humanity, and the civic. These three are necessary conditions for corporate integrity.

AIMING FOR COHERENT INTEGRITY Coherent integrity presents a challenge, especially in our legacy of treating the Earth and our humanity as dead things instead of living beings, of creating incoherent stories to construct our social worlds, allowing commercial or military power to dominate the civic, and suppressing civilian power. Developing civic systems of provision may not repair all the damage that has been done, but it will create coherent social worlds in which corporations can operate in these social worlds with integrity. Let’s explore this possibility with an image and an analysis of a civic system of providing food. A Civic System of Providing Food For most of us, our access to food depends on a complex network of various social organisations and the natural environment. In cities, it may seem like a miracle that millions of people make breakfast every morning. Also, many in developed countries spend less of their family budget on food (around 10–15 per cent) than earlier generations. At the same time, starvation, malnutrition, and food deserts challenge us to improve the system. It’s a vast system: one in five jobs in the US are in the food system and most of these workers are poorly paid women and people of colour. Perhaps most daunting is that the current system of food provisioning is totally unsustainable. The current system increases global warming, depletes resources, makes mountains of waste, and like most other systems of provision today, increases inequality. Constructing (or conducting) a civic system of providing food may seem like a socialist plot or a fool’s errand, but in fact we already have a complex food system that provides food for many, but not for all. The challenge is to re-design the system so the providers in this system respect the integrity of the Earth and our humanity, work for the coherence of their systems of provision, and maintain the autonomy of civilian spaces. The providers include many different organisations that should have a voice in the civic conversations; conversations that could be orchestrated by appropriate agencies, such as a “Secretary of Food.” I recently proposed that such a system would look like Figure 20.4 (2021, p. 63):

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Figure 20.4

Civic food system of provision

This food system, of course, is only one system of provision among others, from housing to health care. It would be a mistake to totally isolate the food system from other systems of provision, and yet, most corporations as providers will function in one system rather than others. The coherence of these systems depends on an awareness of each actor’s existence and each actor’s role in fulfilling the system’s purpose. So, how would this system of provision change our understanding of some of the agencies in the outer circle? Banks would focus on supporting the system of provision, for example, instead of focusing just on making money. Agricultural Research and Business might develop ways of farming that would treat the Earth with respect. Cafes and Grocery stores might ensure that farm labourers are treated with dignity. Commercial advertising would create ads that encourage consumers to know and respect the Earth. Local Grocery stores would find ways to make quality food available to all communities instead of only the “safe” ones. There could be more changes as more voices are heard in civic conversations. The participants in these conversations would represent different priorities and proposals, but the ethos would be similar: empowering civilians to construct coherent civic systems of provision, where no one is omitted and all are represented. These conversations would be quite detailed, and not without disagreement. That’s what civic life is like. What would make these civic conversations special would be the participants’ commitment to create coherent social worlds. Perhaps there is no better example of what such a commitment would entail than reflections on the coherence of food and money in the civic system of providing food.

Organisational integrity as social coherence  333 The Coherence of Food and Money Remember the principle of coherence. “If you cannot understand the providing of food without understanding money, then you cannot understand money without understanding the providing of food.” Money is not a provision – a natural source transformed into a resource for families and communities – it facilitates the making of provisions. In other words, food is not the only thing that flows in the systemic providing of food. So is money. They flow through the system together. There are wind currents that send rain and tornadoes through farmlands. Sometimes, farmers need money to repair their building and replant their crops. There is the flow of migrant workers that follow the seasons for planting and harvesting. Money could flow with them so they could buy the food and other provisions they need. There is the flow of food production from living plants and animals to processing plants to family tables. Money needs to accompany the whole process. There is also the flow of the emission of carbon from the tractors, the trucks, and the family car. Money needs to flow with this environmental destruction to restore the Earth. Since people have a basic right to adequate food, they should also have an adequate amount of money to acquire it. Money is always an enabler, and its function should depend on the needs of families and communities. The flow of money, in other words, should always follow the flow of food. Not the other way around. Money in a civic food system would also finance research, new technologies, and methods for the production, provision, and consumption of food. This function sees money not as a flow, but a stock. Money as stock may seem like capital, if we define capital as things we use to improve the making of provisions. This stock, like a stock of food, should not be treated as a commodity, but as a resource for large-scale development and research in improving the effectiveness of the food system. Money as stored value would also be available to finance government projects such as ensuring food safety, building a viable public infrastructure, as well as supporting the process of public education so citizens would participate in the process of developing sustainable systems of provision. Several providers – from farms to cafes – handle the production and distribution of food, but only one handles money: banks. Banks issue credit to food enterprises to get them up and running. They give credit to buyers and consumers to make everyday exchanges. They provide a place to store money for future use. For banks to have integrity in this system of provision, they would need to maintain the coherent relationships between food and money. Instead of a mission to make money, or even to make money from money, their mission would be to provide financial resources to the providers and the families and communities that participate in this system. If there is plenty of food, banks should make sure people have plenty of money. Like other systems of provision, the food system relies on the smart transformation of the planet’s sources into human resources. Since economic systems are social systems, we can change them and slowly re-direct them toward sustainability and justice. An important element of that change will require that we, as citizens, see money as a means for providing food rather than see providing food as a means for making money. Sometimes, markets can be useful in meeting people’s preferences and paying for the use of resources. Private ownership can encourage personal stewardship. The point is to ensure that the economy fulfils its purpose of making provisions for all based on the principles of coherence – all parts of the system are included – and integrity – all parts fulfil their function to ensure that the whole system fulfils its purpose.

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CONCLUSION We should not aim for something we cannot achieve, so do corporations have what it takes to have coherent integrity? Their character – legal property, communities, moral agents, and providers – does give them that possibility. They are civic creations, and civic agencies could direct them to function with integrity in coherent systems of provision. Can they respect the integrity of the Earth and our humanity? Probably not in our present economy where prosperity is based on exploitation of the Earth and its people. Still there are pressures, mounting pressures, for changing course. The disruption of the climate continues to increase which gives us more evidence that we are destroying our future. Changing demographics are making white supremacy more and more untenable in the United States and elsewhere. Women and people of colour are collecting power. Indigenous communities are presenting us with their claims. It will become harder and harder to pretend that the current economic system has a future. There is an alternative. One we could aim for, if we envision the “we” as participants in civic conversations who design coherent social systems of provision in which corporations could participate with integrity in designing a sustainable future for all.

REFERENCES Brown, M. T. (2022). A Climate of Justice: An Ethical Foundation for Environmentalism. Springer Nature. Brown, M. T. (2021). A civic economy of provisions. In J. Speth, and K. Courrier (Ed.). The New Systems Reader: Alternatives to a Failed Economy. Routledge. Brown, M. T. (2010). Civilizing the Economy: A New Economics of Provision. Cambridge University Press. Brown, M. T. (2005). Corporate Integrity: Rethinking Organizational Ethics and Leadership. Cambridge University Press. Bruyneel, K. (2021). Settler Memory: The Disavowal of Indigeneity and the Politics of Race in the United States. Kindle, location 353. The University of North Caroline Press. Capra, F. (1997). The Web of Life: A New Scientific Understanding of Living Systems. Anchor Books. Damasio, A. (2020). Self Comes to Mind: Constructing the Conscious Brain. Pantheon Books. Du Bois, W. E. B. (1996). The Souls of Black Folk. Penguin Books. Herman, A. (2001). How the Scots Invented the Modern World. Three Rivers Press. Kimmerer, R. W. (2015). Braiding Sweetgrass: Indigenous Wisdom, Scientific Knowledge and the Teachings of Plants. Milkweed Editions. Reich, R. (2018). Just Giving: Why Philanthropy Is Failing Democracy and How It Can Do Better. Princeton University Press. Schein, E. H. (1985). Organizational Culture and Leadership. Jossey-Bass Publishers. Smith, A. (1994). The Wealth of Nations. Cannan, E. (Ed.). Random House, Inc. Walzer, M. (1983). Spheres of Justice: A Defense of Pluralism and Equality. Basic Books, Inc.

21. Organisational integrity as congruence Anthony D. Molina

The main argument of this chapter is that value congruence between citizens and administrators is crucial for establishing and maintaining the integrity of public organisations. Following Huberts (2014), this chapter defines “integrity” as acting in congruence with a set of relevant values, norms, and rules. In the context of public administration in a constitutional democracy, the relevant values, norms, and rules pertain to those that its citizens expect of public officials. In a similar vein, Cooper (1984) has argued that “the ethical obligations of the public administrator are to be derived from the obligations of citizenship in a democratic political community” (p. 143). Rohr (1989) argued that these obligations are reflected in “regime values” such as those found in constitutional law, oaths of office, and court decisions. Likewise, Dobel (1999) has argued that integrity consists of reconciling our personal moral commitments with the obligations that are relevant to a particular position of responsibility. In the case of public administrators, this means framing their judgments and actions according to standards that are embedded in public office. Put simply then, public service integrity consists of acting on values that are congruent with the obligations of public office as understood by citizens. This is important because, in a healthy democracy, citizens trust in the integrity of their public institutions. Research indicates that an individual’s trust in government is influenced by their experiences with public administrators, and the extent to which these experiences match up with their expectations regarding the values that guide how public administrators conduct their work (Houston & Harding, 2013). In this vein, Nabatchi (2012) has argued that public administrators should pay closer attention to the perspectives of the public in identifying, understanding, and prioritising public values. In turn, the term “organisational integrity” is defined as a quality in which an organisation functions in a manner that is congruent with the values, norms, and rules that are relevant to its particular context. Although this congruence perspective also offers valuable insights and ideas for research into private organisations, the primary focus of this chapter is on organisational integrity in public organisations. Therefore, the relevant values, norms, and rules are those that are congruent with the value expectations of citizens. These may vary according to regime type, but in a constitutional democracy they would include values beyond traditional bureaucratic values such as effectiveness and efficiency to include democratic values such as transparency and rule of law, ethical values such as honesty and integrity, and human values such as humaneness and benevolence (Molina & McKeown, 2012). Because these values may sometimes conflict with each other, the role of effective leadership is crucial for ensuring organisational integrity. Along these lines, Terry (1995) introduced a model of “administrative conservatorship” highlighting the role of leadership in protecting the integrity of public organisations. As he put it, “To say that an institution has integrity is to suggest that it is faithful to the functions, values, and distinctive set of unifying principles that define its special competence and character” (p. 45). According to Selznick (1957) institutional leadership itself consists of infusing an organisation with values that extend beyond the technical requirements 335

336  Research handbook on organisational integrity of the work at hand. From this perspective, the primary role of the leader is to act as an “expert in the promotion and protection of values” (p. 28). This focus on values as central to organisational integrity is consistent with the Public Values Perspective (PVP) that has emerged in public administration over the last decade that seeks to move beyond the New Public Management (NPM) paradigm in order to give due attention to a broader range of public values (Beck Jørgensen & Rutgers, 2015; Bryson et al., 2014; Van der Wal et al., 2015). Whereas NPM focuses on efficiency and effectiveness, the new PVP movement gives a more prominent place to what Rosenbloom (2007) has called “non-mission-based” democratic and constitutional values. The New Public Service model is an example of this approach (Denhardt & Denhardt, 2011). In this approach, there is a much more active role for citizens to engage in the process of deliberative problem solving in collaboration with public administrators. Additionally, there is a concern with “a diversity of approaches that are characterized by taking as their starting point the intrinsically normative nature of public administration and the attempt to bridge theoretical and empirical perspectives on the issue” (Beck Jørgensen & Rutgers, 2015, p. 4). As Van der Wal et al. (2015) have argued, it is crucial for researchers to provide a theoretical perspective for how they define, classify, and measure public values. In doing so, they urge public administration scholars to “remove their blinders” and look to research in other disciplines. Therefore, this chapter draws from the field of public administration, but also from a wide range of other disciplines including psychology, behavioural economics, organisational theory and behaviour, and moral philosophy. The section that follows develops an interdisciplinary theoretical framework for understanding public service value congruence and its centrality to the integrity of public organisations. It then turns to an examination of research on representative bureaucracy and organisational culture, both of which have clear relevance to research on value congruence but for the most part have remained separate fields of inquiry. The chapter concludes with suggestions for the future direction of research on public service value congruence between citizens and public administrators, an area that has received relatively little attention. Consideration is also given to how value congruence is relevant to research in private sector organisations.

THEORETICAL FRAMEWORK Public Service Values The goal of this section is to provide a theoretical framework for understanding value congruence and the role that it plays in maintaining organisational integrity. It begins by providing a conceptual definition of public service values, and then turns to a discussion of virtue ethics and how the concept of a practice can aid in our understanding of the nature of organisational integrity. It concludes by providing a model of public service integrity. Values are cognitive-emotional preferences that individuals hold for certain modes of conduct or end-states, and serve as criteria for guiding actions, developing attitudes, and making moral judgments (Rokeach, 1973). Values that indicate appropriate modes of conduct for achieving ends are considered instrumental, and values that serve as ends in themselves are considered terminal. The concept of a “value system” refers to the manner in which instrumental and terminal values are organised into a hierarchical structure, and through which conflicts

Organisational integrity as congruence  337 between competing values are resolved (Rokeach, 1973). Value systems operate at the individual level, as well as within groups, organisations, and cultures. As a particular type of value, public values provide “normative consensus about (a) the rights, benefits, and prerogatives to which citizens should (and should not) be entitled; (b) the obligations of citizens to society, the state, and one another; and (c) the principles on which governments and policies should be based” (Bozeman, 2007, p. 13). Relatedly, public service values refer to the range of values that are crucial for serving the public in a way that is congruent with public values. Public Service Values and Virtue Ethics Virtue ethics provides a powerful conceptual framework for understanding the nature of organisational integrity. For this reason, a number of public administration scholars have turned to virtue ethics as a normative foundation for public ethics (e.g., Cooper, 1987; Hart, 1989; Molina, 2015a; Overeem & Tholen, 2011). In contrast to deontological and utilitarian approaches to ethics, virtue ethics focuses on the traits, or virtues, associated with a good person (Anscombe, 1958; MacIntyre, 1984). Aristotle taught that virtue of character is a state that produces feelings that prompt human beings to function well, and to conduct themselves in a morally upright manner. Importantly, virtues generate different feelings depending upon the particular context or circumstances of a given situation. According to Aristotle, the key is to have the appropriate feelings “at the right time, about the right things, toward the right people, for the right end, and in the right way” (1999, p. 24). In this way, virtue ethics takes as its starting point the moral complexity of human life and focuses on the cultivation of a person’s moral compass to guide them through this complexity (Cooper, 1987). MacIntyre’s (1984) concept of a “practice” is a particularly helpful way of understanding the role that values play in public service. A practice is a “coherent and complex form of socially established cooperative human activity through which goods internal to that form of activity are realized in the course of trying to achieve those standards of excellence which are appropriate to, and partially definitive of, that form of activity” (p. 187). The concept of a practice thus understood offers a useful approach to thinking about the role of public service values in public administration because they focus on the importance of exemplary conduct and standards of excellence in furthering a common good (Cooper, 1987; Overeem & Tholen, 2011). In short, from this perspective, public service values are akin to “virtues of administration” through which standards of excellence are achieved that, in turn, lead to the realisation of goods that are internal to the practice of public service (Molina, 2015a). As Cooper (1987) has argued, “The virtues of the public administrator must be consistent with agreed-upon internal goods of the practice of public administration” (p. 323). A key characteristic of public service values is that they are action oriented (Van der Wal & Huberts, 2008). In other words, they refer to concrete actions on the part of public administrators and represent what Waldo (1984) called “criteria for action.” Conceptualising values as criteria for action highlights their importance to the field of public administration because, in practice, public administration is essentially about taking action and making decisions (Denhardt & Denhardt, 2011). According to Rokeach (1968), “Once a value is internalized it becomes, consciously or unconsciously, a standard or criterion for guiding action, for developing and maintaining attitudes toward relevant objects and situations, for justifying one’s own and others’ actions and attitudes, for morally judging self and others and for comparing oneself with others” (p. 16).

338  Research handbook on organisational integrity There are four basic categories of public service values: ethical values, professional values, democratic values, and human values (Kernaghan, 2003; Molina & McKeown, 2012). Through interviews conducted with public administrators in a wide range of settings, Molina (2015a) found that these four categories of public service values each relate to four different standards of excellence including: (1) personal credibility, (2) professional competence, (3) procedural fairness, and (4) respect for human dignity. Boyd-Swan and Molina (2019) identified sixteen public service values associated with these standards of excellence. For example, public administrators establish and maintain their personal credibility by acting on ethical values such as honesty, accountability, moral courage, and incorruptibility. Similarly, they demonstrate professional competence by acting on professional values such as dedication, expertise, effectiveness, and efficiency, and procedural fairness by acting on democratic values such as lawfulness, impartiality, transparency, and consistency. Finally, they demonstrate respect for human dignity by acting on human values such as humaneness, benevolence, inclusiveness, and responsiveness. Table 21.1 presents the list of sixteen public service values, their categories, and their definitions. Table 21.1

Public service values

Ethical Public Service Values ● Honesty

To act in an honest and truthful manner.

● Accountability

To willingly provide good reasons for actions and decisions.

● Moral Courage

To do the morally right thing, even in the face of personal risk.

● Incorruptibility

To put the public interest above personal interests.

 

 

Professional Public Service Values ● Dedication

To act with diligence, enthusiasm, and perseverance in performing duties.

● Expertise

To act and make decisions consistent with professional expertise.

● Effectiveness

To act in a manner that will be most effective in achieving results.

● Efficiency

To act in a way that achieves results with minimal resources.

 

 

Democratic Public Service Values ● Lawfulness

To act in accordance with laws and regulations.

● Impartiality

To act without prejudice or bias towards particular individuals or groups.

● Transparency

To act in a manner that is open and visible to citizens.

● Consistency

To act in a manner that is consistent, reliable, and predictable.

  Human Public Service Values ● Humaneness

To act in a manner that demonstrates empathy, compassion, and respect for human beings.

● Benevolence

To act in a manner that promotes good and avoids harm to citizens.

● Inclusiveness

To act in a manner that includes a diverse array of citizens and key stakeholders in the decision-making process.

● Responsiveness

To act in a manner that is consistent with the values and preferences of citizens and key stakeholders.

Source: Boyd-Swan and Molina (2019). See also Kernaghan (2003); Van der Wal and Huberts (2008).

When public administrators act in a manner that is congruent with these public service values, they are able to achieve standards of excellence that are associated with the practice of public service. Taken together, these standards of excellence represent the constituent parts of public

Organisational integrity as congruence  339 sector organisational integrity. Importantly, however, context matters because these qualities of integrity are contextualised within particular administrative settings (Molina, 2015b). In other words, what constitutes integrity in one context may not fully constitute it in another. Beck Jørgensen and Sørensen (2013) found, for example, that the manner in which public values are translated into the context of different national cultures results in differences in how they are balanced and communicated. Similarly, others have found that the importance of particular values can vary according to different policy and governance contexts (Huberts & Van der Wal, 2014). Therefore, public administrators must exercise practical knowledge – what Aristotle called phronesis – in order to establish the right balance given a particular context. The key is to act on the right values, at the right time, and in the right way in order to ensure value congruence with citizens. Public Service Value Congruence The term “value congruence” refers to the extent to which a person’s individual values fit with the values that they encounter in their environment. Although a well-established body of research has explored the nature and effects of value congruence, relatively little work in this area has been done by public administration scholars. In general, previous studies have examined how well an individual’s personal values fit with the values that they encounter in their work environment and focus on several different types of fit including person–job fit, person– organisation fit, person–group fit and person–supervisor fit (Kristoff-Brown et al., 2005). Value congruence can be measured in terms of either subjective fit or objective fit. While subjective fit refers to an individual’s perception of how well their personal values match with those found in their environment, objective fit refers to how well individual and environmental values match from the standpoint of a third-party assessment (such as researchers, managers, or coworkers). When deciding between objective fit versus subjective fit methodological approaches, subjective fit is more appropriate when considering how value congruence affects attitudes and motivations since it is the individual’s perceptions that are relevant in their formation (Edwards & Cable, 2009). In other words, although it may be the case that a person’s values are congruent with others, it will not result in the types of outcomes that are associated with value congruence unless they perceive that they are congruent. A large body of research has shown that value congruence produces a number of positive organisational outcomes. For example, value congruence has been shown to lead to increased levels of trust between individuals by fostering perceptions of integrity (Edwards & Cable, 2009; Ren, 2010). Additionally, individuals who share congruent value systems are more likely to interpret and respond to events in a similar way, which has the effect of facilitating communication and making it easier to coordinate activities and achieve common goals (Meglino & Ravlin, 1998). Increased levels of value congruence also enhance group cohesion, help to contribute to positive relations between individuals, and enhance perceptions of legitimacy (Boyd-Swan & Molina, 2019; Boxx et al., 1991; Edwards & Cable, 2009). Research has also shown that higher levels of value congruence are associated with increased motivation to work toward common objectives and to engage in positive organisational citizenship behaviours (Gould-Williams et al., 2013; Meglino & Ravlin, 1998). This suggests that value congruence is associated with higher levels of cooperation and willingness to comply with rules and regulations. Finally, value congruence is associated with higher levels of organisational

340  Research handbook on organisational integrity effectiveness, which can make public organisations better able to advance the public interest (Bao et al., 2012; Paarlberg & Perry, 2007). Boyd-Swan and Molina (2019) have argued that these outcomes are also realised as a result of value congruence between citizens and public administrators, i.e., citizen–administrator value congruence. In this context, they consist of organisational qualities that are indicators of good governance: citizen trust, effective communication, positive relationships, perceptions of legitimacy, willingness to cooperate, compliance with law and regulations, and advancing the public interest. In short, as illustrated in Figure 21.1, when public administrators act on public service values and achieve standards of excellence in a manner that is congruent with the values of citizens, public organisations are able to realise goods that are internal to the practice of public service. We will return to a discussion of citizen–administrator value congruence later in this chapter and consider methodological approaches that can be used to empirically measure and test the theorised relationship described above. First, however, we turn to a review of two prominent fields of scholarship that are relevant to value congruence research: representative bureaucracy and organisational culture. In spite of the relevance of these fields to value congruence research, relatively little work has been done to integrate them. Therefore, suggestions are offered for how future research in these areas can be informed by research methods that measure and assess the effect of value congruence.

Figure 21.1

Model of public service integrity

Organisational integrity as congruence  341

VALUE CONGRUENCE AND REPRESENTATIVE BUREAUCRACY Scholarship on representative bureaucracy examines how personal characteristics, including the values, of public administrators impact the formulation, implementation, and enforcement of public policy. According to Meier (1993), the underlying theory of representative bureaucracy consists of three core assumptions. The first of these is that public administrators exercise discretion in the course of implementing public policies, and that this has the effect of influencing the substance of public policy and its outcomes. Second, external actors such as legislatures and the courts seek to place limits on the exercise of administrative discretion through reporting requirements, oversight, judicial review, audits, and laws that specify administrative procedures. Third, the personal values of public administrators have an influence on the manner in which they exercise discretion through their behaviour and decisions. Along these lines, scholars have identified three distinct forms of representation including descriptive (also referred to as passive), active, and symbolic representation. Descriptive Representation Descriptive representation concerns the extent to which the demographic characteristics of public administrators reflect those of the people that they serve (Grissom et al., 2015). Researchers generally focus on demographic characteristics such as race, ethnicity, and gender. Theoretically, descriptive representation produces positive policy outcomes through several different mechanisms. For example, minority public administrators are assumed to share similar values and backgrounds with minority clients that enable them to communicate more effectively, and thereby more accurately assess their needs. In such cases, representation can have direct effects on policy outcomes through the discretionary decisions made by minority public administrators. However, descriptive representation may also have indirect effects on the behaviour of others that lead to positive outcomes. For example, the presence of minority public administrators within an organisation can influence the decisions and behaviours of their non-minority colleagues, as well as the decisions and behaviours of the clients themselves. This influence can work to improve organisational integrity (Hong, 2016). Active Representation Under some circumstances descriptive representation can lead to active representation in which public administrators actively advance the interests of the group that they represent. Theoretically, the social origins of the bureaucrat generate a set of values that lead them to take actions that produce beneficial policy outcomes (Riccucci et al., 2014). When effective, this type of representation can result in what is termed “policy congruence,” meaning the production of policy outcomes that are congruent with the interests of those that the public administrator represents (Meier, 1993). Active representation advances democratic values by ensuring that a broader range of interests are represented in decision-making and policy implementation (Riccucci & Van Ryzin, 2017). Scholars have identified a number of factors that influence the translation of descriptive representation into active representation (see, for example, Meier, 1993; Riccucci et al., 2015). First, the public administrators must have enough discretionary authority in order to influence the development and/or implementation of public policy. Second, the policy area in which the

342  Research handbook on organisational integrity public administrator exercises this authority must be substantively related to the interests of the population in question. In the case of women, for example, female public administrators must be able to exercise discretionary authority over policy areas that benefit women in order for active representation to occur. Another factor is the extent to which socialisation within an organisation leads public administrators to internalise organisational values that conflict with the values that result from their demographic origins. Wilkins and Williams (2008), for example, theorised that the process of socialisation within police departments in the United States may lead African American officers to internalise organisational values that result in them identifying primarily with other police officers rather than their racial counterparts in the communities that they serve. This has the effect of hindering active representation because “organizational values may actually strip away the racial identity of black police officers and replace it with an organizational identity” (p. 656). Similarly, professional values, such as those associated with the field of social work, can also either strengthen or weaken the translation of descriptive representation into active representation depending on whether or not the professional values in question support advocacy for marginalised groups. Symbolic Representation Symbolic representation establishes another channel through which beneficial policy outcomes may be achieved. Theoretically, the perceived social origins of the public administrator generate a sense of trust and perceptions of legitimacy on the part of citizens who share those social origins (Riccucci et al., 2014). In turn, this makes them more likely to cooperate and comply with public officials, thereby producing beneficial policy outcomes. This is highly relevant to the model of public service integrity described in the previous section. According to Riccucci et al. (2015), “This symbolic representation hypothesis leads to the expectation that citizens will be more willing to cooperate and thus coproduce important outcomes when their gender, race, ethnicity, or even shared identity is represented in a government bureaucracy” (p. 121). The benefits that result from symbolic representation need not be directly linked to the agency’s mission. For example, Riccucci et al. (2015) found that female citizens reported higher levels of willingness to cooperate in the coproduction of recycling as the proportion of women in the agency increases. This is significant, in part, because it demonstrates the effect of symbolic representation in a policy area that is not specifically gendered. Representation and Quality of Governance Research indicates that representation plays an important role in how citizens assess the quality of governance, in part by increasing citizens’ perceptions of the legitimacy of government actions (Theobald & Haider-Markel, 2008). This is important because when citizens view government actions as illegitimate, it has the effect of eroding the public’s trust and willingness to cooperate with authorities. For that reason, the descriptive representation of minority groups among the ranks of public officials has symbolic importance insofar as it allows these groups to “see people like themselves in authority positions,” which can then lead to the perception among group members that “the actions of these government agents are justified or legitimate” (Theobald & Haider-Markel, 2008, p. 411). In a similar vein, Hong (2016) found that the representation of minorities in public bureaucracies improves organisational integrity, as well as the willingness of citizens to coproduce.

Organisational integrity as congruence  343 This is because the presence of a significant number of minority bureaucrats will empower them to speak out against unfair practices that disadvantage minority citizens. By holding non-minority members of the organisation accountable for unethical practices and promoting a stronger ethical climate, public perception of organisational integrity improves and, in turn, leads to higher levels of trust. Again, this results in an increase in the willingness of minority citizens to cooperate with the organisation in working to coproduce public values, thereby making the organisation more effective. Riccucci et al. (2014) also found a link between symbolic representation and citizen perceptions of legitimacy. They found that increased gender diversity in the domestic violence unit of a police department led to increased citizen perceptions of the unit’s trustworthiness, fairness, and performance. In turn, this led to an increase in the willingness of citizens to cooperate with police in the coproduction of public safety outcomes. Directions for Future Research There are a number of methodological challenges associated with research on representative bureaucracy. Theobald and Haider-Markel (2008), for example, argue that a reliance on aggregate-level data makes it difficult to distinguish between effects that result from active representation and effects that result from symbolic representation. They point out that in order to properly test whether policy outcomes result from active or symbolic representation, it is necessary to utilise individual-level data drawn from either public administrators or citizens. Furthermore, Kennedy (2014) argues that scholarship on representative bureaucracy has been overly focused on descriptive characteristics of race and gender, which may have the effect of overlooking other personal characteristics, such as values, that may be relevant to understanding representation. In this vein, Gade and Wilkins (2013) examined the effect of professional identity on representation. They found that veterans participating in the U. S. Department of Veterans Affairs vocational rehabilitation programme reported significantly higher levels of satisfaction with the programme across a range of measures when their counsellor was also a veteran, presumably because the client perceives value congruence with their counsellor due to shared experiences in the military. There are clearly many parallels between research on representative bureaucracy and value congruence. At the heart of representative bureaucracy theory is an assumption that the values held by public administrators influence their behaviour and decision-making, and that when public administrators share similar backgrounds to the citizens that they serve, value congruence will result in positive policy outcomes. The findings on symbolic representation are particularly relevant as they support many of the same outcomes found by researchers of value congruence, especially with respect to increased trust, perceptions of legitimacy, and willingness to cooperate. Value congruence methodologies can also help to overcome some of the challenges associated with research on representative bureaucracy by utilising individual-level data drawn from both public administrators and citizens. Furthermore, value congruence goes beyond descriptive characteristics such as race and gender by focusing on the actual values held by citizens and administrators. As a result, value congruence methodological approaches have the potential to make substantive contributions to research on representative bureaucracy. Finally, it should be noted that value congruence in the context of private sector organisations is also desirable, particularly in settings where the organisation provides important services to the public such as health care, legal representation, or private security. In this context, value

344  Research handbook on organisational integrity congruence between the organisation and its clientele can increase customer satisfaction and enable it to be more effective in providing services.

VALUE CONGRUENCE AND ORGANISATIONAL CULTURE The term “organisational culture” is defined as the set of values and beliefs shared by members of an organisation and the way in which these are reflected in its observable patterns of behaviours, symbols, and representations (Hatch, 1997). According to Ott (1989), values, beliefs, symbols, and representations serve important functions in an organisation including the establishment of expectations about how members should think and act. Over time, these produce an “emotional sense of involvement and commitment to organizational values” (Ott, 1989, p. 68). A strong organisational culture also has the effect of socialising members to respond to problems in a fashion that is congruent with organisational values (Schein, 2010). Levels of Organisational Culture Organisational culture is made up of three levels: (1) a surface level of material and behavioural artefacts, (2) an intermediate level of espoused values, and (3) a core level of basic assumptions (Schein, 2010). At the surface level of organisational culture, material artefacts include the physical architecture, arrangement of workspaces, style of dress, and the products, technology, and archives of the organisation. Behavioural artefacts, on the other hand, include the patterns of speech, activities, routines, and processes that shape organisational life. These material and behavioural artefacts are a visible surface level manifestation of the organisation’s values. Below the surface level, at the second level of organisational culture, are the consciously held and espoused values that give meaning and coherence to the surface level activities and characteristics of the organisation. These values serve as criteria for action that guides organisational behaviour. Finally, the third level of organisational culture consists of the unconscious basic assumptions from which organisational values emerge. These basic assumptions form an “implicit understanding of how the world operates, such as the nature of the universe, human nature, and political organization” (Van Wart, 1998, p. 169). Values and Organisational Culture Change Importantly, the relationships between the three levels of culture work in both directions, meaning that the relationship between the three is circular. In other words, basic assumptions give rise to consciously held values which in turn manifest themselves as material and behavioural artefacts. However, it is also the case that the alteration of behavioural and material artefacts can impact consciously held values and then, over time, lead to a change in basic assumptions. This means that organisational leaders can promote organisational culture change by focusing on material and behavioural artefacts. Values statements are a type of material artefact that can lead to organisational members internalising new values (Kernaghan, 2003). Healthcare organisations are particularly adept at using values statements to influence organisational culture (Molina, 2016). For example, a healthcare organisation may prominently display a poster in the workplace that declares, “Our core values are caring, professionalism, ethical practice, privacy, excellence, and justice.” This material artefact

Organisational integrity as congruence  345 serves as an effective and steady reminder of the values that are expected to guide the actions of organisational members. Over time, these values become ingrained in procedures, routines, and language, as well as the basic assumptions of the organisation. In this way, leaders can adapt organisational cultures to be more congruent with the expectations of citizens. Some leadership styles are more effective than others in promoting value change. Research indicates, for example, that transformational leadership is more effective than transactional leadership (Jung & Avolio, 2000). According to Bass (1985), transactional leadership consists of clarifying what actions employees must take in order to fulfil their responsibilities, and specifying what employees can expect to receive in return for satisfactory performance. In contrast, transformational leadership consists of fostering an employee’s self-awareness of their personal values and motives, highlighting how the organisation can satisfy those values and motives, and inspiring them to place the mission and goals of the organisation above their personal interests. In effect, transformational leadership works by promoting value congruence through the internalisation of organisational values by group members. Jung and Avolio (2000) studied the different outcomes of transformational and transactional leadership as it relates to imparting organisational values to employees and found that transformational leaders had direct and indirect impact on the group while transactional leaders only had an indirect impact. Directions for Future Research Given the centrality of values to organisational culture, research methodologies that investigate value congruence have much to offer by building knowledge about how public administrators can effectively promote values that are congruent with the values of the citizens they serve. It should be noted, however, that value congruence research can also be applied to private sector organisations by investigating the values that are important to its customer base, and engraining those values in the culture of the organisation. As in the example described above regarding the U.S. Department of Veterans Affairs, building organisational cultures that are congruent with the values of clients can help to build trust and improve organisational effectiveness. The field of law enforcement, along with other street-level bureaucracies, in particular could benefit from such knowledge given the authority that police officers exercise and the frequency with which they come into contact with citizens (Lipsky, 1980). Because they are action oriented, public service values can help organisational leaders articulate expectations in ways that clearly illustrate what they mean in terms of concrete actions. This is crucial because in order to effectively promote organisational integrity, norms, values, and responsibilities must be communicated in a clear manner (Kaptein, 2013). Thus, rather than saying that integrity is a core value of the organisation, it is important to give concrete examples of what it means to act with integrity in situations that employees are likely to face (Treviño & Nelson, 2011).

CITIZEN–ADMINISTRATOR VALUE CONGRUENCE As noted at the outset of this chapter, judging organisational integrity in the public sector requires information about the actions of public administrators, but it also requires information about how citizens assess those actions (Huberts, 2014). Relatively little, however, is known

346  Research handbook on organisational integrity about the extent to which there is congruence between the value expectations of citizens – that is, the public service values that citizens believe should guide the actions of public administrators – and the extent to which those actions are congruent with the expectations of citizens. Additionally, relatively little is known about how citizen–administrator value congruence (or noncongruence) affects citizen perceptions of the indicators of quality of governance. This section discusses a pilot study that employed a methodological approach that can expand our understanding of the nature and effects of citizen–administrator value congruence. Boyd-Swan and Molina (2019) conducted a pilot study that measured value congruence between the public service value expectations of citizens and their actual experiences regarding the actions of public administrators, and the effect that congruence (or noncongruence) has on citizen perceptions of the quality of governance (i.e., the ability of public administrators to achieve goods internal to the practice of public service). Based on previous findings of value congruence studies, those quality of governance indicators included citizen trust, effective communication, positive relationships, perceptions of legitimacy, willingness to cooperate, compliance with law and regulations, and advancing the public interest. To measure public service value congruence between citizens and public administrators and its effects on perceptions of the quality of governance, a Citizen–Administrator Value Congruence Survey (C– AVCS) was developed using the set of sixteen public service values and quality of governance indicators presented in Figure 21.1. Although the C–AVCS can be used to measure value congruence in a wide range of public administration contexts, the pilot study focused on public service value congruence between citizens and police officers. Consistent with previous research on subjective value congruence, the survey consists of three main parts. The first asks respondents to consider the values that they believe should ideally guide the actions of police officers in their local community. The second part of the survey asked respondents to consider the values that actually (in practice) guide the actions of police officers in their local community. Finally, the third part of the survey asked respondents to indicate the extent to which they agreed with statements regarding the seven quality of governance indicators. Table 21.2 presents the three main parts of the C–AVCS. Each of the survey questions were rated on a five-point Likert scale where participants reported their level of agreement by responding whether they: strongly agree, agree, are neutral, disagree, or strongly disagree. These responses were coded numerically with “5” indicating “strongly agree,” and “1” indicating “strongly disagree.” Value congruence was measured by comparing responses to each of the questions in the first part with the questions in the second part. In effect, this measures the gap between a respondent’s expectations about the public service values that should guide police officers and their actual experience. That gap is negative in instances where a respondent finds that their actual experiences fall short of their expectations, and positive when their experiences exceed expectations. The results of the survey found that higher levels of value congruence were correlated with more positive assessments of public trust; perceptions of legitimacy; improved communication; positive relationships; and perceptions that administrators are effective in advancing the public interest. The results indicated a more limited association between value congruence and willingness to cooperate with the police and comply with laws and regulations. Interestingly, professional and democratic values had relatively less impact on participant ratings of quality of governance indicators compared to ethical and human values. In fact, higher levels of congruence with ethical public service values were associated with large increases in five of

Organisational integrity as congruence  347 Table 21.2

The Citizen–Administrator Value Congruence Survey

PART I: Please provide answers to the questions below by indicating the extent to which you agree with the following statements. For this part of the survey, consider the values that should ideally guide the actions of police officers. ● Police officers should always act in an honest and truthful manner. ● Police officers should always be willing to provide good reasons for their actions and decisions. ● Police officers should always do the morally right thing, even in the face of personal risk. ● Police officers should always put the public interest above their personal interests. ● Police officers should always act with diligence, enthusiasm, and perseverance in performing their duties. ● Police officers should always act and make decisions consistent with professional expertise. ● Police officers should always act in a manner that will be most effective in achieving results. ● Police officers should always act in a way that achieves results with minimal resources. ● Police officers should always act in accordance with laws and regulations. ● Police officers should always act without prejudice or bias toward particular individuals or groups. ● Police officers should always act in a manner that is open and visible to citizens. ● Police officers should always act in a manner that is consistent, reliable, and predictable. ● Police officers should always act in a manner that demonstrates empathy, compassion, and respect for human dignity. ● Police officers should always act in a manner that promotes good and avoids harm to citizens. ● Police officers should always act in a manner that includes a diverse array of citizens and key stakeholders in the decision-making process. ● Police officers should always act in a manner that is consistent with the values and preferences of citizens and key stakeholders.  

PART II: Please provide answers to the questions below by indicating the extent to which you agree with the following statements. For this part of the survey, consider the values that actually (in practice) guide the actions of police officers. ● In practice, police officers always act in an honest and truthful manner. ● In practice, police officers are always willing to provide good reasons for their actions and decisions. ● In practice, police officers always do the morally right thing, even in the face of personal risk. ● In practice, police officers always put the public interest above their personal interests. ● In practice, police officers always act with diligence, enthusiasm, and perseverance in performing their duties. ● In practice, police officers always act and make decisions consistent with professional expertise. ● In practice, police officers always act in a manner that will be most effective in achieving results. ● In practice, police officers always act in a way that achieves results with minimal resources. ● In practice, police officers always act in accordance with laws and regulations. ● In practice, police officers always act without prejudice or bias toward particular individuals or groups. ● In practice, police officers always act in a manner that is open and visible to citizens. ● In practice, police officers always act in a manner that is consistent, reliable, and predictable. ● In practice, police officers always act in a manner that demonstrates empathy, compassion, and respect for human dignity. ● In practice, police officers always act in a manner that promotes good and avoids harm to citizens. ● In practice, police officers always act in a manner that includes a diverse array of citizens and key stakeholders in the decision-making process. ● In practice, police officers always act in a manner that is consistent with the values and preferences of citizens and key stakeholders.  

PART III: Please provide answers to the questions below by indicating the extent to which you agree with the following statements. ● I have a very strong level of trust in the police. ● I believe that the police have a very positive relationship with the members of my community. ● I believe the authority that the police exercise in my community is always proper and legitimate. ● I believe that communication between the police and members of my community is always positive and effective. ● I believe that people should always comply with the laws and regulations that the police are responsible for enforcing. ● I believe that people should always be willing to fully cooperate with the police. ● I believe that the police are very effective in helping to improve the quality of life in my community.

Source: Boyd-Swan and Molina (2019).

348  Research handbook on organisational integrity the seven quality of governance indicators. Likewise, higher levels of congruence with human public service values had a strong and significant impact on the quality of governance assessments, particularly with respect to citizen trust. Directions for Future Research The initial results of the C–AVCS pilot study point to a number of directions for future research. First, researchers should investigate differences in value congruence according to race, ethnicity, gender, and social origins. In a follow-up to the original pilot study described above, Boyd-Swan and Molina (2018) found key differences in the levels and outcomes of value congruence between whites and African Americans. Whereas the initial results indicated only a limited association between value congruence and willingness to cooperate with the police and comply with laws and regulations, this relationship was found to be mediated by race in the follow-up study. African Americans were found to agree significantly more strongly with the statements, “I believe that people should always comply with the laws and regulations that the police are responsible for enforcing,” and, “I believe that people should always be willing to fully cooperate with the police” when their levels of value congruence were lower. This runs counter to the theorised relationship and may be the result of differences in how respondents interpreted the questions. African Americans in the study had lower levels of value congruence than whites, meaning that their expectations of the values that should guide police officers did not align with their experience. Given the history of violence directed against African Americans by police officers in the United States, this is not surprising. Further research is needed to understand the nature of this relationship more fully, but it is likely that African American respondents interpreted “compliance” and “cooperation” in the context of avoiding the use of force by the police during traffic stops and other encounters. On the other hand, whites (including the researchers themselves) were likely inclined to interpret these questions in a more benign way. This points to the possibility of the role that citizen– administrator value congruence research might play in improving the cultural competence of law enforcement agencies. Second, future research should investigate different types of organisational settings. Other street-level organisational settings such as schools and social service agencies are an obvious place to start, but it may also be fruitful to deploy the survey to examine value congruence with local or national governments more generally. To that end, the questions might be framed as, “Public officials should always act in an honest and truthful manner.” As noted above, value congruence research is also relevant in the context of private organisations, particularly in organisations that deliver important services to the public. Third, comparative research is needed in order to gain more developed insights regarding citizen–administrator value congruence and the quality of governance. Care would need to be taken in translating the survey into different languages, but the ability to compare results across different national (or regional) settings would help to advance theory. Finally, future research should also incorporate measures of objective value congruence. The C–AVCS measures subjective value congruence based on the perceptions of citizens, but it would also be useful to have information on how public officials themselves assess citizen–administrator value congruence. Additionally, objective measures of the quality of governance would allow researchers to see how they match up with citizen perceptions.

Organisational integrity as congruence  349

CONCLUSION This chapter has argued that value congruence between citizens and administrators is crucial for establishing and maintaining public sector organisational integrity. Drawing on MacIntyre’s (1984) account of virtue ethics, and particularly his concept of a practice, a theory of public service integrity was developed in which public service values function as virtues of administration through which public administrators achieve standards of excellence central to the practice of public service. When these values are congruent with the values of citizens, goods internal to the practice of public service are realised through positive outcomes for the quality of governance. Research on value congruence was summarised and linked to scholarship in the fields of representative bureaucracy and organisational culture. Finally, the chapter provided suggestions for a methodological approach and suggestions for the direction of future research to measure value congruence between citizens and public administrators and examine its effects on the quality of governance.

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22. Organisational integrity as wholeness Thomas Maak and Nicola M. Pless

In this chapter we investigate the conditions of integrity as wholeness. More specifically, we start our exploration by discussing the case of Yvon Chouinard, the founder of apparel maker Patagonia, who recently donated his company to a foundation on his lifelong quest as a steward for the planet. We then briefly present the core of the role model of responsible leadership (Maak & Pless, 2006), and the role of the steward, showing how Chouinard exemplifies this role, and concomitantly the significance of the stewardship ethos for leader integrity. We then highlight some shortcomings in the traditional conception of leadership before fleshing out the conditions of relational wholeness and of being a whole person. We build on the rich tapestry of Heidegger’s thinking in “Sein und Zeit” (SZ) to carve out pre-conditions of being a whole person. We conclude this chapter by highlighting implications for leadership research and practice.

THE MEANING OF LEADERSHIP INTEGRITY In September 2022, Yvon Chouinard, the founder of Patagonia, revealed that he and his family had given away the company and that all future profits from the iconic outdoor apparel company would go towards fighting the climate crisis. Chouinard’s gift and ground-breaking act of philanthropy is remarkable in many ways: first, in forfeiting all their shares in Patagonia, which was valued at more than 3 billion USD in 2022, the Chouinards are renouncing their status as one of the wealthiest families in America (Gelles, 2022). Second, by channelling all of Patagonia’s profits, some 100 million USD a year, to a new nonprofit organisation called the Holdfast Collective, they established an entity that will become one of the leading funders of climate causes (Gelles, 2022). And third, instead of selling Patagonia and choosing to donate all funds to climate causes, or taking the company public – two more obvious choices – the Chouniards decided to act with 100 per cent integrity; that is, to enshrine the purpose of their company (“to save our home planet”) in the most creative and uncompromising way, by creating a foundation that will be able to use Patagonia’s profits to do better, and more, to save our planet. Instead of just giving to worthy climate causes, the Holdfast Collective – a special organisation that focuses primarily on social welfare under tax rules – will be able to shape actual policies on climate issues. Put differently, Chouinard acted with unprecedented wholeness and, in line with his own values and those of the company he founded and shaped, made the Earth the company’s only shareholder. According to Webster’s New World Dictionary, integrity means “the quality or state of being complete; unbroken condition; wholeness; entirety,” and “the quality or state of being of sound moral principle; uprightness, honesty, and sincerity”. Indeed, both meanings correspond with our common perception and understanding of the term “integrity”. The first association with the term usually relates to the idea of moral integrity – that a person acts with integrity 352

Organisational integrity as wholeness  353 which means that she acts in accordance with moral principles and does so in a coherent and consistent way. “Integrity involves fidelity to one’s endorsements” (Calhoun, 1995: 244), an unbroken commitment to uphold a set of moral principles (McFall, 1987: 15). Hence, the idea of being complete and of acting in line with desirable moral principles is an essential ingredient of moral integrity. The idea of wholeness connotes the second basic meaning associated with integrity, and that is a state of being undivided, an integral whole in the basic sense of being of sound moral principle, of having the right principles (Calhoun, 1995: 248), and standing up for one’s “deeply held and highly endorsed commitments, [and] to treat all of [one’s] endorsements as ones worthy of being held by a reflective agent” (ibid., p. 245) over time and when challenged. Hence, such commitment implies that a “person of integrity is willing to bear the consequences of her convictions, even when this is difficult, that is, when the consequences are unpleasant” (McFall, 1987: 9). Integrity, “standing for something” (Calhoun, 1995), implies unconditional commitment (McFall, 1987: 11) to do the right thing and to do things right. Moreover, this commitment is not just some internal state but is evaluated by others, by stakeholders, and thus despite being a unique individual state, integrity is a relational phenomenon. As moral agents we must be conscious of our integrity requirements, but it is not a state that we can claim we possess. Indeed, it would look questionable if we did. Rather, integrity is attributed by others and the result of an evaluation of our words and deeds, in good times, under pressure, and over time. Thus, the requirement of wholeness relates to the task of embodying one’s intentions, values, and actions in a consistent manner. And while this is demanding enough amidst the many temptations of everyday life, it is here, in the realm of requirements of relational wholeness and therefore the relationships that shape our being as moral agents, that the fault lines of integrity frequently appear. As Brown (2006: 6) puts it, “for individuals to have real integrity they must be conscious of the relationships in which they live”. For a leader this means being conscious that one’s integrity is affected by, and depends on, all individuals or groups who have a legitimate interest in and are affected by one’s commitment and actions. These interacting but different levels of integrity create a particular challenge of wholeness (Kolb, 1988), reflecting the relational complexity of being a leader and moral agent in an environment of often contested and conflicting values. It is clear from Patagonia’s 50-year history that Yvon Chouinard’s commitment to use his business to fight climate change has shaped not only his convictions but has also shaped the organisational integrity of the company. His unwavering commitment to serve our home planet demonstrates a rare illustrative case of moral integrity. Moreover, the creation of the Holdfast Collective and the decision to donate the company in the interest of saving our planet concludes a cycle of wholeness rarely seen in the business world. It writes forth and extends Patagonia’s values and conviction into the future and does so in a holistic fashion, illustrating both wholeness and the temporal nature of integrity. A leader might do the right thing at any given moment, but this does not mean that she is a person of integrity. The temporal nature of integrity means that moral commitment and wholeness, and thus consistency in action, is evaluated over time and in the context of the relational complexity of one’s life work – as a person and as a responsible leader.

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RESPONSIBLE LEADERSHIP The term “responsible leadership” was first used by George Smith in the subtitle of his 1962 textbook Business, Society, and the Individual: Problems in Responsible Leadership of Private Enterprise Organizations Operating in a Free Society. The author’s objective was to help readers to get acquainted with “real business life [that] for the responsible business leader involves keeping in perspective all the economic facts and all the human and political facts that are inside his enterprise, as well as those that are outside” (p. xiii). Smith’s perspective was advanced and far-sighted. Zooming forwards more than half a century, it is fair to say that responsible leadership in business and society has never been more important, but at the same time it seems more distant than ever: We live in a connected world and witness the growth of a sharing economy, but social cohesion and well-being are in decline. Digital futures are here but at the price of disruption and an unsettling, largely ungoverned digital universe. Indeed, humanity is at a crossroads, faced with profound ethical tragedies and the spectre of extinction: uncontrollable AI, migration, war and extremism, climate change and destructive leadership. Our point here is not to dwell in apocalyptical scepticism; rather, we would like to stress the fundamental importance of responsible leadership in what is simultaneously a connected and a disrupted world. We understand responsible leadership as a values-based and principle-driven relationship between leaders and stakeholders (as followers) who are connected through a shared sense of purpose in the pursuit of sustainable value creation and responsible change (Pless & Maak, 2006, 2011). We therefore extend the view from a narrow, dyadic understanding of leaders and followers as direct reports to a relational view of leaders and stakeholders and suggest several key roles leaders need to adopt to succeed in an environment of contested values, most importantly the roles of the visionary, citizen, servant, and steward. We contend that it is a primary task and responsibility of strategic leaders to fill and navigate the increasingly complex role expectations of leaders with the view to improve human, social, and environmental systems by balancing stakeholder needs, purpose and profit. Indeed, it can be argued that in a stakeholder society leaders deal with relational and moral complexity resulting from a multitude of stakeholder needs and consequently ought to build enduring and mutually beneficial relationships with all relevant stakeholders to be effective (Maak, 2007). Stakeholder salience, or the degree to which leaders give priority to competing stakeholder claims (Mitchell, Agle, & Wood, 1997), includes dynamics inherent in each relationship, which involve complex considerations. Moreover, these relationships are in constant flux as they ebb and flow, are multilateral, and are often coalitional (Mitchell, Agle, & Wood, 1997). The strategic leader is the one person who has access to most stakeholder groups and thus carries a significant responsibility as the centre of the nexus. Concomitantly, boundary spanning and values-centred integration become key measures of leadership success. As organisations are social structures embedded in society, it has long been recognised that they do not act in isolation of their environment and must adapt to this environment – they influence and are influenced by the environment just as leaders influence and are influenced by followers as stakeholders. Recognition of this web of connectivity allows leaders to look at their role as individuals as influencing and influenced by a multitude of stakeholders. In a New York Times interview Enrique Salem, president and CEO of Symantec, refers to Tennyson’s poem “Ulysses”. In the poem, there is the phrase, “I am part of all that I have met”. According

Organisational integrity as wholeness  355 to Salem, this passage has had a profound impact on the way he leads because of his belief that a leader is impacted and affected by everyone with whom he or she interacts (Bryant, 2011). Hence, leaders must mirror the relational complexity that surrounds them, as individuals and at the upper echelon of organisations. This does not imply, however, that leaders are expected to solve all the world’s most pressing problems. No one leader, no matter how responsible and motivated, can conceive of solutions to said problems on her own; problems such as climate change, poverty, pandemics, and the global threat of division and war. Yet, she has a key role and often is the nexus at the centre of a relational network, and it is up to her to leverage the collective intelligence inherent to a stakeholder network to achieve positive organisational outcomes. Responsible leadership plays a decisive role in leveraging this potential, as the case of Yvon Chouinard and Patagonia shows. By adopting an inclusive stakeholder approach that incorporates multiple points of view, the responsible leader acts and makes decisions that include assessment of social, ethical and environmental impact, and openness to diversity and diverse points of view (Maak & Pless, 2006). And, by bundling the energy of different stakeholders, responsible leaders create value networks that generate and enforce social capital, which in turn contributes to sustainable value creation and the common good.

THE CHALLENGE(S) OF LEADERSHIP INTEGRITY Hence, as mentioned earlier, a first key challenge to leadership integrity lies in its relational nature: being embedded in a complex network of stakeholder relations leaders must embrace that very complexity and the concomitant relational work to ensure their integrity – and subsequently relational wholeness. This requires leaders to reconcile different value propositions by thinking about integrative and innovative ways in which their businesses may generate profit while contributing to finding solutions to pressing public problems, to sustainable futures and the common good. A second key challenge arises from the demands of being a person of integrity, of being perceived as a person who acts in accordance with her moral principles in a coherent and consistent way; that is, over time and with unwavering commitment when the going gets rough, or when faced with the temptations of weak will. What is obvious from this meaning of integrity is that wholeness and an unbroken moral condition – of being complete – are an essential ingredient of individual integrity. We will address these two challenges below. Relational Wholeness As mentioned earlier, in the context of leader–stakeholder relations we need a different understanding of both leaders and followers. Indeed, we contend that the relational complexity of present-day leadership reality requires the leader to embrace the full range of relationships and to understand stakeholders as followers in the leadership process. Like the leader, followers have a stake in the leadership project and its vision and purpose. Hence, both are connected through a shared sense of purpose and relational ties that may lead to the creation of social capital (Maak, 2007). Moreover, responsible leadership may result in transforming leadership, once “leaders and followers raise one another to higher levels of motivation and morality” (Burns, 1978: 20).

356  Research handbook on organisational integrity Here, the leader bears a specific responsibility for coordinating concerted action, for facilitating interactive human processes, and for enabling active dialogue across differences. This means that the leader is no longer the sole author who creates innovation and ideas, who interprets and socially constructs organisational reality, who creates and manages meaning (Smircich & Morgan, 1982). Instead, the creation of meaning and the construction of leadership reality takes place in interactive and discursive processes between followers and leaders with joint responsibility for the reality that is created. The role of the leader in relationships is to cultivate the processes and to care for the quality of the relationships and the needs and well-being of all relevant stakeholders; allowing both followers and leader to contribute as whole persons (through their personality, drive, passion, expertise, and emotional and interpersonal skills). The role has an integrative dimension and involves making sure that different voices are included into the dialogue, for example by providing a chance for people to make their voices heard in meetings, or by inviting a previously excluded stakeholder group to participate in the dialogue. In this sense, we understand Greenleaf’s (1977/2002) concept of servant leadership as serving and cultivating the process and quality of the leader-follower relationship with the objective to sustain “the web of connection” (Gilligan, 1982: 62), caring for the needs of followers, creating a desirable reality (and future), achieving common values (economic, social, and environmental) and realising an ethical vision (sustainability of business and society, locally and globally). The latter brings into focus again the idea of stewardship (Block, 1993; Maak & Pless, 2006). The leader as steward is a guardian of values and ensures that social, moral, environmental, and economic values and resources are protected in words and deeds. She also makes sure that values are applied and sustained in all technical and social processes; and that these are fair, transparent, inclusive, and sustainable. The steward is one of four essential roles we have proposed in our role model of responsible leadership (Maak & Pless, 2006). At the heart of the role model lies the view that in order to mirror the relational complexity of contemporary leadership at the upper echelons of organisations responsible leaders understand that they have varying roles and responsibilities pertaining to the enactment of organisational responsibility. This does not imply that leaders need to engage in “shapeshifting” in order to fulfil different roles. Rather, we argue that these roles relate to varying but connected sets of responsibilities of being a leader: first, there is the vision work of defining the purpose of the organisation, based on desirable values and shared by all legitimate stakeholders; second, and in regard to the ontology of leadership, we argue that leaders must understand that leadership is first and foremost an obligation to serve others (based on a desirable purpose) and that the true measure of successful leadership lies in personal growth of followers as stakeholders – building on the core idea of servant leadership (Greenleaf, 1977/2002); third, leaders must be conscious of what it means to be a citizen, giving to community, caring about the latter and the world we live in, and embrace a political co-responsibility; and fourth, as indicated above, leaders are entrusted with people and resources and responsible leaders preserve and enrich what, and who, they are entrusted with, which implies that leaders must understand the fluid and temporal nature of their leadership project and thus that their tenure as a guardian is limited and tied to the moral obligation towards reconciling people, planet, and profit. These four roles – visionary, servant, citizen, and steward – define the ethics of responsible leadership and represent an overlapping set of responsibilities. Hence, these are not separate roles but connected and interwoven role expectations of being a good (and responsible) leader. Indeed, they mirror the relational complexity of contemporary leadership in organisations. In

Organisational integrity as wholeness  357 order to achieve relational wholeness – and integrity – leaders must find a way to embody these roles and the concomitant expectations in sustainable ways. Once again, the example of Yvon Chouinard shines bright. Based on the vision to do business differently 50 years ago, and with the view to not only produce tools for rock climbing and mountaineering, but to use business to help save our planet, Chouinard embarked with a clearly espoused vision to build one of the most successful (and admired) apparel companies. Perhaps because he knew that his goals would only be achievable if he had the right people, who would double up as climate activists, Chouinard nurtured his “climate talent” from day one. Indeed, his autobiography is entitled Let My People Go Surfing. And yet, the most obvious roles for Chouinard have been the citizen and the steward – the former by being a restless climate activist while innovating his business (and stopping unsustainable growth) and an advocate for our home planet; the latter as described at the beginning of this chapter in seeing through the remarkable history of Patagonia by connecting past, present, and future – and ensuring that as the Holdfast Collective it would live up in perpetuity to its promise of preserving our home planet. The idea of relational leading is not new (see, e.g., Dachler, Pless, & Raeder, 1994; Gergen, 2009) but it is of utmost importance in an environment of contested values and both “thick” and “thin” relational ties; that is, a context in which leaders are engaged in formal and informal relationships with varying levels of accountability. From employees as direct reports to peers, shareholders, regulators, suppliers, citizens, and fringe stakeholders. Wholeness requires leaders to mirror this complexity, not to reduce it, much like Yvon Chouinard has done in his own way. From Doing to Being a Whole Person Let us now turn to the challenge of being, and becoming, a “whole person”. We will first highlight the problems of the prevailing, entitative view of leadership. We will then explore the idea of a whole person through Heidegger’s philosophical explorations in “Being and Time” (“Sein und Zeit”) in an (perhaps unusual) attempt to enrich our understanding of integrity as wholeness. Joseph Rost (1993: 94) shows in his critical reflection on leadership definitions of the twentieth century (221 definitions of leadership from 1900 to 1990) that the fundamental understanding of the dominant industrial paradigm of leadership “is rational, management oriented, male, technocratic, quantitative, goal dominated, cost-benefit-driven, personalistic, hierarchical, short term, pragmatic, and materialistic” and ultimately equates leadership with good management. He stresses that a “new school of leadership that articulates a post-industrial concept of leadership is more and more imperative” (1993: 102). Dachler and Hosking’s (1995) epistemological critique takes an even more pronounced stand and stresses that the prevailing entitative leadership narrative (with its underlying assumptions rooted in positivism and scientism) restricts the view to content related leadership questions, such as traits of leaders, thereby excluding those questions relevant to understanding the processes of knowing and relating that define organisational and leadership realities. In the prevailing “modern” understanding, leadership resides within the individual (Rost, 1993). The individual is understood as an autonomous entity with a distinct identity and certain character traits, abilities and competencies, reminiscent of the concept of possessive individualism (Macpherson, 1962). In this sense, leaders are individuals who possess certain superior characteristics that differentiate

358  Research handbook on organisational integrity them from their followers, such as knowledge and technical skills, certain traits and competencies, personality attributes (Bass, 1990; Black, Morrison, & Gregersen, 1999), and charisma (Conger & Kanungo, 1987). Leaders are also understood as being active (Bass, 1990), taking charge (Bennis & Nanus, 1985), creating order and control, moulding followers’ expectations and behaviour, and setting the direction. The classic mechanistic and entitative narrative is built on the idea of individual exceptionalism, the romantic notion of the great man, and the idea of effective management in a confined organisational setting. As our discussion thus far has shown, (1) the idea of leadership exceptionalism in complex relational settings of contemporary organisations is highly problematic; (2) it reduces leadership to effective influencing within organisational boundaries, to doing; and moreover, (3) it reduces the leader to a hyper-individual entity – the know-it-all autonomous leader. This is not the place to further elaborate on the problematic nature of this dominant leadership narrative. Rather, and in the interest of a whole person approach to leadership, we would like to use this brief exploration as a contrasting steppingstone to discuss the link between integrity and wholeness. Let’s therefore turn to the idea of being. More specifically, we would like to explore the idea of the whole person and the subsequent requirements of integrity from a Heideggerian perspective. Heidegger’s existential analytic approach is particularly suited to such endeavour as it seeks to overcome the entitative view of the world and thereby the Cartesian ontology of modernity with its binary structures and separation of mind and matter. Heidegger’s phenomenological approach aims at capturing the essence of our “Dasein”, our being in the life world, including entities in their various way of being (Guignon, 1993: 7). Hence, rather than trying to understand what leaders do, we suggest that it may be more fruitful to investigate what it means to be a leader, and how such being relates to integrity as wholeness. We will proceed in four steps, starting with the idea of temporality, then look at the nature of agency, Heidegger’s notion of “Spielraum”, and lastly the idea of being itself. Temporality. For Heidegger, human existence is inextricably linked to the temporal unfolding of a life’s events in the context of a life world (Lebenswelt). Existence is futural, agency is “being towards the future”, the ability to be – an emergence into presence (Guignon, 1993: 9). Hence, Heidegger is concerned with the ability to be, and thus the possibilities as they emerge in one’s life’s work. The future has priority over the present in Heidegger’s existential ontology. If we link this idea back to what it means “to be” a leader, and to our illustrative case example, then the idea of stewardship no longer seems exceptional at all. Indeed, being a steward requires prioritising the future over the present while being conscious of the past. Consequently, for a steward leader like Chouniard, being in the present means generating possibilities for a sustainable future. It’s this immanent ontoethical trait of being a future-directed agent which sets the steward apart – and which is a requirement of being a responsible leader. This raises the question of why examples like Chouinard appear to be an exception rather than the rule. The answer to this question, we contend, lies in the lack of temporality, or connected long-term thinking, in the classical leadership paradigm. Leaders are encouraged to focus on the present only, on short-term transactional behaviour in a managerial capacity. Their measure of success is tied to the incremental task of getting things done – Heidegger calls it “Besorgen” (Heidegger, 2006: 67) – not to think and care about the future. Like the economic man, the classical view of the leader is a “view from nowhere” (Nagel, 1986), not interested in the normative foundations of existence or the realm of possibilities to shape a better future.

Organisational integrity as wholeness  359 It is, by default, geared towards material presence, to enactment, transactions, and “Zeug” (Heidegger, 2006: 68) – the “stuff” of leading rather than the need of being a leader. Agency. Agency in a Heideggerian sense is always embedded and future-directed agency. Being as “Dasein” is realised in concrete roles, relationships, and traits within the context of the life world. Being in this sense means being in the world over the course of a lifetime or, in our case, as a leader. Hence, agency – being a leader – is not an independent entity or substance based on confined personality traits, but it materialises as our embodiment of agency unfolds in the context of shared practices and a meaningful world. In other words, agency is always embedded, and in the case of a leader, shared agency within the broader context of our relations to, and within, our life world. Or, in Heidegger’s words: “Die Welt des Daseins ist Mitwelt” – the world of being is being with (Heidegger, 2006: 118). It is a world we share with others whose being, like ours, is already there, whether we are connected to them or not. Being with – “Mitsein” – implies a constitutive role of others through their individual being in a way that means that we are always with others. Heidegger’s pre-condition of “Mitsein” has important implications for our understanding of agency and leadership. It suggests, from an ontological perspective, that we cannot conceive of a leader as an independent entity but that on the contrary, leaders by nature of their being are already connected to proximate and distant stakeholders alike and that leadership is a relational construct of both leaders and (potential) followers, shared agency that is future-directed and shapes our life world, including that of organisations. Thus, to achieve wholeness leaders must acknowledge the ontological and physical ties of what it means to be a leader. Spielraum. The notion of “Spielraum” – which literally translates as “field of play” but can be understood as a “realm of possibilities” – offers another important ontoethical feature in Heidegger’s work. We can interpret the notion of “Spielraum” as both a realm and projection of possibilities – of what could be done – such that agents can decide the moves they make, with whom they “play”, and for what purpose. Within the boundaries of our relational structures and within the context of our cultural or organisational practices we can make choices, which in turn will shape our being. These choices are based on everyday practices, but they are not pre-determined. There is, in other words, always “Spielraum” to think about a move or an action in a different way, or to act differently. This means, for our context and the question of leadership integrity, that leadership does not follow natural law and that it cannot, and should not, be limited to the idea of great men influencing others to do their wishes. Instead, we should factor in that leadership is a privilege and a choice, and that leaders will always have “Spielraum” to do the right thing as long as they recognise and identify their realm of possibilities. Once they do, a “clearing” will appear – a “Lichtung” – and thus a way forwards to act with integrity. Being. We have seen so far that being for Heidegger means being in the world, being with others, and that human existence depends on that being with. We also saw that we shape our existence as agents by engaging in future-directed activities and as we do, and based on primordial structures, we have “Spielraum” on our field of play that we can use to move in a different direction, in the pursuit of our life’s work. Hence, being for Heidegger is the result of a future-directed social construction, based on everyday practices. We do not enter this existence as autonomous entities but with the help of an a priori structure of having a world (Frede, 1993: 56). We are already beings in the world, we are constituted by our world, and we are bound to others to succeed in this world. What do these insights mean, then, for being a leader? We argued further above that wholeness is a condition for leader integrity. Being

360  Research handbook on organisational integrity whole, based on the insights from our discussion of Heideggerian ideas, means being conscious of one’s existence in relation to others (being means being with others), the future-directedness of our being, including the possibilities we have to shape it and to lead a meaningful life, and that our being is shaped by a priori structures, and therefore by people and places – that we do not start with a view from nowhere. Hence, in order to be, leaders must recognise that they have a world, that their actions are embedded in complex relational networks and structures, and that their very existence depends on a holistic view of themselves. Their being – as leaders or otherwise – is being with others (e.g., stakeholders); them being agents mean to act with a view to the future, and to shape this future in responsible ways; and to overcome challenges and dilemmas by using their “Spielraum”. Integrity as wholeness therefore depends on these three pre-conditions: the relational ontology of being a leader, the future-directed nature of all agency, and the responsible use of one’s realm of possibility.

CONCLUSION We started this chapter by discussing the living case study of Yvon Chouinard, the founder of apparel maker Patagonia. We then briefly presented and discussed the core of the role model of responsible leadership and more specifically the role of the steward, showing how Chouinard exemplifies this role and concomitantly the significance of the stewardship ethos for leader integrity. We then highlighted some shortcomings in the traditional conception of leadership before fleshing out the conditions of relational wholeness and of being a whole person. The rich tapestry of Heidegger’s thinking in “Sein und Zeit” helped us to carve out the aforementioned pre-conditions of being a whole person. In conclusion, we would like to discuss some implications for leadership research and practice. First, because of the Neo-Cartesian nature of business education and leadership development, there is a need to design educational offerings that help future leaders to develop relational attitudes and abilities. Leaders need relational intelligence to lead responsibly in complex stakeholder settings (Maak & Pless, 2005). We understand relational intelligence as the capacity to engage in relationships by connecting to and interacting effectively and respectfully with people and stakeholders from various backgrounds, cultures and with different interests, both inside and outside the organisation, at home and abroad. We argued earlier that in order to live up to the requirements of relational wholeness, leaders must mirror the relational complexity they are embedded in. We therefore need programmes in business schools and in the area of leadership development that nurture relational attitudes and abilities to help leaders to cultivate an inclusive, respectful and stimulating work environment, to build and maintain sustainable and trustful relationships with stakeholders, to balance multiple interests and values, and to mobilise people for a common purpose. Ideally, these programmes focus on both emotional intelligence of the leader and the development of a responsible mindset. Recognising one’s own and the feelings of others, using this information in respectful and inclusive interactions with others to regulate and adapt one’s own behaviour are essential qualities of a responsible leader. Leaders need a responsible mindset too – the ability to recognise and reflect on one’s own and others’ values, norms, and interests from an informed moral point of view, knowing “when different is different and when different is just wrong” (Donaldson, 1996: 48), and the ability to use moral imagination (Werhane, 1999) where needed to derive ethically appropriate behaviour.

Organisational integrity as wholeness  361 Second, and in regard to being a leader – to being a whole person – leadership research needs to make peace with the search for the “Rosetta Stone” of leadership (Calas & Smircich, 1988: 224). The obsession with leadership effectiveness and the concomitant search for the “ultimate” secret of leadership by breaking the subject matter into smaller and smaller units of inquiry has arguably resulted in the loss of the main code of leadership: a complex relationship between leaders and stakeholders aimed at influencing others for desirable outcomes. Having resonance as a key node in such a web of relationships requires the leader to have an integrative mindset conscious of the fact that leadership must be grounded in one’s life world and that it must be aligned to one’s life work. Too many leaders suffer from a divided self and thus a mismatch of professional and private identity. Being conscious of the temporality of being a leader, the embeddedness and future-directedness of agency, and the “Spielraum” to be a steward – to see through one’s life work with uncompromising integrity – are core pillars of being a responsible leader. Hence, we see a need for programmes and practices that incorporate the whole self (e.g., through mindfulness interventions), leading others (in an inclusive manner), and leading a purposeful organisation. Being a leader means being in the world. For Yvon Chouinard, this meant using his business to protect nature: “The challenges we face as a society require leadership. Once we identify a problem, we act. We embrace risk and act to protect and restore the stability, integrity and beauty of the web of life” (Patagonia, 2023).

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362  Research handbook on organisational integrity Gilligan, C. (1982). In a Different Voice: Psychological Theory and Women’s Development. Cambridge, MA: Harvard University Press. Greenleaf, R. K. (1977/2002). Servant Leadership: A Journey into the Nature of Legitimate Power and Greatness. 25th anniversary edition. New York: Paulist Press. Guignon, C. (1993). The Cambridge Companion to Heidegger. Introduction. Cambridge: Cambridge University Press, pp. 1–41. Heidegger, M. (2006). Sein und Zeit. Neunzehnte Auflage. Tubingen: Max Niemeyer. Kolb, D. A. (1988). Integrity, advanced professional development, and learning. In S. Srivastva, & Associates (Eds.), Executive Integrity: The Search for High Human Values in Organizational Life. San Francisco, CA: Jossey-Bass, pp. 68–88. Maak, Th. (2007). Responsible leadership, stakeholder engagement, and the emergence of social capital. Journal of Business Ethics, 74, 329–343. Maak, Th. & Pless, N. M. (2005). Relational intelligence: Leading responsibly in a connected world. Academy of Management Proceedings, 1, 1–16. Maak, Th. & Pless, N. M. (2006). Responsible leadership in a stakeholder society. Journal of Business Ethics, 66, 99–115. Macpherson, C. B. (1962). The Political Theory of Possessive Individualism: From Hobbes to Locke. London: Oxford University Press. McFall, L. (1987). Integrity. Ethics, 98, 5–20. Mitchell, R. K., Agle, B. R., & Wood, D. J. (1997). Toward a theory of stakeholder identification and salience: Defining the principle of who and what really counts. Academy of Management Review, 22(4), 853–886. Nagel, T. (1986). The View from Nowhere. Oxford: Oxford University Press. Patagonia (2023). Our Values. www​.patagonia​.com​.au/​pages/​core​-values. Pless, N. M. & Maak, Th. (2011). Responsible leadership: Pathways to the future. Journal of Business Ethics, 98, 3–13. Rost, J. C. (1993). Leadership for the 21st Century. Westport, CT: Praeger. Smircich, L. & Morgan, G. (1982). Leadership: The management of meaning. The Journal of Applied Behavioral Science, 18, 257–273. Werhane, P. (1999). Moral Imagination and Managerial Decision-Making. Oxford: Oxford University Press.

23. Organisational integrity as a virtue Miguel Alzola

In a world of complexity and competing values, integrity is central to contemporary discourse and business and professional ethics. Its significance resonates across cultures, disciplines, and professions, shaping the foundations of individuals’ psychological development and business conduct. The references of integrity to wholeness and purity encompass more than mere adherence to the integration of thoughts, words, and deeds into a harmonious whole, forming the bedrock of a person’s character. It is often argued that integrity is a virtue that enables its possessors to live an authentic and excellent life while guiding them to make better choices that fulfil their commitments. From the corporate boardroom to the halls of academia, from the public sphere to private interactions, the demand for integrity remains unwavering. The most influential articles on integrity start by highlighting the need for a precise definition of the concept. Audi and Murphy (2006: 3) claim there is “too little clarity on what integrity is, both in general uses of the term and in business contexts.” Koehn (2005: 125) agrees that an organisation’s “integrity needs to be better defined because the current mode of talking about the subject is misleading.” Coincidentally, Bauman (2013) highlights the lack of agreement on what integrity is and analyses the cognitive structures that explain the confusion surrounding integrity attributions. And Scherkoske (2013: 28) argues that “integrity remains elusive to understand.” Do we need a concept of integrity at all? What work does the notion of integrity play? Cox, LaCaze and Levine (1999) discuss why integrity is essential to certain conceptions of personal identity. Other scholars distinguish between moral and personal integrity, where moral integrity requires truth-telling, honesty, and fairness, but personal integrity does not (McFall, 1987; Olsthoorn, 2009). Similarly, Goodstein (2000) examines situations in our personal and organisational lives where a contemplated choice or action puts at risk the values an individual closely identifies with. And Graham (2001) examines whether integrity places some constraint on the nature of what the agent stands for and argues that it is not enough that a person stands for what she thinks is morally right. “Integrity requires that the principles stood for must be those that a morally good, morally trustworthy agent would stand for” (2001: 235). Not only individuals but also organisations are often the subjects of integrity. Corporate integrity is a longstanding concern in business ethics (Brenkert, 2004). Kirby (2021) criticises what he calls the “officer-first” approach to public integrity, according to which public integrity is a quality of individual public officers and only derivatively a quality of public institutions. He defines a role-specific sense of praiseworthy conduct for public officers by reference to “a public officer’s contribution to the overall moral ideal of her institution” (2021: 1620). A natural way to think about integrity is to frame it as a virtue. This chapter is not the first to explore that path. Kristjánsson (2019), for instance, asks whether the virtue of integrity is redundant in Aristotelian virtue ethics. And Fuerst and Luetge (2021) attempt to render organisational integrity tangible and clarify its role and purpose by returning to virtue ethics. Against this backdrop, this chapter aims to examine the multidimensional nature of integrity and its status as a virtue exploring its historical roots, philosophical underpinnings, and con363

364  Research handbook on organisational integrity temporary significance. Drawing from philosophy, psychology, and management scholarship, this chapter explores the various facets of integrity and its relevance in navigating the complexities of our world. By shedding light on its value and moral status, this chapter contributes to a deeper understanding of the concept and the role of integrity for individuals, organisations, and institutions. The chapter is organised as follows. The first section provides a brief survey on the concept of integrity. The following section considers the application of integrity concepts to collective entities such as business corporations. The subsequent section examines the moral status of integrity, whether and why it may be considered a virtue, what integrity requires, and whether it may be a vice rather than a virtue. The next section explores some issues with the concept and the value of integrity and some ideas for future research. The final section concludes.

THE POLYSEMY OF INTEGRITY This section is concerned with the concept of integrity. Two preliminary questions need to be addressed. First, should we investigate the term as used by scholars or by executives and practitioners? For example, the U.S. Army describes integrity as “a quality you develop by adhering to moral principles. It requires that you do and say nothing that deceives others” (Olsthoorn, 2009: 98). Second, is the value of integrity intrinsic or can it be reduced to its market worth? This section will entertain the first question, while the second will be addressed in another section. What Integrity Is The academic – as opposed to the practitioner’s – conceptualisation relates integrity to the Latin word integritas, which means wholeness or completeness. For Kristjánsson (2019), integrity is related to “integration.” Audi and Murphy (2006) link the concept of integrity to the unity of the soul in Plato’s Republic, “a kind of subordination of the other parts of the soul to reason; it is more a kind of rational autonomy than what we commonly call integrity, and ‘justice’ rather than ‘integrity’ or any close cousin of the term” (2006: 4). Taylor (1981: 146) argues that the “person of integrity keeps his self intact, and the person who lacks integrity is corrupt in the sense that his self is disintegrated.” Bauman (2013: 5) defines integrity as “the state of being untouched.” It refers to the moral soundness of the agent, her moral uprightness. And leadership integrity is a general concept encompassing honesty, trustworthiness, and authenticity. Becker (1998) argues that integrity requires more than following an arbitrary set of values chosen by the agent or others. The criterion for integrity is reality: “life–not subjective opinion–is the foundation of integrity” (1998: 158). For Archer (2017), integrity is a formal relation of coherence between various aspects of a person. A person with integrity is “someone who possesses a certain psychological wholeness – an understanding of the significance of all her various goals and desires, and the true place of each in her overall life-plan – how they fit in with her sense of who she really is” (2017: 435). Scherkoske (2013: 29) suggests that it involves “sticking to one’s convictions, especially in the face of disagreement, challenge and pressure or temptation.” Along similar lines, Goodstein (2000: 810) observes that “(personal) integrity requires subscribing to some

Organisational integrity as a virtue  365 consistent set of principles and, in the face of temptation or challenge, uphold these principles for the right reasons.” It also involves the disposition to be willing to reevaluate, but there are circumstances in which the person of integrity may “refuse to reassess her principles in the face of criticism” (Graham, 2001: 245). In the end, the idea of wholeness suggests a state of being undivided to preserve an integrated whole and achieve consistency between one’s normative beliefs and the coherence of such beliefs with actions and motivations (Calhoun, 1995). We can think of the person of integrity as someone “who ‘keeps his inmost self intact,’ whose life is ‘of a piece’, whose self is whole and integrated” (Taylor, 1981: 144). Such a consistency within the agent’s principles may not be maintained if she has conflicting or non-comparable unconditional commitments (McFall, 1987). Hypocrisy is an example of a lack of integrity, as a person cannot be truly committed to a project or way of life if only pretending to be so committed. “The hypocrite pretends to live by certain standards when in fact he does not” (Taylor, 1981: 146). With Scherkoske (2013), we can identify six distinctive dimensions of integrity, as follows: (1) As an integrated self, integrity involves deciding one’s beliefs, desires, and values and the commitment to upholding them, forming a cohesive and indivisible whole. (2) As an identity, integrity is characterised by remaining true to one’s identity, maintaining consistency with who one is, and being free of inconsistencies regarding one’s identity (Taylor, 1981). (3) As clean hands, integrity lies in adhering to a set of fundamental convictions that will never be betrayed. “There are some things that one is not prepared to do, or some things that one must do. This principle requires some of one’s commitments be unconditional” (McFall, 1987: 13). (4) As a strength of will, integrity is a commitment to the core principles one holds. And weakness of the will indicates a lack of self-integration that compromises integrity. (5) As proper regard for one’s judgement, integrity encompasses maintaining a special relationship with oneself and publicly championing and upholding what one deems worthy before others. (6) As a moral purpose, integrity emphasises the need for standing up for principles as a prerequisite for possessing integrity. What Integrity Is Not According to the previous section, integrity, as understood in academic discourse, is connected to the notion of wholeness. Thus, integrity relates to integration and the unity of the soul and involves keeping one’s self intact, which involves the harmonious integration of normative beliefs, actions, and motivations in the face of challenges and pressures. It requires the willingness to reevaluate one’s self and one’s principles. Overall, integrity encompasses maintaining coherence, consistency, and authenticity in one’s thoughts, actions, and principles. That is what integrity is. What is not integrity? Authors often characterise the person of integrity using qualities and conduct that have a precise meaning, from consistency to honesty to loyalty to authenticity. “Such a person is usually thought of as being honest, upright and loyal” (Taylor, 1981: 144). Other authors define other qualities using integrity. Solomon (1992: 220), for example, defines loyalty as “a kind of integrity, not within oneself (conceived of as a self-sufficient,

366  Research handbook on organisational integrity integral whole) but rather with oneself conceived as a part of a larger self, a group, a community, an organization, or institution.” If integrity is “truth telling, honesty, and fairness” (McFall, 1987: 6), why do we need a new word (“integrity”) to describe other qualities with an established pedigree? One answer to that question is that integrity is not honesty, coherence, loyalty, authenticity, conscientiousness, and so on. It may be a combination of them or it may be something entirely different. Audi and Murphy (2006: 10) argue that there is a strain in both business ethics literature and segments of everyday moral discourse in which integrity is “understood much more specifically and taken to be equivalent to honesty.” But, they argue, integrity has broader moral implications than honesty: without integrity, one cannot have other moral principles. Integrity is not equivalent to conscience or good character as “the direction in which conscience steers an agent varies with culture and even idiosyncrasy too much to capture in the objective high standards that are commonly regarded as essential for integrity” (2006: 4). Integrity is not consistency, either. Koehn (2005: 127) says, “integrity is often described as personal consistency … Integrity is synonymous with goodness. So, while people of integrity may have a certain kind of consistency, integrity does not reduce to formal consistency per se.” Integrity involves subscribing to “identity-conferring commitments and standing by those in the face of temptation or challenge” for the right reasons (Graham, 2001: 235). But integrity is more than holding that some things matter to oneself. Integrity is not conscientiousness. In his empirical study of integrity, Becker (1998) concludes that integrity is a broader and more complex construct than conscientiousness, which only measures the extent to which individuals are responsible, organised, and dependable. Becker explains that conscientiousness tests may not fully capture essential aspects of integrity. Also, intuitively, a person may be careless and disorganised – that is, not conscientious – but still have integrity. And integrity is not loyalty. Olsthoorn (2009: 92) defines integrity as “loyalty to one’s own principles and values.” That loyalty comes in two basic varieties: loyalty to a group and loyalty to a principle, including loyalty to oneself and the pain caused by not being able to live up to one’s self-image. But integrity and loyalty differ in their focus (with integrity primarily revolving around one’s adherence to a set of principles and loyalty centring on a sense of allegiance and commitment to a person, group, organisation, or cause), scope (with integrity being a broader concept that encompasses the personal, professional, and ethical domains and loyalty being more specific and relational), orientation (with integrity being self-oriented and involving being accountable to oneself and maintaining internal consistency while loyalty is more other-oriented, emphasising commitment and devotion to another person or cause), and context (with integrity being more universally valued and loyalty more context-dependent and relevant in specific relationships, such as friendships, family, and nations). Another thing that integrity is not is just conduct. Integrity cannot be simply reduced to behaviour such as not lying, cheating, or stealing (Alzola, 2018). A challenge with the definitions of integrity mentioned in the previous section is that they are often vague: “In a great many cases, ‘integrity’ is a specific-sounding term for something like moral soundness, whose exact character is left quite unspecified. Some tasks can be done with blunt instruments, but many cannot” (Audi & Murphy, 2006: 8). We can make progress in our conceptualisation of integrity by determining what integrity is not.

Organisational integrity as a virtue  367

ORGANISATIONAL INTEGRITY? Who is the “person” of integrity in the talk about integrity? Only human beings? Do collective entities have integrity? Are corporations, states, and other organisations the kind of entities that can be attributed integrity? If so, is integrity different at the individual and the organisational level? Is there something that we can meaningfully define as “corporate integrity”? What can it mean? Paine (1997: 335) defines integrity “in the sense relevant for business ethics, as the quality of moral self-governance.” Self-governance means a form of moral governance, which is “generally identified with one or more of the following related characteristics: moral conscientiousness, moral accountability, moral commitment, and moral coherence.” According to Paine, these attributes can be ascribed to organisations. Along the same lines, Kirby (2021: 1628) defines “public institutional integrity as the robust disposition of a public institution to pursue its purpose efficiently, within the constraints of legitimacy, consistent with its commitments.” These definitions suggest that institutional or organisational integrity is a concept that does not account much for what was defined above as individual integrity. When we say a person has integrity, we mean she stays true to her authentic self. What does it mean to say that a collective person is true to her authentic self? Which self? Fuerst and Luetge (2021: 31) define organisational integrity as “the integral ability of a company to practice self-fidelity in the sense that its activities are based upon an internally consistent framework of principles and reflect to which extent self-legislated norms and legal standards in force are implemented into organizational actions.” So, the organisational self would be comprised of the set of policies and standards that guide the organisation’s decisions. According to these views, organisational integrity would include the ability to self-evaluate and incorporates awareness of the organisation’s strengths and weaknesses. Archer (2017) applies the concept of integrity to the case of an integrated society, where a society counts as integrated when every member shares the same goals and is united to one common cause, even if there is a variety of competing conceptions of the good in such a society. Like Paine, Archer (2017: 452) believes that an integrated society is one in which different groups are involved in the decision-making process, “that each is willing to coexist peacefully with each other and that no group faces social exclusion.” Solomon (1992) also suggests that integrity is “wholeness” and consists not just of individual autonomy and “togetherness” but company “virtues” such as loyalty, congeniality, cooperation, and trustworthiness. Loyalty, as part of integrity, is often attributed to groups and organisations as a quality that leads to prioritising the interests of the group or a country over the interests of other individuals, groups, or countries with the “willingness not to follow good judgment” (Ewin, 1992: 412). Goodstein (2000) discusses how groups and organisations can face moral compromises distinct from personal quandaries. Within institutional settings, “individuals may jointly confront important ethical issues within collective bodies such as governing boards of directors, legislatures and public policy councils, or hospital ethics committees and bioethical commissions” (2000: 807). He argues that moral compromise prompted as a response to resource scarcity, factual uncertainty, or moral complexity is a critical consideration and that not acting in such circumstances risks not realising central values.

368  Research handbook on organisational integrity The idea is that organisations can face the same moral quandaries individuals do. And depending on how they navigate such conflicts, they may achieve or lack integrity as collective entities. Graham (2001) discusses the moral failures of groups and how a few individuals failing within an organisation may make the entire organisation fail morally. He considers the Tuskegee Syphilis Study, where 400 African American men from 1932 to 1970 who took part in a study observing syphilis were unknowingly left untreated. “While it is reasonable to assume that some of the members [conducting the study] were close-minded, arrogant, and deaf to criticism, many of them were not. Unfortunately, this collective decision-making failed morally, and my intuition is that none of the participants were persons of integrity” (2001: 246). Here, the attribution of the collective entity’s integrity (or its lack thereof) is made of the aggregation of the individual “integrities” of its members. A more interesting claim would be an organisation that lacks integrity despite the fact that all (or most) of its members are persons of integrity (or an organisation that possesses integrity despite the fact that, as in Graham’s claim, none of its members are persons of integrity). Not only can an organisation be attributed lack of integrity. It can also undermine the integrity of its members. Olsthoorn (2009) claims that a military organisation is a hostile environment for conflicts between personal and organisational principles, which are ultimately conflicts between integrity and obedience. In the military, “if an order is not patently unlawful, military personnel are expected to act upon it, regardless of their principles” (2009: 99). Fuerst and Luetge (2021: 28) argue that organisational integrity is conceivable at the organisational level only “if organizations can have agency in a non-metaphorical manner, be autonomous, and have responsibility.” Elsewhere, I have argued why I am sceptical about integrity attributions to collective entities such as organisations (Alzola, 2019). But the influence of organisations on the integrity of their members is well-documented (e.g., White & Lean, 2008).

IS INTEGRITY A VIRTUE? Hopefully, the reader now has a better understanding of what integrity is (and is not) at the individual and the collective level. Then, is integrity a virtue? What makes integrity a virtue? How is integrity connected to moral goodness? Does integrity help its possessor make good decisions? What does integrity require from a person or organisation? The Virtue of Integrity Stemming from the Latin integer, which means “wholeness” or “completeness,” integrity has the appearance of being a virtue “which involves one’s life hanging together as a complete and coherent whole” (Archer, 2017: 439). This evokes the ancient unity of virtue thesis, according to which a person cannot have one virtue without having them all. Integrity would play the role of interrelating the individual virtues. While the Greeks do not list integrity as a virtue like courage, justice, temperance, or prudence, some Roman philosophers developed it as a moral notion (Bauman, 2013). A typical starting point for the moral status of integrity is to see it as some integrative master virtue (Calhoun, 1995: 260) or meta-virtue (McFall, 1987: 14) that encompasses all

Organisational integrity as a virtue  369 virtue (Curzer, 2012). Elsewhere, I have argued that a virtue is an excellence of character that benefits its possessor by enabling her to flourish as a good human being – that is, to live a characteristically good human life. And character involves higher-order desires and values, beliefs, framing capacities, emotions, and enduring patterns of behaviour that are relevant in the domain of morality (Alzola, 2012). Does integrity meet the conditions to be a virtue? If it does, it would be a special type of virtue. Taylor (1981) sees integrity as a second-order virtue that involves the possession of other virtues, such as honesty and trustworthiness. “We think of it as a virtue, perhaps, because we assume that being virtuous is a consequence of possessing integrity” (1981: 154). Along the same lines, Kristjánsson (2019: 102) advocates for integrity as a general meta-virtue for securing the integration of all traits, including vicious ones, which “would be surplus to requirements in Aristotle’s virtue ethical system.” As Scherkoske (2013: 28) puts it, “if sticking to one’s convictions in the face of disagreement and challenge – or holding one’s line in the face of varied temptations to capitulate, ‘sell-out’ or backslide – is a virtue, then it is both intuitive and common to call this virtue integrity.” Cox, LaCaze, and Levine (1999) argue that steadfastly maintaining particular commitments is essential to achieving integrity, but integrity and commitment are not equivalent. Different types of integrity (moral, intellectual, artistic, emotional, etc.) require varying degrees of moral commitment. McFall (1987) also sees it as a higher-order virtue. “To have moral integrity, then it is natural to suppose that one must have some lower-order moral commitments; that moral integrity adds a moral requirement to personal integrity” (1987: 16). And Solomon (1992: 168) thinks that it is “not so much a virtue itself as it is a complex of virtues, the virtues working together to form a coherent character, an identifiable and trustworthy personality.” Audi and Murphy (2006) argue that the virtues cannot exist without integrity and conclude that integrity is a virtue that integrates other traits and behaviours. Similarly, Fuerst and Luetge (2021: 28) observe that a person of integrity manages to “integrate all the various fragments of personality, consisting of desires, appraisals, commitments, etc., into a balanced whole.” For Goodstein (2000: 815), loyalty and shame are “virtues most conducive to integrity-preserving moral compromise in business.” And integrity appears connected to traits of truthfulness such as honesty, sincerity, and fair dealing. Archer (2017: 438) explains how a person with integrity has reconciled the various aspects of her life into a coherent whole, as opposed to the fragmented person “whose self is ridden with internal conflict … it may involve being committed to two or more incompatible desires, projects or ambitions … it may involve a lack of coherence between what the agent claims to be committed to or care about and what she actually cares about or is committed to.” This suggests that integrity looks like an intellectual – as different from a moral – virtue. A person with integrity is responsible for grasping the requirements of the common good and the good life by pursuing happiness and implementing such requirements. Graham (2001: 235) suggests that integrity is “internally related to a host of virtues which exclude weakness of will and dogmatism, and presuppose trustworthiness.” Even disagreeing with the unity of virtue thesis, Scherkoske (2013: 29) explains that a person of integrity may not be particularly kind, generous, or imaginative, but “traits such as dishonesty, hypocrisy and shiftiness appear integrity undermining.” Integrity is also a master virtue in the Confucian tradition, equivalent to the virtue of Jen, translated as benevolence, kindness, and authoritative humanity. Koehn (2005) says that it

370  Research handbook on organisational integrity refers to perfect or complete virtue in its broadest sense. “Jen encompasses propriety, loyalty, filial piety, courage, kindness, and all other particular virtues” (2005: 126). Integrity is not only important to fit us for membership in a community but can also be considered an organisational virtue, which involves standing for principles worthy of defence because the agent is interested in living well. Kirby (2021: 1623) discusses how “being capable of dispositions to act in more or less praiseworthy ways, institutions are capable of virtue.” And Palanski, Kahai, and Yammarino (2011: 202) show, based on empirical evidence, that virtue at the individual level has the same nature as applied at the organisational level: “virtues are fundamentally isomorphic – that is, they have the same basic structure and function across levels of analysis.” Similarly, Fuerst and Luetge (2021: 30) conclude that “virtues are features of an organization, as they are of physical persons.” So far this section has reported what integrity has in common with other virtues. But unlike other virtues, ascriptions of integrity are not expressed in adjectival form. We have an adjective for generosity, loyalty, and honesty, but we lack one adjective for integrity. Taylor (1981) thinks the gap can be filled by “is integrated” or “is intact,” but that would not do the work because such expressions do not convey specific information about the agent in the way that “courageous,” “loyal,” or “honest” do. The Value of Integrity But what makes integrity a virtue? In order to be deemed as a virtue in the eudaemonist (or Aristotelian) tradition, there must be some goods that integrity characteristically produces and constitutes. Koehn (2005: 8) observes that the value of integrity cannot be reduced to its market valuation; integrity is intrinsically valuable because “it enables us to be the finite, vulnerable, interdependent human beings that we are.” Archer (2017: 435) provides an account for the value of integrity: “if possessing an integrated self were not valuable then it would be unlikely to be accepted as a plausible account of integrity.” Integrity helps its possessor make good decisions. When we actively seek counsel, guidance, or mentorship, we want to engage with a person of integrity not only because we anticipate and demand honesty from her but also “for their understanding and judgment as both interlocutors and leaders” (Scherkoske, 2013: 30). Both Cox, LaCaze, and Levine (1999) and Graham (2001) emphasise the intellectual authority of (the person of) integrity not only to stand for personal commitments but also to judge what principles are morally right. Thus, having moral integrity means sticking to strong moral principles that lead to better choices. In contrast, Bauman (2013) believes that having integrity does not necessarily ensure better decisions but instead adherence to one’s commitments. Integrity can only be a virtue if it helps its possessor make better decisions and live a better life. Conversely, if integrity is a virtue, lack of integrity makes people live worse lives and leads to poor decisions. Koehn (2005) argues that when we lack integrity, “Lying becomes just another tool of business strategy. If we feel a bit guilty about lying, we tell ourselves that our deceit hurts no one. Yet, lying causes us stress, making us sick” (2005: 133). As a trait, integrity makes people “want to act mindfully whenever, wherever. Those possessing this virtue, by definition, act with a view to both the short-term and the long-term” (2005: 133). Koehn predicts that those who lack integrity will do whatever maximises short-term profits, even if inconsistent with long-term business survival.

Organisational integrity as a virtue  371 Audi and Murphy (2006: 15) suggest that when a company is faced with a crisis like those often reported in the media, “the facet on integrity constituted by moral courage means that the management team will have the backbone to make difficult decisions (possibly including layoffs) and communicate them forthrightly to lower-level employees.” The grounds for organisational integrity are the corporate internal decision-making structures – that is, an organisational flow chart that constitutes positions and oversight responsibilities and policies and procedural rules to distinguish individual from organisational decisions – that let us redescribe individual actions as corporate actions performed for corporate/organisational reasons/intentions (French, 1979). Such corporate intentions are formed in deliberation with others, where disagreement and moral compromise do not imply moral capitulation (Goodstein, 2000) because individual claims must be balanced against other legitimate moral claims (Haan et al., 1983). Kirby (2021: 1622) says that integrity serves as a rational basis for trust: “A person who has integrity is trustworthy,” and that applies to both individual and collective persons. Along similar lines, Archer (2017) argues that a society can have integrity in terms of every member of the society sharing the same goals and being united to one common cause. And Kirby (2022) adds that institutional integrity is important because it provides a reason for citizens to support the institution. Under this rationale, institutional integrity is a continuation of our current use of the term “moral integrity” for individuals. That itself justifies making institutional integrity a goal of public institutions. The Demands of Integrity What does integrity require from an individual or corporate person? Audi and Murphy (2006: 11) observe that “a call for integrity, without explicit indications of the standards to be met, might easily be thought – by someone inclined to pursue profits over all else – to allow those compromises.” Smart and Williams (1973) argue that a person’s integrity is constituted by those commitments to values, principles, and life projects that confer an identity on oneself. These specific identity-conferring commitments are ones with which a person is “deeply and extensively involved and identified” (1973: 116). Similarly, McFall (1987: 16) says that it is a conceptual truth that “personal integrity requires unconditional commitments” that confer an identity to the person. And Taylor (1981: 146) observes that the person of integrity “must fulfill two independent conditions: he must have commitments, and he must be true to them.” Integrity requires us to be loyal to our principles and to ourselves (Olsthoorn, 2009). It also requires a commitment to one’s projects (Scherkoske, 2013). And it requires more than just good intentions and sincerity in pursuing one’s principles; it requires judgement that is “epistemically trustworthy and is grounded in the moral know-how of the agent” (Graham, 2001: 235). What does it mean to have integrity? Leaders of moral integrity consistently act from principle, which makes them morally trustworthy. Bauman (2013) distinguishes three types of ethical leadership, namely transformational (who have “strong moral commitments and leverage them to elevate and influence their followers”), authentic (“who achieve authenticity through ‘self-awareness, self-acceptance, and authentic actions and relationships’”), and spiritual (who use their “values and behaviors to intrinsically motivate followers and oneself

372  Research handbook on organisational integrity to experience ‘spiritual survival’ through being called or being a member of a greater whole”) (2013: 6). Integrity is not only a matter of outcomes. The steadfastness and sincerity of a person’s moral beliefs are not enough; they must also be arrived at in the right way. A person develops her principles through an honest and earnest belief in those principles, not because someone else follows or imposes them. Integrity requires that the actions and reasons of the person be her own, so it demands “coherence between the person’s beliefs, desires, commitments, and actions” that are essential to the person’s self (Graham, 2001: 235). Integrity requires not only coherence between espoused and exhibited values but also motivational unity (“self-integration”); that is, unity between the various psychological drivers eliciting action (Kristjánsson, 2019). Maintaining integrity requires fulfilling one’s commitments to various social groups, which in a sense constitute one’s self (Goodstein, 2000), and a solid commitment to a reflective process of making critical decisions (Paine, 1997). Allowing the violation or corruption of one’s core self in the face of temptation and social pressures undermines integrity. Koehn (2005) argues that integrity requires one to act with care and prudence. And, within organisations, a lack of integrity from senior leadership creates a slippery slope for employees to begin determining that immoral behaviour is acceptable. Can Integrity Be a Vice? This section has examined reasons for integrity to be considered a virtue of individuals and organisations in connection with the normative value and demands of integrity. Instead of framing it as a virtue, can integrity be a vice or at least a neutral character trait? Some scholars hold that integrity attributions are justified by personal commitments that can be immoral, non-moral, or moral as long as they are related to a person’s wholeness, where all that matters is whether a person consistently acts on her commitments, regardless of their content (Bauman, 2013). Likewise, Halfon (1989: 35) argues that “a consistent Nazi could possess integrity, because no a priori restrictions exist concerning the content of the commitments that integrity helps bring into harmony.” In contrast, Kristjánsson (2019) suggests that someone should be morally good to have integrity. And Graham (2001) argues that integrity is fundamentally ascribed to a person who lives out her deep commitment to ethical values. Is integrity a virtue of the vicious person? Is it a vice itself? Schauber (1996) distinguishes moralised from self-unifying integrity. Moralised is the integrity of a person of sound moral judgement, who remains true to exemplary moral convictions in the face of considerable adversity and temptation, while self-unifying integrity emphasises a person’s steadfast commitment regardless of the content. It follows that an evil person may possess self-unifying integrity. In a broad sense, if a person has a personal principle that drives her actions that is important to her, and sticking to that principle grants her integrity (even if the principle is a non-moral pursuit), then integrity could be the virtue of a vicious person. McFall argues (1987: 12) that “when we grant integrity to a person, we need not approve of his or her principles or commitments, but we must at least recognise them as ones a reasonable person might take to be of great importance and ones that reasonable person might be tempted to sacrifice to some lesser yet still recognizable goods.”

Organisational integrity as a virtue  373 Similarly, the Nazi regime could be seen as an example of “self-unifying” integrity. Kirby (2021: 1633) argues that the opposite of institutional integrity is institutional corruption, which “is manifest when there is a systemic and strategic influence which is legal, or even currently ethical, that undermines the institution’s effectiveness by diverting it from its purpose or weakening its ability to achieve its purpose, including … weakening either the public’s trust in that institution or the institution’s inherent trustworthiness.” That move seems to make the value of institutional integrity parasitic on the value of the institution of which it is a part. In other words, institutional corruption in such a system would be morally justified insofar as it would help to subvert the immoral system from within, prevent it from achieving its evil purpose, and undermine public trust in it. To conclude this section, whether integrity meets the conditions for virtue (or rather a vice) at the individual and organisational level partially depends on how it is defined. With Bernard Williams (1981), I would conclude that if integrity is defined as maintaining identity-based commitments, it may not meet the conditions to be a true virtue mentioned above (Alzola, 2012) because it lacks the motivational force that virtue characteristically has. Whereas a virtue motivates individuals to act in desirable ways or enables them to do so, integrity is more focused on maintaining the agent true to herself. This identity-based feature of integrity suggests that acting with integrity means behaving in a manner that accurately reflects one’s self-perception and aligns with deeply held motives, interests, and commitments.

INTEGRITY PROBLEMS: IDEAS FOR FUTURE RESEARCH The previous sections have identified the two main problems with integrity, namely, definitional issues and the moral status of integrity as a virtue. Both issues are related because the vagueness of the definition affects the moral evaluation of integrity, and whether or not integrity is a virtue impacts how we conceptualise integrity. Qualities of mind and character, such as moral conscientiousness, accountability, commitment, and coherence, can be attained by different types of people, even those who participate in abhorrent behaviour. Under that description, integrity is an amoral term in the sense that there is room for a tyrant or a rapist to be a person (and a leader) of integrity. If integrity is just a matter of behavioural consistency, the most repugnant human being may rightfully claim to be a person of integrity (Olsthoorn, 2009: 96). Now, from the fact that vicious people can consistently make wrong choices, does it follow that they possess integrity? If so, how can integrity be a virtue? Scherkoske (2013) sees it as a kind of loyalty or partiality to oneself. Integrity in the sense of being true to oneself may often require being false to others (McFall, 1987). This partiality to the self “creates the bad odour some have detected to integrity. And this worry about partiality prompts concerns as to the normative adequacy of these accounts, since it would appear to discount the sense that integrity is a considerable value” (Scherkoske, 2013: 35). Thus, a full description of integrity as a virtue needs to account for the normative value of integrity. Part of it is about the necessity of integrity to be whole. A person of integrity keeps her self intact, “and the person who lacks integrity is corrupt in the sense that self is disintegrated” (Taylor, 1981: 146). Still, Calhoun (1995: 238) has argued for the value of seeing oneself as a duplicitous or multiplicitous being “whose identity is differently constituted in different cultural ‘worlds’ or

374  Research handbook on organisational integrity meaning systems.” Can a person of flawed character also be a person of integrity? Graham (2001: 250) thinks “we can plausibly and coherently disapprove of the individual’s performance and still coherently ascribe integrity to the person performing the act.” This brings to mind a related problem that empirical scholars have noticed, namely, the lack of “a theoretically sound measure of integrity.” Becker (1998) challenges integrity tests, questions whether they truly measure “integrity,” and shows that current tests are based on incomplete definitions of integrity. As described above, integrity is a multifaceted construct encompassing several traits, from loyalty to trustworthiness, coherence, and conscientiousness. Thus, a more comprehensive and nuanced measure of integrity is needed to capture the different dimensions of integrity. The ambiguities and moral status of integrity are also problematic at the organisational level. Companies interpret and define what integrity means to them with a lot of variation from one to the other. “As often as companies use the term organizational integrity in practice, almost every company interprets it in its own way. Mission statements become a venue to incorporate these values [organisational integrity]” (Fuerst & Luetge, 2021: 27). Official codes of conduct, corporate ethics programmes, and compliance departments tend to emphasize legality, obedience, and compliance that are presented as the “absence of corruption” (Kirby, 2021: 1624). But tensions may arise, and conflicting principles raise “particularly difficult challenges for collaborative policy and decision-making bodies.” Such conflicts of underlying values are qualitatively different from those of “non-moral interests.” Finally, the idea of corporate integrity raises the question of who is responsible for upholding institutional integrity within an institution. Does the responsibility fall on authority roles, is it rather distributed among its members, or is it a responsibility of institutional systems? As institutions do not think for themselves, the metaphysics of organisational integrity should be a significant chapter in the literature on integrity in management and public policy (Alzola, 2019).

CONCLUSION This chapter has delved into the concept of integrity and its multifaceted nature. Integrity is often associated with other qualities with a rich pedigree in philosophy, psychology, and management scholarship, such as honesty, loyalty, coherence, etc. But it is different from such concepts, and it encompasses more than them. This chapter has explored the various dimensions of personal and organisational integrity and their interconnectedness. It has also examined the importance and normative value of integrity at the psychological, moral, and social levels. And it has considered whether the best (or the least problematic) definition of integrity meets the conditions for virtue. The idea of integrity as being true to oneself may sometimes require the agent to be false to others. It lacks the motivational force that virtue has. The significance of integrity lies not only in its moral status but also in its broader impact on individuals, organisations, and society. At the individual level, integrity fosters a sense of self-respect, authenticity, and personal fulfilment. It cultivates trust, reliability, and credibility, enabling meaningful relationships and fostering a sense of cohesion in communities and institutions. Integrity serves as a moral compass that guides individuals through difficult choices, promoting ethical behaviour even in the face of adversity. The absence of integrity can shape the destiny of people, organisations, and societies as the erosion of integrity erodes

Organisational integrity as a virtue  375 trust and undermines social cohesion, leading to cynicism, disillusionment, and moral decay. The social context in which individuals operate can affect their ability to maintain integrity. In organisations where unethical behaviour is tolerated or even rewarded, employees may find it challenging to maintain their integrity. Therefore, organisations must create a culture that reinforces integrity and ensure that employees remain true to their values, even in challenging situations. A culture of integrity can inspire collective action, engendering social trust and fostering environments conducive to virtue, even if integrity does not meet the conditions for virtue. By examining the nature and moral status of integrity, this chapter has explored the nuanced landscape of integrity to ponder its timeless relevance and contemplate its transformative potential. Academic research can provide insights and strategies for individuals and organisations to uphold integrity in guiding their decisions and shaping the very essence of who we are as individuals and as a collective. By definition, a person of integrity is a good person, and a good person makes good choices.

REFERENCES Alzola, M. (2012). The possibility of virtue. Business Ethics Quarterly, 22, 377–404. Alzola, M. (2018). Character-based business ethics. In N. Snow (Ed.), The Oxford Handbook of Virtue. New York: Oxford University Press. Alzola, M. (2019). Even when no one is watching: The moral psychology of corporate reputation. Business & Society, 58(6), 1267–1301. Archer, A. (2017). Integrity and the value of an integrated self. The Journal of Value Inquiry, 51, 435–454. Audi, R., & Murphy, P. E. (2006). The many faces of integrity. Business Ethics Quarterly, 16(1), 3–21. Bauman, D. C. (2013). Leadership and the three faces of integrity. The Leadership Quarterly, 24(3), 414–426. Becker, T. E. (1998). Integrity in organizations: Beyond honesty and conscientiousness. Academy of Management Review, 23(1), 154–161. Brenkert, G. (Ed.). (2004). Corporate Integrity and Accountability. London: Sage Publications. Calhoun, C. (1995). Standing for something. The Journal of Philosophy, 92(5), 235–260. Cox, D., LaCaze, M., & Levine, M. P. (1999). Should we strive for integrity? The Journal of Value Inquiry, 33, 519. Curzer, H. J. (2012). Aristotle and the Virtues. Oxford: Oxford University Press. Ewin, R. E. (1992). Loyalty and virtues. The Philosophical Quarterly, 42(169), 403–419. French, P. A. (1979). The corporation as a moral person. American Philosophical Quarterly, 16(3), 207–215. Fuerst, M. J., & Luetge, C. (2021). The conception of organizational integrity: A derivation from the individual level using a virtue-based approach. Business Ethics, the Environment & Responsibility, 32(1), 25–33. Goodstein, J. D. (2000). Moral compromise and personal integrity: Exploring the ethical issues of deciding together in organizations. Business Ethics Quarterly, 10(4), 805–819. Graham, J. L. (2001). Does integrity require moral goodness? Ratio, 14(3), 234–251. Haan, N., Bellah, R. N., Rabinow, P., & Sullivan, W. M. (1983). Social Science as Moral Inquiry. New York: Columbia University Press. Halfon, M. S. (1989). Integrity: A Philosophical Inquiry. Philadelphia, PA: Temple University Press. Kirby, N. (2021). An “institution-first” conception of public integrity. British Journal of Political Science, 51(4), 1620–1635. Kirby, N. (2022). Institutional integrity: Its meaning and value. Ethical Theory and Moral Practice. In press. Koehn, D. (2005). Integrity as a business asset. Journal of Business Ethics, 58, 125–136.

376  Research handbook on organisational integrity Kristjánsson, K. (2019). Is the virtue of integrity redundant in Aristotelian virtue ethics? Apeiron: A Journal for Ancient Philosophy and Science, 52(1), 93–115. McFall, L. (1987). Integrity. Ethics, 98(1), 5–20. Olsthoorn, P. (2009). A critique of integrity: Has a commander a moral obligation to uphold his own principles? Journal of Military Ethics, 8(2), 90–104. Paine, L. S. (1997) Integrity. In P. Werhane, & R. E. Freeman (Eds.), The Blackwell Encyclopedic Dictionary of Business Ethics, 335–336. Oxford: Blackwell. Palanski, M. E., Kahai, S. S., & Yammarino, F. J. (2011). Team virtues and performance: An examination of transparency, behavioral integrity, and trust. Journal of Business Ethics, 99, 201–216. Schauber, N. (1996). Integrity, commitment and the concept of a person. American Philosophical Quarterly, 33(1), 119–129. Scherkoske, G. (2013). Whither integrity I: Recent faces of integrity. Philosophy Compass, 8(1), 28–39. Smart, J. J. C., & Williams, B. (1973). Utilitarianism: For and Against. Cambridge: Cambridge University Press. Solomon, R. C. (1992). Corporate roles, personal virtues: An Aristotelean approach to business ethics. Business Ethics Quarterly, 2(3), 317–339. Taylor, G. (1981). Integrity. Proceedings of the Aristotelian Society, Supplementary Volumes, 55, 143–176. White, D. W., & Lean, E. (2008). The impact of perceived leader integrity on subordinates in a work team environment. Journal of Business Ethics, 81, 765–778. Williams, B. (1981). Moral Luck: Philosophical Papers 1973–1980. Cambridge: Cambridge University Press.

24. Organisational integrity as an epistemic virtue Marco Meyer

Integrity is commonly understood as a moral virtue that pertains to the coherence between one’s moral convictions and actions, as well as consistency in convictions over time (McFall, 1987; Montefiore & Vines, 2005; Williams, 1982). The individual or organisation displaying integrity upholds their moral convictions and follows through on their actions, despite facing pressure (Kirby, 2022). Integrity is both a trait valued in individuals and a value frequently claimed by organisations (Bodolica & Spraggon, 2015; Murphy, 1995). However, this dominant understanding of integrity is incomplete. While individuals and organisations displaying integrity often exhibit consistency between their beliefs and actions, the traditional understanding of integrity fails to fully capture its essence, and may lead to misconceptions. To illustrate, consider the following scenario: Unreliable quality control. A large pharmaceutical company has a range of hip replacements in its product portfolio. One such device had been sold for over two decades, until it was discovered that in rare cases, small metal parts of the device flake off and cause sepsis. The fault went undetected during medical trials due to its rarity and the device had all the required regulatory approvals. The company was unaware of the issue until recently and promptly withdrew the device from the market. Despite this, the company settled a court case by paying a substantial fine. The settlement stated that although the company could not have been expected to detect the fault beforehand, a more robust quality control system would have flagged the device as potentially unsafe.1

In my view, the case highlights a lack of integrity of the company. From the traditional understanding of integrity as a moral virtue, this may seem implausible. It is difficult to identify at what point the company fell short in terms of moral action. After all, the company was unaware of the safety flaw in the device. Additionally, the company had passed rigorous medical trials to the satisfaction of the regulatory body. The safety flaw only led to harm in rare cases, which occurred over a period of decades and which the company had no means of identifying. Let’s also assume that the company acted with pure intentions: if the company had any means of identifying the safety flaw, it would have promptly withdrawn the product. There does not seem to be any discrepancy between the company’s moral convictions and its actions. Therefore, on the traditional view, the company’s integrity does not appear to be in question. However, the company’s lack of integrity becomes apparent when we depart from the traditional understanding of integrity as a moral virtue, and instead consider it primarily as an epistemic virtue (Scherkoske, 2012). Unlike moral qualities, epistemic qualities focus not on moral action, but on cognitive success (Baehr, 2011; Battaly, 2008; Zagzebski, 1996). From the epistemic perspective, to act with integrity, an individual or organisation must engage in responsible inquiry, that is, the collection, processing, sharing, and storage of information in ways that promote truth (Choo, 2020; de Bruin, 2013, 2014). The pharmaceutical company lacks integrity because it failed to engage in responsible inquiry. Specifically, it failed to establish the necessary infrastructure to detect safety issues with their products in a timely manner. 377

378  Research handbook on organisational integrity This epistemic perspective on integrity offers a new and complementary approach to organisational ethics. Traditionally, organisational ethics focuses on how organisations should trade off the interests of shareholders and other stakeholders (Freeman, 2010; Friedman, 1970). This normative perspective prompts questions such as how a company should weigh profits against social and environmental responsibilities. By contrast, the epistemic lens on organisational ethics begins with the recognition that how an organisation handles information is of great ethical significance (Baird & Calvard, 2019; Lamy, 2022; Warenski, 2018). It complements traditional approaches by providing a framework for comprehending how organisations can create the necessary conditions for sound moral deliberation, specifically by acquiring and utilising relevant and high-quality information. The epistemic perspective shifts the focus from the moral character of individuals or the purpose and values of an organisation, to their ability to effectively process information. Integrity is not primarily about moral convictions; rather, individuals and organisations displaying integrity are characterised by their motivation to engage in difficult epistemic work (de Bruin, 2017; Herzog, 2018, ch. 6). For organisations, integrity requires establishing a virtuous epistemic infrastructure and cultivating an ethical epistemic culture (Dempsey, 2015). By aligning one’s beliefs with facts, integrity has secondary beneficial effects on moral action, such as reducing the risk of culpable ignorance. The structure of the chapter is as follows: I will present the argument that integrity, both in people and in organisations, is primarily an epistemic virtue in the first part of the chapter. In the second part, I will describe how hierarchy and division of labour create challenges to integrity in organisations. In the third part, I will discuss the connection between organisational integrity and moral behaviour, specifically how it can prevent culpable ignorance. Finally, I will explore practical strategies that organisations can implement to cultivate integrity, with a specific focus on establishing epistemic infrastructure and fostering an epistemic culture.

INTEGRITY IS AN EPISTEMIC VIRTUE Recall that integrity is commonly understood as a moral virtue that pertains to the coherence between one’s moral convictions and actions, as well as consistency in convictions over time. By contrast, I argue in this section that integrity is only secondarily relevant to morality. Instead, integrity is primarily an epistemic virtue, i.e. a virtue that makes its possessors more likely to achieve cognitive success. As a first approximation, cognitive success consists in aligning one’s beliefs with the truth (Cassam, 2019; Code, 2020; Goldman & McGrath, 2015). However, this should be understood in an expansive manner, including not just ascertaining facts, but also becoming aware of issues relevant to one’s objectives, judging probabilities competently, and gaining understanding. I hasten to add that there is a connection between integrity and moral action, for individuals and organisations that have moral objectives. In these cases, integrity serves as an essential virtue for achieving moral action. However, not all individuals or organisations have moral objectives. Integrity can also be present in those who pursue morally neutral or even unethical objectives. This point is highlighted by Rawls, who claims that integrity “allows for most any content: a tyrant might display these attributes to a high degree, and by doing so exhibit a certain charm, not deceiving himself by political pretences and excuses of fortune” (Rawls,

Organisational integrity as an epistemic virtue  379 1999, p. 519). While we may admire integrity more in individuals and organisations that have ethically commendable objectives, it is not a requirement for integrity to be present. My core claim is that integrity is primarily an epistemic virtue – it requires collecting, processing, sharing and storing information in a manner that promotes truth. To support this claim, I build on Greg Scherkoske’s (2012) argument that integrity is primarily an epistemic virtue, and apply it to organisations. Scherkoske highlights that although integrity is an admirable trait, it does not possess a distinct motivational profile related to ethical behaviour. This separates integrity from other moral qualities, such as generosity, which involves the motivation to provide benefits to others, or courage, which involves the determination to remain steadfast in the face of danger. Unlike these qualities, integrity does not possess a distinct motivation related to ethical behaviour. Thinking harder about integrity’s distinctive moral motivation won’t result in its discovery. Nor will trying to frame its moral motivation in more complex ways yield convincing results (Cox et al., 2018). Instead, I believe that the absence of a distinct moral motivational profile is a defining characteristic of integrity. Individuals with vastly different moral beliefs can still acknowledge each other as individuals of equal integrity. In fact, recognising the integrity of one’s adversary can be the only redeeming quality in their relationship. This aspect of integrity sets it apart from all other moral qualities. For example, a person of generosity would not, by definition, recognise their stingy counterpart as generous. Therefore it seems to me that integrity really does not have a distinctive motivational profile. If integrity is not a moral virtue, what is it then? Setting the epistemic option aside for the moment, two other proposals have been made. The first grants that integrity is a moral virtue, but denies that it is a distinctive moral virtue (Cox et al., 2018). Instead, integrity functions as an umbrella term to capture moral qualities in general. However, this view won’t do. If integrity was an umbrella term for moral virtue in general, lacking some moral qualities would imply a lack of integrity. Yet this implication does not agree with how the term is commonly used. As Scherkoske (2012, p. 191) puts it: “We may forgive the absence of certain virtues in people, but we don’t forgive lack of integrity”. His point, which undermines the view that integrity is an umbrella term for moral virtue in general, is that shortcomings in one or a few moral virtues do not imply a lack of integrity. The second proposal is more radical. It denies altogether that integrity is a virtue. This is Bernhard Williams’ view (1982, p. 49). His proposal accounts for integrity’s lack of a distinct motivational profile, but it does not align with the common understanding that integrity is highly valued in individuals and organisations. Before accepting this alternative viewpoint, it is important to consider all options that align with the belief that integrity is a positive attribute. This brings us back to the possibility we had set aside, that integrity is an epistemic virtue. Unlike moral virtues, which focus on right action, epistemic virtues focus on cognitive success. This means that integrity is not, in the first instance, about consistency in moral convictions and actions, or consistency over time. Instead, it is about adhering to one’s convictions as long as they are the result of responsible inquiry. Let’s examine whether the proposal that integrity is primarily an epistemic virtue can evade the argument put forth by Williams (1982, p. 40ff.) that integrity is not a virtue at all. He discusses the challenge that integrity is self-indulgent, as it focuses on preserving the convictions of the person of integrity, and ensures coherence between what they say and do, rather than between what they do and what is the right thing to do. However, this perception of integrity as self-indulgent is based on the assumption that integrity is about adhering to one’s

380  Research handbook on organisational integrity moral convictions, regardless of their merit. From the epistemic perspective, integrity is not about rigidity, but rather about adhering to well-justified convictions. A person or organisation of integrity stands by their convictions only to the extent that they are well supported by evidence. Changing one’s views for evidential reasons does not betray a lack of integrity. In fact, a willingness to change one’s views when presented with new evidence is a key aspect of integrity as an epistemic virtue (Meyer et al., 2020, 2021). Integrity is a virtue that requires moral convictions to be based on reason and evidence. As Scherkoske notes, individuals or organisations possessing integrity are motivated to engage in responsible inquiry, making their convictions not only worth holding by themselves, but also worthy of attention and trust by others. For instance, in the case of unreliable quality control, a better-quality management system would have led the company to revise its views on the safety of their hip replacement device. This revised belief would have been justifiable and worthy of adherence for the company and its customers. While the majority of the company’s products may still be considered safe, the improved quality management system would provide additional justification for these beliefs as well, making them more trustworthy for the company and others. I conclude that integrity is primarily an epistemic virtue. It consists in making one’s beliefs accountable to reasons and evidence. It is important to note, however, that simply acknowledging evidence that one stumbles upon is not enough. Instead, individuals and organisations must actively engage in responsible inquiry. This includes seeking and acquiring relevant information that supports their beliefs, as well as being aware of the level of justification for their beliefs. These actions would have prevented the company in the example of unreliable quality control from acting based on ignorance.

HIERARCHY AND DIVISION OF LABOUR CREATE CHALLENGES FOR ORGANISATIONAL INTEGRITY Organisations possess the ability to deliberately adjust their cognitive abilities to meet their information requirements for acting with integrity. For example, they can bring on additional members or adopt information management systems that improve responsible inquiry (Choo, 2006; Frost & Choo, 2017). Compared to individuals, their cognitive flexibility positions organisations better to cultivate the virtue of integrity. However, organisations also face challenges in terms of disseminating information among their members. Hierarchy and division of labour are two strategies organisations adopt to manage this complexity. These two strategies have ambivalent implications for responsible inquiry: Despite their benefits, hierarchy and division of labour also create significant challenges for responsible inquiry within organisations. Therefore, epistemic integrity is inherently vulnerable within organisations. In this section, I will develop this argument and validate it by analysing the results of a study on the challenges with responsible inquiry in organisations. The study uncovered six prevalent factors that contribute to a failure of responsible inquiry within organisations, all of which are closely linked to hierarchy or division of labour. Organisations are not just unstructured groups, but rather impose a system of governance on their members (Foss et al., 2010). A key aspect of this governance structure is the presence of hierarchies, which serve to efficiently accomplish its goals and allocate power (Child, 2019). Hierarchy enables rigorous inquiry by establishing a clear chain of command and system of

Organisational integrity as an epistemic virtue  381 accountability, allowing for efficient communication and decision-making. However, hierarchies also present challenges to rigorous inquiry (Edelman & Larkin, 2015; Herzog, 2018; Kwok, 2020). Power imbalances can make it difficult for lower-level employees to voice ethical concerns or challenge the decisions of higher-level managers (Griffith et al., 2020). This can lead to a lack of diversity in perspectives and can also make it easier for bad decisions to go unchallenged (Bowen & Blackmon, 2003). Additionally, hierarchical organisations risk creating information flows primarily from top-down, leading to a lack of input from lower-level employees (Burris et al., 2013). Organisations are also characterised by division of labour (Choo, 2008). Division of labour can improve responsible inquiry by allowing employees to develop specialised expertise and skill, which can improve the quality of inquiry in an organisation. But division of labour poses risks to responsible inquiry as well. Narrow task assignments can create a situation where members are only responsible for a small part of the overall process of inquiry, making it difficult to identify who is responsible for overall outcomes (Dubnick, 2003). It can also lead to siloed thinking, with employees lacking a comprehensive understanding of the organisation and its objectives, resulting in a lack of awareness of the potential consequences of their actions (Jones, 1991). Additionally, division of labour can undermine transparency in the decision-making process, making it difficult for employees and other stakeholders to understand how decisions are being made and to identify any potential ethical issues (Jordan, 2009). The ambivalent impact of hierarchy and division of labour on responsible inquiry in organisations is validated by an empirical study of information issues in corporations from an employee perspective (Meyer, 2023). I conducted an automated text analysis of a large number of online employee reviews to identify epistemic vices of organisations, i.e. characteristics that undermine the creation, sharing, and storing of knowledge in organisations. Table 24.1 provides definitions and example quotes from the study. For the purposes of this chapter, I have added a column to describe the effects hierarchy (H) and division of labour (D) tend to have on these characteristics of organisations. A “plus” (“minus”) means that organisations characterised by greater hierarchy or division of labour may be more (less) likely to display the respective epistemic vice. Note that these judgments are simplifications intended to make the overall point that hierarchy and division of labour tend to have ambivalent influences on responsible inquiry. Ambiguity, complexity, and dishonesty validate the observation that hierarchy and division of labour are essential to enable responsible inquiry in organisations. For instance, the illustrative quote associated with ambiguity, “Constantly contradictory statements from management”, can be read as the description of an organisation with an unclear hierarchy. Hierarchy is a strategy to reduce ambiguity by creating clear lines of authority to resolve ambiguous decisions. Division of labour reduces the need for members to process information by defining boundaries to the knowledge relevant for each individual member. The effects of hierarchy and division of labour are ambivalent, but one effect of hierarchy and division of labour is to allow for clear lines of accountability, which tend to reduce dishonesty. By contrast, hierarchy and division of labour have partly amplifying effects on incompetence, unreliability, and fragmentation. While division of labour enables specialisation and thereby tends to increase the competence of an organisation, hierarchy tends to have the opposite effect, by removing managers from information that employees are exposed to. Unreliability of systems tends to be amplified in organisations with greater division of labour, because specialisation makes organisations more dependent on processes and information

382  Research handbook on organisational integrity Table 24.1

Epistemic vices of organisations

Epistemic vice

Example quote

Effect

Incompetence: People in the organisation lack the competence to

“Directors … sit in their offices upstairs,

H: +

do their job well.

completely unaware of what is going on”

D: –

Unreliability: The organisation lacks reliable mechanisms for the

“The informational paths haven’t been

H: –

generation, sharing, or storing of organisational knowledge.

established yet to make sure everyone knows

D: +

what they need to” Fragmentation: Fragmented organisational structure or

“Sometimes the simplest changes take a very

H: –

interdepartmental dynamics undermine the creation or sharing of

long time to implement within the matrix

D: +

organisational knowledge.

structure”

Ambiguity: Role conflict and ambiguity undermine the creation

“Constantly contradictory statements from

H: –

and sharing of organisational knowledge.

management”

D: –

Complexity: Complex or otherwise inefficient processes undermine “Overly complex internal processes force you to

H: –

the creation, sharing, or storing of organisational knowledge.

spend too much time on non-value-added tasks”

D: –

Dishonesty: The organisation has a tendency to lie, deceive, or

“These folks have been the most dishonest,

H: –

mislead.

underhanded bunch that I’ve dealt with in over

D: –

30 years”

systems. Hierarchy can counteract this tendency by creating nodes in the organisation that have oversight of several specialist departments. Similarly, hierarchy tends to decrease problems based on fragmentation, division of labour tends to exacerbate them. In sum, the fundamental challenge to responsible inquiry in organisations is to manage information flows between their members. Hierarchy and division of labour are essential strategies to address this challenge. But they create new challenges to responsible inquiry themselves. First, creating layers of managers removed from day-to-day tasks and lack of speak-up can lead to incompetence. Second, specialisation creates the need for process and information systems to share information, creating the risk of unreliability of these systems. Third, the fragmentation of knowledge that comes both with hierarchies and division of labour creates risk to undermine responsible inquiry. As a result, responsible inquiry in organisations is inherently vulnerable.

LACK OF ORGANISATIONAL INTEGRITY LEADS TO DISASTERS If organisational integrity is primarily an epistemic virtue, how can we account for the fact that a lack of integrity is associated with unethical behaviour? In this section, I will use insights from organisational and information science to demonstrate how the inherent epistemic challenges faced by organisations can lead to risks of unethical behaviour. From an ethical standpoint, a lack of epistemic integrity is linked to unethical behaviour by introducing the possibility of culpable ignorance. When we think about unethical behaviour of organisations, we easily make the assumption that the behaviour was intentional. But organisational misconduct can be unintentional as well as intentional (Sezer et al., 2015). The recent Volkswagen scandal illustrates the latter case, where the company installed devices to cheat emissions tests and deceive regulators. In other cases, however, harmful actions are unintentional, such as the tragic incident of the space shuttle Challenger in 1986, which disintegrated during launch (Boisjoly et al., 1989; Vaughan, 1996). Unreliable quality control is also a case in point.

Organisational integrity as an epistemic virtue  383 Shifting our attention to organisational disaster helps to connect organisational integrity with unethical behaviour. Yet when thinking about organisational disasters, we often make another problematic assumption. We tend to assume that disasters are unusual occurrences that result from a specific weakness – whether it be an individual’s mistake or a problem with the organisation’s structure. By contrast, Normal Accident Theory sees organisation wrongdoing as normal in the sense that it is widespread and “generated by a plethora of organizational structures, systems, and processes that are pervasive in organizations and that are generally responsible for rightdoing” (Palmer, 2013, p. 9). Thus, the theory entails that the very same structures, systems, and situational forces that allow an organisation to function properly are also at play when the organisation engages in wrongdoing. For example, administrative rules and procedures designed to keep intellectual property secret and protect personal information can be used to deceive employees and regulators about harms caused by the company. Normal accident theory coheres well with the ambiguous character of hierarchy and division of labour on responsible inquiry that we identified in the previous section. A different body of work on organisational behaviour explains the role of responsible inquiry for avoiding accidents and misconduct. The Man-made Disasters model, proposed by Turner (1976) and Turner and Pidgeon (1997), offers an influential perspective on how information behaviours can contribute to organisational wrongdoing. According to the model, such disasters are not simply random or uncontrollable occurrences, but rather “failures of foresight” that develop over extended periods of time. During these incubation periods, warning signs may go unnoticed due to a variety of factors such as erroneous assumptions, difficulties in handling complex information, and reluctance to consider worst-case scenarios. Additionally, violations of precautions may go unnoticed due to ambiguous regulations or uncertainty in how to address them. Before these disasters occur, there is often a wealth of information available, but it goes unheeded due to its fragmentation among multiple individuals, groups, or locations. As a result, no one possesses a comprehensive understanding, and each party holds a distinct and incomplete interpretation of the situation, which Turner refers to as “variable disjunction” of information (Turner & Pidgeon, 1997, p. 1). The model highlights the importance of information handling difficulties, specifically the failure to recognise warning signals and the dispersion of information, as key contributors to these man-made disasters. In a similar vein, Vaughan (1996) challenges the notion that organisational mistakes happen abruptly and are caused by localised weaknesses in the organisation. In her detailed examination of the space shuttle Challenger accident, she introduces two key concepts – normalisation of deviance and structural secrecy – that relate to responsible inquiry. Normalisation of deviance refers to when members of an organisation become accustomed to disregarding warning signals, resulting in a cultural belief that signals of danger and wrongful conduct are acceptable. Structural secrecy is a method of managing an organisation that prioritises secrecy, thereby obscuring warning signals from those responsible for oversight. Vaughan does not find that NASA caused deliberate harm, but sheds light on the way inadequate risk perception is ingrained in culture and the routine concealment of danger signals. Building on the man-made disaster model and Vaughan’s work, Choo has synthesised the research on inquiry and organisational behaviour from the perspective of an information scientist (Choo, 2008, 2020). He suggests that organisational disasters can be foreseen (Choo, 2008, p. 34). Choo claims that the information to foresee and prevent disasters is often available but goes unnoticed, as in the case of unreliable quality control. Reasons that organisations fail to notice red flags include that the relevant information is hidden in a mass of irrelevant infor-

384  Research handbook on organisational integrity mation; that it was presented too late to relevant decision makers; that recipients of the information did not notice its significance; or that the recipient failed to connect several pieces of information. He synthesised these reasons into three major types of information impairments: epistemic blind spots, risk denial, and structural impediment. Epistemic blind spots lead organisations to ignore warning signals because they do not fit existing convictions (Choo, 2008, p. 34). Choo gives the example of the attack on the World Trade Center in New York on 11 September 2001. The 9/11 Commission Report noted that there were evident warning signs of an attack using aeroplanes by the summer of 2001, which made it into security briefings to the president (Kean & Hamilton, 2004). The FBI knew that Bin Laden had sent students to the US for civil aviation training and had linked Khalid Shaykh Mohammed, the mastermind of the attacks, to Bin Laden and a plan to use aircraft as weapons. Yet these warning signs did not lead to actions that could have averted the attack. In fact, the monitoring of Mohammed was limited to his location, excluding his activities. US Senate hearings showed that part of the reason that intelligence services failed to act was that they were in the grip of the false assumption that the attack would occur overseas, not in the United States (US Senate, 2004). Choo maintains that confirmation bias is the root cause of epistemic blind spots. Confirmation bias consists in holding information rigidly, looking for supporting evidence and ignoring contradictory information. The traditional understanding of integrity as “steadfastness” claims that coherence of convictions over time is a mark of integrity. The example of the 9/11 attacks shows how this understanding of integrity can mislead. The epistemic perspective reveals that not steadfastness, but responsible inquiry is at the heart of integrity. This involves the ability to question one’s assumptions. In the months preceding the attack, US intelligence organisations had received several reports warning of a terrorist attack in the United States that could involve the use of aircraft as weapons. In the light of new evidence, integrity calls for revising one’s beliefs, not for sticking to them. Risk denial consists in organisations discounting warning signals because their inquiry is misdirected by their values, norms, or priorities (Choo, 2008, p. 36). Risk denial differs from epistemic blind spots in that the organisation recognises warning signals, but discounts them. An example is Ford’s failure to recall the Pinto in the 1970s (Gioia, 1992). The car was designed for the mass market. Management had drilled engineering teams to keep costs below a low ceiling to make it widely affordable. Because of a design flaw, the Pinto’s gas tank was prone to explode in rear-end collisions even at low speed. Even though Ford spotted the design flaw during crash tests, the culture of cost cutting led to the decision not to make a cheap design change that would have eliminated the flaw. It also led to the company failing to recall the Pinto when reports of the first accidents came in. Sixty people lost their lives, and 120 were severely injured. Risk denial is more likely if an organisation maintains a high level of ambiguity concerning their goals, as discussed in the previous section. At Ford, even the recall officer had internalised the competing objective of cost cutting as overriding his role’s chief objective of keeping customers safe: The recall officer, Dennis Gioia, voted against recalling the Pinto even after accident reports had come in, a decision he now deeply regrets (Gioia, 1992). Organisations challenged by structural impediments recognise warning signals and assign importance to them, but their response is hobbled by rules, roles conflict, and role differentiation (Choo, 2008, p. 37). Choo illustrates this type of information impairment with the tragic case of a five-year-old boy, who underwent elective neurosurgery to treat epilepsy at Children’s Hospital, Boston in 2003. After the successful surgery, the boy experienced a seizure while still under anaesthesia. The epilepsy specialist listed as the boy’s main physician instructed the

Organisational integrity as an epistemic virtue  385 nurse by phone to administer a lower dose of medication than standard protocol dictated, in order to gather data for the next phase of treatment. Despite the alarm of the neurologist and head of the intensive care unit, they did not intervene, but deferred to the absent epilepsy specialist. The seizure continued and the boy eventually stopped breathing. According to a study by Snook and Connor (2005), the tragedy was caused by a lack of protocol adherence which was due to a high degree of vertical and horizontal differentiation within the organisation, leading to a diffuse sense of responsibility and ultimately, structurally induced inaction. These factors cohere strongly with the taxonomy of organisational epistemic vices described in the previous section, especially with the vices of fragmentation and complexity. The cases presented illustrate that a lack of organisational integrity, considered as an epistemic virtue, is a common cause of organisational disasters. The events themselves may be accidental, but that does not relieve the organisation of responsibility. Typically, ignorance excuses wrongful actions, but in cases of culpable ignorance, individuals and organisations cannot be excused for their actions due to a prior decision to neglect improving their understanding of a situation (Hormio, 2018; Montmarquet, 1995; Smith, 1983). Unreliable quality control illustrates the point. The company may not have been aware of the security flaws in the medical device they distributed. Yet the company is responsible for an earlier decision to fail to improve its quality control system, which would have flagged the device as potentially unsafe. Lack of integrity creates risk of unethical conduct because the epistemic shortcomings that constitute a lack of integrity lead to the “benighting” of organisations about the potentially harmful consequences of their actions (Smith, 1983).

ORGANISATIONS CAN ENHANCE INTEGRITY BY PROMOTING SOUND EPISTEMIC CULTURE AND EPISTEMIC INFRASTRUCTURE In the case of individuals, one tradition of epistemic virtue theorists considers character traits to be the locus of epistemic virtues such as open mindedness, curiosity, or honesty (Zagzebski, 1996). Another tradition locates epistemic virtues in cognitive faculties, such as memory and perception (Sosa, 2007). This raises the question of where the epistemic virtues that constitute integrity reside in the case of organisations. One place integrity may reside is in the character of the organisation’s members. Organisations can improve integrity by ensuring their members have the qualities that responsible inquiry requires. These requirements differ depending on the role an individual plays in the organisation: responsible inquiry requires different qualities of marketers, lawyers, managers, and software programmers, respectively, even though they may all work together in the same organisation. One way to improve integrity is to match individuals to the roles in which their character traits and faculties are most likely to result in responsible inquiry (de Bruin, 2014). Yet organisations are not just the sum of their members. Research on organisational culture has established that the shared values, beliefs, and practices members of an organisation internalise qua members play a crucial role in driving behaviour (Mejia & Skorburg, 2022). In fact, organisational culture is so crucial to ethical behaviour (O’Fallon & Butterfield, 2005; Smith-Crowe et al., 2015), that we may look at it as analogous to character in the case of individuals. I use the term organisational epistemic culture to refer to the shared values, beliefs,

386  Research handbook on organisational integrity and practices that influence responsible inquiry – how information is collected, processed, shared, and stored within an organisation. A strong organisational epistemic culture can help to improve decision-making in organisations by promoting a commitment to evidence-based decision-making and a culture of critical thinking. When employees feel encouraged to ask questions, share information, and challenge assumptions, they are more likely to identify potential problems and come up with innovative solutions. Additionally, a culture that values transparency and open communication can help to prevent information silos and ensure that all employees have access to the information they need to make informed decisions (Cohn et al., 2014). Hence, a sound epistemic culture can help organisations make better decisions, avoid unintended consequences, and promote ethical behaviour. In addition to organisational culture, the information infrastructure of organisations also plays a critical role for promoting integrity (Foss, 2011; Foss et al., 2010). Information systems can be seen as the analogue of cognitive faculties in the case of individuals. The taxonomy of information challenges in organisations confirms the importance of information systems. Organisational epistemic infrastructure refers to the systems, processes, and tools that an organisation uses to support responsible inquiry, both within the organisation and between the organisation and its stakeholders. This includes things like data management systems, access controls, and oversight mechanisms (Kornberger et al., 2019). By having a robust epistemic infrastructure in place, organisations can promote transparency and accountability, and help to ensure that information is collected, processed, and shared in ways that are conducive to truth-seeking. This can help to improve decision-making by providing a solid foundation for evaluating the quality of information and by making it easier for employees to identify and report ethical concerns or errors. Additionally, organisations can help to reduce the risk of unintentional unethical behaviour by making it more difficult for employees to act on false assumptions or to ignore warning signals. In what follows, I lay out some practical implications for organisations and regulators for how to foster a responsible epistemic culture and build sound epistemic infrastructure. These recommendations include suggestions for identifying and counteracting epistemic challenges – an area that has not received much attention to date (Aikin & Clanton, 2010; Baehr, 2013). Organisations themselves can take action to prevent irresponsible inquiry. But would organisations that lack integrity respond positively to suggestions for improvement? Suggestions may be futile if an organisation lacks integrity entirely. However, organisations are not homogenous entities, but composed of individuals with different epistemic stances, and governed by a complex and often contradictory web of policies and cultural practices. Therefore, integrity comes in degrees. Moreover, lack of integrity creates risks of errors or misconduct that often lead to scandal. In the aftermath of public scandal, organisations are more receptive to change. To improve their epistemic culture, organisations can take several steps. They can increase awareness of the consequences of actions taken by their members by fostering cooperative and caring relationships between employees and customers or clients, emphasising their obligations and commitments to the well-being of these individuals (Jenkins & Delbridge, 2020). Management can also be mindful not to condone or reward irresponsible inquiry, setting clear boundaries and standards for quality (Jenkins & Delbridge, 2020). Additionally, organisations can review their incentive systems, policies, and procedures to prevent rewarding irresponsible inquiry (Palmer, 2012). They should also be aware of high-stress situations that may increase the risk of employees resorting to irresponsible inquiry. Finally, organisations can

Organisational integrity as an epistemic virtue  387 implement policies that support whistle-blowing and protect whistle-blowers from retaliation (Mesmer-Magnus & Viswesvaran, 2005; Miceli et al., 2008). Organisations can also establish an epistemic infrastructure that promotes transparency, as suggested by MacCarthy (2020). These formal systems may be most effective in preventing irresponsible inquiry when there are strong internal pressures, such as those rooted in organisational culture (Smith-Crowe et al., 2015). MacCarthy proposes a tiered access system, with Tier 1 consisting of transparency reports for the general public, Tier 2 consisting of disclosures to vetted researchers and regulators, including data for independent verification of claims in transparency reports, and Tier 3 consisting of access to anonymised data for independent studies on the impact of the company on customers and society, as well as access to personal and commercially sensitive data for regulators. This system allows for audits to verify that information systems function as intended and provide the necessary information for effective regulation and external oversight (Frost & Choo, 2017). Additionally, limiting access to private or commercially sensitive data to regulators preserves the privacy of user data and protects the business interests of companies. Another solution to enhance scrutiny is to establish “clean rooms” within company offices, where researchers can access data in a controlled manner (Persily, 2021). Regulators also have a responsibility to encourage organisational integrity. Yet given their limited resources, the task can seem overwhelming. From what food is safe to eat to the size of the country we live in – none of us obtain even such basic information by direct observation. Rather, we rely on the testimony of others; and these others are often organisations. Regulators need to prioritise which information to scrutinise that’s provided by organisations and decide where to request transparency (Etzioni, 2014). Regulators should focus on critical information vulnerabilities, i.e. areas where people depend on accurate information to make decisions protecting their key interests. Regulation had some success in requiring organisations to be more transparent with external stakeholders. For instance, the Sarbanes-Oxley Act which became federal law in the United States in 2002 includes requirements for companies to obtain independent assessments of their internal control systems from auditors and increases penalties for white-collar crime. One study finds that this has positive effects on the quality of accounting data (Arping & Sautner, 2013). Another example is transparency in banking. After the financial crisis of 2008/9, banking regulators have improved transparency by improving capital disclosure, conducting stress tests, and strengthening disclosure requirements to retail investors. Some studies find that these measures improve knowledge of market participants (Costello et al., 2019). Regulators and legislators have an opportunity to bring insights from these successes to bear on other industries such as technology. The content flowing through digital networks operated by private companies needs to be easier to scrutinise. Greater transparency will allow us to observe effects technology companies have on customers and society at large. Regulators can increase transparency by legally requiring platforms to share selected categories of data with academics and journalists, such as lists of the content on social platforms with the most reach, and the accounts spreading it (Aspen Institute, 2021). Regulators and legislators can also bring transparency to non-financial accounting, such as Environmental, Social, and Governance (ESG) reporting. The EU taxonomy for sustainable activities is an example of a legislative initiative to improve transparency of ESG reporting by mandating disclosure requirements (European Union, 2021).

388  Research handbook on organisational integrity It is difficult for regulators to promote a sound epistemic culture in organisations from the outside. Yet focussing on epistemic infrastructure to promote transparency is not enough, as transparency does not guarantee integrity. Information disclosed needs not only be accurate, but also accessible and in fact accessed and investigated to prevent deceptive behaviour by organisations (Etzioni, 2014). Citizens will often lack the training and time to understand the disclosed data. Hence regulators must not stop with disclosure rules, but also hire sufficient resources to scrutinise data made available by organisations.

CONCLUSION I have argued that integrity is not primarily a moral virtue, but first and foremost an epistemic virtue. While traditional views of integrity focus on coherence between moral convictions and actions, as well as consistency in convictions over time, the epistemic perspective on integrity highlights that integrity primarily concerns responsible inquiry. This means that individuals and organisations must engage in the collection, processing, sharing, and storage of information in ways that promote truth. However, division of labour and hierarchy present challenges to responsible inquiry, making epistemic integrity inherently vulnerable in organisations and increasing the risk of unintentional unethical behaviour. Therefore, it is crucial for organisations to develop a virtuous epistemic infrastructure and an ethical epistemic culture, and for regulators to hold organisations to account. By aligning their beliefs with facts, organisations can not only improve their moral action, but also reduce the risk of culpable ignorance. This can be achieved by promoting cooperative and caring relationships between employees and customers or clients, setting clear boundaries and emphasising quality standards, reviewing incentive systems, operational policies and procedures, being mindful of high-stakes and high-stress situations, and implementing policies that enable whistle-blowing and protect whistle-blowers against retaliation. Moreover, organisations can adopt governance structures that encourage transparency, such as tiered access systems, data clean rooms, and independent audits to verify that systems are operating as described and intended. By implementing these measures, organisations can improve their epistemic integrity, thereby reducing the risk of unintentional unethical behaviour and promoting moral action.

ACKNOWLEDGEMENTS I am very grateful to Lily Tappe and Muel Kaptein for insightful comments on earlier versions of the chapter, and to Kate Vredenburgh for her invaluable discussions in shaping the chapter.

NOTE 1. This case is loosely based on a case against DePuy, which had by then become a subsidiary of Johnson & Johnson. Johnson & Johnson settled the case in 2019 for $120 million (James, 2019).

Organisational integrity as an epistemic virtue  389

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PART IV CHARACTERISTICS OF ORGANISATIONAL INTEGRITY

25. Organisational integrity and responsibility Mihaela Constantinescu1

Organisational integrity is a “multi-layered” concept (Kaptein & Wempe, 2002: 86) that draws on both meanings of the basic notion of “integrity”, which was initially correlated to individual natural persons. On the one hand, organisational integrity encompasses the idea of “wholeness” or “completeness” or “unity” (Taylor & Gaita, 1981). On this dimension, we are focusing on the organisation as a wholesome unity, as an autonomous social entity that consists of various key components, both tangible and intangible, which are integral to its functioning and which ensure its entirety; if some of these components are taken apart or fail to function, the organisation becomes incomplete, thus loses its integrity. On the other hand, organisational integrity refers to moral virtue or character (Solomon, 1992). On this dimension, the focus is on the ethical content of organisations, on the organisation as a moral entity in the social realm, displaying a consistent and coherent virtuous approach to moral issues. An organisation that lacks the capacity to integrate moral concerns into its operating practices is an organisation that fails to exhibit integrity. To move from the individual to the organisational level of integrity and speak of “organisational integrity”, we first need to acknowledge organisations as “an object of moral evaluation” (Kaptein & Wempe, 2002: 107). This acknowledgement further rests on the view that organisations may be collective moral entities, displaying a form of autonomous moral agency at group level. Given that any discussion on organisational moral responsibility rests on the implicit assumption that we can rightfully ascribe moral responsibility to organisations per se (Werhane, 2008), we first need to make the latter assumption explicit. Due attention should be paid to this underlying assumption that organisations, distinct from their members, may be considered retrospectively morally responsible for past actions resulting from some organisation activity. As a result, to discuss organisational integrity we first need to answer a more fundamental question: Can we ascribe moral responsibility to an organisation itself and hold it morally responsible for the result of organisational activity at a distinct level from its individual members? Such a question is conceptually prior to our discussion concerning integrity at the organisational level. This chapter provides a critical overview of the current state of research over the possibility to ascribe collective moral responsibility to organisations, whereby the unit of moral evaluation is the organisation as an entity (Collier, 1998), not its members. The first section provides an overview and taxonomy of main arguments advanced by proponents of the individualist and, respectively, of the collectivist approach to corporate moral responsibility. The two sides debate over the possibility to consider organisations as autonomous moral entities, bearing moral agency and responsibility at a distinct level from their individual members. Although the debate is framed around “corporate” moral responsibility, the arguments developed apply not only to business corporations, but more widely to organisations from the private, public, and not-for-profit sectors; this chapter therefore uses corporations and organisations interchangeably. Ultimately, our current inquiries over organisational integrity will rely on this prior debate over the possibility to hold corporations morally responsible at a collective 394

Organisational integrity and responsibility  395 level. The second section moves on to provide a classification of most prominent collectivist accounts over corporate moral responsibility, advancing models, frameworks, or approaches to address the organisational level of moral responsibility, as well as the relationship between the individual and collective levels of moral responsibility in organisations. The third section offers a practical assessment of unethical corporate outcomes, showing how moral blame can be ascribed in practice. It proposes a novel correlation between the individual and organisational levels of integrity and blame for unethical outcomes resulting from collective organisational activity. The chapter ends with an outline of future research directions on the topic.

MORAL RESPONSIBILITY IN ORGANISATIONAL SETTINGS: THE INDIVIDUALIST–COLLECTIVIST DEBATE Ascribing moral responsibility for outcomes generated in organisational contexts has been the topic of half-a-century debate in business ethics research, dating from the 1970s.2 The two sides of the debate engaged in a detailed polemic over right reasons to ascribe moral responsibility collectively to organisations per se, at a distinct level from individual members. This section starts by presenting a concise typology of main arguments advanced by the proponents of the individualist approach to corporate moral responsibility and continues by focusing on arguments advanced by the proponents of the collectivist approach to corporate moral responsibility (see also Graham, 2000; Kaptein & Constantinescu, 2017). Table 25.1 summarises these arguments. Table 25.1

The individualist–collectivist debate over the moral responsibility of organisations

Typology of arguments

Individualists

Collectivists

Theoretical

Ontological

Hasnas, 2010; McKenna, 2006;

French, 1984; List & Pettit, 2011

Methodological

Corlett, 1992; McMahon, 1995

Criteria for collective

Keely, 1979; Ladd, 1970; Mäkelä,

Arnold, 2006; Donaldson, 1982;

moral agency

2007; Miller, 2006; Rönnegard, 2015

Goodpaster & Matthews, 1982; Hanson,

Velasquez, 1983 Copp, 2006; Kaptein & Wempe, 2002; Werhane, 1985

2008; Isaacs, 2006; Tuomela, 1989; Werhane, 1985 Practical

Consequences of holding

Corlett, 1992; Hasnas, 2010; Lewis,

Björnsson & Hess, 2017; Copp, 2006;

corporations morally

1972; Mellema, 1997; Narveson, 2002;

Dempsey, 2013; List & Pettit, 2011;

responsible

Velasquez, 2003

Phillips, 1995; Thompson, 1986

Before moving on, a short note on the terminology used in this chapter might be useful. The phrase “corporate moral responsibility” is used to refer to ascriptions of moral responsibility at the organisational level. While the collectivist approach understands corporate moral responsibility as the organisational level of responsibility, irreducible to individual members, the individualist approach understands corporate moral responsibility as the sum of individual members’ responsibilities (i.e., one member, several members, or all members of the organisation). Other authors prefer a slightly different terminology with similar meaning, such as collective moral responsibility, collective moral agency, corporate moral agency, or corporate collective moral responsibility (Baddorf, 2017; Rönnegard, 2015).

396  Research handbook on organisational integrity Furthermore, organisations are regarded in scholarly research as a special class of collectives, one that functions in a more structured, articulated and coherent mode, like a conglomerate (French, 1984), compared to looser collectives such as informal groups, professional groups, or even nations, that are closer to an aggregate (French, 1984; May, 1987). Therefore, arguing for or against the capacity of a collective such as a corporation to bear moral responsibility becomes a more important stake (Dubbink & Smith, 2011). As a result, this section focuses on corporate moral responsibility and not the larger concept of collective responsibility (which includes less organised collectivities). Moreover, the literature on corporate moral responsibility bears direct connection with research on joint action, collective rationality, and shared intentions, within the broader field of social ontology. This section deals only with accounts directly addressing corporate moral responsibility. The main grounding of business ethics inquiries over corporate moral responsibility lies in the Aristotelian framing of our normative and descriptive practices of blaming and praising individual agents, as spelled out in the Nicomachean Ethics. This section focuses on individualist and collectivist approaches to corporate moral responsibility in this tradition. In the Aristotelian tradition, criteria such as being in control of one’s actions (the freedom condition) and being knowledgeable of the context of one’s actions (the epistemic condition) are considered relevant to ascribe individual moral responsibility (Fischer & Ravizza, 1993). Nonetheless, several important inquiries dwell on Kantian developments over the role of rationality and autonomy—in the form of acting according to maxims—for corporate moral responsibility (Scharding, 2019). Business ethics has an important Kantian tradition that inquires over corporate individual members’ moral responsibility (Arnold & Bowie, 2003; Bowie, 2002; Buchanan, 1996; Wilmot, 2001). However, there are scholars (Altman, 2014) who argue that the Kantian tradition is unable to accommodate collective action, collective inclinations, and collective use of reason, and should thus be abandoned in the business ethics debate over corporate moral responsibility. Others in this tradition argue instead that Kantian ethics is robust enough and provides good reasons to dismiss the collectivist approach to corporate moral responsibility, and to focus instead on individual members’ moral responsibility (Scharding, 2019). The Individualist Approach to Corporate Moral Responsibility Proponents of the approach that it is only the individuals and not the corporation as a whole who can bear moral responsibility for actions or outcomes in corporate settings advance two major types of arguments in supporting their position. On the one hand, they point to theoretical reasons that are mainly concerned with the status of corporations. On the other hand, they mention practical reasons by pointing to unwanted consequences of allowing corporations into the moral sphere. On a more theoretical stance, individualist arguments highlight that the status of organisations is conceptually not fitted for moral responsibility ascriptions: it is only the individuals composing the corporation who bear moral responsibility for their actions. In this respect, the arguments fall under three basic categories.3 First, arguments point to a lack of metaphysical support in considering organisations as real entities (ontological individualism): while individuals are ontologically real entities, organisations are not. Instead, organisations are pictured as the sum of individuals composing them (McKenna, 2006; Velasquez, 1983) or a collective noun employed metaphorically (Hasnas, 2010), rather as a shorthand (McMahon, 1995;

Organisational integrity and responsibility  397 Velasquez, 1983). Second, arguments point to the reducibility (Corlett, 1992; McMahon, 1995) of organisational responsibility to individual responsibility (methodological individualism), holding that the organisation does not have any “additional share of moral responsibility that is distinct from the responsibility that can accrue to each of its members” (Velasquez, 2003: 531). Third, arguments point to the fact that organisations do not meet the necessary criteria for ascriptions of agency, which is a prerequisite of moral responsibility. The ability to act and exert a causal contribution towards an outcome is restricted to individuals (Velasquez, 1983), and collective action can be fully explained in terms of individual action, as it is merely the sum of individual members’ actions. Relatedly, only individuals can form intentions (Miller, 2006; Rönnegard, 2015) and act intentionally (Keely, 1979; Ladd, 1970), because only individuals are able to translate mental states into physical movements (Velasquez, 1983). In addition, organisations are unable to develop moral feelings as individuals do (Ewin, 1991; Rönnegard & Velasquez, 2017). As a result, individualists contend that organisations can be at most pictured as secondary (moral) agents (Corlett, 2001); however, the fact that corporations can only act through their constitutive members (Velasquez, 1983) drastically infringes upon their autonomy, hence restrains their moral agency required for moral responsibility (Mäkelä, 2007; Miller, 2006). On a more practical stance, proponents of the individualist approach argue that blame and punishment attributions generate two reasons for which only individuals and not organisations should be held morally responsible. On the one hand, if we ascribe moral responsibility at organisational level, the argument goes, we end up ignoring the individual level of moral responsibility (Velasquez, 2003). For the supporter of the individualist stance, we cannot have both individual and corporate moral responsibility: “where all are responsible, no one is responsible” (Lewis, 1972: 143). Individuals finally get away with wrongdoing (Mellema, 1997), because ascribing responsibility at organisational level blurs individual responsibility. On the other hand, attributing responsibility at organisational level practically results in punishing the innocent members of the collective along with the guilty ones (Corlett, 1992; Hasnas, 2010; Lewis, 1972; Narveson, 2002; Velasquez, 2003). The Collectivist Approach to Corporate Moral Responsibility Without denying that there are indeed cases when only individuals bear moral responsibility for corporate outcomes, supporters of the collectivist approach to corporate moral responsibility hold that there is yet a different level of moral responsibility that should receive our attention: the organisational level. Major arguments put forward by collectivist scholars generally mirror those advanced by their individualist counterpart. As a result, we might as well distinguish, on the one hand, theoretical reasons concerned with the status of organisations and, on the other hand, practical reasons pointing to unwanted consequences of denying that social entities such as organisations are part of the moral sphere. On a more theoretical stance, proponents of the organisational level of moral responsibility have advanced three major lines of arguments to highlight that organisations can be attributed moral responsibility based on their status, as opposed to individualist arguments. First, arguments point to existing evidence of metaphysical support in attributing moral agency to corporations; ontological realism towards organisations is advanced (French, 1984), with scholars holding that corporations display discontinuous mentalities from their members,

398  Research handbook on organisational integrity rendering organisations as new entities (List & Pettit, 2011; Pettit, 2007). Developments over discursive dilemmas (Copp, 2006; List & Pettit, 2011) highlight that collective corporate decision-making gives primacy to corporate goals, sometimes against individual members’ goals. Second, scholars argue for the non-reducibility of organisational responsibility to individual responsibility (methodological collectivism). The “unredistributability thesis” (Graham, 2000) holds that corporate action “cannot be re-described in terms of the actions of constituents” (Werhane, 1985: 56). We cannot fully trace back organisational outcomes to individual contributions; nor can we reduce corporate morality to individual morality (Kaptein & Wempe, 2002). Third, it is argued that organisational activity displays enough evidence to meet the threshold required by criteria for moral agency, enabling us to hold organisations collectively morally responsible. Organisational actions supervene on individual actions (Tuomela, 1989) and causally contribute to collective outcomes (Donaldson, 1982). Organisations are further able to act intentionally based on Corporate Internal Decision-making (CID) structures (Arnold, 2006; French, 1979), which include corporate policies with corporate decision rules and the organisational responsibility flowchart, and which enable organisations to act based on their own reasons. “The CID structure accomplishes a subordination and synthesis of intentions and acts of various persons into a corporate decision” (French, 1979: 300). In addition, there is a collective level of cognitive and moral attributes that go beyond the mere sum of individual intentionality (Goodpaster & Matthews, 1982; Pettit, 2007). Arguments further point to an organisational level of moral emotions (Björnsson & Hess, 2017). Moreover, collectivist scholars argue that even if we admit that organisations only bear second order autonomy, they still possess the necessary control over policies and rules that shape collective action (Donaldson, 1982). Picturing organisations as secondary moral agents allows us to ascribe moral responsibility to organisations per se, given the secondary type of collective action enacted by organisations through the primary actions of their individual members (Copp, 1979; Hanson, 2008; Isaacs, 2006; Werhane, 1985). Corporations act through their recruited members similar to the way individuals act through their physical body (Hess, 2013) and exert capacities such as moral deliberation through their individual members (List & Pettit, 2011). On a more practical stance, supporters of the collective approach to corporate moral responsibility argue that there are situations when we have collective responsibility without individual responsibility and only organisations per se seem to be fitted candidates for moral responsibility ascriptions (Copp, 2006). Organisational wrongdoing sometimes results “from the combined impact of various individual actions, each of them blameless in its own right” (Phillips, 1995: 560–561), such that corporate wrongdoing does not also involve personal fault (Thompson, 1986). Other times, collective outcomes turn out to be in contradiction with the intentions of individual members (List & Pettit, 2011). If we do not accept that there is an organisational level of moral responsibility, we end up with situations when harmful organisational outcomes are nobody’s fault (Copp, 2006). Furthermore, in the Strawsonian line of thought (Strawson, 1962) that pictures moral responsibility as a set of reactive practices of the community (Björnsson, 2017; Dempsey, 2013; Fischer & Ravizza, 1993; McKenna, 2006; Strawson, 1993), collectivist scholars hold that organisations are appropriate targets of our reactions such as blame, indignation, resentment or praise, and they should thus be part of the community of moral agents (Tollefsen, 2015). In this line of reasoning, organisations are seen as an adequate recipient of such reactive

Organisational integrity and responsibility  399 attitudes, at a distinct level from their constitutive members; the fact that organisations deserve attributions of blame simply makes them morally responsible (Dempsey, 2013). However, a concern remains with equivalating the descriptive practice of displaying reactive attitudes towards organisations with normative reasoning over ascribing moral responsibility to organisations. For instance, positioning corporate moral responsibility along the Strawsonian concept of reactive attitudes might also require the capacity of the target of reactive attitudes, namely, of the corporation, to respond adequately, for instance with the proper moral emotions such as remorse (Gilbert, 2000). After all, this is “the point of robustly second-personal normative exchanges like indignation and resentment: to appeal to the actor to recognize for herself the morally required course of action” (Hedahl, 2013: 298). Moral emotions are deemed important for moral agency given their epistemic and volitional roles associated with moral judgment and motivation (Hindriks, 2018), which seems to undermine organisations’ capacity for collective moral responsibility. In reply, Björnsson and Hess (2017) defend a collectivist approach to corporate moral responsibility along Strawsonian lines, arguing that organisations display capacities functionally equivalent to a moral response to reactive attitudes, which is good enough to legitimately hold organisations collectively morally responsible. Given its focus on moral emotions, this latter approach to corporate moral responsibility has been called “the sentimentalist approach”, as opposed to “the rationalist approach”, which emphasises the role of normative rationality in ascribing moral agency and responsibility (Hindriks, 2018).

THE MORAL RESPONSIBILITY OF ORGANISATIONS: APPROACHES AND MODELS While for a long time the individualist–collectivist debate over ascriptions of moral responsibility at organisational level seemed to produce balanced point-counterpoint arguments (Kaptein & Constantinescu, 2017), currently more scholars have taken the collectivist approach to organisational responsibility. This section provides a critical overview and classification of the collectivist proposal to ascribe corporate moral responsibility. While most of these accounts only refer to the organisational level of moral responsibility, some also tackle the relationship between the individual and organisational levels of moral responsibility. The Ontological Collectivism Approach to Organisational Responsibility Several prominent supporters of the possibility to ascribe moral responsibility to organisations per se advance collectivist models whereby organisations are seen as moral agents capable of forming their own intentions, reasons for actions, deliberative strategies or even beliefs or desires. In this stance, Peter French famously argued that we need to posit the existence of collective group agents to make sense of corporate actions and outcomes. While in his initial writings French (1979, 1984) endorsed a hard position over organisations as moral agents and moral persons, in his later work (French, 1995) he gave up holding corporations to be moral persons. For French and, subsequently, Arnold (2006), organisations can form intentions that are not reducible to individual members’ intentions. These corporate intentions are expressed in the form of plans through Corporate Internal Decision-making structures, which account for organisational capacity to decide and act rationally for group reasons. Furthermore, it is the particular CID structure that gives a corporation its particular personality (French, 1995).

400  Research handbook on organisational integrity While for French corporate intentions do not require mental states, authors such as Tuomela (1989, 2013) connect intention with mental states though the concept of supervenience. A related collectivist approach to corporate moral responsibility is advanced by List and Pettit (2011), who ground corporate agency on the complexities of group decision-making. Interestingly, their approach emphasises that corporate collective intentions need not be shared by all corporate members, and not even by any single member (as French’s account suggested). For List and Pettit, corporate mentality and behaviour are irreducible to individual members’ mentality and behaviour precisely because we can have discontinuities between the individual and the collective levels. This generates situations when wrongdoing results from corporate activity, with no individuals bearing moral responsibility (Pettit, 2007). Corporate moral agency is thus grounded in the process of collectivising reason, which further generates a form of discontinuity between individual and collective rationality, and intentionality. Organisations can have “representational states, motivational states, and a capacity to process them and act on their basis” (List & Pettit, 2011: 21) which may go against individual members’ states. The Methodological Collectivism Approach to Organisational Responsibility Werhane (1985, 2008) and Copp (2006) posit two of the most elaborate methodological collectivist views, in which the organisation is positioned not as an autonomous moral phenomenon, but as an entity that fully depends on the actions of individual constitutive members for its existence. While the methodological collectivist approach does not hold that organisations could act independent of their members, it nonetheless acknowledges that organisational responsibility cannot be fully traced back to individuals and that a modicum of organisational responsibility is still left to be ascribed (Garrett, 1989). Their accounts still see corporate moral responsibility as dependent on corporate moral agency, but they develop the latter as a form of secondary moral agency: “corporate actions are secondary actions that result from a series of primary actions by persons … corporations are what I shall call secondary collectives whose actions are ontologically reducible to, but not identical with, actions of individuals performing on behalf of the corporation” (Werhane, 1985: 50). The notion of corporate moral agency advanced by Werhane seems to emerge from individual members’ moral agency, yet is distinct from it (Rönnegard, 2015). In a similar vein, Kaptein and Wempe (2002) advance the view that collective action resulting from combined individual actions becomes a new type of action, which is irreducible to the simple summing-up of individual actions. The fact that an organisation acts through its individual members does not make organisational responsibility distributive (Pasternak, 2014). Nonetheless, making sense of the secondary moral agency approach to organisational responsibility further requires a focus on the organisational practices in terms of structures, policies, procedures “that enable, constrain and shape individual action” (Crawford, 2007: 196–197). This is because moral evaluation and punishment of individuals who generate organisational practices may not stop future perpetuation of such practices (Werhane, 1985). The Practices Approach to Organisational Responsibility Kaptein and Wempe (2002) argue that understanding the organisation as a moral subject is directly linked to the framework within which individual action occurs, to the context in

Organisational integrity and responsibility  401 which individual behaviour takes place. Organisational practices “include the tasks, responsibilities and procedures, relationships, norms and values, etc. that are actually expressed in the actions of organizational members” (Kaptein & Wempe, 2002: 146). These organisational practices display two dimensions that work as structuring mechanisms: on the one hand, the formal dimension or organisational structure (with tasks, responsibilities, rules, procedures) and on the other hand, the informal dimension or organisational culture (ideas, expectations, and customs). These two dimensions represent the organisational context in which individual action takes place (Kaptein, 2011) and which influences individual ethical and unethical behaviours by defining not only expectations (De Leede et al., 1999) but also individual roles and responsibilities (Solomon, 1992). Therefore, there may be situations when individual actions are moral even though organisational practices are immoral, and vice versa (Kaptein, 2011). Because organisational mechanisms, both formal and informal, exist and shape individual ethical behaviour (Crawford, 2007; Kaptein & Wempe, 2002), we are entitled to speak of organisational responsibility per se. Organisational practices expressed in individual actions thus form the basis for ascribing moral responsibility to organisations (Kaptein, 2017). Furthermore, these organisational practices can be evaluated based on the extent to which they create an ethical framework for individual behaviour. Kaptein (1998, 2008, 2011) has developed and validated the Corporate Ethical Virtues model to make such an evaluation, consisting in a set of seven organisational virtues: clarity, consistency, achievability, supportability, transparency, discussability, and sanctionability. In the same tradition of virtue ethics, scholars posit the concept of virtuousness to account for the organisational level of integrity. Virtuousness is conceptualised as an overall umbrella virtue applied to collective organisational actions (Cameron et al., 2004), which is more than the sum of individual members’ virtues and enables the right corporate context for human excellence (Bright et al., 2014; Sison & Ferrero, 2015). The Community Approach to Organisational Responsibility Another line of collective reasoning over corporate moral responsibility highlights the role of the corporate community in ascribing moral agency and associated responsibility. Although these accounts have very disparate features that would enable their classification within other categories of collective accounts, they all share as a distinctive and prominent feature their emphasis on the role of the corporate community. Donaldson’s (1982) Social Contract Theory and subsequent work by Donaldson and Dunfee (1994, 1999) on Integrative Social Contracts Theory (ISCT) highlight the role of organisational communities with specific goals and ethical norms for normative ascriptions of responsibility at a collective organisational level that is distinct from its members. Moral duties associated with organisations are correlated not with individual members’ duties, but instead with the collective organisation per se, which needs to legitimise its existence through a contract with the rest of society. Van Oosterhout et al. (2006) and Heugens et al. (2008) build on ISCT and look inside organisations at the internal morality of contracting to highlight the role of virtuous business communities for corporate legitimacy. The Non-Agential Approach to Organisational Responsibility While all previous collective approaches to corporate moral responsibility share the assumption that corporate responsibility requires moral agency, some scholars endorse the view that

402  Research handbook on organisational integrity action is not needed to make moral evaluations of the organisation (Chant, 2015; Dempsey, 2013, 2015), not even in the form of secondary moral agency. Instead, we can speak of a highly structured organisation as a “non-agential bearer of moral responsibility” (Dempsey, 2013: 342) given it is created by individual human moral agents. Organisations thus become “morally significant systems” (Dempsey, 2013) and qualify as an adequate recipient of our blaming or praising practices, at a distinct level from their constitutive members (ibid.). Dempsey’s (2015) account of corporations as collectives with a “shared-values culture” further draws on Gilbert’s (1989) account of joint commitments in groups. In her turn, Gilbert discusses plural subjects that need not be agents but can still bear moral responsibility. Levels of Individual and Organisational Moral Responsibility Although organisations perform specific activities through individual members (Werhane, 1985, 2008), the actions or decisions attributed at the organisational level do not automatically imply attributions at the individual level (Isaacs, 2014). Thus, scholars highlight the need to acknowledge that these two levels of responsibility must be treated in their own respect. This means overcoming the approach that views organisational moral responsibility to be based on moral criteria as applied to individuals, and instead to investigate arguments that address the specific moral status of organised collectives such as organisations (Hanson, 2008; Held, 1986; Kuts, 2000; May, 1987). Therefore, we need to engage in a moral evaluation of both the individuals acting within organisations and of the organisation itself, and to acknowledge that “we cannot simply translate moral judgments about individuals into moral judgments about organizations, or vice versa” (Constantinescu & Kaptein, 2021: 802). Individual and organisational responsibility are two distinct levels of responsibility and associated blame (Isaacs, 2006, 2011, 2014). While they interact and influence one another (Bovens, 1998), they are not part of a fixed substance called moral responsibility (Mathiesen, 2006), from which we cut various slices pertaining to individuals and organisations, similar to a pie (Zimmerman, 1985). As a result, we need distinct instruments to acknowledge and rightfully evaluate individual moral responsibility, which would then lead to ascriptions of individual moral blame, and organisational moral responsibility, which would then result in attributions of organisational moral blame (Constantinescu & Kaptein, 2021). But recognising organisational responsibility as a distinct level of responsibility that is separate from individual responsibility does not yet solve the puzzle concerning when and how we should ascribe various degrees of resulting moral blame to each party. For instance, individual and collective levels of moral responsibility occurring within organisational settings may be taken to bear a proportionate relationship: the more responsibility we place on the collective for a corporate outcome, the less is to be placed on individuals. This approach has been called “summative” (Constantinescu & Kaptein, 2015). However, there is a different way to see this relationship, whereby the two levels of individual and collective moral responsibility evolve simultaneously given their mutual support in generating collective outcomes. This has been introduced as the “mutually enhancing” approach to individual and collective moral responsibility (Constantinescu & Kaptein, 2015).

Organisational integrity and responsibility  403

INTEGRITY AND RESPONSIBILITY IN PRACTICE: ASCRIBING INDIVIDUAL AND ORGANISATIONAL BLAME Despite consistent efforts to develop models and approaches to moral responsibility at organisational level and to inquire over the way individual and collective moral responsibility interact in organisations, it is not easy in practice to ascribe blame and praise for outcomes of organisational activity. This section provides case studies that exemplify the four situations of moral responsibility ascriptions for organisational outcomes identified by Constantinescu and Kaptein (2015): (1) only to individuals, (2) only to organisations, (3) both to individuals and organisations in a summative, proportionate manner, and (4) both to individuals and organisations in a mutually enhancing manner. The four possible normative stances pertain to the collectivist approach to corporate moral responsibility. As a result, the cases illustrate how responsibility can be ascribed in practice depending on the actual situation where we need to ascribe blame for unethical outcomes of organisational activity. This illustration is theoretically grounded in an integrative approach whereby we accept that there are not only individual, but also organisational levels of moral responsibility and integrity. The four cases of moral responsibility ascriptions are correlated with varying levels of integrity within organisations. The conceptual correlations can be applied in practice to evaluate unethical corporate outcomes when we need to ascribe varying degrees of blame relative to individual and organisational levels of integrity. Each situation is discussed below and illustrated with real cases, briefly described using only public information as reflected in the media. Case 1: Ascribing Moral Responsibility and Blame at Individual Level Case 1 depicts one of the normative possibilities of ascribing moral responsibility and blame identified by Constantinescu and Kaptein (2015) in the business ethics literature, namely, cases when only individuals are responsible for an organisational outcome, as no relevant organisational fault can be detected. This type of situation combines a medium to high level of organisational integrity embedded by organisational practices with a very low level of individual integrity expressed by organisational members’ behaviour—individual integrity is virtually lacking. It is a case when we place moral responsibility and resulting blame only on individuals: on the one hand, the organisation provides an ethical context for individuals to work; on the other hand, individuals disregard the organisational practices and cause unethical outcomes. Case study: The WorldCom Fraud An investigation led by the Securities Exchange Commission starting 2002 at WorldCom, United States’ second-largest long-distance telecommunications company at that time, revealed serious ethics violations of CEO Bernard Ebbers, finally leading to bankruptcy and a fall in the company stock price from $64 per share to little over $1 (Time Magazine, 2009). As it turned out, hundreds of millions of dollars which Ebbers owned in WorldCom stock were invested in other business ventures but, as the stock price dropped, Ebbers created fraudulent accounting entries to prop up the stock price. At the same time, he managed to convince the WorldCom board to lend him the $400 million demanded from him by banks, so that “he would not have to sell substantial blocks of stock” (Forbes, 2013). According to prosecutors, Ebbers “allowed the accounting fraud because he wanted to protect his personal fortune,

404  Research handbook on organisational integrity which consisted mostly of WorldCom stock” (Crawford, 2005). The fraud was discovered by WorldCom’s internal audit department, with Ebbers being convicted for a 25-year sentence, along with three top managers who contributed to falsifying WorldCom’s financial statements, who received smaller sentences (MyCustomer, 2005). Discussion In this case, on the one hand, we have evidence of a low level of individual integrity expressed in unethical behaviour: Ebbers and the three top managers caused the fraudulent accounting entries both fairly knowing the consequences of their actions (e.g., the possibility of bankruptcy) and following a personal goal (Ebbers simply wanted to secure his own fortune), while deceiving others in the organisation (e.g., Ebbers convinced the board to lend him the $400 million as a means to achieve his goal of securing his own fortune). On the other hand, as Ebbers’ actions do not represent common practice within the corporation and were finally discovered and stopped by WorldCom’s internal audit department, we can estimate that the corporate practices embedded a high level of integrity. Case 2: Ascribing Moral Responsibility and Blame at Organisational Level The second case depicts the normative possibility of moral responsibility ascriptions where only the organisation bears moral blame. In this case we have a very low level of integrity embedded by organisational practices—organisational integrity is virtually lacking— combined with a medium to high level of individual integrity. This occurs in organisational contexts where, for instance, individuals are incapacitated to act as they would do in a normal context, and wrongdoing either results from multiple blameless individual actions (Copp, 2006; Phillips, 1995; Thompson, 1986), or is in contradiction with the intentions of individual members (French, 1979; Pettit, 2007). In such cases, blame for the outcome under evaluation is placed only on the organisation failing to embed a good level of integrity within collective organisational practices. Case study: The Tonawanda Coke Corp. Explosion A $161,100 fine was given by the US Department of Labor’s Occupational Safety and Health Administration (OSHA, 2014) to Tonawanda Coke Corp., following an explosion that occurred in 2014 at the company plant that produced foundry coke, a coal by-product. As it turned out, the explosion was caused by “an over pressured coke oven manifold, which released coke oven gas in an enclosed area where it ignited” (Glynn, 2014), resulting in collapsed brick walls and injury of three employees (OSHA, 2014). The investigation revealed the existence of multiple hazards, such as “obstructed emergency exit routes … failure to lockout machines’ power sources … improperly stored oxygen cylinders, and failure to determine employees’ levels of exposure to the hazardous substance hexavalent chromium and training them about its hazards” (Telvock, 2014). The OSHA report concluded that the working conditions exposed employees “to potential amputations, falls, crushing injuries, injury by unexpectedly activated machinery and an inability to exit the workplace swiftly if fire, explosions or other emergencies arose” (OSHA, 2014), leading to situations “when death or serious physical harm could result from hazards about which the employer knew or should have known” (OSHA, 2014).

Organisational integrity and responsibility  405 Discussion On the one hand, this case displays a pattern of unethical formal and informal activity embedded within organisational practices, with a low level of organisational integrity. As an actor in the coal industry, Tonawanda Coke Corp. is in a position to access robust information concerning the risks of a potential explosion when safety measures are not properly implemented. However, its internal decision-making structures failed to implement safety measures to avoid such an explosion. On the other hand, we can estimate that individuals were doing their best to ensure their own safety and protect their lives, upholding a reasonable level of individual integrity. However, the poor level of integrity embedded by the organisational practices resulted in individuals being largely ignorant about the implications of their actions while operating the machines (e.g., time and costs pressure) and, consequently, being unable to deliberate on options available for safety measures. The low level of integrity within organisational practices combined with a reasonable level of individual integrity resulted in blame placed entirely on the organisation for the unethical outcome. Case 3: Ascribing Summative Moral Responsibility and Blame The third case refers to the normative possibility identified by Constantinescu and Kaptein (2015) where moral responsibility is proportionally divided between individuals and organisations in a summative manner (Card, 2005; Garrett, 1989; Hanly, 1991; Wilson, 1992). This type of situation combines a medium-high level of organisational integrity with a medium-low level of individual integrity and vice versa. This means that neither the individuals nor the organisation bear full blame for the outcome under evaluation. Instead, they are each only partly blameworthy for the outcome under evaluation, with the possibility that external factors (such as the political, economic, or social environment) bear part of the blame as well. In this case, blame is to be ascribed proportionally between the individuals and the organisation: more individual responsibility determines less organisational responsibility and vice versa, with both possibly diminished by the intervention of external factors. Such situations involve straightforward ascriptions of blame to individuals and organisations in a summative, additive manner. Case study: The Turing Pharmaceutical price raise The 5,000 per cent increase in the price of Daraprim, a drug used to treat patients with toxoplasmosis or compromised immune systems, gained huge media attention in 2015. At that time, Martin Shkreli, CEO of Turing Pharmaceuticals—the only company commercialising this type of drug in the US—argued that raising the drug price from $13.50 to $750 would help the company invest in research and improve the drug effects, while gaining a moderate profit (Konstantinides & Rahman, 2015). But with Daraprim distributed through a limited number of specialty pharmacies, thus preventing generic manufacturers from accessing samples and producing their own cheaper version of the product, the US Federal Trade Commission started an investigation on Turing Pharmaceuticals for possible antitrust violations (McLaughlin, 2015). At the same time, an unrelated investigation accused Martin Shkreli of fraud resulting from his previous activity in other companies (Langreth, 2015), leading to his resignation from Turing. However, the company continued to commercialise Daraprim at the same price, with the Chief Commercial Officer appealing to sales figures to back up Turing’s decision to

406  Research handbook on organisational integrity keep the price that Shkreli had set (Merelli, 2016), despite media exposure on how company executives received six-figure bonuses following the price increase of the drug (Mole, 2016). Discussion In this case we have, on the one hand, several individual members (CEO Martin Shkreli and other top executives) causing an organisational unethical outcome (5,000 per cent price increase of Daraprim with antitrust violations) while acting in full awareness of the implications of their actions. Turing executives continued the immoral practices even after Shkreli resigned from the company, thus proving their adherence to the practices advocated by Shkreli. On the other hand, the organisation morally fails to create the right environment for individual ethical behaviour by failingto uphold a good level of integrity within both its formal and informal practices (i.e., organisational structure and culture). While the organisational culture is unable to deter new members from taking immoral courses of actions, the organisational structure fails to ensure that functions are carried out ethically, irrespective of the person occupying them. Moral blame is in this case proportionally divided between individual agents and the corporate entity. Case 4: Ascribing Mutually Enhancing Moral Responsibility and Blame The fourth case refers to the normative possibility identified by Constantinescu and Kaptein (2015) where individuals and organisations are both responsible for an unethical outcome in a mutually enhancing manner, such that the more the individuals are blameworthy the more the organisation is, and vice versa. This type of situation combines a medium-low embeddedness of integrity at organisational level with a medium-low embeddedness of integrity at individual level. This means that we place a high degree of blame on the organisation for failing to display a good level of integrity within organisational practices, while also placing a high level of blame on the individual agents, who act without due integrity. This is a situation in which we may place simultaneously full blame on both individuals and the organisation for the same unethical outcome. On the one hand, individuals fail to improve the organisational culture and structure, thus contributing to and perpetuating unethical practices in time. On the other hand, organisational practices fail to correct individual behaviour, thus generating even more unethical individual behaviour in time. Where we have a similar level of individual and organisational integrity, moral blame is most likely to be ascribed in a mutually enhancing manner and not proportionally. The more the individuals support unethical practices through their own unethical behaviour and vice versa, the more the organisation and its individual members become blameworthy. The lower the integrity at individual and organisational level, the higher the individual and the organisational blame. Where individual lack of integrity supports organisational lack of integrity, we have a situation of mutually enhancing blame in a downward spiralling effect. Case study: The General Motors recall In 2014 General Motors recalled 30 million vehicles worldwide (Halvorson, 2014), officially recognising a manufacturing error of “faulty ignition switches, which could shut off the engine during driving and thereby prevent the airbags from inflating” (Valdes-Dapena & Yellin, 2014). The car manufacturer acknowledged knowing about the faulty switch for more than a decade before the recall (CBS News, 2014), but only took a stance after the accidents

Organisational integrity and responsibility  407 it generated resulted in 87 deaths according to GM declaration (Bruce, 2015), or even 153 according to Reuters (Klayman, 2014). Following an external investigation inquiring whether GM’s internal procedures were “robust enough to catch defects and why the company would have approved switches that did not meet its own specifications” (Spangler, 2014), a $35 million federal fine was issued to the company for “safety issues stemming from the delayed recalls” (CBS News, 2014). The investigation revealed that the issues first appeared when GM approved the design of the switches back in 2002, although the tests showed it was below GM’s own specifications (Spangler, 2014). Furthermore, in 2003 and 2004, GM service technicians and engineers noticed several problems on different models of vehicles (Valdes-Dapena & Yellin, 2014), leading to an internal investigation that resulted in the company considering addressing the problem with a design change in 2005 (Spangler, 2014). However, reports show that “engineers decided against a fix because it would take too long and cost too much money” (Glinton, 2014). It was the same year that the first death related to the faulty ignition switch was reported (Spangler, 2014). Later, in 2006, the manufacturer of the switch, Delphi, suggested a change in the ignition design that was signed off by a GM engineer, but most GM personnel did not know about the fix “because the part number was not changed” (Valdes-Dapena & Yellin, 2014). It wasn’t until 2013 that GM “figured out that the part had been ordered changed by at least one of its own engineers” (Spangler, 2014). Additionally, internal investigation conducted by GM in 2014 found “a pattern of incompetence and neglect” (Valdes-Dapena & Yellin, 2014), following which 15 employees were dismissed and 5 more disciplined for their handling of the matter, after the engineering and quality departments had already been restructured the same year, in a move “the company says could have prevented its current recall crisis” (ibid.). Discussion In this stance, we have, on the one hand, individual members of GM (mainly, but not exclusively, those within the engineering and quality departments) causing an organisational unethical outcome while being reasonably able to know the consequences of their actions (high risks of accidents) and having alternative courses of action available (employees had more possible options to repair the ignition switch, including some coming from the manufacturer). On the other hand, the organisation morally fails to create the right environment, with an organisational unethical culture that works in disconnection from the written procedures (GM’s own safety requirements for the ignition switch were not respected in practice) and employees being given mixed signals as to how they should behave (Constantinescu & Kaptein, 2015). As research shows, it is more likely that individuals follow the informal organisational culture or climate rather than the formal structure (Martin & Cullen, 2006; Kaptein, 2011; Treviño & Brown, 2004). Therefore, the more the individuals perceive the organisational culture as stimulating and facilitating unethical behaviour, the more likely is their own unethical behaviour. Unethical behaviour is repeated in a continuum loop given the joint support of both individuals and the organisation, which generates an increase in the overall responsibility and blame they bear; neither puts a stop to unethical practices, while both continue to generate even more unethical behaviour.

408  Research handbook on organisational integrity

CONCLUSION AND RESEARCH DIRECTIONS Organisational integrity encompasses not only integrity in organisations, at the level of individual members, but also integrity of organisations, at the level of the collective social entity. But any robust inquiry over integrity at organisational level first requires a robust account over the possibility to consider organisations as morally responsible entities. This chapter provided a critical overview and classification of various arguments and approaches to corporate moral responsibility, taking a stance in favour of the possibility to hold organisations morally responsible per se, at a distinct level from their individual members. The normative perspective was complemented with an illustration of the way collective approaches to corporate moral responsibility can be applied in practice, extending previous research with a novel correlation between individual and organisational levels of integrity and blame ascriptions for unethical outcomes of organisational activity. One important implication of the possibility to talk not only about moral responsibility in organisations, but also of organisations, concerns legal requirements for organisational integrity. While some researchers argue that organisations should have imposed legal regulations to minimise their unethical outcomes precisely because they are not full-fledged moral agents bearing moral responsibility and regulating themselves as moral agents do (Hedahl, 2013; Rönnegard, 2015), the opposite argument can be made. Namely, that the legal regulations that can and should be imposed on organisations need to be grounded in the status of organisations as collective secondary moral agents. It is only because organisations are a special type of secondary moral agents that external regulations should be imposed on them, a point that is grounded in the philosophical principle that ought implies can. It is only because organisations have this capacity for secondary moral agency that they become appropriate targets for ascriptions of moral responsibility, and it is because they are capable of moral responsibility in this retrospective sense that we are entitled to impose on them duties and obligations pertaining to moral responsibility in the prospective sense (Bovens, 1998; Werhane, 1985). The fact that adult human beings, who are the standard entities described as moral agents, do not always perform the morally appropriate actions in practice, gives us evidence for the need to impose moral and legal regulations onto organisations. The fact that a moral agent has this inner capacity to self-regulate does not automatically imply that they will actually exert that capacity. Therefore, regulations need to be enforced to ensure at least a minimum threshold where unethical outcomes resulting from organisational activity are avoided. Looking ahead, the field of organisational integrity could further benefit from collectivist arguments and approaches to corporate moral responsibility along several research directions. First, future research could develop conceptual and empirical correlations between personal and organisational integrity in terms of ascriptions of individual and collective blame for organisational outcomes. Second, discussions over blame resulting from holding organisations and their members to be morally responsible could be complemented with discussions over ascriptions of praise associated with a high level of individual and organisational integrity. For instance, we might discuss mutually enhancing ascriptions of praise in situations that correlate a high level of organisational integrity with a high level of individual integrity. Indeed, it appears that in cases where individual integrity supports organisational integrity and vice versa, we have mutually enhancing moral responsibility in terms of praise: the more the individuals contribute to ethical organisational practices through their own ethical behaviour and vice versa, the more the organisation and its individual members become praiseworthy.

Organisational integrity and responsibility  409 Relatedly, conceptual models could be developed to account for the mutual influence between organisational integrity and individual integrity based on individual and corporate virtues, leading to mutually enhancing ascriptions of praise. Third, future research could inquire over the way individual moral responsibility is supported by an organisational culture of integrity. Fourth, the interplay between backward-looking and forward-looking organisational moral responsibility might offer valuable insights for organisational integrity—for instance, is corporate blame ascribed in the past a predictor for future organisational efforts towards integrity programmes? Fifth, future research could analyse to what extent the status of organisations as moral entities justifies societal pressures for organisational integrity programmes. Research on organisational integrity has come a long way over the past 30 years since Paine’s (1994) seminal article, when debates still revolved around questions concerning the very possibility to apply the concept of integrity to business organisations (Kaptein & Wempe, 2002). For the next decades we might expect a more focused interest over organisational mechanisms aimed not only at preventing infringements on integrity, but rather on enhancing organisational integrity both internally (towards internal stakeholders) and externally (towards external stakeholders). Given the current disruptive use of generative Artificial Intelligence in day-to-day organisational practice (including human avatars with generative AI) and the paradigmatic shifts in work practices (with more decentralised, remote work-from-home and the four-day workweek), organisations will face more challenges for the threshold of integrity they have previously set. By the mid-21st century, it might become paramount for organisations to find technology-driven innovative ways to develop cultures of integrity that support value pluralism of their individual members and empower them to make morally responsible choices that balance personal, organisational, and broader societal stakes.

NOTES 1.

Part of the research for this chapter was funded by the European Union (ERC, avataResponsibility, 101117761). The views and opinions expressed are however those of the author only and do not necessarily reflect those of the European Union or the European Research Council Executive Agency. Neither the European Union nor the granting authority can be held responsible for them. 2. Nonetheless, the roots of the discussion over the status of collectives go back to medieval philosophy (List & Pettit, 2011), particularly to the nominalist–realist dispute (Soares, 2003). 3. This classification partly follows Graham’s (2000) account.

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26. Organisational integrity and accountability Natasha V. Christie

Taking up the call by Yang (2012) to push future research into focusing on the interactivity between accountability structure and human agency, this chapter will introduce an accountability process to create mechanisms to build trust and cooperation, thus strengthening organisational integrity. To elaborate, Lindberg (2013: 210) stated, “every common-sense use of the term [accountability] assumes that a certain measure of authority, or responsibility, is vested in an individual, group, or institution.” It is in this transfer of authority or responsibility that we begin to see what we call the accountability environment, where “a constellation of forces— legal, political, sociocultural, and economic—that place pressure on organizations and the people who work in them to engage in certain activities and refrain from engaging in others” (Kearns, 1996: 29). Organisational integrity, in turn, provides us with the framework which guides the behaviours within an accountability environment. To illustrate, Menzel (2011: 110) references the International City/County Management Association as defining organisational integrity as “fostering ethical behavior throughout the organization through personal example, management practices, and training (requires knowledge of administrative ethics; ability to instil accountability into operations; and ability to communicate ethical standards and guidelines to others).” Therefore, accountability is embedded within this definition of organisational integrity and is an integral attribute. Since accountability is integral to our understanding of organisational integrity, it is important to detail how the public administration literature views accountability. Despite the multitude of definitions, typologies, and approaches to accountability, most researchers have come to a similar idea of what constitutes accountability at its core (Bovens, Goodin, & Schillemans, 2014). Yet, it is important to remember that our understanding of accountability continues to be contested even in this broad sense. It is a contested concept because standards for accountable behaviour are mutable (Bovens, Schillemans, & T’Hart, 2008). Yet, having a mutable nature allows for the flexibility to accommodate the fact that accountability will mean different things in different environments. Accountability is never straightforward (Lee, 2017). Despite this, many public agencies associate accountability with appropriate behaviour (de Boer, 2022). If that is the case, how can we talk about accountability so researchers and practitioners can make practical sense of it? We can discuss accountability within the context of trust, cooperation and building organisational integrity. Accordingly, in this chapter we will begin this discussion by laying the groundwork for our understanding of accountability in the public administration literature. To begin, Romzek and Dubnick (1987) and Bovens (2005) provided the most used definitions of public accountability. Romzek and Dubnick’s (1987: 228) definition is as follows: “public administration accountability involves the means by which public agencies and their workers manage the diverse expectations generated within and outside the organization.” Put another way, “Accountability is anchored in the mundane yet important practice of record-keeping and gives rise to storytelling in a context of social (power) relations within which enforcement of standards and the fulfilment of obligations is a reasonable expectation” 415

416  Research handbook on organisational integrity (Bovens, Schillemans, & Goodin, 2014: 3). Further, within this context of storytelling or accounting, there should be an opportunity for debate, judgements, and sanctions (Bovens, 2005). Bovens’ (2005) definition, on the other hand, adds the obligation to explain and justify one’s conduct in a public forum specific to public accountability. Historically, Dubnick (2002) traced the root of contemporary accountability to William I of England’s efforts to legitimise his rule over England. In this vein, William I required that all property holders render an account of what they owned in a Doomsday Book, which was a way of laying the foundation of his legitimacy (Bovens, 2007). Through legitimising the power structure, he forced the people of England to recognise his authority. Some could argue that because of its historical roots, accounting has always had a dual meaning which consists of counting important things and providing an account concerning this counting (Bovens, Schillemans, & Goodin, 2014) which indicates a low level of trust. Now, however, accountability no longer just refers to counting but to authorities being held accountable by their citizens (Bovens, 2005), which indicates a higher level of trust flowing from the citizenry to the authorities. Further, if we consider the burgeoning concept of voluntary accountability, accountability is co-produced by the actor and the audience (Ansell & Torfing, 2021). This concept of co-production is very much in line with Behn’s (2001) argument that we need to focus on better ways of making the accountability process work, including greater reliance on cooperation. To accomplish this, we must create mechanisms for evolving trust as we rely on cooperation. Given these points, the remainder of this chapter will be rooted in Brandsma and Schillemans’ (2013) conception of the accountability stages used in their discussion of the “Accountability Cube”—information, discussion, and consequences—as the framework for the accountability system. The first half of this chapter will introduce the conceptual components of accountability, which include accountability conceptions (I call this the pre-information stage), accountability questions (the information stage) and consequences (the consequences stage), and accountability in practice (the discussion stage). In all, conceptualising such an accountability process requires that all involved have a mutual understanding of accountability conceptions, including but not limited to accountability types, perspectives, functions, and mechanisms. Most importantly, however, we must acknowledge that conceptualising such an accountability process requires a belief that accountability, despite its presentation in the literature, is not a problematic concept but one that actors can use to their advantage to promote organisational integrity.

ACCOUNTABILITY CONCEPTIONS The Cambridge Dictionary (2023) defines a conception as “an idea or a particular way you understand or think about something or a basic understanding of a situation or principle.” Accountability remains a contested topic because it means different things to different people and will suggest other things in different environments. The following section will focus on the ways of thinking about accountability which account for many of our differing conceptions, including virtues, mechanisms, types, functions, perspectives, and questions.

Organisational integrity and accountability  417 Accountability as a Virtue One of the first items one must contend with when discussing accountability is determining whether we conceptualise accountability as a mechanism or a virtue. According to Bovens (2010: 949), “accountability as a virtue is an essentially contested and contestable concept par excellence because there is no general consensus about the standards for accountable behaviour, and because these standards differ, depending on role, institutional context, era, and political perspective.” Similarly, as Goodin, Bovens, and Schillemans (2014: 8) offered, “accountability studies that use accountability in this rather active sense of virtue focus on the actual performance of governments, officials, and agencies. Implicitly or explicitly, they formulate a set of substantive standards for good governance and assess whether officials or organisations comply with these.” To illustrate, Bovens (2010: 954) affirmed that accountability as a sense of virtue could refer to “substantive norms for the behavior of actors.” Thinking about accountability as a virtue in the active sense is to focus on an individual’s perspective on how they think about accountability. This way of thinking brings us to some early definitions of accountability that focused on responsibility and answerability, for example. As an individual, I should (normatively) feel that I should be held accountable for work that I have been asked to complete, even if that organisation does not require such a level of accountability. In this way, accountability is a sense of personal responsibility and ethics which may or may not transfer to accountability from an organisational standpoint. Accordingly, from an individual perspective, accountability is usually personal and derived from personal integrity. Referencing the International City/County Management Association (ICMA), Menzel (2011: 110) defined personal integrity as “demonstrating accountability for personal actions, conducting personal relationships and activities fairly and honestly.” Sometimes, it is tied to professional values and systems such as a code of ethics. For example, Menzel (2011:110) provides the ICMA’s definition of professional integrity as “conducting professional relationships and activities fairly, honestly, legally, and in conformance with the ICMA Code of Ethics—requires knowledge of administrative ethics and specifically the ICMA Code of Ethics.” As a public organisation or an organisation providing public services the accountable to whom question is much broader. At this level it requires “Fostering ethical behavior throughout the organization through personal example, management practices, and training (requires knowledge of administrative ethics; ability to instill accountability into operations; and ability to communicate ethical standards and guidelines to others)” (Menzel 2011:110). Because the public is involved, we must assume that actors are accountable to the public and elected officials. Accountability as a Mechanism As one of the leading public accountability scholars, Bovens (2010: 949) observed that in American discourse, accountability “is used as a normative concept, as a set of standards for the behaviour of actors, or as a desirable state of affairs.” On the other side of the Atlantic, however, British, Australian, and European scholars approach accountability “as a specific social relation or mechanism that involves an obligation to explain and justify conduct” (p. 951). Reinforcing this conception, Dubnick and Frederickson (2011) concluded that accountability as a mechanism involves an obligation to explain or justify one’s conduct:

418  Research handbook on organisational integrity Accountability mechanisms are typically characterized by how they render an actor or agent responsible to some other actor or agent for what takes place at various stages of the input-process-output sequence. Thus, accountability mechanisms are designed to address real or potential issues related to the acquisition, maintenance, and disposition of resources (inputs) used in the organized effort, as well as to ensure that appropriate actions (processes) are being applied and intended outputs or outcomes are achieved. (p. xviii)

To that end, actors are held to account ex post facto (Bovens, 2010). In that regard, “we use retrospective mechanisms to ensure democratic accountability” (Behn, 2001: 103). Further, following the approach of Braithwaite and Drahos (2000), a higher-order view of accountability would regard it as a set of governance mechanisms that encompass the propensity of individuals to act in accordance with what they perceive to be the legitimate expectations of others (or the expectations of others whose claims are regarded as legitimate). Accountability: Mechanism versus Virtue Accountability mechanisms transform accountability characteristics as an individual virtue into a collection of understandings, actions, and consequences in the form of an accountability mechanism. Bovens (2010) concluded that these two conceptions of accountability (virtue versus mechanism) indicate a Transatlantic divide in how we view accountability, with American scholars focusing on accountability as a virtue or set of normative standards and the British, Australian, and European discourse focusing on accountability as a social mechanism. However, Willems and Van Dooren (2011) questioned this idea of the Transatlantic divide by suggesting that intermingling these two conceptions is unavoidable. Zumofen (2016: 11) supported this view by stating, “Mechanism and virtue are both essential aspects of accountability and must be blended if one is to appreciate the full scope of the concept.” Further, this merging of mechanism and virtue is critical for our practical understanding of accountability. For any accountability mechanism to be successful, the actors must, at some level, carry a personal virtue of integrity and practice accountability. Bovens (2010: 962) stated that, “Accountability mechanisms mare meaningless without a sense of virtue and, vice versa, there is no virtue without mechanisms.” For example, a positive personal virtue of accountability could lead to successful accountability partnerships. In contrast, a negative personal virtue of accountability can lead to adverse effects such as shirking, blaming, scapegoating, etc. Similarly, Overman and Schillemans (2022) argue that in order to have an effective accountability mechanism, the people within the organisation must believe that these accountability mechanisms exist and will therefore adjust their behaviour in a way that supports the accountability mechanism. They elaborate that we see this happen when the account holder, through their authority, has imprinted or passed on in the actor’s mind ideas of behaviours that may be appropriate or inappropriate for their specific accountability environment. Further, if the account holders value integrity, they would promote accountability within themselves and their agents, thereby enhancing organisational integrity. The following section will focus on public administration literature’s more common accountability types and functions. In these areas, actors may face varying ideas about how they encounter accountability in practice. Understanding the type of accountability and how accountability functions can help those involved determine the expected behaviour within the accountability environment.

Organisational integrity and accountability  419 Accountability Types and Functions This section focuses on how individuals believe accountability works. Accountability types focus on the structural conceptualisations of the source of power/control within the accountability environment. Similarly, accountability functions focus on what purpose accountability is supposed to serve. In their seminal analysis of the Challenger crisis, Romzek and Dubnick (1987) identified four accountability types used to manage expectations: bureaucratic, legal, professional, and political. These types focus on the vertical chain of delegation of authority wherein the authority can be internal or external to the organisation. The bureaucratic accountability type focuses on the priorities of those at the top of the bureaucratic hierarchy through intense supervisory channels (low levels of trust). Romzek and Dubnick (1987: 228) argued that the functioning of such an accountability system requires two ingredients: “an organized and legitimate relationship between a superior and a subordinate in which the need to follow ‘orders’ is unquestioned; and close supervision or a surrogate system of standard operating procedures or clearly stated rules and regulations.” In the legal accountability type, there is also that element of control; however, instead of emphasising superior and subordinate relationships, the relationships emphasised here are that of a controlling party outside of the organisation where there is an implied fiduciary agreement. This agreement allows the external party to impose legal sanctions or enforce obligations. The professional accountability type, conversely, has the locus of control with the employee who has the specialised skills or is an expert in their field, which requires the account holder to transfer high levels of trust to the skilled employee. In this way, the manager defers to the employee’s expertise with the understanding that the employees expect to be held accountable. In a similar way, political accountability relies on representatives’ responsiveness to their constituents thereby requiring citizens to impart high levels of trust in their representatives. Romzek and Dubnick (1987) also identified the primary question within political accountability as “Whom does the public administrator represent?” Constituencies included “the general public, elected officials, agency heads, agency clientele, other special interest groups, and future generations” (Romzek & Dubnick, 1987: 229). Meanwhile, they defined these accountability types as mechanisms where “expectations are managed through a hierarchical arrangement based on supervisory relationships; the legal accountability system manages agency expectations through a contractual relationship; the professional system relies on deference to expertise; while the political accountability system promotes responsiveness to constituents as the central means of managing the multiple expectations” (Romzek & Dubnick, 1987: 230). Some of these expectations can include that the actor must demonstrate that they are using their powers correctly, working towards the priorities/mission of the organisation, reporting on their performance, ensuring the quality of the programmes and services provided, and serving the public’s needs (Burke, 2005). Willems and Van Dooren (2011: 1015) added that managing expectations includes “a continuous process of anticipation, identification, definition and response to pressures, which eventually leads to certain actions.” Cendón (2000), conversely, supported the view that, in reality, there are two classical forms of accountability: political and administrative accountability, from which all other accountability types derive. For example, he argued that other classifications, such as legal, bureaucratic and hierarchical accountability, are all derived from administrative accountability. To illustrate, Cendón stated:

420  Research handbook on organisational integrity In its vertical dimension, administrative accountability is a relationship that links inferior administrative positions with superior—political or administrative—ones. And in its horizontal dimension, administrative accountability links the individual administrator and the public administration as a whole (a) with the citizen, as a concrete subject or use of the service, but also (b) with other external organs of supervision and control established to this purpose, such as oversight bodies, audits, comptrollers, “ombudsmen,” etc. (p. 34)

Political accountability also has dual dimensions which emphasise expectations of elected authorities and the electorate through provisions adopted by the government. For example, Cendón (2000) provided that in its horizontal dimension, emphasis is placed “on political considerations and on value judgements of an ideological and partisan nature whereas in its vertical dimension, it is linked to those in high positions whereby the form of appointment of those positions and their accountability is truly political” (p. 29). Further, other authors have added to our understanding of accountability by offering additional accountability types, such as dialogue accountability (Roberts, 2002), deliberation accountability (DeHaven-Smith & Jenne, 2006), negotiated accountability (Kearns, 1996), mutual accountability (Whitaker et al., 2004), emergent accountability (O’Connell, 2005), social accountability (Brummel, 2021), and voluntary accountability (de Boer, 2021). All these types rely on varying levels of trust within the accountability partnership. According to Lindberg (2013): First, we cannot scale or even rank order the various types of accountability. The differences between them are nominal and it makes no sense to use qualitative or quantitative techniques designed for scale or ordinal variables in analyzing outcomes. Second, each type of accountability has its designated functions and is compatible with certain situations only; no one is a panacea for all kinds of problems of restraining power. (pp. 217–218)

The purpose of revisiting these accountability types was to highlight the formative types presented in the public administration literature and trace how trust underlies our understanding of accountability. In terms of accountability functions, however, Willems and Van Dooren (2011) identified three distinct accountability functions: constitutional, democratic, and performance. The constitutional function relies on well-established rules to avoid abuses of power. Through the democratic function, citizens are integral to the process because authority rests with them. Both of these functionalities focus on how government functions. Conversely, with the performance function, the emphasis is on what the government accomplishes—accountability for their results. When thinking about accountability functions this way, we can see how each function relies on trust. First, with the constitutional function, trust lies within well-established rules and procedures within the elected official’s power, which does not require a high level of trust in the accountability partnership. However, since it relies on results, the performance function shifts trust from the account holder to the actors “on the ground.” This shift requires a high level of trust that flows from the account holder and is transferred to the actor. The following section will extend this discussion to integrate trust and cooperation in exploring accountability perspectives.

Organisational integrity and accountability  421 Accountability Perspectives How actors and forums view accountability determines how we interact with accountability mechanisms within our accountability networks. Although not exhaustive, this section will present three perspectives of public accountability: the democratic, constitutional, and learning perspectives. The democratic perspective is conceptualised as one in which accountability controls and legitimises government actions by linking them effectively to what they term the “chain of delegation.” This chain refers to citizens entrusting their elected representatives to draft laws and policies. In turn, the elected representatives authorise public ministers to delegate tasks to public servants who use their discretion to implement policies. In short, delegation relies on trust. The constitutional perspective focuses on preventing corruption and abuse of power such that public accountability forums are strong enough to reveal corruption and have firm enough sanctions to dissuade future corruption and abuse of power. Bovens, Schillemans, and T’Hart (2008: 232) say these accountability forums “should prevent or at least uncover and redress abuse of public authority and other public resources.” Last, they offered the learning perspective whereby feedback is introduced to increase effectiveness and efficiency by making “public authorities more effective in achieving set goals and more responsive to the needs and preferences of their key clienteles” (p. 222). Additionally, Schillemans, Van Twist, and Vanhommerig (2013) identified a grouping of accountability that takes us from the more hierarchical focus of traditional accountability through interactive and dynamic to citizen-initiated accountability. The propensity for organisation learning increases as organisations move away from traditional accountability, as does the level of mutual trust. In Schillemans et al.’s view, interactive and dynamic accountability allows for changes along the way so that problems are identified, and they can use interactive discourse to decide on target areas. They expect that there will be an exchange and processing of information between the “two sides of the accountability function” (p. 412). If this is the case, we are more likely to see the emergence of high levels of mutual trust and strengthened organisational integrity. Similarly, Behn’s (2001) perspective of accountability requires a new theory of democratic accountability whereby each member of the accountability environment is accountable to every other throughout the process. Behn based his concept of 360-degree accountability on the concept of 360-degree feedback, where individuals are evaluated not just by their superiors but also by their subordinates and peers. Further, Behn believes that 360-degree feedback should create 360-degree accountability. He notes that in our past efforts to achieve this, we have made 360-degree harassment instead of 360-degree accountability. However, to move accountability forward, members of the accountability environment must get on the same page regarding their questions (information) and discussion (consequences) so that we do not end up once again with 360-degree harassment. Accountability Questions In this sequence of our discussion, it is vital to address the inherent questions that bound our discussions of this concept: accountable to whom, accountable for what, and its consequences. These are questions which, if we do not have an agreed-upon understanding, could significantly impact an organisation’s performance. Even more critical, actors may not clearly

422  Research handbook on organisational integrity understand who is part of their accountability environment, what they should be accountable for, and what happens if they fail in their accountability efforts. To begin, depending on the perspective, accountable to whom could be to a chain of delegation, oneself, the organisation, or the public. Bovens (2010) suggests that modern public managers operating in a democratic system may have at least five types of forums for which they are to be held to account. Some examples include: their bureaucratic superiors, elected representatives and political parties, courts, auditors, inspectors, controllers, and professional peers. An even bigger question to answer in the literature is: accountable for what? On the surface, this would appear to be a straightforward question; however, unless there is an established understanding, everyone involved in production will hold different concepts for which they are accountable. According to Schillemans (2016: 6), “If different types of accountability produce different types of responses from decision-makers, this logically means that different types of tasks are best served by different types of accountability.” It may indeed be that different actors are accountable for various aspects of the production of a good, but unless that is explicit, the idea of accountability for what becomes muddy. This need to be precise is even more relevant in networked relationships where different organisations have different conceptions of accountability. Still, they must agree on how accountability will be used/accounted for in their relationship. For example, are we accountable for processes, results, or both? In the past, many only focused on results, but as mentioned above, with the evolution of networked relationships, methods have also come under scrutiny for lack of accountability. Perhaps it is more relevant now for organisations to be accountable for both processes and results—hence performance. Behn (2001) noted that the agency often establishes more procedures and additional regulations than the legislature provides. If this is the case, there is a high level of trust in the actors “on the ground” working daily in this grey area. What happens if you meet or fail to meet a specific accountability goal? Specifically, Rock (2020) outlines how much of the literature mentions accountability deficits and overloads but does not give us a sense of the ideal amount of accountability. She continues, “a ‘benchmark’ of accountability would enable us to articulate what ‘enough’ (and, in turn, ‘not enough’ and ‘too much’) accountability might look like” (p. 4). In a similar vein, these actors “on the ground” are making decisions that align with their interpretation of what is needed to achieve a specific accountability goal; yet, they, too, are not provided with an accountability benchmark. Behn (2001), when speaking of retrospective accountability, says that we have different expectations for public managers; if we expect them to be responsible for results and to establish those expectations, we need to create goals. However, public managers are given a lot of discretion in pursuing those goals. Do we also care about how the actors use their discretion? Behn (2001) reminded us that accountability holders do not have to do anything particularly right; they just have to catch others doing wrong. He even said that accountability holders would be shocked and offended (and possibly retaliate) if they received any feedback from the actors. While the accountability holders have to do to the very minimal, it is the actors themselves who work with the threat of looming punishment which can lead them to shirk their responsibilities, cut corners, engage in deceptive practices, and other such activities to ensure that they are free from punishment but engaging in such activities can also erode trust in an accountability partnership. Bovens (2010: 952) expounded, “These consequences can be highly formalised, such as fines, disciplinary measures, civil remedies or even penal sanctions, but they can also be based on unwritten

Organisational integrity and accountability  423 rules, as in the case of the political accountability of a minister to parliament, where the consequence can extend to calling for the minister’s resignation.” By their nature, including blame and wrongdoing weakens the trust between partnership members. However, if members of the accountability environment agree upon consequences, this provides an opportunity for strengthened organisational integrity.

ACCOUNTABILITY IN PRACTICE Although, by definition, accountability seems to call for simplicity (Schillemans & Bovens, 2011), in practice, that is far from the case. Schillemans (2016: 7) suggested, “we need to look beneath the formal characteristics of mechanisms to the actual interactions between decision-makers and their accountability forums to understand the outcomes of accountability and to be able to calibrate accountability to task requirements.” What does accountability look like in practice? What does it look like “on the ground” as practised by those actors who are to be held to account? Aleksovska, Schillemans, and Grimmelikhuijsen (2019: 2) contended that as a field, public administration still does not have a good understanding of the “causal effects of accountability mechanisms on individual decision-making, behavior, and the outcomes of those activities in the public sector.” Similarly, Overman and Schillemans (2022: 13) pointed out that, to date, “the public administration literature lacks an articulated theory of accountability at the individual level.” One concept that has evolved from discussing individual-level accountability is “felt accountability.” This concept has been advanced most through social and organisational psychology but has recently made its way over to the public administration literature. For example, Overman and Schillemans’ (2022: 13) work presented felt accountability as an “individual’s explicit or implicit ‘sense of accountability’ toward an accountability environment (cf. Klinger, Nalbandian, & Romzek, 2002) and varies according to professional socialisation and beliefs.” Overman, Schillemans, and Grimmelikhuijsen (2021) noted the account holder’s perceived expertise and perceived legitimacy as critical dimensions of felt accountability and emphasised the relational aspect of felt accountability. They further emphasised, “the authority and influence that fuel felt accountability in an agent [actor] are the result of a psychological contract based on a combination of formal and unwritten rules or formal or informal accountability mechanisms” (p. 14). Overall, the authors cited in this section advised that, as a field, we still need to grow in this area. Nevertheless, this provides hope for moving accountability forward. Moving Accountability Forward We see a lot of discussion in the literature surrounding accountability types and mechanisms. Similarly, we see much discussion around consequences with much less discussion on what happens in practice. Along those lines, Bovens and Schillemans (2014) pointed out that we tend to focus on what happens at the beginning of the accountability process—the obligation to disclose information—and at the end of the process, where the account holder may punish the accountee. However, could it be the case that what happens at the end (the consequences) can influence the beginning (the chosen accountability types and mechanisms), and what happens in the middle (“on the ground”) can impact both the beginning and the end? Behn (2001)

424  Research handbook on organisational integrity promoted this sort of cycle with his concept of 360-degree accountability. He continues, “If we had true 360-degree accountability, each individual who is part of a public agency’s accountability environment would be accountable to the others” (pp. 199–200), causing us to reconsider the traditional unidirectional concept of accountability. Behn offered us this concept in 2001, and it has yet to come off the ground in the field of public administration. So why have we not moved towards Behn’s conception of 360-degree accountability? Bovens (2007) explained that public trust in government is fragile. Due to this perceived lack of trust in government, there has been a move in Eastern democracies toward more direct forms of accountability, which include clients, citizens, and civil society. Although speaking generally, Behn (2001; 114) argued, “If we don’t trust public managers to pursue improved performance in a diligent and intelligent manner, we may be tempted to create some rules for them to follow and to charge some accountability holder with checking to see whether the managers have complied with these new rules. But we ought not to confuse such micromanagement with accountability for performance.” Do we trust the individuals on the front lines doing the day-to-day work to have the expertise necessary to be accountable and to hold others accountable? Traditional accountability systems were designed to establish and enhance the public’s trust in the government’s integrity; however, now, we need a system to enhance the public’s trust in the government’s performance (Behn, 2001). A Conceptualised Accountability Process: The Accountability Cycle Behn (2001) argues that 360-degree accountability requires a mental reorientation to a place where everyone sees everyone else in their accountability environment as an accountability holder. As conceptualised, this process relies on Behn’s 360-degree accountability and Brandsma and Schillemans’ (2013) accountability cube. Specifically, it incorporates members of the accountability environment at critical stages of the process, whereby each stage is based on Brandsma and Schillemans’ accountability phase as provided by their accountability cube. Further, I base the entire accountability cycle on Behn’s 360-degree accountability concept, whereby members of the accountability environment are accountable to one another at various stages within the accountability cycle. This section will present a conceptualisation of an accountability process based on these authors to have it as a starting point for future research in this area. Future research should perfect this conceptualisation and test it within a “real-world” accountability environment. First, I will briefly discuss Behn’s 360-degree accountability and Brandsma and Schillemans’ accountability cube. Second, I will present a diagram of the accountability cycle (Figure 26.1). Last, I will tie in the first part of the chapter as components of the accountability process as they correspond to the various phases of said process. Behn (2001) also observed that we put too much emphasis on rules and not enough on results. Similarly, he insists we focus too much on competition and not enough on cooperation. To get to where we emphasise collaboration, we must work on ways to evolve trust. He wrote, “[W]e need to worry that the aggressive, adversarial strategy pursued by these institutions of accountability is destroying the legitimacy and capabilities of many public agencies—and of government in general” (p. 217). Bovens (2005) found that as public accountability increases in pressure, public managers can use this to their advantage by becoming “accountability entrepreneurs.” Accountability can be a mutually beneficial arrangement in which all parties benefit from the accountability partnership.

Organisational integrity and accountability  425 This idea of a beneficial partnership is where Behn’s 360-degree accountability comes into play. It allows every member to provide feedback to every other member of the accountability environment, with each individual answerable to the others. Specifically, Behn’s 360-degree accountability asks us to reconsider our unidirectional, hierarchical conception of accountability. He asks us to think of the possibilities of such an arrangement: it could mean a public manager providing feedback to a politician. Can we imagine such a scenario? I say yes! Behn argues that if we are to rethink accountability, we must do so from ground zero. Only then can we focus on building trust, cooperation, and accountability, strengthening our organisational integrity. Importantly, Behn (2001) pointed out that we will not get to our future accountability system through theoretical thinking; instead, we must begin experimenting. Similarly, Brandsma and Schillemans (2013: 953) recognised that empirical research on accountability is “fragmented, episodal, and scarce.” To bridge the gap in this area, they offered us the accountability cube as a way of moving away from our normative emphasis of accountability to a more practical understanding of accountability by focusing on the intensity of accountability processes to include the level of information provided, the intensity of discussions, and the reach of sanctions. To do so, they began by focusing on the actual steps of accountability and what takes place on the ground that constitutes accountability. The first step is the information phase, where an actor provides retrospective information on conduct, choices, and behaviours. From there, we expect a discussion where the forum (account holders) critically assesses the information they received or will ask for additional information and follow-up questions. Since this is a discussion/debating phase, we expect dialogue and debate between the actor and the accountability holder. The last phase is the consequences phase, where the forum passes judgement on the actor and will punish, correct, or reward the actor. Brandsma and Schillemans (2013: 956) caution us that, in practice, these “phases may occur simultaneously, happen in reversed order, or skip one of the elements altogether.” As we continue to move accountability forward, mutual trust must be established where members of the accountability partnership can engage in organisational learning to improve organisational performance and results. In the policy realm, we understand these phases and feedback loops; however, that is less apparent when discussing public accountability. In Figure 26.1, I present the accountability cycle.

Figure 26.1

The accountability cycle

426  Research handbook on organisational integrity To illustrate, in the pre-information stage, the actors in the accountability environment convene to decide on how they view accountability and come to terms with how their personal views of accountability impact organisational integrity. In this stage these views will converge into a mechanism that allows members in the environment to embark upon their accountability journey with everyone on the same page. As they enter the information stage, they decide on the answers to “accountable to whom” and “accountable for what,” what information is needed and who provides that information. However, as they work through the answers to these questions, they may have to jump back and forth between the pre-information and discussion stages to solidify their agreed-upon conceptualisation of accountability in their accountability environment. Finally, when they arrive at a resolution and are comfortable in the discussion stage, there is agreement on what they expect of one another in the accountability environment. At this point, they can request the information necessary to measure accountability and hold each other accountable in a way they will agree upon in the consequences stage. Finally, in the consequences stage, the members will adopt formal sanctions and determine the actual effects of the accountability results. The cyclical nature of this process implies that learning is taking place at each stage such that even the consequences stages can influence the pre-information stage during the next cycle. When it happens this way, the accountability process never ends but is constantly being improved. However, as mentioned earlier, this process hinges on a few assumptions: (1) all members agree that accountability is a desired characteristic; (2) all members of the accountability environment are willing to see each other as peers; (3) they are willing to cooperate throughout the process and build trust; (4) they are willing to engage in organisational learning. Members of the accountability environment could accomplish this through a compact between members.

CONCLUSION Accountability is a matter of building trust and cooperation amongst all members of an accountability environment and building processes that enhance organisational integrity. Historically, however, accountability has been used in a way that made high levels of trust and cooperation questionable. Ideally, all actors within an accountability environment should be working from the same understanding of accountability; however, the literature has shown that this is not the case (Bovens, Schillemans, & T’Hart, 2008). This is problematic because accountability is something that most organisations want to have as a part of their organisational integrity efforts. Yet, the concept has not given us much to lean on in practice as a guide to action. However, many scholars have done much work over time to make accountability more of an actionable concept. The accountability cycle proposed in this chapter adds to the work of these authors by allowing for a space where co-creation can take place, mutual trust can be built, and our commitment to organisational integrity can be enhanced. Further, it is essential to impart that organisations that want to use accountability to enhance their organisation’s integrity must understand that to do so, they must emphasise both the structural and cultural aspects of accountability. For example, structures such as those promoted with 360-degree accountability should allow actors to freely express their feedback, issues, and concerns regarding tasks implemented for accountability purposes. Doing so

Organisational integrity and accountability  427 should help to foster a culture of openness and responsiveness that organisations can use to build or enhance organisational integrity. Where do we go from here? Future research should focus more on the actual “on-the-ground” relationships between actors and forums. We must examine how accountability environments promote or deter organisational integrity. First, members of the accountability environment must mutually agree on their conceptions of accountability and how they choose to operationalise those conceptions. What mutual values do those within the accountability environment believe are essential in promoting organisational integrity, and how do their actions bring life to those values? Next, future research should focus more on the dynamic and proactive forms of accountability, which rely on greater trust and cooperation. They should continue conceptualising these accountabilities through a system of integrated feedback (similar to the proposed accountability cycle) whereby the actors’ expertise is valued, and they offer their input to the account holders, who in turn integrate that feedback into the accountability process improvement. Through these processes, members prioritise trust, cooperation, and organisational learning, upholding organisational integrity.

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428  Research handbook on organisational integrity Cendón, A. B. (2000). Accountability and public administration: Concepts, dimensions, developments. In M. Kelle (Ed.), Openness and Transparency in Governance: Challenges and Opportunities. Maastricht: EIPA, NISPAcee, pp. 22–61. de Boer, T. (2021). Updating public accountability: A conceptual framework of voluntary accountability. Public Management Review, 1–24. de Boer, T. (2022). Why do public agencies seek accountability? The role of audiences. Public Administration, 1–19. DeHaven-Smith, L., Jenne, K. (2006). Management by inquiry: A discursive accountability system for large organizations. Public Administration Review, 66, 64–76. Dubnick, M. J. (2002). Seeking salvation for accountability. Annual Meeting of the American Political Science Association, 29, 7–9. Dubnick, M. J., & Frederickson, H. G. (2011). Accountable Governance: Problems and Promises. New York: Routledge. Goodin, R., Bovens, M., & Schillemans, T. (2014). Public accountability. In M. Bovens, R. Goodin, & T. Schillemans (Eds.), Oxford Handbook of Public Accountability. New York: Oxford University Press, pp. 1–22. Kearns, K. P. (1996). Managing for Accountability: Preserving the Public Trust in Public and Nonprofit Organizations. San Francisco, CA: Jossey-Bass. Klinger, D. E., Nalbandian, J., & Romzek, B. S. (2002). Politics, administration, and markets: Conflicting expectations and accountability. American Review of Public Administration, 32, 117–144. Lee, M. (2017). Accountability and co-production beyond courts: The role of the European Ombudsman. In Regulating Risks in the European Union: The Co-production of Expert and Executive Power. New York: Bloomsbury, pp. 217–240. Lindberg, S. I. (2013). Mapping accountability: Core concept and subtypes. International Review of Administrative Sciences, 79(2), 202–226. Menzel, D. C. (2011). Ethics and integrity in the public service. In D. C. Menzel, & J. D. White (Eds.), The State of Public Administration: Issues, Challenges, and Opportunities. New York: M.E. Sharpe, pp. 108–125. O’Connell, L. (2005). Program accountability as an emergent property: The role of stakeholders in a program’s field. Public Administration Review, 65(1), 85–93. Overman, S., & Schillemans, T. (2022). Toward a public administration theory of felt accountability. Public Administration Review, 82(1), 12–22. Overman, S., Schillemans, T., & Grimmelikhuijsen, S. (2021). A validated measurement for felt relational accountability in the public sector: Gauging the account holder’s legitimacy and expertise. Public Management Review, 23(12), 1748–1767. Roberts, N. C. (2002). Keeping public officials accountable through dialogue: Resolving the accountability paradox. Public Administration Review, 62(6), 658–669. Rock, E. (2020). Measuring Accountability in Public Governance Regimes. New York: Cambridge University Press. Romzek, B., & Dubnick, M. (1987). Accountability in the public sector: Lessons from the Challenger Tragedy. Public Administration Review, 47(3), 227–238. Schillemans, T. (2016). Calibrating public sector accountability: Translating experimental findings to public sector accountability. Public Management Review, 18(9), 1400–1420. Schillemans, T., & Bovens, M. (2011). The challenge of multiple accountability. In M. Dubnick, & H. G. Frederickson (Eds.), Accountable Governance: Problems and Promises. New York: Routledge, pp. 3–21. Schillemans, T., Van Twist, M., & Vanhommerig, I. (2013). Innovations in accountability: Learning through interactive, dynamic, and citizen-initiated forms of accountability. Public Performance & Management Review, 36(3), 407–435. Whitaker, G. P., Altman-Sauer, L., & Henderson, M. (2004). Mutual accountability between governments and nonprofits: Moving beyond “surveillance” to “service.” The American Review of Public Administration, 34(2), 115–133.

Organisational integrity and accountability  429 Willems, T., & Van Dooren, W. (2011). Lost in diffusion? How collaborative arrangements lead to an accountability paradox. International Review of Administrative Sciences, 77(3), 505–530. Yang, K. (2012). Further understanding accountability in public organizations: Actionable knowledge and the structure–agency duality. Administration & Society, 44(3), 255–284. Zumofen, R. (2016). Public Accountability: A Summary Analysis. No. 4/2016. IDHEAP.

27. Organisational integrity and voice Brett Beasley with Mary Gentile

There is nothing new about the idea that voice is (or ought to be) connected to organisational integrity. Lynn S. Paine implied such a connection in her classic 1994 article “Managing for Organizational Integrity.” In the article, which has been cited nearly two thousand times in subsequent scholarly conversations, Paine suggests the connection by way of a cautionary tale that highlights both the potential benefits of voice and the costs of silence.1 Paine explains that a member of a research department at a juice company, “voiced concerns about the juice to operating management” (p. 108) Managers were quick to accuse the employee of “not being a team player,” of being naive and impractical, and of “acting like ‘Chicken Little’” (p. 108). With the employee now silenced, the misrepresentations went unchecked. Eventually, the company’s CEO pleaded guilty to criminal mislabelling charges. The fines, legal expenses, and losses in sales added up to an estimated $25 million. Paine’s article and examples like this one have become familiar in organisational scholarship. So it can come as a surprise to recognise that Paine neither names nor attempts to define “voice.” At the same time, Paine’s definition of “organisational integrity” is of a very specific kind. She primarily defines it by way of contrast. It differs from legal compliance on the one hand and from exclusively personal morality on the other. What Paine actually offers, then, is not a full account of organisational integrity as a set of coherent organisation-level norms that would offer a conception of the “good organisation.” Rather, what Paine primarily sets out to provide is a strategy for managing legal and reputational risk. To be sure, Paine leaves open the possibility that organisational integrity of some kind may be good in itself. But her primary justification of it is pro-organisational (ethics for the sake of the organisation). In light of Paine’s article and the approach it embodies, it is worth asking whether any more comprehensive vision of the good organisation is really necessary. In what sense would such a vision matter for the practice of voice? After all, Paine’s work has been influential even in the absence of any strong account of the norms that voice connects to. At this point, it is helpful to consider a few cases of voice that are considerably more complex than the one Paine offers. For example: (1)

In 2016, National Football League (NFL) quarterback Colin Kaepernick began kneeling during the pregame playing of the “The Star-Spangled Banner.” The gesture was offered in protest of ongoing racial injustice – and especially violence against Black Americans. Kaepernick subsequently became a free agent and was not signed to another NFL team. In 2019 he won a multimillion-dollar settlement of his claim that the league unfairly excluded him because of the protests (Powell, 2016; Streeter, 2020). In 2020, after a wave of protests over the murder of George Floyd swept the United States and many players expressed support both for the protests and for Kaepernick, NFL Commissioner Roger Goodell released a public video message that stated, “We, the National Football League, admit we were wrong for not listening to N.F.L. players earlier and encourage all to speak out and peacefully protest” (Belson, 2019). 430

Organisational integrity and voice  431 (2) In 2018, an estimated 20,000 Google employees worldwide held a walkout to draw attention to the company’s handling of sexual harassment claims, some holding signs with “I Reported and He Got Promoted” and similar messages (Steinmetz, 2018). The walkout prompted Google to overhaul its sexual harassment policies, including, most notably, driving the company to put an end to the practice of forced arbitration of sexual harassment claims (Conger & Wakabayashi, 2018). Nevertheless, two of the organisers, Claire Stapleton and Meredith Whittaker, later reported that they received backlash from the company for their role in the walkout (Conger & Wakabayashi, 2019). (3) In 2021, Jason Fried, the CEO of Basecamp, a project management software company, and co-founder David Hanemier Hanson made the decision to ban “social and political discussions” at work. The decision, which followed on the heels of debates about employees’ racialised comments about customers, prompted resignations from nearly a third of Basecamp’s staff. Fried and Hanson apologised, saying, “We started with policy changes that felt simple, reasonable, and principled, and it blew things up internally in ways we never anticipated” (Kessler, 2021; Lyons, 2021). What we mean to indicate with these three examples is not just the complexity of voice in our current climate, where managers and leaders encounter a rapidly changing set of circumstances, concerns, and criteria for making decisions about voice. Rather, we also mean to point out that in practice, decision-making about voice will often rely on some prior understanding of voice’s purpose and its role in making the organisation good. Even armed with a definition of voice like Morrison’s (2023, p. 80) – the “informal and discretionary communication of ideas, suggestions, concerns, problems, or opinions about work-related issues, with the intent to bring about improvement or change” – managers cannot easily resolve questions about what counts and does not count as voice. Any decision about what counts as internal vs. external, formal vs. informal, or work-related vs. non-work-related depends on an implicit understanding of what voice is for. We can see this point further illustrated in the fact that in each case, different ways of thinking about voice are occasioned by different views about the organisation’s purpose. In the case of the NFL, the league was fundamentally rethinking the role of players and whether they are employees hired to play for the league or whether the NFL exists also to serve players and to provide them a platform and visibility to effect change. In the case of the Google walkouts, the organisers were clear that the protests took aim not just at particular policy but also at the culture of the organisation in an attempt to redefine what it meant to be “Googly” and to rethink and re-apply the longtime ethics code of the organisation: Don’t be evil. The case with Basecamp was even more explicitly a question about the kind of value the organisation wanted to create and was capable of creating in the world. In announcing and defending the policy change at Basecamp, Fried (2021) acknowledged as much. He wrote, “We make project management, team communication, and email software. We are not a social impact company. Our impact is contained to what we do and how we do it” (para. 14). Fried, who had previously written four successful books on work culture with Hasson, went so far as to deny the validity of a concept like “organisational integrity,” offering a quote from Aldous Huxley’s Doors of Perception that states, “We live together … but always and in all circumstances we are by ourselves … By its very nature every embodied spirit is doomed to suffer and enjoy in solitude.” The company, “must settle the collective difference, pick a point, and navigate towards somewhere,” according to Fried, but, in the end, “We all make individual choices”

432  Research handbook on organisational integrity (Huxley, 1954/2009, p. 12; Fried, 2021, para. 5–6). As these examples show, the decisions organisations make about voice depend upon a set of convictions about what voice is for. In what follows, we consider what it would look like to justify voice in terms of organisational integrity. We will review the rise of voice as a concept and identify some of the key ways voice has been (and has failed to be) justified in terms of the good of the institutions and practices it shapes. Then we will consider contemporary voice scholarship as well as experience of Giving Voice to Values a cross-disciplinary, action-oriented approach to values-driven leadership. We then assess a few approaches for connecting voice to organisational integrity. We emphasise the importance of avoiding “quandary ethics,” and we highlight the underappreciated potential of approaches rooted in contemporary virtue ethics for providing an ethical justification for several kinds of voice while also integrating key findings from voice scholarship into a coherent framework that is both normative and practical.

TRACING THE HISTORY OF VOICE Valuing Dissent in General In On Liberty (1859/1989), John Stuart Mill advanced a set of highly influential arguments for the value of dissent, arguments that, as organisational scholars have recognised, are important precursors for the way scholars and organisations conceptualise the value of voice today (Nemeth & Staw, 1989). Mill was hardly the first thinker to recognise the value of listening to dissenting voices. The Western philosophical tradition, for example, is rooted in the example of Socrates and Hypatia and their example of “dying for ideas” as Brădăţan (2015) illustrates. However, in these examples, “dying for ideas” typically means “dying for the truth,” or at least what one believes to be the truth. What Mill inaugurates in On Liberty is a conversation about the value of dissent that did not depend primarily on the truth of a dissenter’s claims. Mill provides a set of reasons for being concerned about conformity even if conformists are right and a set of reasons for protecting and promoting dissent even if dissenters are wrong. He writes, “the mere example of nonconformity, the mere refusal to bend the knee to custom, is itself a service. Precisely because the tyranny of opinion is such as to make eccentricity a reproach, it is desirable, in order to break through that tyranny, that people should be eccentric” (p. 67). Mill offers four reasons to explain how dissent or even mere eccentricity could lead to positive outcomes in the long run. The first two reasons have to do with what researchers today would call “epistemic humility.” Mill thinks it is possible that dissenters can alert us to truths we have missed (reason one), and we cannot know in advance that others are wrong. Relatedly, the truth comes in degrees; we are likely never in possession of wholly accurate truth, and, at the same time, others are likely not wholly incorrect (reason two). Furthermore, even if a dissenter is wholly incorrect, and even if the dissenter is speaking up in bad faith, Mill thinks that when the truth withstands challenges, it affects us more deeply (reason three). Finally, the truth always needs defenders – without challenges we might become complacent and lose our way (reason four). These arguments render Mill’s well-known general rule (i.e. the “harm principle”) that in order to gain the benefits of dissent, a society must tolerate dissent, even when it offends, so long as it does not harm anyone, and he thinks in doing so we create the best environment for the progress and development of culture and society. Any opinion should be allowed

Organisational integrity and voice  433 expression, except “when the circumstances in which they are expressed are such as to constitute their expression a positive instigation to some mischievous act” (p. 56). Mill says, for example, a person should be allowed to express the “opinion that corn-dealers are starvers of the poor, or that private property is robbery,” (p. 56) but they can face punishment for inciting an angry mob assembled at a corn-dealer’s house. Mill offers a set of ideas about the value of dissent and few rules for deciding when it is good. What resources does this provide for thinking about organisational integrity? On this point, Mill’s own thought is unstable and even potentially internally contradictory. Mill was avowedly a utilitarian, and he justifies the value of dissent primarily in utilitarian terms. Yet, at the same time, Mill also appears to appeal to other normative criteria of the sort he would disavow. Mill suggests, for example, that individuality (along with the freedom to express that individuality) is an end in itself. He writes, “Individuality is the same thing with development, and that it is only the cultivation of individuality which produces, or can produce, well-developed human beings” (p. 64). He appeals to the idea that “Human nature is not a machine to be built after a model, and set to do exactly the work prescribed for it, but a tree, which requires to grow and develop itself on all sides, according to the tendency of the inward forces which make it a living thing” (p. 60). Elsewhere, he puts the same point in the opposite formulation: “No one’s idea of excellence in conduct is that people should do absolutely nothing but copy one another” (p. 58). In these instances, it is not individuality and the freedom to express it that serve the larger end of progress and development; rather, individuality is the aim of progress and has “intrinsic worth.” Mill is an important precursor for the contemporary study of voice because he opened up new ways for thinking about and valuing dissent – space to consider how dissent helps groups thrive. At the same time, Mill’s legacy involves uncertainty about the moral good of dissent and a convoluted conception of the overall purposes of dissent. As this brief sketch shows, Mill on the one hand has a general respect for dissent from a utilitarian perspective in that it produces good results as well as a very different kind of sense that expression is a good in itself. Nevertheless, in Mill’s work, we already see the rudiments of a broader view. Valuing Dissent in Organisational Life When Mill speaks about the target groups that can benefit from dissent, he speaks primarily of nations and societies. He is concerned that England or Europe more generally may stagnate without the animating influence of consensus breakers. It would take considerable time before Mill’s work would be seriously applied to organisational life. That work began in earnest with Albert O. Hirschman. While Hirschman (1989) openly rejected Mill’s claims about the value of eccentricity in itself, in his best-known work, Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States, Hirschman provided a crucial linkage exploring the value of dissent in organisational life that would give voice something like its contemporary form. Crucially, for Hirschman (1970), “voice” is an act not opposed to conformity but rather opposed to exit – i.e. leaving the organisation. This is an important point of contrast with Mill and with voice behaviour in political life. Hirschman saw clearly that voice within the context of an organisation is fundamentally different from other forms of dissent. Dissenters in political discourse often cite their citizenship or residency within a particular nation or society as the source of both the right and obligation to speak up.2 Hirschman (1970), writing in an age he acknowledged as an “age of protest” (p. 30), pointed out that relatively little attention had been

434  Research handbook on organisational integrity paid to the dynamics of dissent within organisation, which would be defined by an interaction between the option to leave the organisation (the “exit” option) and the option to “attempt at all to change, rather than to escape from an objectionable state of affairs” (the “voice” option). For Hirschman, voice is primarily a mechanism for empowering an organisation to prevent or reverse decline – and his definition of decline is broad enough to include declines in satisfaction (with products, payment, etc.) as well as declines in behaviour, including immorality and illegality on the part of an organisation or its members. Hirschman (1974) would later note that in importing what had been “an essentially political concept” and creating “an entirely new category for economists” his advocacy for voice was “too timid” (p. 8). While Hirschman provides a broad definition of voice, he does not attempt to give an exhaustive account of voice behaviours. In fact, he suggests that such an account would be impossible to provide precisely because “voice is essentially an art constantly evolving in new directions” (1970, p. 43). Hirschman’s sense that voice is an “art” and is in constant flux and constant dynamic tension with exit options may suggest limits for the predictive power and effectiveness of behavioural science research on voice – by suggesting, in short, that voice is a more dynamic concept than many organisational behaviour scholars allow. For Hirschman (1970), the cultivation of this art of voice is crucial because there always exists “an important bias in favor of exit when both options are present”3 (p. 43). So long as we can exit, in other words, there is always a tendency for “the development of the art of voice” to “atrophy.” What Hirschman (1970) does provide, however, from the perspective of organisational integrity, is a new focus for dissent, one that utilises dissent in order for an organisation to recuperate in the presence of decline – including moral decline. He writes, “While moralists and political scientists have been much concerned with rescuing individuals from immoral behavior, societies from corruption, and governments from decay, economists have paid little attention to repairable lapses of economic actors” (1970, p. 1), a neglect Hirschman aims to rectify. With Hirschman, we have the addition of a third possible way of construing the relationship between voice and organisational integrity. While Mill suggested that dissent could serve as a spur to moral progress as well as a constitutive element of moral progress, Hirschman’s work suggests that voice might help interrupt the process of ethical decline. Hirschman’s work impacted organisational scholarship during what Colquitt et al. (2005) call the “procedural wave” of organisational justice scholarship. Folger (1977) provided some of the first definitive proof that having a voice in the process could shape employees’ perceptions of the fairness of an outcome. Organisational justice scholarship could be seen as lending support to both moral as well as instrumental reasons for allowing or encouraging voice. On the one hand, organisations could allow or encourage voice in order to treat employees fairly. On the other hand, organisations could allow or encourage voice to increase perceptions of fairness in order to retain them at the organisation. As scholarship on voice developed in the 1980s, some of the benefits long claimed to arise from voice began to receive a more thorough elaboration, and crucially, more empirical validation and support. In a 1989 study on dissent, UC Berkeley researchers Charlan Nemeth and Barry Staw analysed a series of previous studies, both in lab and organisational settings, and concluded that the pressure to conform which tends to exist in most groups can have detrimental effects on the group’s efforts to innovate and solve problems and that groups that allow or even encourage dissent are more effective. Their study offered, they said, “some empirical underpinnings for Mill’s approach” (p. 204).

Organisational integrity and voice  435 Voice as a Contrast to (Mere) Compliance The consensus that powered much of the subsequent work on voice would arise from another development: the rise of ethics and compliance training, programmes, and professionals. The promulgation in 1991 of the Federal Sentencing Guidelines for Organizations by the U.S. Sentencing Commission (USSC) was a watershed moment in the history of corporate ethics and compliance programmes, and the Guidelines led to a new set of incentives for corporate strategy as related to ethical and unethical behaviour. There were clear punishments for corporate misconduct, but there were also clear benefits such as reduced sentences for corporations that could demonstrate the existence of an effective ethics/compliance programme. While the short term effects of the Guidelines were largely formal positions, structures, and programmes within organisations – Chief Ethics Officers, reporting mechanisms and hotlines, and mandatory ethics training programmes – the Guidelines also inaugurated a more long term shift away from a view of ethics grounded in personal characteristics (e.g. avoiding “bad apples”) and towards the necessary elements of an ethical corporation, including a corporate culture that creates the right environment for ethical behaviour. We are now in a position to understand and situate the argument we found in Paine’s (1994) article “Managing for Organizational Integrity” with which this essay began. Paine’s core advice is for managers not simply to trust that they (or their employees) possess moral character but also that managers should take an active role in promoting the ethics and values of the organisation. As we have already had occasion to notice, Paine does not fully spell out the norms that ought to guide the conduct of an organisation. Her point is only that the manager needs to take responsibility and needs to commit to fully ethical business practices. Paine does not rule out or deny that corporate misconduct results from poor moral character and individual misdeeds. Rather, her point is simply that “More typically, unethical business practice involves the tacit, if not explicit, cooperation of others and reflects the values, attitudes, beliefs, language, and behavioral patterns that define an organization’s operating culture” (p. 106). This suggests that “Ethics, then, is as much an organizational as a personal issue” (p. 106). Thus, Paine’s is an “integrity-based approach to ethics management” that rests on acknowledging and supporting managers’ responsibility to “provide proper leadership and to institute systems that facilitate ethical conduct” (p. 106).

CONTEMPORARY EMPIRICAL SCHOLARSHIP ON VOICE A final key development in the study of voice within the field of organisational behaviour was the introduction of the first scale for measuring voice, developed by LePine and Van Dyne (1998). Defining voice as “nonrequired behavior that emphasizes expression of constructive challenge intended to improve rather than merely criticize,” LePine and Van Dyne offered the hope of developing a comprehensive account of the causes, consequences, and methods of controlling or promoting voice (p. 854). To a large extent, scholars have made good on this potential, producing the explosion of voice scholarship first reviewed by Morrison in 2014 and nearly a decade later in 2023. At the time of LePine and Van Dyne’s seminal work, only a few organisational behaviour studies of voice appeared in print each year whereas today Morrison (2023) documents, a scholar can expect to see nearly 100 new studies published on the topic per year. Nevertheless, Morrison also writes that the practitioner looking to improve

436  Research handbook on organisational integrity voice behaviour within an organisation will face obstacles. She writes, “with such a long list of individual and contextual factors that affect the likelihood of voice and/or silence, it is not easy to cull out the most impactful drivers. Furthermore, many of the effects that have been found are dependent on other conditions holding true” (p. 99). Scholars other than Morrison have called for greater integration in service of more effective application as well. Burris et al. (2018) noted that: Despite the demonstrated desirability of voice in organizations and a broad range of research into impediments that prevent employees from speaking up or their managers from being receptive to voice, we know little about possible avenues to materially change these employee and managerial perceptions about voice behavior, the level of the behavior itself, or the outcomes of actual voice attempts. (p. 508)

Similarly, Chen and Treviño (2023) state that “a systematic understanding of when and why positive, negative, and more complex outcomes occur has remained elusive and is much needed” (p. 1). Although these integrative efforts have acknowledged a wide array of moral motivations as causes for voice behaviours, no integration of voice scholarship proposes a normative framework like organisational integrity. To prepare the ground for our further discussion of voice and organisational integrity, we will review three major streams of scholarship on voice in order to identify what each might suggest about organisation-level norms. Stream 1: Engagement One of the most robust findings in the scholarly literature on voice is that people who are engaged at work are more likely to engage in organisational citizenship behaviours (OCBs) in general, a category that includes voice in most measures. This finding holds true for a wide array of different types of engagement. Cho and Jiang (2022) find that employees who approach their work as a calling rather than merely as a job or career are more likely to engage in OCBs. Similarly, Ong et al. (2018) found that employees who feel their work tasks are connected to a meaningful social mission are more likely to engage in OCBs. At the same time, it is difficult to select ethical employees on the basis of intrinsic motivation for their work, since as Astakhova (2015) has found the relationship between passion for one’s work and OCBs is not linear and, as Kwon et al. (2023, para. 1) find, employees who are intrinsically motivated are also more likely to moralise about their work motivation, revealing that “intrinsic motivation does not uniformly increase prosocial behavior toward all others.” Work in this stream of voice scholarship parallels and at some points intersects with a stream of research on character and personality. A broad implication of this research is that companies are well-served by selecting and retaining employees who are high in honesty-humility or, more specifically, guilt-proneness (Cohen & Morse, 2014). In short, any view of organisational integrity that seeks to integrate this stream of voice scholarship into a normative framework would need to take an individual’s intrinsic motivation to speak up, act ethically, and improve the organisation into consideration and give it an important role in the overall conception.

Organisational integrity and voice  437 Stream 2: Cohesion Another major finding of voice scholarship concerns the relationship between pro-organisational messages and ethical messages. On the one hand, voice scholarship highlights the value of speaking up in a solutions-focused manner that emphasises the feasibility of one’s solution for the organisation (Brykman & Raver, 2021; Burris et al., 2018; Ng et al., 2022). At the same time, some studies (e.g., Mayer et al., 2019) show the value of using a specifically moral as well as a financial or business frame as one goes about connecting the issue one is selling to the values and interests of the organisation. Similarly, Chen et al. (2020) showed that “ethical champions” who framed issues in explicitly ethical terms could be effective in stopping the process of moral disengagement and that this effect was independent from (though combinable with) a business frame in support of making the ethical decision. Any conception of organisational integrity that seeks to integrate voice scholarship would need to address the ways in which voice’s prosocial and pro-organisational purposes coincide. Stream 3: Alignment A final stream of voice scholarship – though one that is clearly related to the first two – concerns the types of opportunities employees receive for speaking up. This stream matters because even if an employee is motivated (stream one) and has the capability to speak up (stream two), opportunities for speaking up affect the prevalence of actual voice behaviours. In this regard, one robust finding of the scholarly literature on voice concerns the limits of formal structures. Indeed, as we have seen, the most widely used definitions of voice consider it an “informal” and “discretionary” behaviour. Many organisations do utilise anonymous reporting mechanisms such as ethics hotlines, and the benefits would appear to be obvious. By lowering the apparent cost of speaking up and shielding from the fear of retaliation, we can encourage the practice of voice. But as Detert and Burris (2016, p. 82) point out, “allowing employees to remain unidentified actually underscores the risks of speaking up – and reinforces people’s fears. The subtext is ‘It’s not safe to share your views openly in this organisation. So we’ve created other channels to get the information we need.’” One of the benefits of dissent, as implied by Mill and documented since the classic conformity studies of Solomon Asch (1951), is that dissenters – even when they are wrong – diminish the pressure to conformity and thus alleviate what is potentially an even more destructive force than any that could result from any untruth in a dissenter’s claims. Both because voice behaviours are most effective when observed and because voice is typically directed “upward” in an organisational hierarchy, the role of the leader is critical. In fact, the importance of leaders may be the single most durable finding in all of voice scholarship. While the list of different leadership styles and traits associated with voice is long, it is clear that a leader who encourages voice does so by creating psychological safety, using inclusive language (Weiss et al., 2018), by helping (Hu et al., 2018) and coaching (Farh & Chen, 2018). As we attempt to move from contemporary voice scholarship’s findings on leadership to organisational integrity, we should exercise caution. Some studies have highlighted the difference between a leader’s integrity and the leader’s effectiveness in encouraging voice. Research by Hewlin et al. (2017) indicates:

438  Research handbook on organisational integrity Ironically, when members perceive their leader as having high integrity, the tendency to suppress personal values and pretend to embrace organizational values in response to low values congruence is heightened, whereas having a leader with low integrity seems to release people from the obligation to conform when they hold values that differ from those of the organization. (p. 190)

A concept of organisational integrity, in other words, could prove especially helpful for understanding the role of leadership in voice if it is capable of saying more about the role of leadership in a way that makes sense of the insights of voice scholarship without resorting to the more simplistic view that leader integrity leads to organisational integrity in an obvious or automatic way.

GIVING VOICE TO VALUES The approach to voice embodied in Giving Voice to Values (GVV) is both distinct from but closely related to contemporary voice scholarship. GVV is not an area of voice scholarship but rather a skill- and practice-based curriculum.4 The insight that gave rise to GVV concerned a particular lack of balance in the ethics curriculum of most business schools and corporate ethics trainings. Most of these focus on either developing an awareness of ethical issues or on the analysis of ethical issues while paying little attention to how an ethical decision would be implemented. Thus, GVV’s focus is on enacting values which also includes the development of the competencies – and ultimately the habits, or “moral muscle memory” – necessary to put values into action. Whereas the voice scholarship we have reviewed is not specially focused on ethical voice (as Morrison, 2023, pointed out), GVV’s focus is on ethical voice and was created for programmes teaching practical and professional ethics. GVV does not advocate for a particular normative approach to ethics but instead consists of seven principles, or “pillars,” aimed at helping individuals to bring their values, identity, and capabilities to bear in professional contexts. Although GVV is not a defence of voice on normative grounds, it does welcome normative values and invites practitioners to reflect upon their values and to pursue alignment between moral values and their professional and organisation purpose. Like behavioural approaches to ethics, GVV often finds reasons for scepticism about the efficacy of exclusively normative approaches. GVV characteristically focuses on the post-decision phase of ethical action – not because the decisions are not in themselves important but because the interconnection between decision and action matters. Decisions will be more satisfactory if decision-makers are confident in their ability to put their decision into action. By building moral competence, GVV finds, decision-makers are often able to gain distance from the reasons and rationalisations that so often inhibit ethical behaviour. While GVV cautions against the exclusive reliance on external, abstract models of ethical reasoning, it also welcomes “values” in the sense of “something that we own ourselves and hold dear – ‘my values’ – and something that we experience deeply and internally, which although it possesses a cognitive aspect, is not exclusively about analysis” (Gentile, 2010). GVV stresses the importance of bringing norms to bear on our work while also maintaining an emphasis on action, not just on reasoning. GVV can help explain why some normative approaches may appear to be (and may in fact become) inimical to the exercise of effective voice while also showing that this need not be the case. In this regard, the approach to voice embodied in GVV intersects with a major current of ethical thought beginning in the 20th century that raised doubts about the excessively

Organisational integrity and voice  439 reductive and speculative character of philosophical ethics – what we might call, following Pincoffs (1971), “quandary ethics.” As Pincoffs puts it, “quandary ethics” typically presents a “quandary which arises because I fall into a certain situation. The situation is such that it can be described in perfectly general terms, without any reference to me as an individual, including my personal conceptions of what are and are not worthy deeds and attitudes and feelings: worthy of me” (p. 561). Stout (2009) writes that for quandary ethics, discourse about ethics becomes a matter of looking at examples that cause “moral perplexity” and simply seeking a “moral principle” to resolve the perplexity, a view that ultimately views the moral life as an effort to live according to certain impersonal principles. To reject quandary ethics, on the other hand is to open space for bringing one’s own purpose, personal values, and context – often as understood through one’s own life narrative (what GVV calls a “self-story”) – to bear on ethical considerations. Like the first stream of scholarship mentioned above, the approach embodied in GVV sees intrinsic motivation as a key leverage point in increasing voice behaviour. It recognises most people are motivated to behave ethically; hence GVV’s first starting assumption: “I want to voice and act on my values” (Gentile, 2010, p. 3). Although the strength and nature of this motivation varies, among “idealists,” “pragmatists,” and “opportunists,” GVV recognises the potential for people at various points in the taxonomy to find the motivation to speak up and act on their values (Gentile, 2010). The insights of GVV relate to the second stream of voice scholarship as well. GVV’s message that ethical competence increases the likelihood of speaking and acting on one’s values aligns with the findings of this stream. At the same time, GVV recognises that one’s values can and may often conflict with the pro-organisational or business case for ethical action. As Morrison (2023) points out, much voice scholarship “implicitly equates [the term prosocial] with pro-organisational. However, prosocial behavior also includes behavior aimed at promoting the welfare of workers, customers, or other constituents, even when those interests are at odds with the interests of management” (p. 98). GVV emphasises the value of speaking up even though good practical outcomes are not guaranteed either to the individual or the organisation – not as a claim that voice is good but because individuals do want to speak up about their values even in the absence of guarantees. It points out that outcomes are never guaranteed in any organisational decision and that by building the skill and competence to voice and enact values effectively, individuals will be more likely to do what they would already like to do. GVV retains Hirschman’s sense that voice is essentially an art. It places its emphasis on one’s intimate knowledge of oneself and the organisational context in order to play to one’s own strengths while thinking creatively about solutions. Like the third stream of voice scholarship we identified, GVV emphasises that leaders play a key role in normalising values conflicts, but GVV also stresses the usefulness of lateral communication, which helps individuals to gain insights and build more effective scripts as well as to build allies. Although the stakes can be high in values conflicts, GVV emphasises the value of anticipating them and, through practice, becoming more comfortable with them, recognising that the stakes are often high in any organisational choice or action and that success is never guaranteed. GVV emphasised that through more effective communication and more developed and well-practiced influence strategies, individuals will become effective and will experience the stakes differently. Although GVV can function as a form of leadership development, it also recognises the continuous, complex, and contextual nature of all communication. As such, it assumes that efforts to speak up about one’s values will often be multidirectional.

440  Research handbook on organisational integrity Although voice may have an “upward” component, it often includes lateral communication to build allies and support within the organisation, and GVV offers insights for all parties included – managers, employees, and allies.

WHOSE VOICE? WHICH ORGANISATIONAL INTEGRITY? In contrast to the proliferation of scholarship on voice in recent years, “the concept of organizational integrity has been largely ignored in organizational and management literature” (Fiorito & Ehrenhard, 2019). In what follows, we will review three of the most promising existing approaches offered in scholarship on organisational integrity for uniting and applying voice scholarship. Neo-Kantian Approaches to Organisational Integrity Bowie (2010) relies on a framework rooted in Kantian constructivism and inspired mainly by Rawls’s (1999) theory of “justice as fairness.” Bowie ultimately uses this framework to argue that organisational integrity is a kind of ethical climate, one produced by attention to a wide range of stakeholders. What is attractive about Bowie’s approach is that it brings normative concerns to bear while employing a language that is familiar to and even widely accepted in current practices of management and corporate governance. The U.S. Business Roundtable, a group of many of the largest U.S. corporations, even adopted in 2019 a stakeholder-focused view in its “Statement on the Purpose of a Corporation.” Nevertheless, large questions remain about the status of voice in Bowie’s understanding of organisational integrity. While Bowie does not address the topic of voice directly, we can surmise that voice would serve one of two main purposes in his view. One would be as a mechanism for hearing stakeholders’ concerns and preferences. Alternatively, Bowie might conclude that voice – perhaps an aspect of freedom of speech or expression – is part of the set of basic freedoms due to an individual. Without this point clarified, Bowie’s view, at least from the perspective of encouraging voice, remains largely too abstract to address particular cases or crises – what Sen (2011) has called (referring primarily to Rawls) a kind of “transcendental institutionalism” (p. 5) Discourse ethics, which shares many of the fundamental commitments Bowie identified, could present a promising avenue for situating voice within a stakeholder-focused view of organisational integrity. Discourse ethics shares a grounding, like Bowie’s Rawlsian approach, in neo-Kantian constructivism, but it pays special attention to the ideal structures and practices of argumentation as a source for identifying and understanding moral norms. Although it was developed as a theory of politics rather than a theory of organisational ethics, as Stansbury (2009) has shown, discourse ethics can be connected to the practice of ethical voice in organisations. Organisations-as-Actors Approaches to Organisational Integrity Unlike Bowie’s approach, Kaptein’s (2013) culture-focused view offers an explicit role to constructive forms of dissent as part of its seven-factor approach. Voice as defined in this paper most clearly aligns with Kaptein’s sixth factor, “openness.” (The other factors are clarity, role-modelling, achievability, commitment, transparency, and enforcement.) Kaptein

Organisational integrity and voice  441 defines openness as “the freedom people have to discuss opinions, feelings, dilemmas, and transgressions at work” (p. 105). He explains the need for openness in terms of the need for those within organisations to share dilemmas, unsettle conformity, express grievances, and intervene rather than become bystanders. The main question for situating voice in Kaptein’s framework is its relationship to openness as well as to other aspects of the framework, given that it also relates to other organisational factors, and also perhaps even more closely to the general activity Kaptein calls “challenge.” Challenge, Kaptein writes, is “a powerful medicine against bad behavior” that also serves as “a powerful vitamin for a healthy organization and a healthy individual career.” It is: a matter of confronting important issues in an open, constructive, stimulating manner, in order to open our eyes and ears and those of others. Challenge is about issues which matter to people, at the heart of which are values, norms, and interests. These are issues of right and wrong, responsibility and irresponsibility, moral and immoral. Challenge occurs openly. People should not mince their words but should speak from the heart. This openness is constructive, because it is directed towards people gaining an improved understanding of one another, learning together and guarding against mistakes and transgressions. Challenge is not a matter of talking ourselves down into the dumps, wearing away at one another, putting one another down, or gossiping. (p. 129)

With this similarity between voice and “challenge” in mind, a remaining question concerns what normative status we would afford to voice in Kaptein’s framework: Would it be a factor that encourages ethical behaviour at the individual level, or would it be a virtuous quality of the organisation itself, as Kaptein (2008) suggested in his earlier “corporate ethical virtues” model of organisational culture? Fiorito and Ehrenhard (2019) offer a promising “social actor” framework for organisational integrity that integrates several levels at once. Inspired in part by Paine (1994), they “conceptualize organizational integrity as the coherence between formally espoused moral values by top management, embedded values reflected in the formal organizational structures and systems and shared by its members in organizational routines, beliefs and symbols, and the values enacted in organizational actions” (p. 16970). Fiorito and Ehrenhard’s model would provide resources for thinking about voice as a way to embed values – both formally and informally – within an organisation, which also makes those values more likely to be enacted. It could also provide resources for thinking about the ways that encouraging voice helps employees enact values or convert them into behaviour. What Fiorito and Ehrenhard do not address is the relationship between individual integrity and organisational integrity nor do they provide a way for thinking about which values an organisation ought to have beyond “socially accepted” ones. Having observed two types of approaches for integrating organisational integrity and voice, let us turn to one final, particularly promising approach whose merits have not been widely recognised. Virtue-Centred Approaches to Organisational Integrity Our first line of connection to this final approach will be by way of narrative. As we have seen, a key intuition in moving beyond quandary ethics shared by both GVV and certain normative approaches is a focus on narrative. One of the core exercises of GVV is known as “A Tale of Two Stories.” The exercise asks students or workshop participants to recall a time when they

442  Research handbook on organisational integrity acted on their values as well as a time they failed to do so. The purpose of the exercise is first of all to help participants focus on their own agency while moving away from conceptualising ethics as a question of good or bad people or as a set of rules or obligations. Instead, it helps participants come to understand their own motivations and capabilities as well as their own limits. It is also the first step in more explicitly formulating one’s “self-story,” a narrative that “integrates acting on our values with our (already held) sense of who we truly are” (Gentile, 2010, p. 110). Similarly, the tradition of normative ethics that rejected “quandary ethics” has instead emphasised the value of what is often called “narrative identity” in the moral life. Burrell and Hauerwas (1981), drew attention to quandary ethics’ tendency to ignore or reject “the significance of narrative for ethical reflection” in an effort to secure “a rational foundation for morality” (p. 75). MacIntyre (1981/2007), went on to argue that a human being is “essentially a storytelling animal … a teller of stories that aspire to truth” (p. 216). MacIntyre’s point is not just that narrative offers “the basic and essential genre for the characterization of human action” but also that the intelligibility of our life narrative helps us see what it would mean to possess “the virtue of integrity or constancy” (p. 203). Thus, with the virtue tradition we find a helpful definition of what integrity consists in and how it can be characterised in terms of narrative – especially the effort to “compose a narratable life” (p. 217). Due in part to MacIntyre’s trenchant critique of “managerialism” in After Virtue (1981), it was not immediately clear to many scholars that the conception of virtue ethics developed in his work could be meaningfully applied to organisational contexts. The full implications of his claims for organisations have only recently emerged in his work and in the work of others (MacIntyre, 2016; Moore, 2017). However, now it has become clear that contemporary virtue ethics offers resources for thinking about how our individual attempt to live a life of integrity (understood as a unified story) connects with the organisations that we shape and that also shape us and our efforts. MacIntyre (2016) shows how a workplace can be organised in such a way as to help us become more excellent. He mentions the British Broadcasting Corporation (once a private company and today a public service corporation), the manufacturers who employ the methods of W. Edwards Deming, and the Cummins Engine Company, a manufacturer of diesel engines and other power and propulsion technologies, as examples of such organisations. What MacIntyre finds attractive in these organisations is the way they prioritise a worker’s genuine connection to the core practice – and thus the common good – of the organisation. He (2016) writes, “The ends informing the workers’ activity are now those of achieving through shared deliberation and decision the making of an excellent car and of becoming excellent in making such cars. It matters that they understand what they are doing and that their standards are ones that they have made their own, not standards imposed by external managerial control. They share direction toward a common good” (pp. 170–171). Those who are engaged in practices like these will necessarily find themselves engaging in various kinds of voice. They will be “deliberating with others as to how in this particular set of circumstances here and now to act so as to achieve the common good of this particular enterprise” (MacIntyre, 2016, p. 174). And this kind of ongoing deliberation is what constitutes the health of the organisation as well as the health of the larger tradition to which it belongs. Ultimately, organisational integrity, in a MacIntyrean view, would require voice for the same reason that a tradition requires it. MacIntyre (1981/2007) writes:

Organisational integrity and voice  443 When a tradition is in good order it is always partially constituted by an argument about the goods the pursuit of which gives to that tradition its particular point and purpose. So when an institution – a university, say, or a farm, or a hospital – is the bearer of a tradition of practice or practices, its common life will be partly, but in a centrally important way, constituted by a continuous argument as to what a university is and ought to be or what good farming is or what good medicine is. Traditions, when vital, embody continuities of conflict. (p. 222)

In his recent work MacIntyre (2016) still maintains that “Managerial control of the workplace may result in methods of work which are inimical to excellence,” but he makes it clear that for precisely this reason we need an ongoing set of disagreements to keep an organisation focused on its core practice (p. 170). Moore (2017), applies this point to the practice of management, claiming that a virtuous manager will connect employees to the common good of the organisation by encouraging “debate both internally … and in the community, about what the internal goods of the practice are, and that they contribute to the common good.” Thus, the virtuous manager, Moore says, will not only engage in that debate themselves but also put “in place appropriate structures to facilitate it” (p. 149). Like any other perspective, an approach to voice centred in contemporary virtue ethics will still require further specification. It will encounter difficult questions about which tactics will be most effective in a particular instance (the kinds of questions addressed by GVV) and questions about whether specific instances of dissent fit with its overall conception of organisational integrity. Nevertheless, we can say that an approach rooted in contemporary virtue ethics holds under-recognised promise for connecting voice to organisational integrity. In this view, it would be part of the normal and expected operation of an organisation pursuing a common good to have (1) employees who are engaged connecting their own individual good to the common good of the organisation (stream 1), (2) employees at all levels who are seeking to ensure that the good of the organisation is a genuine common good (stream 2), and (3) both structures as well as managers and leaders who support the ongoing “continuity of conflict” that always accompanies a genuine practice (stream 3).

FUTURE DIRECTIONS Morrison (2023) has suggested that voice scholarship would benefit from more robust interdisciplinary connections (primarily with employment relations and human resource management scholars). Building upon the interdisciplinary approach of GVV, we have explored the value of one additional interdisciplinary connection here. One implication for scholars is that this work should continue. Here we have focused on establishing that how an organisation or leader responds to voice is necessarily shaped by what the organisation or leader thinks voice is for. Our main contentions here – that responses to voice entail a prior normative conception of what voice is for and that virtue ethics provides a particularly powerful normative framework for integrating voice scholarship – stand in need of further specification and application. In particular, it would be valuable to have a deeper understanding of the ways decisions are made in organisations about particular types of voice and especially what implicit understandings of organisational integrity shape them. For this, it would be valuable to foster more interdisciplinary connection between voice scholarship and the fields of communications and ethnography, in addition to the fields Morrison (2023) has suggested.

444  Research handbook on organisational integrity At the same time, virtue ethics emphasises the limits of direct organisational control over behaviours and outcomes. As MacIntyre (1981/2007) has said, “Organizational success and organizational predictability exclude one another,” so for an organisation to thrive, it will “need to allow for individual initiative, a flexible response to changes in knowledge, [and] the multiplication of centres of problem-solving and decision-making” (p. 106). Given the systematic uncertainties present within the actual practice of voice, we can see the value of connecting voice scholarship with fields that could situate voice in both a broader and more concrete context. Communication scholars, for example, could help supply a richer account of the tactics actually deployed in organisational contexts just as ethnographers could supply a more thorough understanding of how all of the organisational factors interact in concrete instances where employees give voice to their values or fail to do so. The virtue approach emphasised the importance of understanding one’s unique situation, character, and processes of practical reasoning. As such, it would place a strong emphasis on the value of actual rhetorical practice, ways to understand the shifting elements, concrete ideas and the “art” as Hirschman put it, which will involve situational awareness combined with deft, empathic understanding of the needs of various stakeholders. At the same time that voice will always be the work of agents and their communication, it will involve the set of meanings shaped by a particular organisation, and this will involve ethnographic research for a deep understanding of how organisations actually function and how they derive meanings. It may seem that we have taken a very roundabout course from Paine’s 1994 suggestion about the connection between voice and organisational integrity. However, our purpose has not been to move away from Paine’s suggestion but to move towards it, to supply the missing normative basis on which suggestions like Paine’s not only make sense but can withstand certain questions in voice scholarship as well as the practical challenges coming from organisations themselves.

NOTES 1. Voice is here defined, following Morrison (2023), as the “informal and discretionary communication of ideas, suggestions, concerns, problems, or opinions about work-related issues, with the intent to bring about improvement or change.” 2. Hirschman (1970, p. 76) writes that “exit is ordinarily unthinkable, though not always wholly impossible, from such primordial human groupings as family, tribe, church, and state.” For an example of the similarities and differences between organisational voice and dissent in political life, we can cite a few instances from the activism of Martin Luther King, Jr. As King put it in his speech “A Time to Break the Silence,” “A time comes when silence is betrayal,” and in this speech, King spoke as an American attempting, as he put it, to “save the soul of America.” Although King held that “injustice anywhere is a threat to justice everywhere,” he appealed specifically to his status as an American to support his right to demonstrate and exercise his right to protest. To his opponents’ claims that he was an “outsider” with no right to speak against segregation in Birmingham, King replied, “Anyone who lives inside the United States can never be considered an outsider.” Moreover, citizenship could also result in not just the right but also the obligation to speak against an unjust or incorrect consensus. Otherwise, there “comes a time when silence is the same as assent.” 3. Given Hirschman’s focus on responses to decline in organisations, the bulk of his analysis attends to the exit-voice dynamic. However, Hirschman is aware of the fact that a certain portion of “loyalists” may “simply refuse to exit and suffer in silence, confident that things will soon get better” (p. 38). Bird and Waters (1989) drew attention to the phenomenon they called “moral muteness.” They identified moral muteness as a tendency among managers to avoid moral talk due to their concerns

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“that moral talk will threaten organizational harmony, organizational efficiency, and their own reputation for power and effectiveness” (p. 76). GVV was developed by Mary Gentile. The Aspen Institute was the Founding Partner, along with Yale School of Management, and the Incubator for GVV. From 2009 to 2015, GVV was hosted and supported by Babson College. GVV is now based at the University of Virginia Darden School of Business. GVV exercises, cases, modules, scripts, and teaching plans can be found at www​.Giving​ VoiceToVal​uesTheBook​.com and www​.GivingVoiceToValues​.org.

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Organisational integrity and voice  447 Morrison, E. W. (2023). Employee voice and silence: Taking stock a decade later. Annual Review of Organizational Psychology and Organizational Behavior, 10(1), 79–107. Nemeth, C. J., & Staw, B. M. (1989). The tradeoffs of social control and innovation in groups and organizations. Advances in Experimental Social Psychology, 22, 175–210. Ng, T. W., Wang, M., Hsu, D. Y., & Su, C. (2022). Voice quality and ostracism. Journal of Management, 48(2), 281–318. Ong, M., Mayer, D. M., Tost, L. P., & Wellman, N. (2018). When corporate social responsibility motivates employee citizenship behavior: The sensitizing role of task significance. Organizational Behavior and Human Decision Processes, 144, 44–59. https://​doi​.org/​10​.1016/​j​.obhdp​.2017​.09​.006. Paine, L. S. (1994). Managing for organizational integrity. Harvard Business Review, 72(2), 106–117. https://​hbr​.org/​1994/​03/​managing​-for​-organizational​-integrity. Pincoffs, E. (1971). Quandary ethics. Mind, 80(320), 552–571. Powell, M. (2016, September 13). Colin Kaepernick finds his voice. The New York Times. www​.nytimes​ .com/​2016/​09/​14/​sports/​football/​colin​-kaepernick​-monday​-night​-national​-anthem​.html. Rawls, J. (1999). A Theory of Justice. Second edition. Cambridge, MA: Belknap Press. Sen, A. (2011). The Idea of Justice. Cambridge, MA: Belknap Press. Stansbury, J. (2009). Reasoned moral agreement: Applying discourse ethics within organizations. Business Ethics Quarterly, 19(1), 33–56. Steinmetz, K. (2018, November 2). Google employees hold worldwide walkout over sexual harassment. Time. https://​time​.com/​5442445/​google​-walkouts​-sexual​-harassment. Stout, J. (2009). Democracy and Tradition. Princeton, NJ: Princeton University Press. Streeter, K. (2020, June 5). Kneeling, fiercely debated in the N.F.L., resonates in protests. The New York Times. www​.nytimes​.com/​2020/​06/​05/​sports/​football/​george​-floyd​-kaepernick​-kneeling​-nfl​-protests​ .html. Weiss, M., Kolbe, M., Grote, G., Spahn, D. R., & Grande, B. (2018). We can do it! Inclusive leader language promotes voice behavior in multi-professional teams. The Leadership Quarterly, 29(3), 389–402.

28. Organisational integrity and inclusion Geoffrey A. Silvera, Jonathan M. Fisk, and Courtney N. Haun

Workforces, customers, and citizens are increasingly diverse. Traditional public servants, including law enforcement, fire protection, and education, for example, have daily interactions with a myriad of stakeholders with various needs, attitudes, and experiences. Non-profit organisations, such as recreational venues, civic centres, and museums must also engage with an ever-changing citizenry and in some cases donor base. The private sector is also confronting a diverse and constantly evolving set of supply chains and customers as well as encountering challenges with recruiting and retaining a diverse workforce. Across sectors, however, the ability to effectively engage with various groups is not a given. Rather, meaningful connection requires a continuous process of prioritising, reflecting, learning, and improving programmes, policies, and goals so that values associated with inclusion are consistent with actions and behaviours. By prioritising such efforts, the promise of inclusive integrity may be realised alongside more traditional operational goals. In other words, organisations engaging in meaningful inclusion need to go beyond legal minimums, hollow words, and mere counting and towards institutional change. In this chapter, we identify inclusion as a distinct organisational value with a corresponding set of actions. The goals here are to define inclusive integrity and to offer a roadmap to engendering inclusion with integrity throughout an organisation. To accomplish this task, the chapter is divided in several sections. First, we provide a brief overview of the applicable literature, especially scholarship that operationalises inclusion within organisations. Second, using this review, we then describe a novel organisational typology that categorises different behaviours that embody inclusion as it relates to organisational integrity. We then conclude with a path forward by identifying the managerial competencies necessary to build organisations with inclusive integrity.

OVERVIEW OF THE LITERATURE In this section, we provide a cursory overview of the literatures defining inclusion and integrity within organisations. This section is organised into three sections representing practical, scholarly, and combined perspectives that inform our understanding of inclusive integrity. Focusing on Inclusion and Integrity from a Practitioner’s Perspective We begin by providing an overview of inclusion and integrity from the perspective of practitioners. This, we believe, is critical as it is practitioners who define, set, operationalise, and enforce the behavioural expectations relative to both inclusion and integrity. Importantly, such efforts range from satisfying legal thresholds to administering programmes that are well 448

Organisational integrity and inclusion  449 beyond mandated standards. Moreover, by incorporating the “voice” of practitioners, our roadmap to inclusive integrity offers actionable value as it is shaped by how organisations establish expectations, how stakeholders interact with one another, how they ensure accountability, and how they make operational decisions. Definitions from leading professional organisations typically begin with defining diversity within their context, customer-base, or operations, which is then linked to inclusion, equity, and in some cases, integrity. The United States Department of Housing and Urban Development (HUD) for example, describes diversity as “[encompassing] the range of similarities and differences that each individual brings to the workplace, including but not limited to national origin, language, race, color, disability, ethnicity, gender, age, religion, sexual orientation, gender identity, socioeconomic status, veteran status, and family structures” in the context of housing and urban development (HUD, 2022, n.p.). Inclusion goes beyond diversity. As a value and set of practices, inclusive organisations build and support their diverse stakeholders via a culture that “recognizes, appreciates, and effectively utilizes the talents, skills, and perspectives of every employee” (HUD, 2022, n.p.). In effect, inclusion is reflected (or not) in “culture, practices, policies, and relationships that are in place to support a diverse workforce” (HUD, 2022, n.p.). According to HUD, the outcomes of such efforts are two-fold: ● First, employees in inclusive organisations report “being valued, respected, and supported. It’s about focusing on the needs of every individual and ensuring the right conditions are in place for each person to achieve his or her full potential” (HUD, 2022, n.p.). ● Second, inclusive organisations strive towards equitable systems. In other words, equity is the systems-level goal of inclusion, especially so that the organisation engages in “consistent and systematic fair, just, and impartial treatment of all individuals, including individuals who belong to underserved communities that have been denied such treatment” (Biden, 2021, n.p.). Practitioners have also sought to unpack integrity. The U.S. Department of Veterans Affairs (VA),1 for example, defines integrity as “more than technical compliance with the laws and regulations, integrity means having the sort of character where behavior and actions are trusted to be ethical, reflective of agency values, without the intent or effect of being false or misleading and beyond minimal compliance with laws, regulations and policies” (U.S. Department of Veterans Affairs, 2023, n.p.). More specifically, integrity within the VA means understanding, modelling and honouring laws and institutional policies regarding the following – which have direct and indirect connections supporting a diverse set of stakeholders: ● ● ● ● ● ● ● ● ●

Diversity and equal employment opportunity Harassment (sexual and non-sexual) Hostile work environment Workplace violence Occupational health and safety Standards of ethical conduct for employees of the executive branch Criminal conflict of interest prohibitions Hatch Act (political activity) Interacting with fellow employees and veterans/clients (U.S. Department of Veterans Affairs, 2023, p. 4).

450  Research handbook on organisational integrity The International City and County Management Association (ICMA), a leading professional association for local government practitioners, also links integrity to its ethical code of conduct and to specific behaviours of members. Here, we note that ICMA’s Code of Ethics requires its adherents to go beyond compliance and engage in behaviours that engender trust, fairness, and justice among internal and external audiences: ● Tenet 3 mandates that members “demonstrate by word and action the highest standards of ethical conduct and integrity in all public, professional, and personal relationships in order that the member may merit the trust and respect of the elected and appointed officials, employees, and the public.” ● Tenet 4 mandates that members should serve the best interests of all people. To this end, the code describes that members are to “ensure that all the people within their jurisdiction have the ability to actively engage with their local government, members should strive to eliminate barriers to public involvement in decisions, programs, and services.” ● Tenet 11 mandates that members should manage personnel matters with fairness and impartiality (ICMA, 2017). In short, each of these definitions establishes behavioural expectations that are well beyond legal standards. In fact, they establish a behavioural baseline as to how individuals treat one another, how they administer programmes, and how they make decisions. Thus, for practitioners inclusive integrity centres on behaviours that build trust, display impartiality, and are fair across a wide swathe of stakeholders. Focusing on Inclusion and Integrity from a Scholarly Perspective We now pivot to an overview of integrity and inclusion emanating from the scholarly world. These perspectives are also critical to our notion of inclusive integrity. Scholars, for example have unpacked such terms and concepts across organisations and sectors as well as offered explanatory models to identify factors that are critical to success relative to organisational inclusivity and integrity. Here too, such efforts range from meeting legal requirements to efforts that exceed what applicable law requires of organisations and provide a blueprint for our understanding of inclusive integrity. Pitts (2006, 2009) organises scholarship concerned with diversity, equity, and inclusion into three broad areas. One set of studies focuses on measuring how and to what extent individuals identifying as a member of a historically disadvantaged group are included within organisations. A second area of research examines organisational inclusion and evaluates factors associated with programme implementation. Finally, another set of studies evaluates diversity, equity, and inclusion programming and its impact on organisational outputs such as employee satisfaction, conflict, and retention (see also Pitts & Wise, 2010). We focus here on implementing diversity and inclusion programmes. Prior research has observed a multitude of reasons as to why organisations pursue efforts aimed at inculcating inclusion (Rice, 2007) defined by Shore et al. (2011, p. 1265) as “whether an employee considers himself or herself to be an ‘esteemed’ member of an organisation by experiencing treatment that satisfies his or her needs for belonging and uniqueness.” Organisations seek such initiatives because their leadership believes such efforts will contribute to a greater understanding of customers/clients’ needs and preferences, and thus, the organisation’s ability to meet stakeholders’ needs. In other instances, inclusionary programmes can

Organisational integrity and inclusion  451 be described as an attempt to improve the organisation’s knowledge of their employees’ (or potential employees’) lived experiences as well as an effort to inculcate feelings of respect, being valued, and belonging among employees. Finally, other organisations link inclusion with their larger organisational mission or pursue inclusion based on normative beliefs that inclusion, from an ethical perspective, is the right thing to do. Whatever the underlying motivation, once equipped with new knowledge about their efforts, inclusive organisations work to adjust and modify their values, routines, procedures, and policies so that stakeholders feel valued. In a related vein, scholars have also offered conceptual models that have defined inclusion as well as distinguished effective implementation efforts from efforts that are less effective. In prior work, Fisk, Silvera and Haun (2019) organised diversity management efforts within a 2x2 typology. They placed the degree of institutionalisation on the X-axis, whereas the Y-axis mapped commitment to proactive programmes aimed at improving diversity management. They concluded that effective programmes are highly institutionalised, have organisational support, avoid siloes, and are proactive. Pitts et al. (2010) utilising contingency theory noted the importance of understanding an organisation’s environment and its uncertainty. Here, they highlight the importance of the degree to which the organisation has ample resources, possesses requisite expertise and capacity, and is able to build relationships in its external environment. For inclusive integrity, this likely means that an organisation provides adequate resources such as elite level support, funding, space, human, and time to pursue goals, as well as possesses the capacity to collect and interpret data (Aldrich, 1979; Dess & Beard, 1984). Scholarly approaches to unpacking integrity are also varied. Representative of these is work by Six and Huberts (2008), which noted that organisational theorists have adopted definitions of integrity around the concepts of organisational wholeness, adherence to applicable laws and codes, and the exhibition of moral and ethical character. Molina (2016), for example, defined integrity as the extent to which the organisation (and by extension individuals) engage in actions that align with the organisation’s mission and values. Research has elucidated factors that are likely to harm efforts associated with ensuring organisational integrity. These factors, we believe, are critical as they are likely to push organisations away from inclusive integrity (which we describe later in this chapter). Molina (2018) describes two broad sets of factors (integrity risks and violations), that may damage efforts to build and sustain organisational integrity. According to Molina (2018, p. 2) violations are actions and decisions “that have the effect of undermining its integrity,” which may or may not constitute criminal behaviour, but they are best described as actions that run counter or that undermine the organisation’s core mission, vision, and values. Integrity risk factors are situations, cultures, rules, norms, and behaviours within an organisation that increase the likelihood of integrity violations (Molina, 2016). We embed these factors within our inclusive integrity roadmap, i.e., how they pose challenges to the managerial and leadership competencies necessary for inclusive integrity. Research Gaps Previous work has laid important foundations for the study of inclusive organisations (Devine & Ash, 2022). It has offered conceptual definitions, delineated among various motivations, and elucidated factors associated with programmatic success. Yet, current academic literature has little to offer in terms of action-based findings, i.e., answering the question of how

452  Research handbook on organisational integrity do organisations effectively move toward and institutionalise inclusion (Pitts, 2006, 2009). Similarly, little is known as to how inclusive climates and organisations develop and evolve over time, especially in terms of how individuals from historically underrepresented groups become full members of the organisation (Pelled, Ledford, & Mohrman, 1999, p. 1014). In fact, Devine and Ash (2022) put forth a call to action to build better “diversity science” so that organisations are better positioned to assess intended outcomes from organisational diversity and inclusion efforts. Noting these gaps, this chapter focuses on offering several actionable pathways that are designed to couple the values and actions of inclusion and integrity together, i.e., inclusive integrity, an idea that we turn to next. Focusing on Inclusion and Integrity from a Combined Perspective By combining the insights of applied and scholarly research, an understanding of inclusive integrity is possible. First, we suggest that inclusion and integrity are at the centre of organisational life and that inclusive integrity is best defined as an action or decision that is taken to inculcate feelings of belonging and respect among individuals who possess a variety of identities. Second, inclusive integrity means aligning organisational words to actions relative to treating individuals in such a manner that satisfies needs for equity and uniqueness. Third, behaving with inclusive integrity requires actions and words to exceed minimal legal compliance and be accomplished in such a way that is authentic, transparent, and trust-building. Therefore, if an organisation states that inclusion is a core value, then that organisation must clearly define the concept as both a value and set of behaviours, and efforts must exceed legal minimums, half-hearted attempts, and align its spoken and written words with individual-level and organisational actions. Fourth, inclusive integrity means committing organisational resources to address several realities that come along with an organisation’s commitment to inclusion. A meaningful commitment to inclusive integrity necessitates a commitment of organisational resources because, it is likely to contribute to conflict and stress as it injects uncertainty into the organisation through introducing ideas and actions that challenge the “way things have always been done,” reshuffling winners and losers, and creating feelings of vulnerability in continuous cycles. Inclusion is also continual and reflective, as there is an ongoing process of learning about the needs and ideal conditions for individual stakeholders. Thus, inclusive integrity is more than “lip-service” (or else organisations risk tokenism and integrity violations). As an organisational process, it involves looking inward and building an awareness of the impact of potential and real biases, collecting data and performance measures, an analysis of real and potential cross-cultural differences and avoiding judgement. Then, it requires support for developing the individual/group skills, organisational policies, and strategic plans to engage across diverse stakeholders. In short, the pursuit of inclusive integrity goes beyond compliance and places an emphasis on learning and aligning values with behaviours. The ethical ethos, if you will, is a recognition that inclusion must be more than a slogan and placed alongside core values such as effectiveness, economy, and efficiency.

Organisational integrity and inclusion  453

CATEGORISING ORGANISATIONAL INCLUSIVE INTEGRITY In this section, we explicate the concept of inclusive integrity and how it may (or may not) manifest itself within organisations based on the presence or absence of inclusion and integrity. This section is organised into two major components. First, we present a novel 2x2 typology based on inclusion and integrity. Second, we explain the quadrants in terms of organisational behaviours as well as offer a short vignette that further illustrates the concepts in action. We begin by building on the work by Fisk and colleagues (2019) by developing a novel typology that features integrity as the Y-axis and inclusion as the X-axis. The Integrity and Inclusion Typology, displayed in Table 28.1, is provided as an aid to help assess where specific organisations and organisational practices fall on their journey towards inclusive integrity. Along with a description of organisational characteristics within each quadrant, a vignette is offered to outline how specific actions might have differential effects based on the organisation’s level of inclusive integrity (Boxes 28.1 to 28.4). Users may utilise the typology to map individual practices, organisational subunits, and organisations overall. They may use the typology as both a reflective exercise, i.e., where we have been, and a goal setting one, i.e., where we want to go. We note that actions taken by one individual, operating within a department might have different impacts on varying groups and that such impacts change over time. Table 28.1

Organisational Inclusion

Integrity

Organisational

 

Inclusive and integrity typology

 

Without

With

Without

Compliance-Focused Organisation

Siloed Organisation (e.g., no full integration across

(e.g., efforts aimed at legal compliance)

the organisation)

Ad Hoc Organisation

Enterprising Organisation

(e.g., lack of permanent changes; efforts are

(e.g., consistent, proactive efforts internally and

inconsistent but proactive)

externally)

With

Source: Adapted from Fisk et al. (2019).

We draw attention to the description of each quadrant in Table 28.1 (Compliance-Focused, Siloed, Ad Hoc, and Enterprising). To explicate these archetypes in action, we adopt a common vignette across them designed to exhibit how organisations in each quadrant may have different outcomes. The vignette used is based on a common first step taken once organisational actors decide to address inclusion in their organisations. Often, the initial step taken to address organisational inclusion is to diversify the workforce by adding individuals from ethnic minority backgrounds. Within all the vignettes (Boxes 28.1 to 28.4), we depict a hiring manager within an organisation that decides to diversify his department staff by hiring recruits from a local HBCU (historically black college or university). In these vignettes, the assumption is that the hiring manager has operated with the best intentions to make their organisation more inclusive and is following best practices to establish a pipeline of diverse applicants by establishing relationships with the HBCU Career Center and by regularly attending job fairs at the university to meet with potential applicants and cultivate enduring relationships. The use of these vignettes shows how even well-intentioned individuals who follow best practices, policies, and procedures related to inclusion may find their efforts result in varying levels of success based on their level of inclusive integrity in that process.

454  Research handbook on organisational integrity Compliance-Focused Organisation In a Compliance-Focused organisation, organisational integrity is based solely and exclusively on ensuring that all the organisation’s policies and procedures meet legal requirements. With respect to inclusion, the legal parameters are based on anti-discrimination laws, specifically organisations can ascribe to equal opportunity employment organisation practices. Beyond meeting the legal requirements, organisations in this quadrant do not actively engage in institutionalising inclusion practices or policies. This does not mean to suggest that these organisations discourage such activities necessarily, but any actions done by individuals in the organisation related to inclusion would be viewed by organisational leaders from the perspective of legal compliance. The mission, vision, and values of organisations that fall into this quadrant are likely to not have explicit language related to advancing diversity, equity, or inclusion. However, many of the organisations in this quadrant may discuss concepts in their strategic documents that could be related to values with words such as “caring,” “loving,” “tradition,” “family,” and “respect.” The language of these strategic orienting documents is intentionally vague and disassociated from any specific actions to ensure that it does not compromise the legal liability of the organisation. Thus, the relationship between organisational integrity and inclusion in this quadrant is determined by legal restrictions and an individual’s ethical morality. Individuals, in this organisational archetype, who are interested in progressing the organisation’s commitment to inclusion will need to be self-motivated and self-reliant because organisations in this quadrant are indifferent to advancing inclusion initiatives, to mitigating integrity relative to inclusion risks, and likely will commit violations relative to inclusive integrity. For example, organisations in this quadrant will neither be supportive of inclusion initiatives, nor will they be discouraging. Any actions taken by an individual within these organisations to forward an inclusive culture will be done so based on their own efforts and resources, and their organisations will remain indifferent so long as the actions taken by the individual do not raise legal concerns.

BOX 28.1 COMPLIANCE VIGNETTE The hiring manager finds that their organisation is disinterested in actively diversifying the workforce of the company. When attending career centre job fairs at the HBCU, the manager is cautioned that they should also attend other local university job fairs so that their recruitment activities do not suggest a preference for graduates from one demographic group, as this would be a legal concern. When the manager hires one of the HBCU graduates to their staff, the recruit asks about employee resource groups for minority employees. The organisation does not have any employee resource groups available for employees but suggests in their employee handbook that they are “all one big family.” Ad Hoc Organisation For organisations in the Ad Hoc category, organisational integrity is based on episodic efforts of inclusion. Typically, activity within these organisations will be initiated by individuals

Organisational integrity and inclusion  455 who are empowered to act according to their ethical and moral compass. However, organisational resources are either put towards these initiatives sporadically or not at all. Ad Hoc organisations are most identifiable by their instability. Often, organisations will have diversity champions, individuals who are dedicated to building an inclusive culture, but they will not have significant resources available for organisations to develop skills, apply learnings, or lead training related to diversity, equity, or inclusion initiatives. As well, these organisations will lack organisational leadership dedicated to formulating inclusion strategy, mitigating inclusion risks, or overseeing strategic initiatives. With respect to inclusion, organisations in the Ad Hoc quadrant will be morally supportive of efforts to be more inclusive. But moral support may be, in many instances, the only form of support available for individuals in these organisations. Similar to Compliance-Focused, organisations in the Ad Hoc group also do not actively engage in institutionalising inclusion practices or policies throughout the organisation. There will not be institutionalised structures such as leadership roles like chief diversity officers (CDOs), nor will there be policies and procedures specifically dedicated to advancing efforts and making such efforts permanent. Organisational indifference is similar to that of organisations in the Compliance-Focused quadrant, however, there will not be the same level of resistance. The mission, vision, and values of organisations that fall here will also not have explicit strategic language related to supporting inclusion. Many of the organisations in this quadrant will also include the vague yet positive concepts in their strategic documents like those listed in the Compliance-Focused quadrant. However, some will have more specific DEI-directed language included in their mission, vision, and values. A defining feature of organisations in this quadrant is that they will not have organisational strategic actions or initiatives dedicated toward these values. As such, these organisations are, thus, marked as well-intentioned, but have unrealised advancements towards inclusive integrity. Thus, the relationship between organisational integrity and inclusion for organisations in this quadrant is often difficult to assess as they may be in a state of change but there are integrity risks given the lack of institutional support. These organisations may be at the beginning stages of an intentional organisational change process to establish a cultural identity around inclusion, or they may not be engaging in any organisation-wide process at all but have individuals within the organisation working towards establishing DEI initiatives with little to no organisational support. Individuals within Ad Hoc quadrant organisations that are interested in establishing DEI will also find the need to be self-motivated. However, these individuals may also find that their efforts are celebrated by the organisation who will identify them as champions. This acknowledgment of efforts to build a culture of inclusion within the organisation can often be disorienting for these individuals because there will not be a corresponding subsequent support for these efforts from the organisation. Diversity champions will often find organisations within the Ad Hoc quadrant frustrating as they will feel empowered personally to act based on their own ethics but will feel unsupported in any attempts to influence the organisation’s collective ethics or its integrity. The sporadic support or lack of support is a risk and may result in stakeholders viewing the organisation’s efforts towards inclusion as performative or inauthentic.

BOX 28.2 AD HOC VIGNETTE The hiring manager finds that their organisation is excited about the notion of actively diversifying the workforce of the company. When attending career centre job fairs at the

456  Research handbook on organisational integrity HBCU, the manager has great success in recruiting applicants by speaking about how encouraging the organisation is employee towards development. When the manager hires one of the HBCU graduates to their staff, the recruit asks about employee resource groups for minority employees, and the manager is sure to connect them to a manager in another department who started a group some years ago. The manager admits, however, that they are not sure what exactly happens in those meetings or even if they are still happening. When following up with the employee, the new hire lets the manager know that the group is no longer active, so the manager encourages the recruit to start a new one. The manager offers to give the group access to the meeting room and a budget to host a monthly luncheon. When attending the following year’s recruiting trip to the HBCU, the new employee is surprised to hear how often the hiring manager mentions this group to potential applicants, especially because meeting attendance has been low since the manager is no longer supplying a catering budget. Siloed Organisation For organisations in the Siloed category, integrity regarding inclusion is established throughout the organisation but lacks shared resources and governance structures to ensure that such activity aligns with other organisational goals. Typically, inclusion efforts within these organisations exist within a single department such as human resources, and the function of inclusion activities is narrowly focused on supporting the wellness of a single group of stakeholders. Often there will exist many of these groups within an organisation, but there will be little to no interaction amongst the groups even when they have similar overarching goals. While this is likely the most common example, this is not the only way organisations can have inclusion related activities siloed. For example, organisations that have community outreach or other important external stakeholder groups may also find their efforts and activities to be siloed and held apart from the rest of the organisation’s stated goals, policies, and processes. Using the example of an organisation that has siloed its efforts to become more inclusive within the context of human resources, the defining characteristics of this quadrant come clearly into focus. At some point in the history of an organisation, a group of employees from an underrepresented background formed an affinity group. For example, a Women in Banking group is formed and ultimately this group was able to establish themselves as a supported resource for new hires. The group was able to also secure annual funding through the human resources training and retention budgets. Some years later a Black Bankers group forms within the same employee group following the same model, and later Latino Bankers and LGBTQ in Banking groups form. Each of these groups is well resourced and well supported by management and organisation leadership, yet they do not collaborate with each other, though they often have similar programme offerings and activities. Siloed organisations empower individuals to operate according to their own ethical and moral compasses, and they do so by clarifying how to establish resources towards these efforts. Another key identifier of these organisations is that there will be key performance metrics that indicate the effectiveness of activities toward a specific organisational goal. Unlike organisations in the Compliance and Ad Hoc categories, organisations in the Siloed grouping will have institutional features related to inclusion. These may include leadership roles like CDOs or a senior vice president of diversity. In most instances, these leadership roles

Organisational integrity and inclusion  457 will be housed within a specific department and will not be a C-suite-level leadership position. Additionally, the mission, vision, and values of organisations that fall into the Siloed quadrant will likely have strategic language that is explicitly related to advancing a narrower version of diversity and/or inclusion. However, that language will be specific to the target recipient of the organisation’s efforts. For example, the banking organisation described above may have a strategic value to Reflect the Diversity of the Communities We Serve, which indicates that diversity is important to them and why it is important to them. With respect to organisational integrity, organisations in the Siloed category can be perplexing when it comes to inclusive integrity because there often arise inconsistencies between what these organisations say and what they do. Given the example of a bank’s strategic value to, “Reflect the Diversity of the Communities We Serve”, this indicates that diversity is important to the organisation and also makes clear the boundaries of that importance. Diversity within this organisation is germane to whom (and what groups) the organisation employs, i.e., recruits, hires, trains, retains, and promotes. This stated value does not have any suggestions toward how the bank might operate outside of human resources. A bank could, for example, hire a diverse workforce but still neither open new branches in minority communities nor have dedicated resources to funding minority-owned small businesses. In short, siloed efforts are incomplete because an organisation could value inclusion relative to a specific organisational domain (human resources, community engagement, development, supply chain, etc.) but fail in other domains and still be seen as having organisational integrity as it is acting according to its stated values. Individuals within Siloed organisations that are interested in establishing DEI activities will find that their self-motivation will be met with encouraging support and resources. Individuals in these organisations may also find that these organisations are zealous about encouraging inclusive behaviours within the targeted areas. In fact, such efforts may even be celebrated by the organisation. DEI activities outside of the expected domain, however, will not be supported, encouraged, or celebrated. That is until an individual takes on a significant undertaking to convince the organisation and its leaders that doing so is otherwise beneficial to the organisation or somehow in line with organisation strategy. Diversity champions in organisations in the Siloed quadrant will find that their efforts and activities will be supported by the organisation as well, so long as they are within the specified area of concentration. Diversity champions at organisations within this quadrant will not have the lack of clarity that was exhibited in the Ad Hoc quadrant. It will be clear what the objective of diversity champions are, and it will be clear when activities go beyond the scope of the specified objectives. While not reaching the level of “performative,” stakeholders viewing Siloed quadrant organisations’ efforts towards DEI may view these organisations as stunted or half-baked.

BOX 28.3 SILOED VIGNETTE The hiring manager finds that their organisation is excited about the notion of actively diversifying the workforce of the company. The manager regularly attends programmes put on by employee affinity groups, even the ones they are not a member of, because they love learning about other cultures and walks of life. The manager is excited to share how much their organisation embraces diversity when attending the HBCU job fairs. The manager has

458  Research handbook on organisational integrity great success in recruiting applicants by speaking about these affinity groups and how they make everyone in the organisation feel seen and important. When the manager hires one of the HBCU graduates to their staff, the recruit asks about employee resource groups for minority employees, and the manager is sure to connect them to the president of the Black Employee Affinity Group and sends them the link to the webpage with all the other affinity groups’ contact information. When following up with the employee, the new hire lets the manager know that the group has been a great resource for them. The members were welcoming and encouraging to the new hire and made them feel safe. The new hire offered that they were not really sure what the function of the group was exactly. However, the employee was excited to let the manager know that the group would be celebrating Juneteenth with a luncheon and invited the manager to join them. The employee said a luncheon is not as good as a day off but celebrating with a luncheon is similar to how they would have usually celebrated it with their family. The manager admitted that they had never heard of the holiday before or what it represents, and why they love working at an organisation that celebrates diversity. The manager was also surprised that they had not already heard about the event since it seemed like a big deal. The employee shared that they did not know if there were plans to share it across the company emails, but he found out at the affinity group meeting where they have been talking about it for months. When attending the following year’s recruiting trip to the HBCU, the new employee and the manager laugh as they are both featured in the recruitment material, which includes a picture of them at the Juneteenth celebration. A potential applicant asks the recruit if they feel good about the organisation. The employee affirms that they do. They feel the organisation is a great place to work and they feel their accomplishments have been recognised, and they feel like they can have conversations with anyone across the organisation because they feel psychologically safe there most of the time. Curious about the “most of the time” in the employee’s response, the potential applicant asks, why “most” and not “all”? The employee admits there was a day when something terrible happened, it was race related, but it did not happen at work. It did not seem like the Black Resource Group was the right place to talk about it because all they do is plan events, and the manager did not seem accessible because there was a deadline looming that they were more concerned about, and so, that day, really that week, it did not feel that good to be at work. Really, the employee admitted, it did not feel good to be anywhere, but it also did not feel like it was okay to not be okay at work because it was not directly related to the job or the people at the office. The worst part, the employee explained, was that it felt like other employees knew what was happening with me and they knew that I was not being myself and they knew why, but no one said anything to me those few days. Enterprising Organisations For organisations in the Enterprising category, integrity is ever-clear and ever-evolving with respect to inclusion. For these organisations, inclusive integrity is marked by its energy and enthusiasm towards inclusion and desire to inculcate feelings of belonging among stakeholders. These organisations also show a sincere dedication toward committing resources relative to inclusion throughout the organisation and across organisational contexts. Within a specific

Organisational integrity and inclusion  459 context or department, these organisations may appear similar to those of the Siloed quadrant, but a notable difference is that for organisations here there will be boundary spanning inclusive activities that engage across contexts and align with multiple, if not all, of the organisation’s strategic values. One way these organisations achieve the boundary spanning activities is through the presence of a CDO in a C-suite position. Other organisations will have fully resourced departments dedicated entirely to advancing organisational diversity, equity, inclusion, justice, or belonging with multiple levels of senior vice president or vice president level positions serving a chief-level officer. Organisations in the Enterprising-Inclusive quadrant are comfortable with the risks related to conflict and conflict management and approach these conflicts as an opportunity for deeper learning, for strengthening relationships, and for building connectivity throughout the organisation. Moreover, they prepare their workforces to engage with activities and the learning opportunities created therein require intense individual training throughout the organisation to prepare all levels of the organisation, from the C-suite to the front line, on concepts such as self-awareness, implicit bias, power dynamics, microaggressions, etc. As such a foundational concept for organisations here is that inclusive integrity is in a constant and iterative process of establishing and reestablishing trust throughout the organisation. As noted, Enterprising organisations are active in establishing DEI activities as essential to the organisation mission, vision, and values. For these organisations, inclusion is not solely dedicated to achieving all of the known benefits but also dedicated to advancing to discover benefits yet unknown. As such, many of these organisations will have explicit declarations of the organisation’s strategic intentions related to diversity, equity, and inclusion. Additionally, Enterprising organisations will seek to establish clarity that inclusion is a central value for the organisation. In other words, inclusion is viewed as essential to the organisation and all of the activities therein. In instances wherein DEI values are not explicit, there will be overarching statements to make this intention clear such as, for example, “At this organisation, we pursue our mission, vision, and values with an ever present and ongoing commitment to Diversity, Equity, and Inclusion.” Characteristics of organisations in the Enterprising quadrant will, for most things, be difficult to determine in terms of organisational structure. They will look, in terms of structure, very similar to many Siloed quadrant organisations. In many instances, qualitative inquiry will be needed to examine the differences between organisations in these two quadrants. One of the notable distinctions of the culture in this quadrant is there will be noteworthy humility and curiosity related to learning about others within these organisations. Stakeholders in organisations in this quadrant are much more likely to ask questions than to assume they know the answer, and this notion of inquiry will be encouraged throughout the organisation. The inclination to discover in such organisations, however, does not come without its drawbacks. Namely, conflict is common in Enterprising organisations. Many of the features within Enterprising-Inclusive quadrant organisations will be structured to directly address and deconstruct the organisational boundaries that are evident in the other quadrants. For these organisations, the limitations of holding inclusion activities as independent from, or as non-essential to, the organisation’s main functions will have been made apparent by either internal or external stakeholders. The nexus of these organisations’ regard to engage in DEI activities can be sourced to either internal or external stakeholder groups, or both, that may have questioned the authenticity of the organisation’s episodic efforts towards full inclusion at some point in the past. Another alternative is the instalment of new C-suite

460  Research handbook on organisational integrity leaders that initiate a shift in how the organisation regards DEI action. Notably, even in instances when C-suite leaders are hired specifically to orient strategic action towards inclusion, success in advancing organisations to the Enterprising quadrant will likely depend on a continuous commitment of organisational resources and support from other C-suite leaders. Here, organisations will be supportive of individual efforts to initiate and sustain inclusion activities that will help to cultivate a culture based on integrity and inclusion. Unlike in the Siloed quadrant, there will be much more concern for how new activities and interests within the organisation relate to the existing groups. Employee resource groups (ERGs) will be supported according to racial, gender, age, ability, language, culture, and all manner of groupings that the employees deem to be important just as in organisations within the Siloed quadrant, however organisations within this category will also have mechanisms with the organisation to cultivate shared resources amongst these groups. In the Siloed quadrant, organisations are interested in ERGs because they believe them to help employees feel more welcomed and psychologically safe within the organisation. In the Enterprising quadrant, there is a notable difference in how ERGs are leveraged to influence the culture of the entire organisation. ERGs are often tapped to host company-wide cultural celebrations, as an example, to not only celebrate the presence of employees within that group, but also to embrace what employees from that group bring to the organisation and its efforts to meet strategic goals. Individuals within organisations in the Enterprising quadrant will also have undergone significant levels of training to reduce integrity risks. Unlike in other organisations, these trainings will not be specific to specific functions of the organisation, such as hiring, but instead will be a condition of employment. All employees will have undergone some level of training in self-awareness, bias mitigation, conflict management, microaggressions, power dynamics, and allyship. Job applicants to these organisations may have also had to produce materials to show how diversity is beneficial to their desired job function. The emphasis of inclusion activities in these organisations is used to orient stakeholders early in their relationships to make clear that inclusion is a central value for organisations. In short, these organisations are often thought of as proactive towards DEI as opposed to the reactionary responses typical of the other quadrants. As organisations are shifting from reactive to proactive, existing employees and stakeholders may, and often do, voice discomfort or unease with the changes. However, sometimes these discomforts are not voiced because of the identities covered by the Iceberg Metaphor. Many of these individuals feel uncomfortable voicing these feelings because they do not want to appear unsupportive of advancing inclusion. Yet, inclusive-integrity leaders remain curious about the experiences of these individuals and seek connection with them as often it is the rate of change that is disconcerting and not necessarily what the change is about that is causing the most angst. Concerted efforts to work with the groups going through the significant shift will be needed as in many respects the shift between Enterprising and the other quadrants is a paradigm shift. An important series of questions that are asked when decisions are made in organisations in this quadrant are: “Who wins? Who loses? and Who is missing?” These questions, or a similar set of questions, are deployed to ensure that organisational actors act with humility and seek diverse, perhaps divergent, voices when decision-making. This is especially apparent in instances when the answer to the “Who loses?” and the “Who is missing?” questions are the same groups. Practices such as these ensure that the organisation is not operating with glaring knowledge and experience gaps in terms of information, but it also puts a heightened value on

Organisational integrity and inclusion  461 the information that comes from individuals and groups that have been historically marginalised. As a result of practices such as these, organisations in this quadrant may be slower to make decisions but are more likely to make more effective decisions.

BOX 28.4 ENTERPRISING VIGNETTE The hiring manager finds that their organisation is excited about the notion of actively diversifying the workforce of the company. The company has established a pipeline partnership between the organisation and the local HBCU. The manager is encouraged to broaden his search to also include the HBCUs in the region as well as the Hispanic-Serving Institutions (HSIs) and Native American Serving Non-Tribal Institutions (NASNTIs) as the organisation has not yet established relationships with these organisations. When attending career centre job fairs at the HBCUs, and the local HSI and NASNTI, the manager has great success in recruiting applicants by speaking about how encouraging the organisation is to diversity, equity, and inclusion. When the manager hires graduates of these institutions to their staff, the recruits each go through DEI training as part of their onboarding. Employee resource group membership representatives reach out to them in their first weeks on the job. They also note how much is going on in the organisation in the company newsletter. The new recruits regularly stay connected to each other by attending each other’s cultural ERG functions even though they are all in different ERGs. The manager is also engaged with an ERG for Gen X employees and is leading an initiative to do community outreach with several of the other ERGs in the coming months. When attending the following year’s recruiting trips to the HBCUs, HSIs, and NASNTIs, all the employees attend each other’s institutions, and relish in the learning experiences. They learn not only about the cultures of these institutes that their co-workers come from but also deepen their appreciation for their co-workers’ perspectives and the experiences that shaped them. The manager notes how little they need to speak at these recruiting events now as the new recruits are so engaged with the organisation, they do most of the speaking. The manager does speak up to note how the culture is changing and how great it has been to see the organisation make the transition in the past few years. There were some people who have left the organisation since the leadership made the shift to advancing DEI, the manager admits. But they feel, strongly, that was those individuals’ loss, and that the organisation has been making incredible progress since the organisation leadership made the commitment to DEI. The hiring manager, themself, has grown so much individually as a person in ways that not only make them better as a manager and at doing the job, but has also enabled them to show up to work as their whole person. While learning about things like masking and performative allyship, different ways that people might feel like they must perform in a certain way to be socially acceptable, the manager was able to appreciate how they have also engaged in these practices at work. For example, the hiring manager states, they have been a lifelong musician and would never talk about it at work, just never thought it to be relevant. Now they are part of a music appreciation group that plays at the local hospital once a month, and the hospital (which was not an existing customer) learned about the group and is now in talks to make the biggest order of the quarter. Which the hiring manager says is great, but for them it is just icing on

462  Research handbook on organisational integrity the cake of being able to show up at work as their whole person and to feel safe doing that and to feel safe encouraging others to do the same. It is just a great environment to work and to be a leader in. Even though there are still challenges, there is something about working on a team where everyone is showing up as their authentic selves and doing work that is important to them.

INCLUSIVE INTEGRITY IN ORGANISATIONS In this section, we provide a roadmap to achieving inclusive integrity. This section is organised into two sections best described as a set of tools identified by both the practitioner and scholarly world. Each, we suggest, offers a variety of tools and practices for organisations seeking to translate the values associated with inclusion and integrity into actions i.e., moving toward inclusive integrity. Practitioner-Identified Tools In 2005, the U.S. Government Accountability Office published a list of best practices ostensibly aimed at improving efforts to manage diverse organisations: (1)

A visible and institutionalised commitment by organisational leadership that emphasises diversity and inclusion as part of the organisation’s mission, vision, and values; (2) Developing and institutionalising mechanisms that capture data relevant to DEI such as the diversity of an organisation’s applicant pools, hires, promotions, and dismissals as well as pre and post-test data following DEI trainings; (3) Ensuring upper-level accountability so that staff at all levels understand that DEI are more than just performative statements; (4) Building strategic alliances with historically underrepresented groups and offering such groups proactive support; (5) Conducting self-assessments (barrier analysis) which the Equal Employment Opportunity Commission (EEOC) described as “agency’s self-assessment [that] indicates that a racial, national origin, gender, [or disability] group may have been denied equal access to employment opportunities, the agency must take steps to identify the potential barrier. Workplace barriers can take various forms and sometimes involve a policy or practice that is neutral on its face, i.e., disparate impacts. Identifying and evaluating potential barriers requires an agency to examine all relevant policies, practices, procedures and conditions in the workplace” (EEOC, 2005). Scholarly-Identified Tools According to Kaptein (2013), a variety of virtues, ranging from high cost to low cost and from direct action to more indirect modelling of behaviours, may further mitigate the likelihood of integrity risks and violations. They include (a) clarity, (b) role-modelling, (c) achievability, (d) commitment, (e) transparency, (f) openness, and (g) enforcement and offer opportunities for organisations to proactively mitigate integrity risks and violations. We apply these virtues to

Organisational integrity and inclusion  463 inclusive integrity so that organisations are better equipped to capitalise on diversity, engage in reflective learning, and allow for vulnerability so that they may catalyse meaningful connection across stakeholders. Clarity Defining the norms, rules, values, goals, and behavioural expectations is often the first step towards inclusive integrity. It is especially important for organisations and leaders to concurrently establish concrete and tangible actions that align with those values. These actions and decisions should be embedded within and across various management tasks such as employee recruitment, selection, training and development, performance appraisal, and promotion. When efforts are episodic and/or siloed, they are ultimately inadequate and represent an integrity risk. Additionally, providing clarity relative to inclusion may also enable the organisation, and as such, its staff to recognise situations that may lead to decisions that are not consistent with applicable values. This is especially important as rules, even the most detailed rulebook, cannot address every possible situation. Role-modelling Svara (2015) explains that leading with ethics and integrity necessitates a form of leadership that is visible, authentic, and seen as credible. As applied to inclusive integrity, leaders with integrity must display an outward, sincere, and legitimate commitment to the values and actions associated with inclusive integrity. In other words, leaders practicing inclusive integrity behave in a manner that is consistent between their stated values and their subsequent actions. If the leader fails to do so, it is likely that he or she is engaging in performative work – at best an integrity risk and at worst a violation of organisational integrity. A visible commitment to inclusion is also necessary as leaders are often able to establish a tone, create expectations, support, and grow systems of accountability and model concrete behaviours relative to inclusion. As Zimbardo (2007) notes, followers adopt many of these behaviours/values as their own, which impacts how welcoming and supportive an organisation feels, which is especially important to those from traditionally disadvantaged groups. Achievability For leaders to reach their goals related to inclusive integrity, goals must be feasible and achievable yet still ambitious. One common approach is utilising the SMART Goal framework: ● ● ● ● ●

Specific – What will be accomplished? What actions will you take? Measurable – What data will measure the goal? How much? How well? Achievable – Is the goal doable? Do you have the necessary skills and resources? Relevant – How does the goal align with broader goals? Why is the result important? Time-Bound – What is the time frame for accomplishing the goal? (Wang, 2017)

By applying the SMART Goal framework, integrity risks are reduced as there are greater levels of goal clarity, accountability, and transparency when it comes to the activities that support inclusive integrity. This framework, for example, can help the organisation avoid goals that are not achievable or that are overly ambiguous. This feature is useful on two levels. The first is that individuals or subunits may feel pressure to reach unattainable goals and thus resort to shortcuts, rationalisations, cutting corners, or outright lies and obfuscation (Kaptein, 2013). These actions violate core notions of integrity in that such actions destroy trust and

464  Research handbook on organisational integrity are unlikely to support employees. The second is that when leaders signal that a goal is to be achieved at any cost, it often means that accomplishing that goal becomes the main priority which can diminish the value of achieving the goal in the right way (Treviño & Nelson, 2011). Commitment Inclusive integrity requires substantial, recurrent, and widespread organisational commitment. In other words, if an organisation states that inclusion is a value, it must assess if that value is prioritised throughout the organisation, if it is it tracked and measured, and if it is embedded as part of the various tasks, functions, and roles of the organisation. Organisations committed to inclusive integrity must also determine if such programmes receive enough support especially as compared to the organisation’s other stated values. For example, inclusive integrity in a performance appraisal setting may consider the following: ● Has the organisation addressed, created goals, and provided resources for SMART goals? ● Has the organisation established performance targets and engaged in data collection (e.g., hours spent in training)? ● Has the organisation identified the knowledge, skills, and abilities relative to inclusive integrity including pre and post-test evaluations of organisational interventions? ● Has the organisation institutionalised the ability to analyse findings and processes to incorporate findings into reevaluated/reimagined policies, programmes, and procedures? Here, integrity risks are influenced by the scale and degree to which organisations and individuals are committed to complying and achieving goals and values (Kaptein, 2013). If institutionalisation is missing, integrity is at risk, given that DEI efforts are likely to evaporate if key personnel and other champions leave. Additionally, if employees perceive a lack of commitment, they are also more likely to focus on other values and goals. Transparency As both a virtue and tool, transparency provides stakeholders a clear view of the organisation, its actions, and the “why” behind said actions as well as the data it collects. Understanding the “why” behind inclusive integrity is important for several reasons. First, as Molina (2018) describes, transparency reduces bias, especially when decisions may be influenced by conflicts of interest. Second, a key aspect of inclusive integrity is the recognition that individuals and organisations are continuously self-evaluating, learning, and applying those lessons to grow and become more inclusive. This virtue also recognises that mistakes are inevitable and represent learning opportunities, i.e., opportunities to understand the why and how behind a real or perceived (micro) aggression. Third, by enabling stakeholders to take a clear view of the organisation, they may be well positioned to assess if efforts to inculcate inclusive integrity are being implemented effectively (or at all). For example, if the organisation states that inclusion is a value, does the data captured in applicant pools, hires, promotions, and dismissal decisions support this assertion (EEOC, 2005). Openness Leaders and organisations seeking inclusive integrity create cultures that embrace questions, reflection, data, and learning. In other words, they are open to discussing where and how the organisation has created conditions where employees feel valued, supported, and included as well as situations in which employees did not feel that they could be their authentic selves.

Organisational integrity and inclusion  465 To do so, individuals within the organisation must feel safe to discuss their lived experiences, their concerns and anxieties, and conflicts as related to inclusion and integrity (Kaptein, 2013). Additionally, institutions must create and meaningfully support whistle-blower and/or reporting mechanisms. Finally, as Molina (2018) summarising work by Weenig and Midden (1991) explains, there is value in engaging in difficult conversations. Through difficult conversations, employees are better positioned to understand and make sense of their environment, their colleagues, and make decisions that align with organisational values. Kaptein (2013) adds that debriefing and discussing challenging issues aids individuals in understanding their environment, in learning, and signals the importance of said values (Weenig & Midden, 1991). Chen (2019) identifies a process for mitigating integrity risks and difficult conversations relative to inclusive integrity: ● ● ● ● ● ● ●

Move toward the conflict, towards being uncomfortable Be there to learn about someone’s experience Check assumptions and biases and identify unknown biases Identify knowledge gaps Be open to new ideas and learning Listen to understand, to learn, and to believe Acknowledge that experiences among groups are likely to be different.

Organisations must be cautious of shallow levels of openness or groupthink relative to inclusive integrity. In this sense, organisations must create safe spaces for dissent and encourage open dialogue. Enforcement Enforcement is at the heart of compliance and organisational behaviour. If, for example, an individual believes he or she will not be held accountable for ignoring a value or engaging in a specific behaviour, that person is more likely to ignore said value. Several dimensions of rules and enforcement shape the reality and perceptions of organisational inequity/compliance. According to DeHart-Davis (2017), dimensions that harm the ability of supervisors to effectively enforce rules include: ● ● ● ● ● ●

Imposing more control than is necessary Unclear consequences if the rule is violated or ignored The lack of incentives and inducements to follow the rule Lack of training as to what the rule requires Inadequate means to supervise such as lack of resources or elite level support Limited or unclear flexibility via exemptions.

How organisations disseminate rewards and sanctions relative to rules and norms further shapes feelings and outcomes related to inclusive integrity. Again, we highlight the importance of consistency between words and actions. If an organisation or supervisor is unwilling to hold individuals accountable for behaviours that fail to adhere to inclusion or integrity, then that situation or supervisor has committed an integrity violation in that the action is inconsistent with values and fails to build trust (Kaptein, 2013). Moreover, such actions also fail to build a culture that is supportive of employees and can lead to perceptions of inequities.

466  Research handbook on organisational integrity The Big Picture What is inclusive integrity? Based on our findings of previous scholarship as well as the typology, integrity is the bond that links inclusive values to actions. As Terry (1995, p. 45) stated, “to say that an institution has integrity is to suggest that it is faithful to the functions, values, and distinctive set of unifying principles that define its special competence and character.” In short, we argue, similar to Terry (1995) that the bridge between organisational words and organisational deeds is integrity, as shown in Table 28.2. Table 28.2

Inclusion with and without integrity

Value

With Integrity

Without Integrity

Diversity:

Consistently surpasses legal compliance and

Focus is on legal compliance and organisational culture

includes an organisational commitment to reflect

diminishes, belittles, fails to reflect upon, celebrate, or

upon, celebrate, or learn about similarities and

learn about similarities and differences.

differences. Inclusion:

Individuals with various identities consistently feel At best, some and/or no individuals feel valued, valued, respected, and supported with their needs

respected, and supported with their needs met but often

met in a way that exceeds worker/workplace laws. in a way that fails to exceed worker/workplace laws. Equity:

Organisations are consistent, fair, and systematic in Organisations are inconsistent, unfair, and arbitrary their treatment (across management functions) of

in their treatment (across management functions) of

all individuals, including individuals who identify

individuals, including individuals who identify as part

as part of marginalised groups.

of marginalised groups or adhere to minimal legal standards.

For organisations, the movement towards inclusive integrity is quite complicated. Organisational values and goals are often established and enforced by multiple principals, meaning that those implementing the goals may face considerable ambiguity on the goals themselves, which goals are to be prioritised and enforced, and even how best to achieve those goals. Additionally, organisations often hold multiple goals that are not easily operationalised – meaning that for street-level actors and middle managers discretion abounds. The goals of higher education, for example, are not only to attract grant research dollars and author publications but to do so in a way that also permits effective teaching, mentorship, and student development. The presence of these goals, however, is not always made clear and the evaluative criteria is not always known – making the challenge of inclusive integrity quite pronounced.

CONCLUSION AND FUTURE RESEARCH We envision a robust line of action-orientated scholarship needed to understand the important topics related to inclusive integrity. To illustrate this vision, future plans include distilling how and why organisations (including private, public, and non-profit) and subunits within organisations move within the typology, utilise the typology, how they operationalise and utilise the organisational archetypes within the typology, perceptions relative to organisational placement, and if placement within the typology is associated with specific organisational outcomes such as employee recruitment, retention, and performance. The vignettes of inclusive integrity typology quadrants also offer scholars several research avenues for future scholarship. From its inception, institutionalisation has been framed as a process that organisations undergo to

Organisational integrity and inclusion  467 establish or project legitimacy (DiMaggio & Powell, 1983). What remains a question for further consideration is how and to what degree organisations can move through the quadrants and toward inclusive integrity, i.e., what works and what presents as an inclusive integrity risk. In addition, the vignettes explicated several organisational strategies, processes, and policies that delineate the various quadrants (for example strategic language and recruitment practices). Yet, research affirming these quadrants or similar typologies is nascent in nature (Chen, Silvera, Haun, & Fisk, 2023; Cole, Haun, & Silvera, 2022; Fisk et al., 2019, 2020; Williams, Silvera, & Lemak, 2022) and future studies should continue to examine the degree to which organisational differences are captured through the quadrants as well as the extent to which organisations mimic one another. The vignettes also elucidate differences in psycho-social factors of the individuals within these organisations (both the manager and the employees) that warrant further exploration. Specifically, there is a need to understand the psycho-social influence on workers in instances when organisational integrity and inclusive strategy are in misalignment (when what the organisation says conflicts with its practices) as this may be a significant contributor in industries with high levels of burnout (e.g., education, health care). Finally, future scholarship may also seek to examine the perceptions of various groups through an organisational justice lens and assess whether certain groups are more prone to stronger perceptions of inclusion or exclusion as compared to others. These projects seem to us, however, to be a small part of what is possible in what should be an important and prolific area of research.

NOTE 1.

The U.S. Department of Veterans Affairs’ mission is to fulfil President Lincoln’s promise: “To care for him who shall have borne the battle, and for his widow, and his orphan by serving and honoring the men and women who are America’s Veterans.”

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Organisational integrity and inclusion  469 Wang, L. (2017, June 27). Be smart when setting goals. ICMA. Retrieved from https://​icma​.org/​articles/​ pm​-magazine/​be​-smart​-when​-setting​-goals. Weenig, M. W., & Midden, C. J. (1991). Communication network influences on information diffusion and persuasion. Journal of Personality and Social Psychology, 61(5), 734–742. Williams, J. H., Silvera, G. A., & Lemak, C. H. (2022). Learning through diversity: Creating a virtuous cycle of health equity in health care organizations. Advances in Health Care Management, 21. https://​ doi​.org/​10​.1108/​S1474​-823120220000021009. Zimbardo, P. (2007). The Lucifer Effect: Understanding How Good People Turn Evil. New York: Random House.

29. Organisational integrity and transparency Colin Higgins and Samuel Tang

Does transparency improve integrity – or does some basic sense of an organisation’s integrity need to exist before transparency efforts are taken seriously? How does transparency sit alongside other aspects of organisational integrity – such as trust, consistency, and honesty? How is organisational integrity different to trust – and does transparency make much difference to either? These questions sit at the heart of the relationship between organisational integrity and transparency. In this chapter we introduce transparency and demonstrate that it has the potential to influence judgements about organisational integrity. At its simplest, transparency involves the provision of information about an organisation to enable stakeholders to evaluate its performance (Albu & Flyverbom, 2019). But, as we explain, the relationship between transparency and outcomes is not simple. Empirical evidence casts doubt on whether transparency delivers as expected, suggesting other factors influence its effectiveness (Fung, Graham, & Weil, 2007; Schnackenberg & Tomlinson, 2016). Some factors are well known, particularly those related to the way information should be shared. Most scholars agree that transparency is most effective when information is provided in a timely way, it is accurate, and stakeholders can access it and understand it easily (Schnackenberg & Tomlinson, 2016). Several scholars point out the importance of context, particularly appropriately targeted legislation, the use of intermediaries, and enforcement of disclosure requirements (van Zyl, 2014). We introduce these considerations, turning our attention to how they contribute to organisational integrity. Other factors are less well understood. Little is known about how stakeholders use, make sense of, and react to information shared (Williams, 2005). Even less is known about how transparency relates to trust, organisational integrity, and the achievement of specific outcomes (Schnackenberg & Tomlinson, 2016). We know that stakeholders are sceptical of information provided, but addressing this goes beyond simple specifications about how information should be presented. There are widespread (and nuanced) trust issues between organisations and stakeholders (Pirson & Malhotra, 2011), and stakeholders vary considerably in their needs and expectations (Loewenstein, Sunstein, & Golman, 2014). There are also considerations related to who controls information disclosure – what, when and in what form – that influence its effectiveness (Albu & Flyverbom, 2019). Alongside this, widespread concern exists about greenwashing and hypocrisy in what organisations communicate (Higgins, Tang, & Stubbs, 2020). We introduce some of the stakeholder (or demand side) issues associated with transparency, particularly given the importance of stakeholders to organisational integrity judgements. To illustrate our points, we make use of a detailed, illustrative case study. As the following section demonstrates, transparency is a vast topic that has spread across domains and been studied for a considerable period of time. To capture how it relates to organisational integrity specifically, we present our insights in the context of forced labour,1 which can be broadly understood as work that is performed involuntarily and under the menace of any penalty 470

Organisational integrity and transparency  471 (International Labour Organization, 2023). This is an important societal issue that also raises significant challenges to an organisation’s integrity. At face value, it should be self-evident that transparency plays a key role in how forced labour is managed and the integrity of organisations subject to these pressures. Yet, as we engaged with civil society organisations concerned with this issue, we found new insights about transparency and organisational integrity, and we identified opportunities for further research. Those who use and rely on information provided for insights about forced labour reveal that transparency by organisations is desirable, but current practice is poor. The information shared in modern slavery statements and sustainability reports is too generic and of low quality, suggesting to stakeholders that the motivation is more about compliance and legitimacy than transparency. In these cases, poor transparency erodes trust and limits its potential to shape judgements about an organisation’s integrity. Overall, we suggest that transparency is necessary but not sufficient in and of itself to drive organisational integrity outcomes. Before we introduce the transparency landscape in the next section, we outline how we understand organisational integrity. As has been detailed by Leo Huberts and Anthony Molina in this research handbook, organisational integrity refers to the consistency of an organisation’s actions in line with its values and wider community standards. The link to transparency is clear, pointing to the importance of honesty in communications, and openness about performance and intentions. Following the background to transparency outlined in the next section, we discuss the stakeholder perspectives on transparency that we generated through our conversations with several civil society organisations in Australia and the UK. We then distil from our discussion the key applications of transparency to organisational integrity, including the types of considerations that scholars and practitioners need to consider in how it is operationalised. We conclude with some suggested areas for future research.

WHAT IS TRANSPARENCY? Most people have some basic idea of what transparency is, and what it involves. Simply put transparency involves the intentional sharing of information to enable users of that information to make decisions and to alter their choices about their interactions with an organisation (Schnackenberg & Tomlinson, 2016). It has come to be seen over the past 20–30 years as (almost universally) desirable – so much so that it has spread to different types of organisations, been studied within a number of disciplines, and turned to the achievement of a wide range of outcomes (Etzioni, 2010). Early on, transparency was largely confined to the public sector and government. The general principle was that “sunlight is the best disinfectant” (Brandeis, 1913) – or openness in what organisations are doing, their performance, and the choices they have made offers the incentive for organisations to act properly (Lamming, Caldwell, Harrison, & Phillips, 2001). It is this principle that sits behind modern day initiatives such as freedom of information legislation (Calland & Bentley, 2013). More recently, transparency has formed part of the reform agenda in other types of organisations, including international NGOs, civil society bodies, and the private sector (Kosack & Fung, 2014; Oliver, 2004). Indeed, for NGOs and civil society organisations, transparency forms part of the issues-based project work, including the development of rating schemes to expose organisational performance (Schäfer, 2010), as well

472  Research handbook on organisational integrity as their own governance (Burger & Owens, 2010). Several organisations now produce their own impact reports (Asogwa, Varua, Humphreys, & Datt, 2021; Auld & Gulbrandsen, 2010) that have become increasingly important as these organisations seek to reassure stakeholders – including donors – about their own integrity (Burger & Owens, 2010; Ossewaarde, Nijhof, & Heyse, 2008). In the private sector, demands for transparency have intensified (Micheletti, Follesdal, & Stolle, 2006). Many organisations now produce sustainability reports, detailing their environmental, social, and governance (ESG) goals, as well as their progress towards them (Christensen & Cheney, 2015; Garsten & de Montoya, 2008; Higgins, Milne, & van Gramberg, 2015; KPMG, 2020). Further, organisations across a wide range of sectors are required to provide extensive detail about their performance in a wide variety of areas, using various means (Florini, 2007). Many are required to provide information about their products and services, including ingredients, allergens, nutrition, and use by or best before dates in food products. Public companies, in many jurisdictions, are required to disclose the remuneration of senior executives (Conyon & Sadler, 2010), and their carbon emissions (see, for example, Australia’s National Greenhouse and Energy Reporting requirements). As transparency continues to evolve, cross-over in application can be observed. There has, for instance, been interest by government in stimulating greater transparency in the private sector, partly due to recent corporate scandals (Albu & Flyverbom, 2019; Vishwanath & Kaufmann, 2001), but also as an alternative to regulation (Etzioni, 2010; Loewenstein et al., 2014). Transparency and Action Transparency is orientated towards action. Most definitions – and empirical explorations of its application – focus on how transparency can stimulate change or improvements in what organisations do (see, for example, Haufler, 2010, and examples therin). In the public sector, and amongst governments, transparency promises to affect change in policy, and the performance of public organisations (Dingwerth & Eichinger, 2010). Scorecards in hospitals, and league tables in schools, for example, can expose performance issues, and stimulate change (see Björkman & Svensson, 2009). More broadly, Sifry (2011) suggests transparency can influence democracy and participation. As Mol (2010) explains, in relation to environmental outcomes, more information leads to better informed citizens, which enables their participation in the decisions and policies about our relationship with the environment. Transparency may also assist to identify areas for government regulation (Dingwerth & Eichinger, 2010), improve resource allocation, enhance efficiency, and increase prospects for growth (Vishwanath & Kaufmann, 2001). In the private sector, a similar emphasis on action prevails. As foreshadowed, initiatives such as sustainability reporting enable stakeholders to make judgements about an organisation’s social and environmental performance, and alter their interactions accordingly (Gray, Owen, & Adams, 1996). In other areas, initiatives such as Balanced Scorecards or peer reflection of the outcomes of actions enable employees to alter their behaviour and improve performance (Kaptein, 2008). Other examples including product labelling and warnings on dangerous products, will shift their consumption patterns (Sirgy & Su, 2000). The role of transparency in stimulating action differs across sectors. In their two-by-two matrix, Kosack and Fung (2014) illustrate four varieties of transparency. As shown in Table 29.1, where government is the target of transparency, citizens use information to influence

Organisational integrity and transparency  473 Table 29.1

Users and targets of transparency

 

Users of transparency

Targets of transparency

Self-governing citizens

Individual customers/beneficiaries

Governments

I. Freedom of information

IV. Transparency for accountability

(e.g., use by journalists and citizens)

(e.g., disclosure to improve public services in health and education)

Private firms/

II. Transparency for responsible corporate

III. Regulatory transparency

corporations

behaviour

(e.g., financial disclosures of corporations, product

(e.g., union-made labels)

safety disclosures)

Source: Adapted from Kosack and Fung (2014).

policy and decision-making (Quadrant I). An example includes the details of tendering and contracting projects for major infrastructure. Citizens are also consumers of public services in which transparency (in, for example, school and hospital performance) enables citizens to exert public pressure for specific improvements in the delivery of public services (Quadrant IV). In Quadrant III (Regulatory Transparency) consumers seek information about private organisations to shape their choices, but regulation is required in order for organisations to provide it. Examples include modern slavery statements (see below) and audited financial statements. In Quadrant II (Transparency for Responsible Corporate Behaviour) citizens use information to force change in private sector organisations directly, including via boycotts and investor pressure. Transparency within Organisations But, transparency isn’t just of relevance for external audiences. Internally, transparency can aid in governance, building strong employee relationships, and developing trust within the organisation (Bandsuch et al., 2008; Rawlins, 2008). Boards, for example, that are open and honest in their communications can establish and repair employee trust – and positively influence loyalty and job satisfaction (Bandsuch et al., 2008; Rawlins, 2008). This type of internal trust unlocks potential for organisational adaptation and productivity (Gillis, 2003). Transparency can also assist in delivering internal operational outcomes. Data collection and provision can detect problems in facilities, and with suppliers when data collection and technology is deployed smartly (Searcy et al., 2022). In terms of sustainability outcomes, some report that the external reporting of performance information raises consciousness internally, stimulating internal management attention to social and environmental impacts (Pérez-López, Moreno-Romero, & Barkemeyer, 2013). Caution needs to be exercised however to limit the dark side of transparency (Bernstein, 2014; Searcy et al., 2022; Suddaby & Panwar, 2022) where data collection and monitoring can be perceived as surveillance and control (Mol, 2010). Efforts to improve transparency can be misunderstood, quickly leading to “distrust, resistance, and cheating among employees and can also give rise to an overall blame culture within organizations” (Suddaby & Panwar, 2022, p. 7). Organisations can manage this “transparency trap” by being “transparent about the extent of their transparency”, and to not overpromise (Suddaby & Panwar, 2022). Organisations should state clear, modest expectations about what information they can share and what information is private and confidential – and the organisational aims being pursued.

474  Research handbook on organisational integrity Transparency as an Organisational Virtue Outside of outcomes and benefits – either internal or external – transparency is viewed by many as simply being the right thing to do. While important organisational outcomes are said to accrue from the act of transparency, its practice should be something organisations commit to as an organisational virtue and/or behavioural principle (Jahansoozi, 2006; Searcy et al., 2022). It is perhaps this less instrumental understanding of transparency that matters most for building trust and establishing perceptions of an organisation’s integrity. Like Schnackenberg and Tomlinson (2016), others including Suddaby and Panwar (2022), suggest that transparency can signal an organisation’s virtue or character to interested audiences.

WHAT ABOUT TRANSPARENCY AND ORGANISATIONAL INTEGRITY? The contribution of transparency to less direct outcomes – such as organisational integrity – is not so clear. The popular press – as well as the academic literature – is replete with examples of organisations that provide detailed information about their performance – yet struggle to shift stakeholder perceptions (Stubbs, Higgins, & Milne, 2013). While some are in industries with a poor reputation (e.g., oil), others have historical legacies (e.g., Nike) and/or have been accused of greenwashing and hypocrisy (e.g., Volkswagen) which has affected perceptions of integrity (Ioannou, Kassinis, & Papagiannakis, 2022). While Bennis, Goleman, and O’Toole (2008) suggest that transparency can assist these organisations to build trust and confidence about an organisation’s integrity, others point out that a pre-existing position of integrity is necessary for transparency to be effective (see Albrecht & Travaglione, 2003) Of those who have unpacked the transparency–integrity relationship, it seems that it is dimensions of transparency, rather than transparency per se, that matters. While providing information can assist stakeholders to make direct decisions – such as whether to purchase from or invest in organisations – intangible aspects of stakeholder relationships are more nuanced. Three distinct dimensions make up transparency and influence what it achieves. These include: the actual disclosure of information, the clarity of the information provided, and its accuracy (Schnackenberg & Tomlinson, 2016). Table 29.2 provides a basic outline of each dimension. Table 29.2

Dimensions of transparency

Transparency dimension

Definition

Disclosure

Information shared is perceived to be relevant and complete, enabling users to observe and analyse trends, and is received in a timely manner.

Clarity

Information shared is perceived to be lucid and comprehensive, enabling users to make informed decisions.

Accuracy

Information shared is perceived to be well founded and free from bias, enabling users to ascertain its actual value.

Source: Adapted from Schnackenberg and Tomlinson (2016).

Taken together, disclosure, clarity, and accuracy all constitute effective transparency, but each contributes differently to organisational integrity. As Schnackenberg and Tomlinson (2016)

Organisational integrity and transparency  475 explain, the act of disclosure conveys an organisation’s willingness to be open – and when intentionally done in a way that produces relevant, timely, and accessible information provides reassurance about the organisation’s commitment to a set of values and principles. Accuracy too reinforces organisational integrity. It suggests honesty, signals that the organisation cares about what it is disclosing, and demonstrates a commitment to doing things properly. Clarity provides some indication that an organisation understands stakeholder needs and is motivated to disclose in ways that improve their understanding of the organisation’s commitments and performance. But information disclosure, its clarity, and accuracy only go so far in securing stakeholder perceptions of organisational integrity. Whether it does so also rests on understanding the difference between the “performativity” and “verifiability” of transparency (Albu & Flyverbom, 2019). Verifiability refers to the characteristics of the information shared (as above), but performativity relates to the way social action comes about because of the information shared. Performativity hinges on the motivation, interests, and ability of users to make sense of the information shared. While it might seem intuitive that users and stakeholders care about what organisations disclose, there is little evidence that they do (Etzioni, 2010). They are also not always motivated to act, even if they consider an organisation’s performance to be poor (Kosack & Fung, 2014). Stakeholders will not always abandon organisations on the basis of poor performance, nor do they necessarily reward it. Further, transparency does not always influence direct outcomes, and its contribution to judgements about organisational integrity are even more tenuous. What we do know is that transparency is more likely to shape and influence stakeholders when its objectives are carefully set, the audience and their needs are considered carefully, and it is built into their routines (Dingwerth & Eichinger, 2010). Of particular significance are psychological factors associated with the users of information. These typically fall outside the control of organisations, but have a significant impact. Loewenstein et al. (2014) suggest that despite efforts to improve how information is presented, stakeholders make sense of it in a variety of (unpredictable) ways. Users, or those to whom transparency is directed, have limited attention spans and competing priorities for their attention. There are limits to the amount of information that people can take in – in both the volume of information and its complexity (Etzioni, 2010). Stakeholders are also often biased in the judgements they form, and have limited ability to imagine or consider information that is missing. Both inhibit their ability to judge the completeness of information shared. There are also issues associated with motivated attention, wherein users tend to gravitate towards the information that they expected/accept (rather than views that might be contrary to what they expect). Loewenstein et al. (2014) go on to posit that people tend to have certain beliefs about how things should be and misestimate what is essentially good or bad behaviour. Paradoxically, Loewenstein et al. (2014) also suggest that those who go to great lengths to ensure disclosure are often less trusted by recipients. Even genuine commitments to transparency, and considerable effort to ensure clarity and accuracy, can fail to deliver transparency outcomes. Performativity issues have important implications on how transparency contributes to organisational integrity. While organisations might strive for clarity and accuracy in their disclosure, how the information is received and what users do with the information falls well outside of their control. Other stakeholders also have a considerable impact on whether transparency delivers as expected. In order to aid understandability, and to address aspects of how stakeholders

476  Research handbook on organisational integrity approach and understand information disclosed, capable intermediaries are required. These include specialised media, rating agencies, and civil society organisations who can interpret, disseminate and champion information (van Zyl, 2014). Carefully designed regulation is also essential. As we explain below, regulation that ensures information is produced does not always ensure it is understandable, trustworthy, or provide the right incentives for organisations to provide necessary information. Intermediaries, and the specificity of regulation, can assist to place information in front of stakeholders in a format they require, when they need it. Stakeholders are time poor, and information needs to be accessible and embedded into their routines (Kosack & Fung, 2014). In order to influence perceptions of integrity, context matters and a one-size-fits-all approach will limit its potential to deliver. Finally, the way transparency is organised and the processes surrounding it need to be intentionally developed. In their work on the effectiveness of transparency, Kosack and Fung (2014) propose a Transparency Action Cycle (see Figure 29.1). The basic point is that value in what an organisation discloses – and by extension trust in the organisation and perceptions of its integrity – will rest on the information being provided in a way that matters to users, they are able to engage meaningfully with it and the disclosing organisation, they have the ability and motivation to act on it, the user reactions will impact the organisation, and stakeholders see the value in, and outcomes arising from, their action.

Source: Kosack and Fung (2014).

Figure 29.1

Transparency action cycle

It is also necessary to consider the scope of transparency. According to Dingwerth and Eichinger (2010), approaches to disclosure that have a clear, focused, and single objective tend to be more effective. The Toxic Release Inventory, for example, involves focused data, on a single issue, with a clear objective in mind (in contrast to sustainability reporting which con-

Organisational integrity and transparency  477 tains a large amount of data, addressed to multiple audiences). It is not disclosure per se that leads to outcomes, but how the approach to transparency has been designed and developed.

WHAT DO STAKEHOLDERS SAY ABOUT TRANSPARENCY AND ORGANISATIONAL INTEGRITY? Given the importance of specific and targeted issues, and the significance of how stakeholders access and make sense of information disclosed, we explored the connection between transparency and organisational integrity through the lens of those associated with forced labour. Forced labour is a significant issue that has attracted the attention of NGOs, governments, and business organisations across the globe. As outlined above, forced labour is work that is performed involuntarily and under the menace of penalty (International Labour Organization, 2023). Despite global attention, the issue is getting worse with current estimates suggesting 27.6 million people on any given day are forced to work against their will (International Labour Organization et al., 2022). Business organisations are responding with new policies, supplier audits, due diligence of business relationships, and disclosure in the form of sustainability reports (Tang & Higgins, 2022). Governments, in many jurisdictions, have responded with legislation requiring organisations to prepare and lodge modern slavery statements. In Australia, for example, the Modern Slavery Act 2018 requires organisations based or operating in Australia, with an annual turnover of 100 million AUD, to report annually on the due diligence conducted with respect to potential risks of exploitation in their supply chains. The requirements extend to detailing how firms assess such risks and establish “remediation processes”. The approach in the UK is similar. The UK’s Modern Slavery Act 2015 creates an obligation on businesses with a turnover of over 36 million GBP to report on steps taken to identify and address modern slavery in their business and supply chains. The resulting modern slavery statements, produced by Australian and UK businesses, are publicly available for all stakeholders to review. While the enactment of legislation should certainly be seen as positive, raising awareness about modern slavery issues (e.g., forced labour and exploitation) in business (Global Slavery Index, 2018), cases of forced labour persist. In 2020, for example, Boohoo, a UK fast fashion company, was accused of paying workers at a factory in Leicester as little as £3.50 per hour, withholding employment contracts, breaching health and safety practices (Labour Behind the Label, 2020), and poor enforcement of regulation and labour standards (BBC, 2020). In Australia, seasonal workers from Vanuatu have recently alleged bullying, exploitative working conditions, and poor living conditions in the agricultural sector (Jackson, 2022). The persistence of cases brings into question the purpose and value of modern slavery statements as a mechanism for helping address forced labour in business, the transparency of reporting, and the connection between transparency and integrity. We asked 10 practitioners who work for UK- and/or Australian-based civil society organisations, concerned with forced labour issues, about their views of current transparency practice and its impacts. We sought their views about how they work with business organisations; the extent and nature of the forced labour issues they’re seeking to address; and information sources of forced labour activities in business. Our aim was to uncover their views about how transparency contributes to their judgements about an organisation’s integrity.

478  Research handbook on organisational integrity Conversations revealed practitioners in civil society organisations perceived that (a) transparency is essential for organisational integrity; (b) business reporting on forced labour is opaque and lacks detail because (c) there is a lack of depth and objectives are misaligned. According to practitioners, the broader setting (e.g., regulation, well-resourced inspectorate, societal knowledge and engagement) needs to change for transparency to build trust potential in organisational integrity (d). The following sections explain our findings in more detail. (a)

Transparency is Essential for Organisational Integrity

In general, civil society organisations feel that transparency is important for organisational integrity, especially where the information is presented with clarity and accuracy. It contributes to how they investigate traceability, and form views about an organisation’s corporate accountability. Without it, civil society organisations “cannot hold [business] accountable to the commitments that they are making publicly, and to the type of industry that we want to see and want to support” (Interview 5). The connection to integrity is clear – transparency enables judgements to be made about the alignment of business responses (e.g., decisions and actions) with espoused social values. For instance, factories (suppliers) that share information about employee wages enable buyers, trade unions, and civil societal organisations to review and investigate their performance to commitments and industry standards (Interview 4). It also assists civil society organisations to understand the scale and urgency of the challenge: “without transparency in the industry it is really hard to quantify the size of some of these issues, and therefore, where the industry should be putting strategic priority” (Interview 5). Transparency contributes to direct outcomes – but also plays a role in less direct outcomes such as trust and integrity. Most interviewees also assert that transparency requires detail and specificity to deliver outcomes. For many, trust and stakeholder relationships are most likely to form on specific cases where “there [are] clear graphs and charts, data and information, representation of what the numbers mean, and detail on how many suppliers, and to what extent they [suppliers] engaged in your [a company’s] commitments, their responses and key issues for change” (Interview 7). Equally, organisational integrity is enhanced when information is “independently assessed” (Interview 1), pointing to the critical role of intermediaries and other participants in the broader context in which transparency is undertaken. (b)

Business Reporting on Forced Labour is Opaque and Lacks Detail

Civil society organisations require disclosure that is comprehensive, includes commentary, and incorporates critical reflection to form judgements about an organisation’s integrity. In this context, those we interviewed expressed concerns about current disclosure practices. Typically, information shared about forced labour is incomplete, inconsistent, ambiguous, and disconnected from business practice and performance. One interviewee suggested, for example, that “modern slavery statements are generic, low quality, and are not open about progress [of business actions]” (Interview 9). The lack of critical reflection and commentary dents the value of disclosure, and neuters the trust and integrity potential of transparency. One interviewee suggested that modern slavery statements contain too little about what changes to labour practices mean for the company’s business model, governance, and supply chain – information critical for influencing users’

Organisational integrity and transparency  479 decisions. What is more, companies typically respond to forced labour charges with caution and defensive strategies. They emphasise that the issue has been addressed without providing detail on changes made. In such cases, one interviewee lamented that “We do not want to read something that says, oh we found this case, but we sorted it, and everything is fine now, because it [addressing forced labour] is not that straightforward” (Interview 2). Ambiguity and disconnect to business practice, and a lack of information about annual improvement, reduce relevancy and clarity of information shared. Transparency is reduced, limiting potential to foster strong relationships and to shape perceptions of organisational integrity. Similarly, most current practice is opaque and imprecise. There is limited use of data metrics to present key information on, for example, employee wages in supply chains. One interviewee pointed out that in one recent case: “there was no [employee wage] amount in pounds shared … instead, 20 per cent of our workers get paid a living wage. You know, it makes the whole thing very opaque. It is useless to anyone, so their transparency report becomes irrelevant because they are not being transparent” (Interview 4). Poor transparency practice limits usefulness and erodes public trust (Interview 6) in the organisational integrity of forced labour reporting. (c)

There is a Lack of Depth and Objectives are Misaligned

Most current disclosure and reporting is too generic. The emphasis seems to be on compliance, rather than engagement and improvement. One interviewee suggested that most contain statements such as “we have not found any modern slavery risks in our operations” (Interview 2). This largely means “that they are not looking well enough because there are risks for every single business” (Interview 2). Failure to discuss either potential or actual forced labour risks signal to civil society organisations that a business’ engagement or understanding of the issue is limited. Rather than enhancing integrity, most current practice is interpreted as legitimacy seeking – whether compliance to regulation or reputational management. While most see regulation as a step in the right direction, and an important part of the transparency landscape, it is seen as misaligned and leading to perverse outcomes. Some went so far as to say that the current design and enforcement of regulation is a barrier to transformative change. In both Australia and the UK regulation focuses on reporting instead of action. One suggested that “a business can just say that they are doing nothing on modern slavery in the value chain and that would be complying with the legislation” (Interview 2). In neither Australia nor the UK does regulation contain sufficient penalties for failure to disclose. Businesses, in both countries, are complying – performing risk assessments and reporting on whether action has or has not been taken – but do not indicate “whether the companies that are complying with the act [Australian Modern Slavery Act 2018] are being effective in preventing or remediating modern slavery” (Interview 5). As a result, most felt that modern slavery statements were not fit for purpose, useful, or usable in delivering transparency outcomes. Furthermore, interviewees questioned the accessibility of modern slavery statements. One pointed out that they “are developed, at the moment, to be submitted to government, and not in a consumable format for the majority of people to go and look at, unless you have expertise, time, and assessment criteria” (Interview 6). Current regulation produces information irrelevant for most investors or customers, which is likely to negatively affect organisational integrity perceptions amongst these stakeholder types who are unable to find what they are looking for to inform decisions.

480  Research handbook on organisational integrity Overall, almost all of those we spoke to felt transparency alone is not suitable for all types of sustainability challenges. The application of transparency to enable organisational integrity depends on the issue and nature of the organisation. Target setting and demonstrating performance of environmental business risks, such as climate change, are more easily considered than social business risks, such as forced labour. Equally, certain organisations are inherently not trusted by stakeholders due to historic malpractice. (d)

What Needs to Change for Transparency to Build Trust Potential in Organisational Integrity on Forced Labour?

For transparency to contribute to trust and organisational integrity outcomes, the broader setting in which it sits needs to be supportive. Regulation is important, but a well-resourced inspectorate to enforce sanctions for poor performance is also essential: “part of the problem is the inspectorate is poorly funded” (Interview 10). Public understanding of important social issues is also lacking and inconsistent. Generally, few societal actors have a learned or knowledgeable understanding of the extent of forced labour happening in their own country. Consequently, there is a need for an active and engaged society that is empathetic towards a journey, but holds a critical, progressive relationship with business to ensure effective feedback (Interview 8). When information shared by a business is perceived to be transparent (characterised by traits associated with disclosure, clarity, and accuracy) by a stakeholder, transparency can enhance trust potential in organisational integrity (between the business and the stakeholder). The approaches companies use to report and disclose their sustainability performance are many and varied. Not all contribute equally to satisfying transparency expectations, and not all address the critical issues of trust that are required to deliver the outcomes expected.

SUMMARY, CONCLUSIONS, AND FUTURE RESEARCH We began this chapter by posing an important question: Does transparency improve organisational integrity or does some basic sense of an organisation’s integrity need to exist before transparency is taken seriously? Our aim was to unpack the relationship between transparency and organisational integrity to provide guidance about its operation, as well as opportunities for future research. There is no doubt that transparency plays an important role in building perceptions about organisational integrity. A vast literature demonstrates its application across a number of settings, and most governments have enacted various legislative requirements on organisations to provide details of their performance to the public. In our investigation of how civil society organisations attempt to gain information about forced labour, many highlighted the critical role of transparency in doing their work and driving corporate accountability. But the relationship isn’t simple. While the value (and outcomes) of transparency is often taken-as-given, the empirical evidence is less convincing. Even in cases where transparency is designed to deliver specific operational improvements, doubts persist about its effectiveness. We do know that careful design and a wide range of informational, social, organisational, and contextual factors are critical in achieving success.

Organisational integrity and transparency  481 In the case of less direct outcomes, such as organisational integrity, the connection between transparency and outcomes is less clear, and more tenuous. What we do know is that it is the dimensions of transparency, rather than just the simple act of disclosure that matters. How an organisation discloses matters. Improving perceptions of integrity is more likely when disclosure is relevant, timely, understandable, and contextualised. This point reinforces the importance of audience and objective. If organisational integrity is important, the audience and the form of disclosure needs to be carefully considered. Despite this, understandings about the relationship between transparency and organisational integrity are underdeveloped. Much more is known about transparency direct outcomes, and transparency and trust. Most assume organisational integrity to be a component of trust (Pirson & Malhotra, 2011; Schnackenberg & Tomlinson, 2016), but this relationship requires greater scrutiny and study. It would also be of benefit to understand more about how the dimensions of transparency (disclosure, clarity, and accuracy) differ where the objective is to establish or rebuild perceptions of organisational integrity, compared to a situation in which organisations are already viewed favourably. Do the dimensions operate similarly, or is clarity more important than accuracy? Our deep dive into forced labour also reveals some tension between users’ needs, stakeholder expectations, and the information that organisations provide. More research is needed into the forms of transparency that are effective for specialised stakeholders (such as civil society organisations) compared to the general public. While it is possible that the dimensions of transparency could differ by the objective and outcomes being sought, they might also differ by stakeholder group. Those we spoke to had very specific expectations regarding the “what” of disclosure, and clarity and accuracy extended well beyond data presentation to clarity about what was being done, the implications of forced labour issues, and how management were learning and responding to the issues that arise. Overall, the relationship between transparency and organisational integrity is important, but not well understood. What we have attempted to demonstrate is that managers and researchers need to take a wide view of transparency. It is necessary to consider its constituent dimensions, craft specific objectives, consider audience needs, and place transparency into the wider context of stakeholder groups, intermediaries, and regulations. For organisational integrity sunlight might be the best disinfectant, but some stains are harder to shift than others.

NOTE 1. According to the International Labour Organization Forced Labour Convention, 1930 (No. 29), forced or compulsory labour is all work or service which is exacted from any person under the threat of a penalty and for which the person has not offered himself or herself voluntarily. It refers to situations in which persons are coerced to work through the use of violence or intimidation, or by more subtle means such as manipulated debt, retention of identity papers, or threats of denunciation to immigration authorities.

482  Research handbook on organisational integrity

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30. Organisational integrity and hypocrisy Gökhan Kılıçoğlu and Derya Kılıçoğlu

Organisations tend to have similar practices to those of successful ones to survive in a competitive environment and improve their efficiency and productivity (Burrell Nickell & Roberts, 2014; Dowling & Pfeffer, 1975; March & Olsen, 1989; Meyer & Rowan, 1977). This is known as isomorphism. Isomorphism involves organisations adapting to the environment, determining the best ways to operate and pursuing goals for gaining legitimacy (DiMaggio & Powell, 1983). However, conflicts may arise when organisations try to adopt successful practices, leading to inconsistencies with their existing structure and culture (Meyer & Rowan, 1977). Consequently, organisations may comply with rules, norms and standards superficially, resulting in ‘organisational hypocrisy’. Organisational hypocrisy is an undesirable situation where organisations show inconsistencies between their talks, decisions, values and actions (Brunsson, 1989; Kılıçoğlu, 2017a, 2017b). ‘Talks’ refer to the promises organisations make, as well as the expressions of what they intend to do. This includes the words spoken by organisation members, particularly leaders. ‘Decisions’ are formal statements made by the organisation, typically in written documents. ‘Values’ represent the ethical principles proclaimed by the organisation to guide their actions, whereas ‘actions’ refer to the actual practices and behaviours exhibited by the organisation and its members. Organisational hypocrisy is ethically undesirable because organisations are expected to behave consistently in line with their talks, decisions and values (Falk & Blaylock, 2012). Therefore, it is important to understand the factors that contribute to hypocrisy, its impact on organisations, and how integrity can be embraced to eliminate hypocrisy (Phillippe & Koehler, 2005). This chapter focuses on examining organisational hypocrisy and proposes organisational integrity as its opposite. The chapter reviews the conceptualisation of organisational hypocrisy and factors leading to hypocrisy. The organisational impacts of hypocrisy and consistency are discussed. Organisational integrity is presented as a contrasting concept to hypocrisy, and threats to integrity within organisations are highlighted. Some interventions to improve organisational integrity and eliminate hypocrisy are explored. The chapter concludes with future research suggestions and practical implications for organisations.

ORGANISATIONAL HYPOCRISY AND ITS DETERMINANTS The history of ‘hypocrisy’ is based on classic theatre in ancient Greece. It comes from the Greek word hypokrisia, which means ‘to speak in a dialogue’ or ‘to act on the stage’. In ancient Greek theatre, the role of hypocrites was to play the parts of multiple characters in a play. Hypocrites are like actors pretending to be what they are not and saying things that they don’t mean by acting out momentarily (Szabados & Soifer, 2004). Hypocrisy can be seen as wrong because a hypocritical person undermines the moral system by deliberately misrepresenting the evidence upon which we base our judgements. 485

486  Research handbook on organisational integrity Hypocrisy is a form of dishonesty where people mislead others about what they are going to do or what the other person can count on (Hangel, 2013). Truth-telling and honesty are part of our moral lives. Morality is damaged when the requirements of truth-telling are not met. Hypocritical people lack the intention to develop virtuous behaviour and derive no pleasure from doing the right thing. Instead, they derive satisfaction from bad outcomes (McKinnon, 1991). Hypocritical people pretend to embrace values for their own purposes (Fernando & Gross, 2006). Hypocrisy is a complex concept that has been studied by psychologists and discussed by philosophers over the years (Alicke, Gordon & Rose, 2013; Crisp & Cowton, 1994; McKinnon, 1991; Szabados & Soifer, 1999, 2004). Addressing the situations in which hypocrisy occurs in organisation life can help organisations understand what makes them behave the way they do. Factors, such as intent to deceive others, weakness of will and self-deception, prompt the presence of hypocrisy in organisations (Alicke et al., 2013; Szabados & Soifer, 1999). Hypocrisy is often associated with deceiving others (Szabados & Soifer, 1999). When people fail to keep promises, they may perceive their own behaviour as hypocritical when they had the intent to deceive others (Crisp & Cowton, 1994). People may also act hypocritically when they lose their control and willpower. Another trigger for hypocrisy is self-deception, where people deliberately contradict their actions, previous statements and values (Alicke et al., 2013). Hypocrisy in organisations can also arise from conflicting pressures and inconsistent demands of the environment, especially in loosely coupled organisations during legitimation process. Even when organisations attempt to align their internal structures, processes and ideologies with environmental demands, conflicts and different ideas can arise among opposing groups within the organisations (Brunsson, 1989; Weick, 1976). These attempts may be superficial, only existing in written documents such as strategic plans, without being realised in organisational practices (Larsson, 2013). Thus, organisations may not keep the promises and decisions taken in practice, and not reflect their espoused values, so they fail to fulfil their goals and mission. While hypocrisy can be prevalent in organisations due to these triggers, the opposite situation, organisational integrity, is also possible, as discussed in this chapter.

ORGANISATIONAL HYPOCRISY VERSUS ORGANISATIONAL INTEGRITY Integrity, derived from the Latin integritas, refers to wholeness, coherence, completeness, rightness or purity (Fuerst & Luetge, 2021). It involves consistency between talks and actions adhering to a set of principles and commitments (Barry & Stevens, 1998). Integrity is perceived when actions are consistent with espoused values (McFall, 1987; Petrick & Quinn, 2000). Integrity also encompasses the congruence between stated and enacted values, and between promises made and promises kept (Simons, 2002). Unlike hypocrisy, integrity is characterised by consistency between talks, decisions, values and real actions. Integrity is rooted in the ‘adherence to moral and ethical principles’. Integrity is guided by ‘moral obligation’ or ‘moral justification’ of a rational universal truth or reality, rather than a set of agreed-upon morals and values (Becker, 1998; Simons, 1999). It encompasses ethical principles such as independence, self-esteem, rationality, fairness, reliability, justice and productivity (Becker, 1998; Bews & Rossouw, 2002; Mayer, Davis & Schoorman, 1995).

Organisational integrity and hypocrisy  487 Other inherent aspects of integrity are honesty, respect, trust and compassion (Badaracco & Ellsworth, 1989; Becker, 1998; Paine, 1997). Integrity is a socially and timely relative concept and it pertains to meeting the legitimate and generally accepted expectations of others. It can vary depending on the situation, location and time, as well as among individuals, groups, organisations and societies (Palanski & Yammarino, 2009). In this regard, integrity can be examined at three levels: individual, group and organisation (Palanski & Yammarino, 2009). At the individual level, integrity refers to the consistency between a person’s talks, decisions, values and actions. It involves acting in accordance with ethical values, norms, standards and rules accepted by organisation members or the society (Huberts, 2014; Huberts, Kaptein & Lasthuizen, 2007; Kolthoff, 2016). A person is considered to have integrity if others believe that this person talks openly and honestly about what they do. Essential characteristics of integrity include having a morally sound commitment and maintaining consistency between the commitments and actions (Fuerst & Luetge, 2021). Thus, integrity requires ‘walking the talk’ (Maak, 2008) or ‘being a person of one’s word’ as opposed to hypocrisy. Hypocrites are lacking in integrity since their actions are not integrated with their endorsements or commitments (Calhoun, 1995). Contrary to integrity, hypocritical people do not practise what they preach. They fail to keep their word, internalise espoused values and demonstrate them in their actions (Alicke et al., 2013). This contradiction between talks and actions results in a failure to ‘walk the talk’ at the individual level (Greenbaum et al., 2012). At the group level, integrity refers to the collective behaviour and actions of a group of individuals. A group is considered to have integrity when there is consistency between the group’s talks, decisions, values, and actions, encompassing both espoused and enacted values. This can apply to sub-organisations such as departments or working teams. The integrity of a group is influenced by the integrity of its individual members and the norms adopted by the group. Integrity at the group level depends on the average level of integrity among its members, and each member’s actions can have an impact on other members of the group (Palanski & Yammarino, 2009).

Figure 30.1

Organisational hypocrisy versus organisational integrity

Integrity can also apply to the organisational level. At the organisational level, integrity refers to the extent to which an organisation’s behaviour is in accordance with the talks, decisions and values espoused (Kolthoff, 2016). Organisational integrity refers to the organisation as a whole and being whole (Huberts, Kaptein & Lasthuizen, 2007; Kaptein & van Reenen,

488  Research handbook on organisational integrity 2001). Organisational hypocrisy occurs when an organisation acts inconsistently with its talks, decisions and values. Figure 30.1 illustrates the contrast between organisational integrity and organisational hypocrisy.

THREATS TO THE INTEGRITY OF ORGANISATIONS Hypocrisy and integrity are opposite concepts. Organisational hypocrisy poses a significant threat to organisational integrity. When hypocrisy increases within an organisation, it disrupts integrity. Conversely, prioritising integrity of the organisation is a powerful approach to addressing and mitigating hypocrisy within organisations. In this section, we explore three metaphors that explain how inconsistencies arise in organisations and how these threats breach integrity, and lead to organisational hypocrisy. Inconsistencies in organisations can be understood through the three metaphors of the entangled hands, many hands and dirty hands. These metaphors, as described by Kaptein (1999), highlight the conflicting interests that arise, respectively, in the relationships between an organisation and its employees, among employees themselves, and between the organisation and its stakeholders. These metaphors help to illustrate the complexities and challenges organisations face in maintaining integrity. The entangled hands dilemma describes that employees have multiple roles and have their own interests and expectations (Kaptein, 1999). The individual roles and interests of employees may not be similar to those of the organisation. The entangled hands metaphor addresses the fact that the conflict between the interests of employees and their organisation may lead employees to use the organisational resources, such as budget, equipment and information, for their own interests, thereby damaging the integrity of the organisation. The many hands dilemma refers to the conflict between the internal parts of the organisation. The many hands dilemma describes the risks ensuing from the need to employ more than one employee in an organisation. Employing more than one employee implies that employees receive different tasks, roles and responsibilities. Because of this specialisation, organisations run the risk that corporate responsibilities are lost as they are not well operationalised into the responsibilities of employees. Organisations also run the risk that employees become less inclined to bear responsibility for the organisation as they only focus on executing their own responsibilities. Employees can even start to compete with each other which may also result in the loss of corporate responsibilities. In all these situations, the integrity of the organisation is breached as the organisation loses its consistency. The dirty hands dilemma addresses the conflicts between an organisation and its stakeholders. Organisations and their stakeholders may have conflicting interests and expectations. The dirty hands dilemma refers to choices that an organisation has to make between conflicting stakeholders’ interests and, whatever the organisation decides, it harms the interests of at least one stakeholder, thereby making its ‘hands dirty’. Organisations may also make their hands dirty to survive in competitive world and ensure profit by ignoring stakeholders’ interests and expectations. Imbalance between these conflicting interests and expectations experienced in these three dilemmas may infringe on the legitimate interests of organisations and their stakeholders. When the interests and expectations of the organisations do not align with those of stakeholders, conflicts may arise, leading to situations where organisations fail to keep their promises

Organisational integrity and hypocrisy  489 and take actions contrary to what they have promised to their stakeholders. These conflicts can occur at the personal and departmental levels within the organisation as well. The conflicting interests and expectations may be sources of inconsistencies and hypocritical acts within organisations. Even hypocritical acts in organisations may fill the gap between their images and daily practices. Inconsistencies between talks, decisions, values and actions may lead to breaches in organisational integrity. Examples of such breaches include engaging in discrimination, abusing power, nepotism, wasting organisational resources, consciously selling faulty products, engaging in blackmail, unethically collecting information about other organisations and violating environmental laws (Huberts, Kaptein & Lasthuizen, 2007; Kaptein, 1999; Kolthoff, 2016; Lasthuizen, Huberts & Heres, 2011).

IMPACT OF HYPOCRISY IN ORGANISATIONS Organisational hypocrisy may invite negative consequences. These impacts may be related to the leader, organisation members and the organisation. The Leader When leaders display inconsistency between their talks, decisions, values and actions, it can damage their reputation, honesty, sincerity and justice. This inconsistency may undermine their legitimacy and make it difficult for them to maintain trust and credibility (Bhatti, Hansen & Olsen, 2013; Effron & Miller, 2015). When leaders fail to treat people fairly and do not fulfil their expectations of justice, it can lead to unfavourable reactions from organisation members. They then believe that their leader does not walk the talk (Cha & Edmondson, 2006; Duffy, Ganster & Shaw, 1998; Greenbaum, Mawritz & Piccolo, 2012; Prottas, 2008). When leaders consistently align their talks, decisions and values with their actions, it enhances trustworthiness that is characterised by reliability, dependability and fairness within the organisation (Bews & Rossouw, 2002; Mishra, 1996). Demonstrating consistency between talks and actions positively affects leaders’ task performance ratings (Way, Simons, Leroy & Tuleja, 2018). According to Simons (2002), leaders with high behavioural integrity provide followers with a sense of certainty about the actions that they will perform. Based on this sense of certainty, followers are more likely to trust their leader (Palanski & Yammarino, 2009). This consistency and behavioural integrity of leaders strongly influence positive work behaviours such as follower trust, commitment and job performance (Kılıçoğlu et al., 2020; Simons, Leroy, Collewaert & Masschelein, 2015). Consistency and integrity of leaders not only improve employees’ attitudes and well-being but also decrease employees’ absenteeism and deviant behaviours through effective leadership guidance in the organisation (Davis & Rothstein, 2006; Dineen, Lewicki & Tomlinson, 2006; Prottas, 2008; Simons, 2002). Organisation Members Research has consistently shown that hypocrisy within organisations can have various effects on organisation members. Organisational hypocrisy can lead to discomfort, distress, absenteeism, decreased performance, reduced trustworthiness and a decreased sense of justice (Brunsson, 1989; Cha & Edmondson, 2006; Fields, 2002; Kılıçoğlu, Yılmaz & Karadağ, 2014;

490  Research handbook on organisational integrity Koh & Boo, 2001; Kowal & Roztocki, 2015; Kuchinke, Kang & Oh, 2008; Prottas, 2008; Schwepker, 1999; Sims & Kroeck, 1994; Viswesvaran, Deshpande & Joseph, 1998; Yidong & Xinxin, 2013). Specifically, organisational hypocrisy reduces employees’ commitment to the organisation, work motivation, job satisfaction and willingness to do an activity volitionally (Palanski & Yammarino, 2007). Hypocrisy also undermines employees’ stimulation to work for the interest of the organisation, brings tension among employees and triggers employees’ intentions to leave (Brunsson, 1989; Phillippe & Koehler, 2005). Additionally, employees may experience reduced productivity when there is an inconsistency between espoused values and actual behaviours (Cording, Harrison, Hoskisson & Jonsen, 2014). Employees in organisations trust each other when their actions align with expectations and when they believe that commitments regarding future actions will be upheld (Simons, 2002). In contrast, they perceive hypocritical actions as a threat to their perception of self-integrity (Aronson, 1999; Stone & Fernandez, 2008; Stone, Wiegand, Cooper & Aronson, 1997). Hypocrisy also damages perceptions of organisational justice. The inconsistency between the talks, the decisions taken by the managers, espoused values and the organisational actions may strengthen the negative perceptions of the members regarding the equal distribution of resources and work and objective and impartial decision-making (Kılıçoğlu & Yılmaz Kılıçoğlu, 2019). On the other hand, ensuring consistency has positive consequences for organisations. It can enhance employees’ willingness to engage in activities, facilitate the implementation of desired changes and boost their intent to stay with the organisation while reducing their turnover (Simons, Leroy & Nishii, 2022). The Organisation Organisational hypocrisy, whether displayed by individuals, teams or the organisation as a whole, can have negative long-term consequences. Organisational hypocrisy evokes insincere and dishonest behaviour, leading to negative reactions from employees and damage at all levels of the organisation (Effron et al., 2018). When there is an inconsistency between what is asserted (x), what is decided (y) and what is actually implemented (z), organisational integrity suffers, resulting in mistrust within the organisation (Kılıçoğlu, 2017a, 2017b). Hypocrisy can result in a loss of organisational credibility (Christensen, Morsing & Thyssen, 2010) and can damage its reputation (Wagner, Lutz & Weitz, 2009). Furthermore, organisational hypocrisy often fosters a sense of cynicism among employees (Han & Koo, 2010; Kılıçoğlu et al., 2014; Naus, Iterson & Roe, 2007; Simons, 2002). Dishonesty, insincerity and experiences of unfair treatment can contribute to the development of organisational cynicism.

INTERVENTIONS TO OVERCOME ORGANISATIONAL HYPOCRISY Organisations need to establish moral virtues or qualities in order to overcome organisational hypocrisy. Kaptein (1999) proposes seven virtues for organisations, which are clarity, congruency, achievability, supportability, visibility, discussability and sanctionability. These moral virtues need to be embedded in the organisation to achieve integrity (Kaptein & van Reenen, 2001). For each of these virtues, we discuss one intervention.

Organisational integrity and hypocrisy  491 Clarity: Setting Clear, Consistent and Precise Policies To achieve clarity within organisations, it is essential to have clear, consistent and precise policies. These policies need to be clearly defined, formulated and operationalised to defeat hypocrisy. Uncertain, inconsistent and contradictory policy statements regarding decision-making, rewarding and sanctioning may create inconsistency in actions. Therefore, setting clear policies may facilitate the implementation of these policies and ensure consistency between talk and action. Congruency: Ethical Leadership To achieve congruency within organisations, leaders need to set a good example of how to turn their talk into action. Ethical leaders are credible and consistent persons in what they say and what they do in practice (Brown & Treviño, 2006). Having traits such as honesty, integrity, altruism and commitment to the organisation, ethical leaders can transform their moral intentions into behaviours, align their talk and action, and behave coherently in different relationships with the same array of ethical values (De Hoogh & Den Hartog, 2008; Leroy, Palanski & Simons, 2012; Yidong & Xinxin, 2013). Achievability: Building and Getting Involved in a Network To ensure achievability, organisations can build or get involved in networks. Through collaboration within a network of other organisations, organisations can realise the legitimate expectations of the stakeholders and respond to environmental demands. Getting involved in networks includes the exchange of knowledge and experience regarding consistency, identifying best practices and setting realistic expectations for tackling challenges and dilemmas (Hoekstra, Talsma & Kaptein, 2016; Kaptein & van Reenen, 2001). Organisations can gain a better understanding of each other’s challenges or failures, formulate consistent and achievable expectations and improve the consistency between talk and action. Supportability: Integrity-Based Training To promote supportability within organisations, an effective approach is to implement integrity-based trainings. Supportability corresponds to providing employees assistance to make a responsible choice when they face dilemmas. Integrity-based trainings encompass a set of coherent, values-driven activities offered to employees to raise their moral conscience, moral reasoning and moral quality of their behaviour (van Montfort, Beck & Twijnstra, 2013). These training programmes provide a deeper understanding of the organisation’s code of ethics and dilemmas, enabling employees to make responsible choices (Fudge & Schlacter, 1999; Honeycutt, Glassman, Zugelder & Karande, 2001). Visibility: Auditing and Monitoring Mechanisms To enhance visibility, organisations can establish auditing and monitoring mechanisms. These mechanisms can serve to identify inconsistencies in the organisations, address discrepancies between talks, decisions and actions, and identify areas for improvement in order to ensure

492  Research handbook on organisational integrity consistency. Additionally, auditing and monitoring allow for critical reflections. Policies and measures can be evaluated to assess whether the organisation is living up to its expectations. This evaluation can be achieved by examining the seven moral virtues experienced by employees in their work (Kaptein & Avelino, 2005). Discussability: Decision-Making with Espoused Ethical Values To promote discussability, it is essential to integrate espoused ethical values into decision-making processes and reflect them in critical activities of the organisation. Since appropriate decision-making is believed to lead to proper actions within organisations, it is critical to discuss the dilemmas and conflicting expectations considering espoused ethical values that the organisation should uphold. Through making conflicting expectations and dilemmas discussable, new insights can grow, aiding in the resolution of dilemmas encountered in organisations (Kaptein & van Reenen, 2001; Manning, 2020; Paine, 1994). Sanctionability: Selecting Employees with Integrity To embed sanctionability, organisations can select employees based on their ethical values and capabilities of the organisation. Including integrity-based assessments in the recruitment process and selecting employees with integrity can contribute to the integrity of an organisation. Therefore, it is crucial to ensure that selected employees share the organisation’s values (Hoekstra, Huberts & van Montfort, 2022; Tsahuridu & Perryer, 2002). Also, after the recruitment process, clear expectations can be provided to new employees regarding the importance of acting with integrity (Kaptein, 1999).

CONCLUSION AND DISCUSSION Organisations are expected to respond to the demands of the environment and adapt to the environment to incorporate conventions. They need to accomplish their missions and goals by reflecting the values of the environment. However, they may be exposed to operational and normative inconsistent demands and pressures. Organisations may be forced into hypocritical situations with uncoordinated actions and efforts to gain legitimacy. As a result, inconsistencies between talks, decisions, values and actions may invite negative consequences and create several pathological behaviours in organisations. If ethical principles are not supported by and embedded in an organisation, individuals in the organisations perceive these hypocritical acts as a threat to the integrity of the organisation. Since hypocrisy and integrity are believed to be two opposing concepts, the increase of one in an organisation is a threat to the other, or the decrease of one gives way to the other. Therefore, an increase in hypocrisy breaches organisational integrity. To eliminate hypocritical situations and their impacts on organisations, all kinds of interventions are possible such as setting clear, consistent and precise policies, ethical leadership, building and getting involved in a network, employing integrity-based trainings, implementing auditing and monitoring mechanisms, decision-making with espoused ethical values, and selecting employees with integrity. Such interventions will overcome inconsistency between talks, decisions, values and actions, defeat hypocrisy, and strengthen integrity in organisations.

Organisational integrity and hypocrisy  493 For future research, some suggestions could be provided. New research may explore the relationship between organisational hypocrisy, organisational integrity and other work-related outcomes such as performance, job satisfaction, intent to stay, work engagement, motivation and efficiency. It is necessary to investigate the conditions that give rise to organisational hypocrisy to create an organisation with integrity. Future research may also focus on leadership combining the concepts of hypocrisy and integrity. Lastly, cross-national studies in countries with different cultures could also be performed to comprehend consistency and discrepancies in organisations.

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31. Organisational integrity, citizenship, and legitimacy Jacob Dahl Rendtorff

In this chapter, I will explore the importance of organisational integrity for corporate citizenship and business legitimacy. Organisational integrity is the result of ethical behaviour in business and corporations which is founded on strong organisational ethics and good values-driven management. Integrity is closely connected with concepts of “excellence” and “best practice”, which are essential for organisational development. Likewise, integrity expresses an approach to the organisation’s strategy and organisational aims and scope from an ethical point of view. This helps to build the legitimacy of the organisation, because legitimacy depends on the expectations of the organisation by the stakeholders of the internal and external environment. So what are the most important aspects of integrity? Integrity can be considered a virtue that is necessary to realise justice in society (Ramsey, 1997). There is also a close connection between integrity and a commitment to justice and fairness because integrity is about being committed to principles of justice (Freeman, 2001). To clarify what organisational integrity entails, I will discuss in this chapter some key aspects of organisational integrity regarding the definition of integrity, the relationship between individual and organisational integrity, the concept of integrity, economic and ethical integrity, as well as ethical judgement and organisational integrity. Here, there is a close relation between organisational integrity and the idea of the balanced company (Kaptein & Wempe, 2002). Moreover, since compliance with external expectations by stakeholders are constitutive of business legitimacy, balancing different concerns and requirements help to develop and maintain organisational integrity. This chapter follows up on my work on individual integrity in bioethics and biolaw and develops this into business ethics and organisation ethics. In bioethics and biolaw, I focused on integrity as an account for the inviolability of the human being, related to corporal wholeness and narrative of self-understanding in life (Rendtorff & Kemp, 2000; Rendtorff, 2007, 2015). The definition of integrity was as follows: The idea of integrity expresses the untouchable core, the basic condition of dignified life, both physical and mental, that must not be subject to external intervention. Therefore, respect for integrity is respect for privacy and in particular for the patient’s understanding of his or her own life and illness. Integrity refers to the coherence of life of beings with dignity that should not be touched and destroyed. In relation to human beings, it is coherence of life which is remembered from experiences and therefore can be told in a narrative. It is the life story of a person, the narrative unity or history of human society and culture. Some would also include the natural grown coherence in the life of animals and plants and finally the created wholeness of the world which makes the conditions for all life. (Kemp & Rendtorff, 2007, p. 240)

Regarding organisational integrity, I will in this chapter extend the vision of integrity as narrative unity to the organisational level of wholeness and consistency of values of organisations. Thus, in this chapter I will propose a theory of organisational integrity as both an extension and development of the concept of individual integrity. This theory will be presented in three 497

498  Research handbook on organisational integrity steps. Step 1 is about integrity as a virtue of good corporate citizenship, step 2 is about organisational integrity as essential for business legitimacy in organisations, and step 3 is about integrity and ethical judgement as essential for business legitimacy.

INTEGRITY AS A VIRTUE OF GOOD CORPORATE CITIZENSHIP Organisational integrity can be described as a virtue. It is an expression of the organisation’s ideal moral and political unity. This narrative wholeness is essential for citizenship. Corporate citizenship can be defined as the way a corporation relates responsibly and dutifully to its internal and external local and global environment (Rendtorff, 2009). Citizenship is a classical political virtue of good and constructive membership of society that can be viewed as a collective and not only individual virtue. Citizenship connects to legitimacy since good corporate citizenship implies that the corporation fulfils its obligations to society by responding to social expectations and requirements by stakeholders. In this context, integrity is essential for business legitimacy, because a company needs integrity to be considered as legitimate in relation to different stakeholders in society (Rendtorff, 2020). Integrity is important for the licence to operate a business because it creates trust and trustworthiness by responding to social expectations. At the same time, organisational integrity can be perceived as a basis for the company’s good citizenship insofar as citizenship is created by good values-driven management. Here integrity includes trustworthiness, accountability, and reliability. It involves a culture of honesty, truth-telling, and transparency in organisations. Such moral unity of values-driven organisations contributes to normative integration of business in society. Organisational integrity can also be regarded as the theoretical conceptualisation of moral and legal responsibility. In a broad legal sense integrity is an expression of the ability of individuals in organisations to act with practical wisdom, reflection, and reliability. Thus, this notion of organisational integrity reflects the classic republican virtue of citizenship and can be advanced as an indication of individuals’ commitment to be virtuous and trustworthy regarding obligations to the social and political community. Integrity is further a legitimising concept in business ethics insofar as the concept expresses the corporate civic obligation to the community and its members. This is because the corporation assumes political and economic responsibility for the common good for the constructive future of the local and global political community. In this context, there is a close connection between the company’s good citizenship (in terms of political corporate social responsibility and legitimacy) and the organisation’s ethical integrity. In addition to this, it can be stated that the concept of business integrity is fundamental to an organisational theory that is based on organisational ethics addressing legitimacy challenges of the business organisation. There are many different uses and aspects of the concept of integrity. Integrity is commonly defined as wholeness, coherence, and absence of moral corruption (Rendtorff, 2011a). The concept of integrity is simultaneously understood as a moral virtue that is broader than practical rationality and the autonomy of decisions, but also narrower than the concept of moral judgement and practical wisdom. Integrity is also associated with honesty and persistence in one’s character insofar as it involves ethical unity and conscientious adherence to one’s moral principles. Integrity is therefore an important concept in business ethics and management theory, because the concept expresses a willingness, ability, and clarity to be committed as

Organisational integrity, citizenship, and legitimacy  499 a good citizen and responsible moral agent for corporate social responsibility in society. With this meaning, integrity becomes an important virtue of the company’s good and responsible citizenship, and the concept of integrity expresses the willingness of the business organisation to become part of the social community, which strengthens business legitimacy. From this point of view, integrity is linked to concepts of identity and moral character of both individual and organisation, because the concept expresses the ability to be moral in one’s choices, actions and other concerns in a way that benefits other people. When we make corporate citizenship the basis of corporate ethics, it is important to consider integrity as a virtue that results from true leadership with values (Paine, 2002). When virtue becomes a part of the decision-making structure and the company’s policy, integrity expresses the company’s good character as an organisation as well as a moral and political actor in society. From that point of view, integrity can be said to express the application of moral virtues in practice in business life. Integrity expresses the ability to integrate ethical views and values into the organisation. The theoretical concept of corporate integrity expresses the basis for integrity in corporate ethics in practice. Regarding the various concepts of business ethics, integrity can be defined as loyalty to the ethical virtues that express the universal obligation of business organisations to assume responsibility for the common good and for the prosperous development of society. The theoretical basis for the development of corporate ethics and social responsibility in the U.S. and Europe can be found in the work in the 1990s by Paine (1994). She has developed an important theory of organisational integrity that tries to place the organisation’s ethical and social responsibility on the collective level. She has emphasised the institutional aspect in the definition of business ethics. This means that she makes the concept of the business organisation’s integrity a key word in the current formulation of values-driven management. The company’s various codes of conduct and rules must be considered as contributions to such a development of organisational integrity. Paine bases the ethics on integrity as “integritas”, which means wholeness, completeness, and purity (Paine, 1994, 1997a, 1997b). Integrity is a central concept as a moral virtue and as a basis for the individual’s good life. It is closely related to identity and the sense of self-respect. Integrity includes the ability to gain the trust of others and to create trustful organisations with legitimacy. Integrity expresses the commitment to virtue and justice and outreach to receive internal and external trust by the stakeholders of the corporation. To be trustworthy, individuals and organisations need to express integrity. To express trustworthiness, integrity is associated with a high degree of commitment, self-control, and self-respect. Such unity of values should be consistent over time to increase trustworthiness. Integrity is here closely related to the ability to assume specific and ongoing obligations. It expresses a moral firmness and solidity in decisions, even if one is not dogmatic. It manifests an ongoing moral coherence through time in individual and organisational behaviour (Paine, 1997a, 1997b). There is a close connection between principles and practice in such organisational commitment. Integrity is thus also essential for a coherent personality and personal identity in time. Paine rejects the philosopher John Rawls‘ idea that integrity as a concept should be merely formal and thus should not be grounded in any moral virtue. Paine believes that it is in the concept of integrity that it is contradictory to say, for example, that a mafia boss should have integrity. Instead, development of a republican business ethics is important. Responsible citizenship is the foundation of business legitimacy in democratic societies. Here, there is a close connection between integrity and morality.

500  Research handbook on organisational integrity It is the moral dimension of integrity that constitutes the normative dimension of business legitimacy because morality is a key concept of the constitutive dimensions of integrity. It is also essential to Paine’s concept of integrity that value-driven management combines ethics and law. The reason is that integrity as a whole means that the manager combines legal compliance to legal regulations with ethical behaviour. With this approach, we can place the concept of integrity in the classical republican tradition of political philosophy. An implication of this would be to define ethical action and ethical integrity as a commitment to shared social and political values in society. From this point of view, integrity must be considered as a virtue that is necessary to implement justice in organisations and society. I agree with Audi and Murphy (2006) when they emphasise that the epistemology of integrity, which relates to oneness, wholeness, purity, and wholeness, refers to the realisation of moral principles in organisations. An important core of the integrity principle can therefore be defined using the concept of integration. Following up on this idea of integrative organisational culture, integrity is a general principle that expresses persistent commitment to “political morality”, moral principles and moral standards in organisations. Integrity expresses the ability to integrate values and ethical ideas in the organisation in a common framework for individual employees, but also in relation to the organisation and its stakeholders. Integrity refers to the ability to make good judgement and to strong moral character. We can emphasise that integrity expresses the ability to connect the company with the moral demands of society, which implies that the organisation’s action expresses a question of political morality. It is here that there is a close connection between integrity and the concepts of justice and fairness. This link to justice is also important for political legitimacy of business in a republican democracy (Rendtorff, 2020). Thus, the responsible commitment to political community is essential for understanding the links between the different dimensions of integrity, including the definition of integrity, the relationship between individual and organisational integrity, the concept of organisational integrity, integrity and the concept of “leadership”, and finally the relationship between ethical judgement and organisational integrity. I consider the concept of integrity as being the virtue that contributes to the integration of individual and organisation. Integrity has a political dimension that is essential for legitimacy of political community according to the “aiming at the good life with and for others in just institutions” (Ricoeur, 1992, p. 180). Ricoeur helps us to understand the relation between integrity and legitimacy when he focuses on the political dimension of integrity. To understand organisational integrity as the basis for legitimacy, it is also important to elaborate a little bit on the contents of integrity as a personal virtue or value. Halfon (1989) discusses the concept of integrity with focus on individual integrity. He defines integrity as “wholeness, completeness, unimpaired or an unmarred state” (p. 11). Regarding individual human beings, integrity expresses the wholeness of human life. This approach demonstrates the link between personal and organisational integrity. Following this analogy, we can say that integrity implies authenticity (Halfon, 1989; Sartre, 1943). The ethical dimension of integrity implies that integrity cannot be isolated from ideas of the good and of human dignity (Solomon, 1999). Therefore, it is difficult to be a pure consequentialist and still focus on integrity. Integrity is rather linked to self-choice of our visions and plans for existence (Williams, 1973, 1985). Accordingly, it is important to stress the narrative content as the unity of personal character. This is defined by the virtues, practices and dispositions of the individual that are realised as personal identity in a life-long moral commitment (Babbitt, 2001). In the perspective of such

Organisational integrity, citizenship, and legitimacy  501 a Kantian moral philosophy, integrity is closely linked to autonomy and dignity. Integrity functions as a norm for autonomous actions of individuals (Kant, 1784/1985, 1785/1999, 1797/1983). It puts constraints on duties and defines an individual’s concerns for wholeness and unity of life (Rendtorff, 2015). The Kantian deontological and universalist approach is here very important for integrity. In the Kantian perspective integrity is a fundamental virtue of good moral character that includes moral principles (Ramsey, 1997). But does this mean that integrity cannot be combined with compromise in situations of moral conflict? What about the ethics of the adversary (Appelbaum, 1999)? Here, it is important to emphasise the link between integrity and commitment to moral ideals. A person of integrity maintains the commitment in situations of conflict and temptation. We may argue that ethical responsibility relates to different contexts and therefore the self in some cases must enter compromise to maintain the relation with these different contexts (Rendtorff, 2002, 2009, 2011a). Of course, there is a tension between integrity and compromise, but in some cases to preserve the core of the self may include compromise in certain contexts (Goodstein, 2002). It might be the real sense of good integrity that you can engage in dialogue with others and reach views that are morally acceptable for everybody. With Dworkin (1986) we extend this move from individual integrity towards organisational integrity. In law Dworkin defines integrity as simultaneously a legislative and adjudicative principle. The idea is that judges understand all laws and legal principles as created by one judge who searches to apply those laws and principles consistently in a moral framework. Those principles are in law a matter of interpretation and the judge ought to interpret the law as expression of historical and cultural consistency with the rules and principles of the legal order. A law as integrity is a political ideal for the application of the norms of the order to create a “true community” (Freeman, 2001: 1401). This vision of integrity helps us to understand the concept of integrity as an expression of practical reason, virtues, and dispositions of collectivities to ensure political legitimacy of business. In this context we can refer to the professional integrity of specific organisational groups, for example integrity of the nursing profession or of the professional integrity of lawyers and indeed of organisations as a unity with a specific identity and narrative history.

ORGANISATIONAL INTEGRITY AS ESSENTIAL FOR BUSINESS LEGITIMACY IN ORGANISATIONS We can now develop a strategy with a view to building and maintaining the organisation’s integrity. After having presented the relation between the concepts of business legitimacy and integrity in the previous section, we will focus on how developing and maintaining integrity responds to social expectations of business legitimacy. The work of value-driven management can be considered an obligation to establish such norms. This involves the development of strategies to build organisational integrity in specific organisations. Responsible decisions at all levels of the organisation are indeed the ultimate dimension of organisational integrity that contributes to organisational effectiveness. In this perspective, following Paine (1997a), we can highlight some important aspects of organisational decisions that lead to the improvement of organisational integrity. Ethical principles should be interpreted in the light of social and technological change for this specific organisation. Ethical principles are applied according to the specific dimension of reality in the specific organisation. It is in this context that work

502  Research handbook on organisational integrity with organisational integrity must involve various stakeholders and focus on the organisation’s cultural dimensions. Seen from this point of view, organisational integrity means that policies and strategies in organisations are based on ethical principles and values that are emphasised as the foundation for the organisation’s coherence. This integration of principles and values contributes to the constitution of business legitimacy (Rendtorff, 2020). The company is considered in this context as an agent, an entity that shows its character and identity through the ability to self-regulate. In this perspective of organisational integrity, ethics can be defined as “invisible infrastructure of norms” (Paine, 1997a). But these norms should also be explicitly formulated in the company’s policies for values-driven management. Ethics and values involve an effort to enter into the right relationship with the stakeholders and other constituents of the company to create a relationship of trust and responsibility. In a modern knowledge-based economy, these requirements for organisational integrity become more and more important to ensure cooperation for maximum performance in the organisation (Paine, 1997a). Solomon (1999) emphasises in this context that the concept of integrity implies a completely new way of thinking about business and companies, which aims to overcome the dominant trivial metaphors about how to do business: The question “who really benefits” is a misunderstanding. To transcend the opposition of self-interest (profitability) and ethics is what the focus on the virtues is all about. Whether or not virtue is “its own reward”, the virtues on which one prides oneself in personal life are essentially the same as those essential to good business – honesty, dependability, courage, loyalty and, in short, integrity. To be virtuous, in other words, is to act in one’s own best interests. (Solomon, 1999: 34)

We can emphasise that an integrity strategy aims to go beyond the many metaphors that Solomon highlights as contributing to a dehumanisation of business life. It concerns the following metaphors: “Making money, business is war, business is brutal violence, business is a battlefield, business is based on survival of the fittest, a corporation is an efficient money machine, business is a game of decisions, a corporation is a machine, business is characterized by competitive cowboy capitalism and finally the idea that the abstract greed as such is good” (Solomon, 1999: 34). I agree with Solomon that we need to move beyond such metaphors and that it is very important to recognise that integrity is closely related to professionalism that results from the virtue of integrity. We can say that the strategy for organisational integrity goes far beyond the dehumanising metaphors of business life. It is an interesting and enriching, albeit controversial, project to make the concept of integrity also include organisations as legal subjects in society. Making integrity a central concept in business ethics expresses an effort towards this. It can be said that The Federal Sentencing Guidelines for Organizations in the U.S. from 1991 and the work of the European Union (2023) on corporate social responsibility, sustainability, and due diligence illustrates this definition of integrity. In particular, the relation between integrity, compliance, due diligence, and values-driven management is important. We can demonstrate that organisational contexts are constituting the ethical content of individuals’ organisational behaviour. The formation of the individual’s integrity cannot be separated from its affiliation with organisations. To develop integrity, one must concentrate on both the individual and the organisation-based integrity. This is essential in the establishment of an ethically coherent organisational culture (Paine, 1997b). Such a development will contribute to the formation of organisational integrity in practice.

Organisational integrity, citizenship, and legitimacy  503 In her article “Managing for Organizational Integrity”, Paine (1994) emphasises the importance of values for integrity. She says that ethical values help to define the organisation’s culture and relationship with the outside world. The U.S. Federal Sentencing Guidelines for Organizations are based on an organisational view of ethics and integrity. The guidelines consider whether the company has tried to act ethically through the implementation of a corporate ethics programme. But the integrity approach does not leave it all to the organisation. It can be said that an integrity-based approach to corporate ethics sees no contradiction between respect for the law and the manager’s personal ethics. Focusing on integrity means that the company does not only focus on duty, but also on the values that the company has formulated in an ethics programme. These values become the governing ethos of the organisation (Paine, 1994: 107). Programmes for value-driven management function as an instrument that the organisation can use to influence the individual’s behaviour internally within the company. These instruments are therefore institutional means to ensure that employees act ethically in the organisation. An ethics programme implies an organisational pressure on the individual’s behaviour and helps to create an organisational culture around behaviour, contributing to the reinforcement of business legitimacy. This is not an expression of apostasy in assigning guilt, but the ethics programmes help to form an organisational basis for influencing the behaviour of individuals and personal moral responsibilities. The fact that there is thus an organisational basis for the understanding of ethics should not be understood as a weakening of the employees’ personal responsibility, quite the opposite (Paine, 1994: 109). One objection, however, is that ethics programmes simply express a further “legalisation of the company”, where organisations are characterised by an opaque number of rules and laws that do not really have an ethical content. It can be argued that ethics programmes simply lead to even more opaque rules and laws. In this connection, it is important to understand that the ethics programmes can lead to a more precise insight into the boundaries between ethics and law. It is also important to keep in mind that the ethics programmes do not only lead to a limitation of the individual’s action but are open to the good and virtuous practice that goes far beyond the individual action. Ethics programmes express a “hope for good practice of individual employees”. Ethics must therefore not simply be understood as “obeying the law”, which would lead to mediocrity, but rather as a pursuit of virtue in the individual’s ordinary practice (Paine, 1994: 109). The focus on values means that an integrity strategy is different from a legal strategy that is primarily about obeying the law. The integrity strategy aims to create an ethical culture in the organisation that is the foundation for law-abiding behaviour. The integrity strategy implies that the organisation’s values become governing for the relationship with the law. The ethical values become decisive for the decision-making processes by individuals and groups in the organisation (Paine, 1994: 111). This also helps to understand how one should perceive the organisation’s basic concepts and values. Basing management on an integrity-based ethics programme thus expresses a deeper and more comprehensive approach to the company’s ideals and values than is the case in the law-based approach. This is because the integrity-based management helps to create an organisational culture for the employees. Therefore, the integrity-based strategy that applies between stakeholders involves several of the elements that have been formulated through requirements for an effective ethics programme in The U.S. Federal Sentencing Guidelines. Here, an ethics programme aims at establishing standards and procedures that can contribute to the reduction of crime, improving such standards everywhere in the company, and carrying out an ongoing evaluation of

504  Research handbook on organisational integrity the programme’s effectiveness and timeliness. It is important that there is a requirement to obey such a programme, and thus there must be some form of “compliance procedure”, but the integrity-based strategy at the same time emphasises the visionary and virtue-orientated (standards of excellence) in such an ethics programme. And this strategy also depends on the organisation’s special context, where both the managers, employees and the company’s general structures contribute to cementing the values of the business organisation as a reinforcement of business legitimacy. A summary of the main points of such an ethics programme, which also aims to promote the company’s social responsibility to ensure business legitimacy, therefore implies the following (Driscoll & Hoffman, 2000): (1) There must be a focus on the manager’s role; (2) There should be a formulated objective (vision statement); (3) The ethics programme should also contain formulation of the company’s values (value statement); (4) An ethics code should be drawn up; (5) An ethics officer should be appointed; (6) The ethics officer should be able to report to a higher standing authority (ethics taskforce) or to an ethics committee; (7) The company should have a strategy for ethics communication internally and externally; (8) The company should offer employees courses in ethics training; (9) Ethics help could be developed in extreme situations, and there should be an opportunity to communicate and discuss ethical problems in the workplace; (10) The ethical behaviour must be followed up with endorsements or rewards; (11) Systems should be developed to process and catalogue ethical data; (12) These systems should be subject to periodic evaluation by ethics committees, management, etc.; (13) There should be a reporting system involving ethics officers, ethics committees and management; (14) Special strategies for implementing the company’s value programme should be formulated, which, however, follow the company’s specific context and thus can be law-based, values-driven, or virtue-based depending on the company’s history. The problem is how integrity can be a direct part of strategies for leadership and organisational excellence at different levels of the organisation. In opposition to the view of management not as a practical art for achieving excellence, but as a science of strategic planning and corporate finance, Badaracco and Ellsworth (1989) have addressed this problem. They examine how different management strategies face dilemmas of leadership in their efforts to achieve organisational integrity. Here, there is also focus on integrity as a part of a realist strategy of political power (Jay, 1967/1996). Badaracco and Ellsworth’s analysis focuses on the basic assumptions and presuppositions of three common strategies of management, which are political leadership, directive leadership, and values-driven leadership. These different strategies are then considered in relation to the most important dilemmas that managers are confronted with to understand the possibilities and dilemmas of management’s quest for integrity and excellence in organisations (Brown, 2005). The different philosophies of leadership may be understood as some fundamental prejudices that managers have when they approach different problems in their organisations. In these different prejudices the quest for integrity plays an important role in helping managers to overcome problems and strive towards organisational excellence (Badaracco & Ellsworth, 1989). The different strategies of leadership can be considered as some of the most common strategies for improving business legitimacy in the organisation. In this context we may distinguish between the management strategy of values-driven management and other strategies of management based on process, formality, and substance. In some cases, organisations work with values-driven management without accepting that it may be necessary to reflect the strategy of values in the leadership style of the organisation. So, organisations may try to

Organisational integrity, citizenship, and legitimacy  505 improve organisational integrity and excellence by using a political or directive style of leadership, which would be somewhat different from a strategy that is directly based on personal integrity and values (Rendtorff, 2011b). Another focus on strategy and economic performance could be the economic view on integrity, a workability concept of integrity as proposed by Jensen and his colleagues based on the principle-agent view of the firm (Jensen, 1976; Jensen & Meckling, 1976). At the time of the financial crisis, Jensen became aware of the importance of integrity, so he tried to develop a concept of integrity of the firm. This concept can be defined as “economic integrity” (Erhard & Jensen, 2007; Erhard, Jensen, & Zaffron, 2007; 2008; Jensen, 2009a; 2009b). The economic view of integrity emphasises that integrity should be built on wholeness, transparency, and consistency of agents in making economic and managerial decisions about the firm. Jensen focused on a workability concept of integrity in contrast to the ethical view. Workability in integrity means that it is possible to account for wholeness, consistency and transparency without appeal to ethical and moral values. But is this possible? Confronting this view with the ethical integrity view on integrity, it is important to emphasise that integrity of economic performance and strategy is not possible without the ethical integrity view. Therefore, integrity as essential for business legitimacy presupposes the close relation between ethics and economics.

INTEGRITY AND ETHICAL JUDGEMENT AS ESSENTIAL FOR BUSINESS LEGITIMACY It is important that, in a theory of organisational integrity and values-driven management, we do not forget the importance of the manager’s ability to have an ethical formulation competence. Ethical formulation competence could be defined as a capacity of reflective thinking and judgement. Such reflective competence is necessary to act ethically and to promote business legitimacy of the organisation. In the perspective of creating a balance and close connection between individual integrity and organisational integrity, ethical judgement of leaders and managers as well as individual members of organisations is important for developing and maintaining integrity in organisations. In this context, it is important to clarify the role of ethics and law in relation to leadership and management. Here, Paine (1994) tries to develop a theory of values-driven management that moves beyond legal compliance to a stronger focus on ethics and values in organisational integrity. Paine argues that an ethics approach to management is superior to the judicial method because it focuses on human existential well-being, responsibility, and moral virtues. This implies an argument against the notion that everything is ethical as long as it is legal. But at the same time, the legally orientated ethicist is aware of the necessity of law for ethics (Paine, 1994). It is not the case that law and morality are totally separate since law expresses an attempt to universalise and institutionalise important ethical principles. However, the law cannot capture all the ethical aspects, and it is still the task of ethics to help ensure the rights and responsibilities of managers. The legal system is an effective system for maintaining certain ethical norms, but it remains a subsystem with certain limits (Paine, 1994: 167). In this context, the European approach to business legitimacy in the movement from CSR to sustainability and due diligence can be an advantage in contrast to a bureaucratic management of ethics in the company, which is always doomed to fail. It is in this context that ethics emerges as a necessary background for understanding and interpreting the law. This means that even

506  Research handbook on organisational integrity if ethics is legally institutionalised in an ethics programme, it is important that managers have strong reflective ethical formulation competences and judgements. This is essential for ensuring business legitimacy in the development of the business organisation. Training in ethical judgement in connection with management decisions can, on this background, involve the following questions, which one asks oneself with reflexive thought before performing an action: (1) Is the action legal? (2) Is everything in order based on business and professional ethical standards? (3) What values are at stake? (4) What types of alternatives are available for decisions and what are their consequences? (5) Would others be able to perform the same action in my place? (6) Can I explain my action to my partner or to my child? (7) Would I be happy to see the result of my decision on the front page of the newspaper? (8) How does the action contribute to society’s social responsibility? (Rendtorff, 2009: 360). Judgement is therefore still necessary, even if The U.S. Federal Sentencing Guidelines for Organizations is an expression of a legalisation of ethics. Ethics is also required if the responsibility is to be perceived as a compulsory initiative, as in the due diligence legislation of the European Union. An understanding of judgement and ethical formulation competence based on organisational integrity can be said to mediate between ethics and law without reducing or dissolving one discipline into the other. This management decision is based on a trained ability to understand the complex relationship between personal and organisational integrity and understanding of the need to involve all the company’s stakeholders in the ethical decision-making process. Although institutional requirements are important for organisational integrity as corporate citizenship based on values-driven management we should not forget the significance of ethical formulation competency to formulate and understand ethical problems. This is indeed required in situations of distrust and lack of integrity. There is a close connection between the moral manager and the moral organisation. What do we really mean when we say that managerial judgements imply development of the capacity of managers to do “moral thinking” (Paine, 1996)? Moral thinking implies second order reflection on first order ethical choices, as it has been suggested by the moral philosopher Hare (1981). In focusing on ethics, managerial judgement avoids the problems of compliance. Ethics is not separated from rules, but ethical judgement is broader than legal judgement. Ethical judgement linked to moral thinking is an essential capacity of good managers working for corporate integrity. Moral thinking in management with focus on integrity involves commitment to substantial responsibilities and ideals. Paine (1997a) gives the foundation for her strategy in three Ps: Purpose, Principle, and People. Purpose refers to the mission and value of the organisation. Integrity-based strategies see purpose as a very important part of developing a good and coherent organisation. The framework of values and mission statements is considered central to further achievement of organisational integrity. Principle refers to the obligations and ideals, which are central to the ethical behaviour of the organisation. In this context it is important to develop organisational structures and systems that are strong enough to build and maintain the ideals of the organisation. People refers to the required respect for different stakeholders and constituencies of the organisation. High-integrity strategies involve fair treatment of these different stakeholders in specific situations. At the level of organisational structures, integrity is at stake at many different levels as management, career development, performance evaluation and rewards, employee education and treatment, planning and goal development, budget and resource allocation, information and

Organisational integrity, citizenship, and legitimacy  507 communication, audits, and controls. Moreover, Paine (1997a) mentions that organisational integrity may be important in many different contexts of business, for example gift-giving, gender and race relations, environmental concerns, employment practices, employee health and safety, worker and consumer privacy, intellectual property rights, competitive fairness, whistleblowing, etc. In all these areas high-integrity organisations try to behave with excellence, honesty, and fairness to achieve organisational unity. This is done in the development of different programmes of values-driven management to improve organisational structure as foundation for business legitimacy. However, it is not sufficient to establish structures of integrity in an organisation without continuous revision of these structures. Indeed, organisational integrity must be viewed as a continuing, ongoing process. Organisational integrity must be considered as a part of daily management practices. Therefore, integrity is never accomplished but it is always a concern in organisational decision-making. In fact, the strength of the integrity of the organisation is tested in times of organisational crises. In such cases, managers must make critical decisions including ideals of purpose, principle, and people. In many cases, ethical decisions are not easy and different facts, norms and decision criteria might conflict. The problem might be lack of awareness of ethical issues in specific economic decisions based on bottom-line considerations. Cost-benefit analysis may have certain “ethical blind spots”, a kind of moral blindness, which make actors unaware of ethical problems. Rational economic decision-making is often neglecting the specific ethical issues in the case that must be decided. Because of this danger of moral blindness, Paine (1997a) gives the advice that managers should focus directly and explicitly on ethical issues in the decision-making process. In this way these problems will not be excluded or overlooked from the decision-making process. In this context it is important not to neglect specific stakeholders or other concerns in the process. If a specific stakeholder group is not recognised in the decision-making process, it may have unforeseen consequences. These different claims and ethical needs of stakeholders must be accounted for, when evaluating specific cases of ethical judgement to achieve organisational integrity as the basis for corporate citizenship in complex organisations. Integrity is an instrument to create a balanced company that can be communicative with society and stakeholders (Kaptein & Wempe, 2002). Paine’s three Ps might therefore be defined as the evaluation of the aims and objectives, rights, and obligations, as well as the stakeholders that are affected by the decision-making of the organisation. Indeed, it is very difficult to find the right determination of organisational integrity when evaluating these different dimensions of managerial judgement. But there is a close connection between ethical judgement and organisational strategy to find the right balance between compliance to rules and efforts to integrate values in organisational culture. Managerial judgement is based on a required capacity to understand the complex relation between personal and organisational integrity and include all relevant stakeholders in decision-making processes in a fair and just manner. Accordingly, corporate citizenship is an important outcome of integrity management. Indeed, future research should focus on concrete implementation of corporate citizenship and business legitimacy through integrity management, based on the theoretical framework that has been proposed in this chapter.

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CONCLUSION In this chapter, I have analysed how developing and maintaining organisational integrity is essential for corporate citizenship that is necessary to achieve business legitimacy. The result of the movement from individual to organisational integrity as basis for ethical judgement can be summarised in the concept of organisational integrity as essential for corporate citizenship and constitutive of business legitimacy. Business legitimacy is created and maintained in organisations with a high level of integrity, because these organisations are good corporate citizens that are aware of their political and economic responsibilities in society. Organisational integrity is essential for building and maintaining business legitimacy in organisations. Individual and organisational integrity belong together in the constitution of the foundations for business legitimacy. This concept of business legitimacy implies that the business organisation is considered as a legal subject with rights and duties. This concept also emphasises the importance of organisational culture and can thus be said to be based on the institutional definition of the moral and ethical responsibility of the organisation. But organisational integrity is not possible without the ethical commitment to integrity of the individual members of the organisation. Ethical judgement and formulation competence determines decision-making of business legitimacy and organisational integrity. Ethics discussion and the debate about business organisations’ ethical and legal responsibilities can be conceived as the foundation of good corporate citizenship in the perspective of business legitimacy.

REFERENCES Appelbaum, A. I. (1999). Ethics for Adversaries: The Morality of Roles in Public and Professional Life. Princeton, NJ: Princeton University Press. Audi, R. & Murphy, P. E. (2006). The many faces of integrity. Business Ethics Quarterly, 16(1), 3–21. Babbitt, S. E. (2001). Artless Integrity, Moral Imagination, Agency, and Stories. New York: Rowman and Littlefield Publishers Inc. Badaracco, Jr. J. & Ellsworth, R. R. (1989). Leadership and the Quest for Integrity. Cambridge, MA: Harvard Business School Press. Brown, M. T. (2005). Rethinking Organizational Ethics and Leadership. Cambridge: Cambridge University Press. Driscoll, D. M. & Hoffman, M. W. (2000). Ethics Matters: How to Implement Values-Driven Management. Waltham, MA: Center for Business Ethics, Bentley College. Dworkin, R. (1986). Law’s Empire. Cambridge, MA: Harvard University Press. Erhard, W. & Jensen, M. C. (2007). Integrity: Where Leadership Begins. A New Model of Integrity. Center for Public Leadership, John F. Kennedy School of Government, Cambridge, MA: Harvard University. Erhard, W., Jensen, M. C., & Zaffron, S. (2007). A New Model of Integrity: Without Integrity Nothing Works. Retrieved from http://​ssrn​.com/​abstract​=​920625. Erhard, W., Jensen, M. C., & Zaffron, S. (2008). A New Model of Integrity: An Actionable Pathway to Trust, Productivity and Value. Retrieved from http://​ssrn​.com/​abstract​=​932255. European Union (2023). Just and Sustainable Economy: Commission Lays Down Rules for Companies to Respect Human Rights and Environment in Global Value Chains. https://​ec​.europa​.eu/​commission/​ presscorner/​detail/​en/​ip​_22​_1145. Freeman, M. D. A. (Ed.) (2001). Lloyd’s Introduction to Jurisprudence. Seventh Edition. London: Sweet and Maxwell. Goodstein, J. D. (2002). Moral compromise and personal integrity: Exploring the ethical issues of deciding together in organizations. Business Ethics Quarterly, 10(4), 805–819.

Organisational integrity, citizenship, and legitimacy  509 Halfon, M. S. (1989). Integrity: A Philosophical Inquiry. Philadelphia, PA: Temple University Press. Hare, R. M. (1981). Moral Thinking: Its Levels, Method and Point. Oxford: Oxford University Press. Jay, M. (1967/1996). Management and Machiavelli. New York: Prentice Hall Press. Jensen, M. C. (1976). A theory of the firm: Governance, residual claims and organizational forms. Journal of Financial Economics, 3(4), 305–360. Jensen, M. C. (2009a). Putting Integrity into Finance: A Positive Approach. Finance Intermediation Research Society (FIRS). Prague, Czech Republic. Jensen, M. C. (2009b). Integrity: Without it nothing works. Rotman Magazine. The Rotman School of Management, 16–20. Jensen, M. C. & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. Kant, I. (1784/1985). Kritik der praktischen Vernuft (1784). Hamburg: Felix Meiner Verlag. Kant, I. (1785/1999). Grundlegung zur Metaphysik der Sitten. Hamburg: Felix Meiner Verlag. Kant, I. (1797/1983). Metaphysik der Sitten. In Kant, I., Werke, Band IV, Darmstadt. Kaptein, M. & Wempe, J. (2002). The Balanced Company: A Theory of Corporate Integrity. London: Oxford University Press. Kemp, P. & Rendtorff, J. D. (2007). The Barcelona Declaration: Towards an integrated approach to basic ethical principles. Synthesis Philosophica, 46(2), 239–251. Paine, L. S. (1994). Managing for organizational integrity. Harvard Business Review, 72(2), 106–117. Paine, L. S. (1996). Moral thinking in management: An essential capability. Business Ethics Quarterly, 6(4), 477–492. Paine, L. S. (1997a). Cases in Leadership, Ethics and Organizational Integrity: A Strategic Perspective. Chicago, IL: Irwin. Paine, L. S. (1997b). Integrity. In P. H. Werhane, & R. E. Freeman (Eds.), The Blackwell Encyclopedia of Management, Volume II, 247–249. Oxford: Blackwell. Paine, L. S. (2002). Value Shift: Why Companies Must Merge Social and Financial Imperatives to Achieve Superior Performance. New York: McGraw-Hill. Ramsey, H. (1997). Beyond Virtue: Integrity and Morality. New York: Macmillan Press. Rendtorff, J. D. (2002). Values and organisational integrity: The function of integrity in achieving organisational excellence, Business Mastery Series, De Montfort, Southern Africa, 1(2), 6–14. Rendtorff, J. D. (2007). Virksomhedsetik: En grundbog i organisation og ansvar. Copenhagen: Samfundslitteratur. Rendtorff, J. D. (2009). Responsibility, Ethics and Legitimacy of Corporations. Copenhagen: Copenhagen Business School Press. Rendtorff, J. D. (2011a). Corporate citizenship as organizational integrity. In I. Pies, & P. Koslowski (Eds.), Corporate Citizenship and New Governance: The Political Role of Corporate Actors in Societal Rule-Setting Processes. Berlin: Springer Verlag, pp. 59–91. Rendtorff, J.D. (2011b). Business ethics, strategy and organizational integrity: The importance of integrity as a basic principle of business ethics that contributes to better economic performance. In C. Wankel, & A. Stachowicz-Stanusch (Eds.), Handbook of Research on Teaching Ethics in Business and Management Education. New York: IGI global, pp. 274–288. https://​doi​.org/​10​.4018/​978​-1​ -61350​-510​-6​.ch016. Rendtorff, J. D. (2013). A business ethics approach to balance. In I. Jensen, J. D. Scheuer, & J. D. Rendtorff (Eds.), The Balanced Company: Organizing for the 21st Century. Aldershot: Gower Publishing, pp. 33–59. Rendtorff, J. D. (2015). Integrity, concept of. In H. ten Have (Ed.), Encyclopedia of Global Bioethics. Springer Science+Business Media, pp. 1–7. https://​doi​.org/​10​.1007/​978​-3​-319​-05544​-2. Rendtorff, J. D. (Ed.) (2020). Handbook of Business Legitimacy: Responsibility, Ethics and Society. II. Cham: Springer. doi: 10.1007/978-3-319-68845-9. Rendtorff, J. D. & Kemp, P. (2000). Basic Ethical Principles in European Bioethics and Biolaw: Autonomy, Dignity, Integrity and Vulnerability. Barcelona: Center for Ethics and Law. Ricoeur, P. (1992). Oneself as Another. Translated by Blamey, K. Chicago, IL: University of Chicago Press. Sartre, J. P. (1943). L’Etre et le Néant. Paris: Gallimard.

510  Research handbook on organisational integrity Solomon, R. C. (1999). A Better Way to Think about Business: How Personal Integrity Leads to Corporate Success. Oxford: Oxford University Press. United States Federal Sentencing Commission (1991). Federal Sentencing Guidelines for Organizations. Washington, DC. Williams, B. (1973). Problems of the Self. Cambridge: Cambridge University Press. Williams, B. (1985). Utilitarianism and Moral Luck. Cambridge: Cambridge University Press.

32. Organisational integrity, trust, dissociative identity, and HR Roger C. Mayer and Paul W. Mulvey

Prior to 1995, the literature on trust in organisations was both sparse and fragmented. It was not uncommon for research to mention the importance of trust, for example to promote organisational change, and then turn to other more tangible issues. Several very visible works were all published that year, which appeared to awaken the field to both the importance of trust and the ability to scientifically study it. Kramer and Tyler (1995) published an edited Sage volume of chapters focused on various aspects of trust. Mayer, Davis, and Schoorman (1995) introduced an integrative model of trust in The Academy of Management Review which pulled from such varied sources as management, law, psychology, and philosophy. McAllister (1995) published work from his dissertation in Academy of Management Journal that suggested there are two types of trust—one based on reasoning and the other on emotion. Another work that helped trigger a tsunami of subsequent trust research, and importantly for the purpose of this chapter, is Hosmer (1995). He also published a paper in The Academy of Management Review that focused on the organisation itself as the referent of trust. All of these works have become well cited across a variety of literatures. Similarly, the Mayer et al. (1995) model of trust and trustworthiness was designed to be applicable not only to individuals, but to groups and organisations as well (Schoorman, Mayer, & Davis, 1996). Thus, both of these approaches were consistent in that they identified an organisation as a referent of a judgement of integrity. The Mayer et al. (1995) model of trust posited that three factors comprised an entity’s trustworthiness: ability, benevolence, and integrity. As this Research Handbook is focused on integrity, our attention in this chapter is mainly on that dimension of trustworthiness. That said, a closely related construct is trust, in that if a party is judged to be deficient on integrity, this will often cause that entity to be less trusted. We first introduce organisational dissociative identity disorder (ODID), and we briefly point to some of its causes. We discuss how ODID relates to trust in the organisation and organisational integrity. Following this we draw on psychological contracts and the attraction, selection, attrition (ASA) model to further understand how ODID affects organisational integrity, particularly in the context of several human resource practices.

ORGANISATIONAL DISSOCIATIVE IDENTITY DISORDER (ODID) The idea that employees should have a clear understanding of what is expected of them and whose directions they should be following is not new. It was already taken as established half a century ago by Rizzo, House, and Lirtzman (1970), who developed measures of role conflict and role ambiguity. Along these lines, Lewin’s (1951) seminal work on change depicted forces 511

512  Research handbook on organisational integrity both driving for a given change and those opposed to it. All the arrows on his “force-field” depiction of these forces were 180 degrees opposed to one another. A recent line of research considers whether the organisation is internally consistent in its expectations of an employee (Mayer & Williams, 2021; Noble et al., 2022). Their work is based on the writings of Lewin (1951), as well as the DSM-V (Diagnostic and Statistical Manual, fifth edition) of the American Psychological Association (APA). Mayer and Williams (2021) argue that in modern organisations the situation is more complex than that described by Lewin (1951). Not only are there likely to be multiple changes occurring at a given time, but the forces to which an employee must attend and determine how to respond are more likely to be less patterned than being diametrically opposed to one another as depicted by Lewin’s early work. In fact, in the worst case, the forces might more appropriately be thought of as arrows of different magnitudes (which represent how powerful they are) pointing randomly within three-dimensional space. Mayer and Williams (2021) referred to these as vectors. An increasing number of non-aligned vectors makes it very difficult for employees to make sense of what is expected of them, and to determine how best to allocate their time and effort to meet the expectations of them. Mayer and Williams (2021) argue that when the expectations of and directives to an individual become discrepant enough, it may begin to feel to the employee like dealing with the organisation is like dealing with a person who has multiple personalities. While this was once referred to as multiple personality disorder, the APA’s DSM-V labels it as dissociative identity disorder, or DID. Mayer and Williams suggested that when there is sufficient disorder among the expectations of different entities within an organisation for an employee, the employee may come to feel like s/he is dealing with an organisation that is similar to a person with DID. They labelled this organisational dissociative identity disorder, or ODID. Causes of ODID There are a variety of factors Mayer and Williams (2021) identified that help to foster a perception by employees that their organisation has ODID. These explanations span various levels of analysis. Those authors suggested that the roots of a perception of ODID may include “(1) those who hold power within different parts of the organisation either hold different objectives, change them repeatedly, or have self-serving agendas, or (2) other influences act either to change the magnitude or directions of the vectors or to add new vectors” (p. 257). There are a variety of reasons that people in various parts of the organisation may have different agendas. It is recognised that people whose education and/or work histories differ can be consciously focused on one issue to the relative exclusion of others (Pfeffer, 1981). For example, someone heavily steeped in marketing may pay inordinate attention to growing market share, while conversely someone in accounting may be most focused on cost control. While ultimately an organisation needs to have a balance of both of these, an employee whose outcomes are affected by (in the simplest case) two managers who are each particularly focused on only one of them will be challenged to serve both masters to the satisfaction of both of these managers. The same sort of outcome can arise from the structure of the organisation if it gives rise to managers or other entities with influence over the employee who themselves are rewarded for different things. On a somewhat more nefarious note, managers who have self-serving agendas can be strong influences that promote an employee’s perception that the organisation has ODID. A manager

Organisational integrity, trust, dissociative identity, and HR  513 in a support area may seek to expand their influence and stature within the organisation. To accomplish this, they may use influence or control over resources inherent in their position to either advance the cause of or withhold resources from those who either comply with or ignore their requests. Thus, the self-serving agendas of a variety of managers throughout the organisation who control different resources can each add one or more vectors to the employee’s understanding of what they should be doing, vectors that by their nature and origin are unlikely to be consistent with the others within the employee’s workspace.

INTEGRITY Integrity was defined by Mayer et al. (1995) to be the perception that the trustee follows a set of values that the trustee finds acceptable. This does not necessarily mean that the values of the trustee match those of the trustor—that would be a higher bar than is specified by their definition. There may be differences between the two parties’ sets of values, but within the relationship with the trustee the trustor may deem the dissonant differences to be relatively inconsequential. Following this approach to integrity, two major issues would be expected to damage a trustor’s view of the trustee’s integrity. Firstly, the trustor may not find the trustee’s values acceptable. Perhaps the trustor believes that the relationship should be considered a long-term, win-win proposition, but sees the trustee as behaving consistently with a belief that the relationship is each party for themselves, no matter the consequences for the other party. The trustee could even explicitly state that this is their operating assumption and behave with a high level of consistency with those stated values. If the trustor sees this value set as unacceptable, the trustor will deem the trustee to have low integrity. A second situation that can undermine a trustor’s perception that a trustee has integrity arises from the trustee’s consistency when the trustee espouses a set of values that the trustor finds acceptable. The trustor may, however, observe over time that the trustee does not consistently follow those values. It may become apparent that the trustee will do whatever is in the trustee’s own best interests at the time, rather than adhering to their stated values. In sum then, an entity can be seen as having low integrity either by (1) having espoused values not viewed as acceptable, or (2) not behaving consistently with their supposed values. Thus, a trustee can behave entirely consistently with their espoused values, but if those values are unacceptable to the trustor, the trustee will be deemed to have low integrity. Conversely, a trustee can either claim or be assumed to have an acceptable set of values, but inconsistency in their behaviour can undermine the perception of their integrity. Either holding unacceptable values or failure to consistently follow espoused (or assumed) acceptable values can lead to a perception that the trustee has low integrity. Employees can view their employing organisation as an entity worthy of an evaluation of trustworthiness (Fulmer & Gelfand, 2012; Mayer & Williams, 2021), and even as though it were a living, sentient being (Ashforth et al., 2020). In doing so, we submit that they recognise both the organisation’s values via its stated policies, and their own experience of how the organisation enacts those values and principles in dealing with others, notably the employees and the organisation’s other major stakeholders. Discrepancies between the two are likely to be particularly salient to employees because the employing organisation has so much influence over their economic outcomes and security.

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ORGANISATIONAL INTEGRITY, PSYCHOLOGICAL CONTRACTS, AND ASA Organisational integrity is the result of many possible conditions, as noted in this Research Handbook. In this chapter, we noted several including (1) a mismatch between an employer’s espoused values and the employee’s values; (2) the disconnect between an employer’s espoused values and the employer’s enacted values as perceived by the employee; and (3) high perceptions of ODID by the employee where the consistency of expectations by an employer becomes unclear. In addition, an increasingly turbulent organisational environment makes it difficult to clarify what employers and employees expect and owe each other in the exchange relationship, and thus makes it difficult to fulfil obligations (McLean-Parks & Kidder, 1994; Sims, 1994). Two frameworks which can help explain the sources of these disconnects which may lower perceptions of organisational integrity are psychological contracts and the ASA framework. Firstly, we address psychological contracts in relation to organisational integrity and later we do the same with the ASA framework. Interestingly, the psychological contract literature has approached the topic from a more negative perspective investigating contract breach, whereas the ASA framework looks at the same topic from a more positive perspective, investigating fit or similarity. Secondly, we will apply these frameworks to several specific human resource practices. Psychological Contracts and Integrity A psychological contract in the employment setting is an employee’s beliefs regarding an employment agreement with an employer (Robinson & Rousseau, 1994, Rousseau, 1989). Employment agreements have both relational and transactional elements (McClean-Parks et al., 1998). Research has found that trust is more important in relational psychological contracts than transactional aspects of the psychological contract (Montes & Irving, 2008). Human resource professionals may be more familiar with the one side of psychological contracts which is what is received from the employer, also known as an employee value proposition (Mascarenhas, 2018). The tricky issue is that the psychological contract exists in the mind of the employee, so is not necessarily known to the employer and can be breached without the employer’s awareness. Hiring managers and human resource professionals leading up to and through the course of employment play an important part in defining psychological contracts (Guzzo & Noonan, 1994). Specifically, psychological contracts are often developed as applicants move through pre-employment human resource practices such as recruiting, selection, and job offers, and are then further clarified as they transition to employees experiencing other human resource practices such as orientation, training, development, performance management, and compensation (Suazo et al., 2009). Applicants must believe, at some level, that the job offer and subsequent position are as they are portrayed or are at least worth taking, even if not everything is as it is portrayed. In other words, the candidate must perceive that the employer has enough integrity and will follow through on what was promised. However, most employees have experienced some breach in their psychological contract by their employer (McLean-Parks & Schmedemann, 1994; Robinson & Rousseau, 1994).

Organisational integrity, trust, dissociative identity, and HR  515 As applicants transition into being employees, violations of psychological (and even expressed and/or implied) contracts may be caused by the employer unilaterally changing the terms of the contract—whether by choice or because of changing environmental circumstances that the employer faces (Krantz, 2006; Vogelgesang et al., 2021). These reversals in contract terms, if not agreed to, may lead employees to think that the employer’s values are not aligned with their own or with values that are acceptable. While the focus of psychological contract research has largely been on employee attitudes, two meta-analyses demonstrated contract breach was related to both work attitudes (e.g., organisational commitment) and performance (i.e., citizenship behaviours and in-role performance; Bal et al. 2008, Zhao et al., 2007). A key feature related to this chapter is that integrity-related attitudes (i.e., contract breach and trust) mediated the relationship between work attitudes and these outcomes (Zhao et al., 2007). Also, Bal et al. (2008) found that age moderated the relationship between contract breach and employee attitudes such that the negative relationship between contract breach and trust was stronger for younger employees. Although it has yet to be investigated, it is likely that perceptions of ODID will influence stronger perceptions of contract breach, again leading to lower perceptions of integrity. The ASA Framework and Organisational Integrity Slightly before Rousseau (1989) introduced psychological contracts (some say the concept was first noted by Argyris (1960) and Schein (1965)), Schneider (1987, p. 440) elaborated on his ASA framework in his presidential address “The People Make the Place”, later published in Personnel Psychology. He argued that people are “attracted to, selected by, and stay in an organization” because of their fit with the organisation over a variety of factors. A primary focus for person–organisation fit research has, however, been on values (Dickson et al., 2008). Dickson et al. (2008) reviewed research showing that person–organisation fit has resulted in positive outcomes for both the employer and the applicant. In particular, the consistency perceived by the applicants and then employees would be, in part, due to a similarity of values. If an applicant made it through the attraction and selection phases and accepted a job offer, they may not stay with the organisation. Employees may leave the organisation for a variety of reasons which could include the organisation was not a good fit for them. Dickson et al. (2008) argued that employees would leave only if they “made errors in assessing potential fit in the first place, if the organization’s circumstances have changed leading to a change in fit, or if the person changed in some way leading to a change in the level of fit” (p. 15). Currently, there is a paucity of research that investigates if these decreases in the perception of person–organisation fit would lower perceptions of employer integrity and thereby influence turnover. However, Lauver and Kristof-Brown (2001) did find that person–organisation fit accounted for more variance in turnover intentions than person–job fit. While the first two phases of the ASA model, attraction and selection, have received much more support than the attrition phase, it is still unclear if similarity of values positively influences the perception of integrity by employees. Applicants are often selected by a match in values (i.e., person–organisation fit) and behaviour/skills/knowledge (i.e., person–job fit) among others (Kristof-Brown et al., 2005). To the extent that employers are consistent in applying these values, perceived integrity should remain high. While Schneider (1987) argued that the ASA framework leads to a “restriction in range of people” (p. 443), there still may be enough variance among and within leaders for ODID

516  Research handbook on organisational integrity to occur in organisations. When employers become inconsistent in their messaging, either through a change in their values or not being consistent in the application of those values, perceived integrity issues arise. Further explanation of the ASA framework as it applies to perceived integrity will be explored as human resource practices are explained below.

THE ELEPHANT IN THE ROOM: COVID-19 The Covid-19 pandemic was an environmental shift that likely changed many psychological (and explicit) contracts. For many employees, and front-line workers exposed to a potentially deadly virus in particular, expectations concerning work have changed (e.g., Gulzar et al., 2022; Lopez & Fuiks, 2021; Ronnie et al., 2022). After many businesses closed, approximately 13 million US workers were laid off, which was a Bureau of Labor Statistics JOLTS record in March 2020; “surviving” employees were either expected to work from home or were labelled as essential workers. According to some estimates about 50 per cent of US workhours were compelled to work from home during April 2020 to December 2020 (Barrero et al., 2021). While many employees accepted (and welcomed) this change for a variety of reasons, others did not and either dropped out of the workforce or switched employers. As the pandemic receded in a year or so, some employers decided that a return to the office was expected, changing the contract once again. The remaining employees who could not do their job from home were deemed essential workers by their government—if they were not laid off. They were expected to continue working in-person throughout the pandemic (e.g., employees in hospitals, grocery stores, pharmacies, hardware stores, and even liquor stores in some locations!). These were likely viewed as contract breaches, even if it was not the choice of the employers and were not acceptable for many employees. For example, parents who needed to provide childcare, or those at risk themselves, or who had family members at risk and did not want to risk exposure, had to leave the workforce. In any case, the contract breaches likely affected employee attitudes including perceived trustworthiness of the employer, including integrity. Next, we will further explore how transparency relates to integrity and then review how human resource practices impact perceived integrity. Organisational Integrity and Transparency Integrity and transparency have been investigated across many of the organisational sciences in a wide variety of domains and contexts including but not limited to Accounting, Government, IT, Finance, Marketing, Management, Public Administration, Artificial Intelligence, and Supply Chain journals (e.g., Dirks & de Jong, 2022; Hoekstra & Kaptein, 2021; Lewicki & Brinsfield, 2017; Schnackenberg & Tomlinson, 2016). Human resource management practices have not been a focus of much of this research until recently (Schnackenberg & Tomlinson, 2016). Kaptein, (1999, p. 625) defined integrity management as “systematically and completely reviewing, analyzing and developing or safeguarding the ability of organizations to combat breaches of integrity”. This process overlaps with many of the processes involved with managing people in organisations. Our focus here is on human resource decisions affecting employees in the context of psychological contracts and the ASA framework.

Organisational integrity, trust, dissociative identity, and HR  517 Transparency Transparency has been defined as “the perceived quality of intentionally shared information from a sender” (Schnackenberg & Tomlinson, 2016, p. 1788). Schnackenberg and Tomlinson (2016) note that transparency has three components including disclosure, clarity, and accuracy. In this context, employee perceptions of transparency increase when information is perceived to be timelier (i.e., disclosure), understandable (i.e., clarity), and reliable (i.e., accuracy). Research has investigated the relationship between transparency and trust, but there is little on transparency and integrity. Studies conducted at the individual level between employees and their managers found positive correlations between transparency and trust (Akkermans et al., 2004; Jahansoozi, 2006; Kaptein, 2008; Palanski et al., 2011; Rawlins, 2008). Pirson and Malhotra (2011) found no relationship between transparency and trust. However, they did not use multidimensional measures of transparency. Tomlinson and Schnackenberg (2022) found that disclosure and accuracy led to trustworthiness, but not so with clarity. The push towards organisational integrity and transparency has slowly built momentum from the post-World War II era until today (Tapscott & Ticoll, 2003). Technologies such as personal computers, the internet, smart phones, and the internet of things have increased employees’ and other stakeholders’ access to a wide amount of information. Also, national, state, and local legislation has intended to increase transparency and accountability, precursors to perceived integrity. Long gone are the days when United Automobile Workers’ leader Walter Reuther challenged General Motors to open the books in 1945. But how far have we come? Has organisational integrity increased, just compliance, or have our expectations for organisational integrity changed?

HUMAN RESOURCE PRACTICES AND ORGANISATIONAL INTEGRITY Employees are affected by an organisation’s decisions as applicants during the recruiting and selection processes, and later as employees as they are orientated, trained, evaluated, and compensated. As we argued above, increasing ODID lowers the employees’ perception of the organisation’s integrity; it is more difficult to perceive an acceptable set of values when the values lack consistency across organisational referents. On the surface it may appear that human resource transparency should have the opposite influence, that of increasing perceptions of organisational integrity and thus trust. Unfortunately, the direction of influence is not clear, as it may increase or decrease employee perceptions of organisational integrity depending upon what the increased transparency reveals (e.g., Bamberger & Belogolovsky, 2010; Bamberger & Belogolovsky, 2017). There are at least three issues that make the direction of transparency influences unclear. First, when human resource processes pay less attention to how decisions affect employees, organisational integrity may suffer rather than improve as processes become more transparent, at the very least in the short term. Second, if the information revealed in increasing transparency goes extreme (i.e., radical transparency, Tapscott & Ticoll, 2003), employee privacy concerns may emerge, and therefore, perceptions of organisational integrity may be reduced. Third, if increasing transparency reveals that the HR practices are biased, this may increase

518  Research handbook on organisational integrity the visibility of unfairness in the system, which would also undermine the perception of the organisation’s integrity. Current social issues such as work-from-home, Covid-19, return to the office, worker surveillance, employee privacy, work–life balance, pay transparency, and artificial intelligence, among other current employment issues, have further moved organisational integrity towards the forefront of conversations about the employment relationships. Despite some progress, employees and governments recently have called for organisations to become even more transparent and accountable in the hopes of improving organisational and employee outcomes including organisational integrity. For example, while the efficacy of measures to reduce sex and racial pay discrimination may be questioned, state and local governments recently have passed pay transparency or “sunshine” laws including California, Colorado, Connecticut, Maryland, Nevada, Rhode Island, Washington, and New York City in the US (Pay transparency laws do not work as advertised, 2023). Largely, these laws require salary ranges to be posted on job advertisements. If there is a trend pushing towards organisational integrity, the effects of these changes are not entirely clear. Increasing transparency in order to positively influence perceived integrity and therefore trust is not so straightforward. If the organisational leaders attempted to design a fair and equitable employment relationship, transparency (i.e., disclosure, clarity, and accuracy) should affect integrity and benevolence perceptions positively, and possibly also perceptions of the organisation’s ability (e.g., the organisation has learned how to identify and correct underlying problems in the employment relationship). However, if the organisational leaders have focused on other issues (e.g., efficiency, cost reductions, and layoffs) to the neglect of a fair and equitable employment relationship, more transparency (i.e., disclosure, clarity, and accuracy) could affect integrity, benevolence, and ability perceptions negatively. We posit that a significant component of an organisation’s perceived integrity consists of how the organisation manages applicants and employees. How do employees react to the integrity and transparency of specific HR practices? Do they influence trust over time during the employment relationship? Applicants’ and then employees’ perceptions of the organisation are influenced by many decisions throughout their employment life cycle, including when they are recruited, evaluated, and compensated. Recruitment and Selection In the context of recruiting, employer brand perceptions, including organisational integrity, are beliefs or knowledge about a potential employer (Yu & Cable, 2012). Brand equity is influenced by familiarity, image, and reputation (Yu & Cable, 2012). Cable et al. (2000) found that different information sources influenced accuracy beliefs that job applicants developed about the employer. Employer sources such as advertisements and recruiting material led to less accurate beliefs about the employer’s culture. Although they did not collect information about employer integrity, it would be useful to learn (and not surprising if found) if the employer’s reputation would suffer when former applicants’ beliefs did not match with their experiences. However, employers may try to present more accurate information during the recruiting and selection processes by using realistic job previews (RJPs). RJPs are a method to recruit to make aspects of the job more transparent by presenting both positive and negative job-related information to an applicant (Premack & Wanous, 1985). These RJPs are contrasted with more traditional presentations which focus on the positive aspects of the job (Saks et al., 1994).

Organisational integrity, trust, dissociative identity, and HR  519 RJPs should increase the transparency and possibly the applicants’ perceived integrity of the employer. Wanous and Colella (1989) and others argued that RJPs, in presenting a more complete picture of the job or internship, would affect turnover intentions and turnover itself through inoculation, self-selection, and commitment to the choice to take the position. It is possible that, although unmeasured, perceived integrity was also at work in forming an impression of their future employer. Once people apply for a position, they experience both recruiting (i.e., attracting applicants) and selection (i.e., choosing which applicants to offer jobs) processes. Selection research began to focus on the applicant’s experience through an organisational justice lens in the early 1990s (Arvey & Sackett, 1993; Gilliland, 1993; Rynes, 1993). After the passage of the Employee Polygraph Protection Act of 1988, employers increased their use, not without controversy, of integrity tests in the selection process. Such tests have been found in the aggregate to reduce such outcomes as employee theft even if limited in their effectiveness (Billings & Dages, 2018; Ones et al., 1993). However, we suggest that research on whether such testing causes candidates to raise the bar on their expectations of the employer’s integrity would be interesting. Performance Management While accuracy or validity is cited often as critical for performance management systems (Aguinis, 2023; Noe et al., 2022), politics which distort their accuracy are a common part of the performance management system (Longenecker et al., 1987). Politics may resort to self-serving agendas which can add to perceptions of ODID. In fact, the failure of performance management systems has led many large employers to scrap or drastically revise their systems (Buckingham & Goodall, 2015). When performance evaluations are dependent on subjective ratings of behaviour or competencies, there often is a gap between the ratings that employees think they should get and the ratings they receive (Murphy, 2020). This gap can lead to perceptions of unfairness, distrust of the manager, the rating system, and the organisation (Rosen et al., 2017). Compensation Organisations use compensation and benefit plans to attract, retain, and motivate employees (Fulmer & Li, 2022). Individual, internal, and external perceptions of equity have been a major focus for compensation research and compensation professionals, but research has not kept up with a switch from an internal (e.g., job evaluation and pay structures) to an external (e.g., market pricing) focus (Fulmer & Li, 2022). Even though pay transparency has emerged as a relatively recent topic, research on how pay transparency affects organisational integrity is speculative (Tomlinson & Schnackenberg, 2022). Gutierrez, Obloj, and Zenger (2022) found that at the individual level pay transparency with 20,000 faculty who were overpaid inequitably increased their effort and faculty under-compensated inequitably decreased or did not change their effort. Overall, at the organisational level, they found that pay transparency decreases productivity when inequity was revealed. Aside from public sector employees, private employees’ base pay, pay raises, and bonuses have traditionally been kept secret in many organisations. An exception, for example, has been professional hockey players. Flynn (2022) investigated National Hockey League

520  Research handbook on organisational integrity individual pay and performance when salaries became public in 1990. He found that underpaid players began scoring more but allowed their teams to get scored on more than the increased goal scoring they provided. Beyond performance, increasing transparency could initially lead to higher conflict, lower satisfaction, and higher turnover. On the other hand, it may be difficult to disentangle these attitudes and behaviours from perceptions of organisational integrity. As briefly noted above, governments have passed pay transparency laws in the United States, Austria, and other countries. While some research has demonstrated it has lowered the gender pay gap (e.g., Baker et al., 2019; Kim, 2015), other research contradicts these findings (Gulyas, Seitzz, & Sinha, 2020). Regardless of the effect of pay transparency on gender pay equity, its impact on organisational integrity is unclear. Furthermore, employee compensation is much more complicated than mere salary ranges which most locales require (Brown, Nyberg, Weller, & Striver, 2022). Research has yet to consistently investigate the effects of other compensation features such as information about pay processes, pay increases (merit pay, individual, group and organisational incentives), benefits, and the quality and accuracy of the information (Brown et al., 2022).

CONCLUSION The importance of an organisation’s integrity in the eyes of its employees has been increasingly recognised. Much of the focus of the field of HR has been on technically improving various HR functions and evaluating the improvements. More research needs to consider how various HR functions and their uses affect employees’ perceptions of the organisation’s integrity, ODID, and trust in the organisation itself. Given the importance of recruiting, selection, performance management, and compensation in organisational integrity and trust, future research should investigate the design and implementation of these HR systems from this perspective. We addressed several such HR functions in the current chapter; others such as employee career development and training need to be considered as well.

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33. Organisational integrity and success Madeleine J. Fuerst and Christoph Luetge

How is organisational integrity (OI)1 related to business success? And what influence does OI have on different dimensions of business performance? We could summarise studies or surveys by research institutes that subsume the term (organisational) integrity under the umbrella of ethics or straightforwardly refer to ethics and compliance programmes and their effectiveness (e.g., Ethics & Compliance Initiative, 2018; Ethisphere, 2022). Yet, this would fall short of one critical point: precision – as (organisational) integrity is something more precise than ethics and something beyond compliance. Referring to the first, ethics is a subdivision of philosophy dealing with evaluating human actions in a broad sense; it is the scientific theory of morals (Luetge & Uhl, 2021). (Organisational) integrity can be similar to ethical behaviour when leaving room for different opinions on what is ethically proper and what is not. What completely distinguishes the two concepts, however, is the interpretation of wholeness and self-fidelity attributed to (organisational) integrity (Solomon, 1992). Referring to the latter, OI is more than avoiding illegal practices. In fact, companies need a comprehensive approach beyond legal compliance, addressing the problems of underlying unlawful conduct (Paine, 1994), and taking their moral and societal responsibility. For this reason, we rather provide context, including contextual studies, and give insight into current challenges of the OI impact research field. Furthermore, we outline why this is unsatisfactory for both academia and practice, yet simultaneously offers great potential for future approaches and crucial empirical studies. This chapter is organised as follows. In the first section, we provide groundwork including our definition of OI, elaborate on when a company is considered successful, and explore whether a virtue ethical concept, like OI, can have strategic business relevance at all. In the second section, we give an overview of four challenges in the research field of OI impact research, hence indicate its maturity level. The third section presents influential discussions and results on how OI impacts different aspects of business performance. With the fourth section we go one step further and introduce an approach on how to strengthen OI within the company. Finally, we close this chapter with a brief conclusion.

GROUNDWORK A prerequisite for concluding generalisable results on the relationship between OI and business success is, firstly, a common understanding (and stringent usage) of the concept of OI and, secondly, a uniform perception of when to consider a company successful. It is to this that we turn in this section.

525

526  Research handbook on organisational integrity Towards a Unified Understanding of OI The concept of integrity is a virtue ethical concept and has its origins at the individual level of analysis. Using a virtue ethics approach in conjunction with the study of the etymological roots and its application to the organisational level of analysis, we have recently developed a theoretically grounded definition of OI (see Fuerst & Luetge, 2021). With this definition, we aim to reduce the prevailing patchwork of ad hoc operationalisations that persists in academic research. Organizational integrity is the integral ability of a company to practice self-fidelity in the sense that its activities are based upon an internally consistent framework of principles and reflects to which extent self-legislated norms and legal standards in force are implemented into organizational actions. A certain maturity is required regarding the company’s infrastructure, its CID [corporate internal decision2] structures. Organizational integrity includes the ability to self-evaluate and incorporates awareness of both its own organizational strengths and weaknesses, resulting in the ability to further mature (in the sense of further develop). Finally, organizational integrity is in need of desirable moral principles like legal compliance, honesty, and respect. (Fuerst & Luetge, 2021, p. 6)

To break this definition down to an operational process, or, in other words, to assure that the theoretical definition qualifies as a working definition, we have also developed a three-step process model. “Operationalized, organizational integrity means that a company (1) actively commits itself to self-imposed norms and principles, (2) transparently institutionalizes these commitments in its CID [corporate internal decision] structures, and (3) assures that these commitments are implemented into actions” (Fuerst & Luetge, 2021, p. 6).3 We call this three-step process the organisational integrity triad consisting of manifestation degree 1: commitment; manifestation degree 2: transparent institutionalisation; and manifestation degree 3: coherence between commitments and actions. When it comes to the quality of these commitments, we follow McFall (1987), who says that commitments for attributing integrity cannot be easy-going commitments, rather, they must be demanding. She gives an example of the individual level of analysis: “A person whose only principle is ‘Seek my own pleasure’ is not a candidate for integrity because there is no possibility of conflict – between pleasure and principle – in which integrity could be lost” (McFall, 1987, p. 9). Applied to the organisational level of analysis, this means that companies as well should set themselves demanding commitments that may not always go together with maximising profits. When is a Company Called a Successful Company? When is a company successful? What numbers or characteristics make successful companies? To answer these questions, we must ask one question first: in fact, what is a company’s purpose? According to the Friedman (1970, p. 32) doctrine, “the social responsibility of business is to increase its profits”. Friedman assumes shareholder primacy and that companies have a (sole) profit orientation, thus purpose. With an updated statement in 2019, the Business Roundtable, an association of chief executive officers of America’s leading companies, has reignited the discussion about the company’s purpose. As a result, an updated statement by the Business Roundtable commits to promote a prosperous U.S. economy and expanded opportunity for all Americans – meaning all companies’ stakeholders – through sound public policy (Business Roundtable, 2019). For the first time since 1997, no principles of shareholder primacy have

Organisational integrity and success  527 been included, implying that companies exist first and foremost to serve shareholders. Instead, the CEOs commit to leading their companies for the benefit of all stakeholders, just like Freeman and Reed (1983) introduced with their well-cited stakeholder theory approach. We support this view and consider a company successful if it creates the greatest possible value for all stakeholder groups in a balanced way. Because a contemporary understanding of business success goes beyond the bottom line. Possible concepts to meet this ambition are, for example, the commitment to the United Nations Sustainable Development Goals, implementation of an Environmental Social Governance (ESG) programme, or the triple bottom line concept by Elkington (1997), which basically was the forerunner of the ESG movement. Accordingly, a company can be called successful when succeeding in considering societal, environmental, and governance issues on equal footing with their economic dimension, in particular profits. The concept of OI builds the basis for sustainable business success, as opposed to short-term business success (Fuerst & Luetge, 2021). Can a Virtue Ethical Concept Like OI Have Strategic Business Relevance? Virtue ethics and its application to economic phenomena gains in frequency and relevance. In the business context, it looks for motivating values and corporate purpose (Chun, 2005). The latter seems to be more present than ever, looking into practice where mission statements become the flagship of many companies. As a result, virtue ethics is also ascribed an increasingly strategic role. It can assume this strategic role when establishing a link among corporate character, corporate behaviour, and business outcome (Chun, 2005). Business outcome includes not only financial results, but also non-financial results that lead to financial results in the long run, such as organisational reputation, trust, high-quality products and services, employee satisfaction and thus employee retention, customer satisfaction and thus customer retention. If virtues or virtuousness at the organisational level have an (positive) impact on any form of business outcome or performance, they gain strategic importance. Cameron et al. (2004) find that virtues are mostly ignored when analysing matters that have impact on business performance. However, there is reason to “expect that virtuousness may have a positive association with organizational performance” (Cameron et al., 2004, p. 768). The strategic role of virtue recognises the differences between individual- and organisational-level virtues. Unlike normative individual virtues which can be universally defined as good, the concept of strategic organisational virtue is relative – it depends on, for example, industry affiliation or is specific to certain stakeholder groups (Chun, 2005). To bridge the gap between organisational-level virtue and business success, particularly empirical research – in addition to theoretical contributions – contributes and supports the translation process into practice.

FOUR CURRENT CHALLENGES IN THE FIELD OF OI IMPACT RESEARCH There are several challenges in the OI impact research context that make a clear answer to the question of what influence OI has on different dimensions of business performance, and finally business success, rather difficult. In this section, we introduce four fundamental challenges we see as responsible for why the current state of research is somewhat unsatisfactory to date.

528  Research handbook on organisational integrity Challenge 1: Diverse Interpretation and Usage of the Concept OI The first challenge is the lack of a theoretically grounded consensus on and usage of the OI concept. This shortage manifests in a patchwork of ad hoc operationalisations across areas of academic inquiry and practice. Although efforts towards a uniform understanding of OI are being made in academic research, a consistent use of the term has not yet become generally established. In practice, corporate values and mission statements incorporate the (organisational) integrity concept exponentially. Among the 2022 top ten most valuable companies in the world,4 six companies have explicitly defined integrity as one of their core values (as of December 2022). At the same time, almost every of these company interprets it in its own way, even on different levels: the individual level and/or the organisational level. In academia, interpretations stretch from managerial and employee behaviour to respective corporate structures or incentive systems that enable (corporate) actions with integrity (Becker, 1998; Brown, 2006; Maak, 2008; Moore, 2015; Paine, 1994; Solomon, 1992; Tullberg, 2012). Yet the diversity of interpretation has not prevented the concept of (organisational) integrity from being widely used in theoretical discussions of business phenomena. With our work from 2021 (see section “Towards a Unified Understanding of OI”), we aim to combat this patchwork of ad hoc operationalisations by offering one grounded definition of OI based on the original meaning of the integrity concept, found in virtue ethics. Challenge 2: (Still) Weak Cross-Disciplinary Research The second challenge is that OI is examined and approached from two different research domains. On the one hand, the philosophical domain, virtue ethics to be precise (see, e.g., Fuerst & Luetge, 2021; Koehn, 2005; Moore, 2015; Sison et al., 2017; Solomon, 1992). On the other hand, the positive social science domain, such as Positive Organisational Scholarship (see, e.g., Bright et al., 2006; Cameron et al., 2004; Rego et al., 2010; Shanahan & Hyman, 2003). These domains are all as different as their research methods. Virtue ethics explores the concept of OI with a primarily conceptual approach. Positive Organisational Scholarship studies the concept with an empirical approach – a long uncomfortable idea in theses circles as “[e]mpiricism and virtuousness have usually not been located in the same domain” (Cameron et al., 2004, p. 766). However, since the 2000s, empirical and quantitative studies on virtue ethical concepts, like OI, have become a prominent research theme (Ferrero & Sison, 2014) as these studies “seek to objectify, measure, and analyze virtues and virtuousness in individuals and organizations” (Sison & Ferrero, 2015, p. 1). The separate research domains have begun to break down their silos and interact in a more cross-disciplinary way (see, e.g., Bright et al., 2014; Constantinescu & Kaptein, 2021; Sison & Ferrero, 2015); however, there is still some way to go; future research should enhance these developments. Challenge 3: Tension between Virtue and Virtuousness The third challenge we face is that Positive Organisational Scholarship, the empirical dominated domain, focuses on the notion of positive organisational virtuousness, rather than neo-Aristotelian virtue; although closely related, the two notions are not identical. According to Sison and Ferrero (2015), a fourfold tension between virtue and virtuousness exists.5 The first tension is the locus of residence, the locus where the two notions unfold. While virtue

Organisational integrity and success  529 lies and unfolds in internal character, virtuousness lies and unfolds in external behaviour. The second tension is the level of degree. Virtue lies in a golden mean, meaning the right mean between two opposing vices of excess and defect. For virtuousness, however, more is always better. The third tension refers to the level of analysis. While virtue is on an individual level of analysis, virtuousness is to be found on an organisational level of analysis. Yet, this point is a controversial one as there is “the orientation in POS [Positive Organisational Scholarship] toward exploring virtue as an organization-level concept, when virtue has historically been regarded as solely an individual-level function of personal character” (Bright et al., 2014, p. 450). Palanski et al. (2011) even focus with their research on a team level of analysis. The final and fourth tension, according to Sison and Ferrero (2015), is the context. Virtue is contextual and leaves latitude for situational specification, virtuousness is universal. The vulnerability that explicitly appears in the third tension can be transferred to all four tensions. All four are in some way vulnerable which shows how controversial the debates are and how high the overall tension between the two notions is. So, how is OI to be positioned within these two similar but different concepts? Solomon (1992) considers (organisational) integrity as a super-virtue. It is “not so much a virtue itself as it is a complex of virtues, the virtues working together to form a coherent [corporate] character” (Solomon, 1992, p. 168). He, among other business ethicists, perceives (organisational) integrity as something a person (or company) has or lacks, rather than a particular (corporate) act or activity. Positive social science goes one step further and studies virtue emphasising virtuous behaviour, thus calls for a holistic understanding of virtue that considers both character and behaviour (Bright et al., 2014). Consequently, OI is something a company can achieve by not merely being, but also (and primarily) by its activities, hence behaviour. This requires a constant striving to adapt as a company in a constantly evolving environment (Fuerst & Luetge, 2021). Challenge 4: Blurry Empirical Research Focus The fourth and final challenge is that there is little empirical work with a specific focus on OI. Positive Organisational Scholarship has a clear focus on the concept of organisational virtuousness, of which OI is merely one dimension. While empirical research in the context of organisational virtuousness is growing (see, e.g., Cameron et al., 2004; Chun, 2005), it is still of limited significance concerning the very concept of OI, simply because respective studies investigate organisational virtuousness as a complex of various dimensions. The findings (e.g., the positive effect of organisational virtuousness on overall business performance) can merely show tendencies for the concept of OI. In addition, the different studies operationalise and assess OI differently, which also makes direct comparability impossible. This diverse interpretation and assessment of the concept closes the circle to the first challenge we introduced at the beginning, calling for a uniform understanding and usage of the concept.

OI AND ITS IMPACT ON BUSINESS SUCCESS From a theoretical perspective, ethics can be considered as complementing the classical production factors like labour or capital (Luetge et al., 2016; Luetge & Uhl, 2021). This means that OI is an intangible good necessary to produce other goods or services; in other words,

530  Research handbook on organisational integrity for doing business. Based on the stakeholder theory (Freeman & Reed, 1983), we consider business success to have manifold manifestations. To think solely of the bottom line would fall short of the mark, as noted at the beginning. In this section, we address the question of how OI is related to business success by focusing on different dimensions of business success manifestation on which the current state of research allows us to draw conclusions. Improved Overall Business Performance There are two directional empirical studies that include OI when investigating the implications of organisational virtuousness on business performance from a Positive Organisational Scholarship perspective: Cameron et al. (2004) and Chun (2005). We outline their key findings focusing on the concept of OI and respective assessment scales. The results indicate OI to have a positive effect on different dimensions of business performance; they form a first baseline. Organisational virtuousness Cameron et al. (2004) are pioneers in bringing together organisational virtuousness and an empirical research design. They aim to join these domains by defining and measuring the concept of organisational virtuousness – of which OI is one factor – and exploring its relationship to the performance of organisations. The empirical study forms a milestone in investigating the positive relationship between organisational virtuousness and both perceived and objective measures of business performance. “A general definition of organizational virtuousness, then, includes individuals’ actions, collective activities, cultural attributes, or processes that enable dissemination and perpetuation of virtuousness in an organization” (Cameron et al., 2004, p. 768). Virtuousness cannot be measured with a single indicator, but there are key attributes of virtuousness that help explain its relevance in organisational studies: moral goodness, human impact, and social betterment. Table 33.1 shows the five factors used to assess perceived organisational virtuousness. Table 33.1

Statistically viable measure of the concept of organisational virtuousness with its five factors and three related items each, according to Cameron et al. (2004)6

Factor

Items

Organisational optimism

● A sense of profound purpose is associated with what we do here. ● In this organisation we are dedicated to doing good in addition to doing well. ● We are optimistic that we will succeed, even when faced with major challenges.

Organisational trust

● Employees trust one another in this organisation. ● People are treated with courtesy, consideration, and respect in this organisation. ● People trust the leadership of this organisation.

Organisational compassion

● Acts of compassion are common here. ● This organisation is characterised by many acts of concern and caring for other people. ● Many stories of compassion and concern circulate among organisation members.

Organisational integrity and success  531 Factor

Items

Organisational integrity

● Honesty and trustworthiness are hallmarks of this organisation. ● This organisation demonstrates the highest levels of integrity. ● This organisation would be described as virtuous and honourable.

Organisational forgiveness

● We try to learn from our mistakes here, consequently missteps are quickly forgiven. ● This is a forgiving, compassionate organisation in which to work. ● We have very high standards of performance, yet we forgive mistakes when they are acknowledged and corrected.

The results show significant relationships between perceived virtuousness and perceived organisational performance. As organisational performance indicators, Cameron et al. (2004) use five outcome measures: innovation, quality, customer retention, employee turnover, and profit margin. Organisational virtuousness, and OI as a single factor, is positively related to all five outcome measures. Particularly noteworthy is the fact that this positive relationship occurs in organisations that have recently experienced downsizing. This finding is due to two qualities of virtuousness: the amplifying quality, which “can foster escalating positive consequences” and the buffering quality, which “can protect against negative encroachments” (Cameron et al., 2004, p. 770). Virtue Ethical Character Scale (VECS) for organisations Chun (2005) prepares the ground for showing the connection between OI and successful business performance. She develops the Virtue Ethical Character Scale (VECS) for organisations consisting of six dimensions – of which OI is one dimension – and 24 associated items (see Table 33.2) using a mixed-methods approach that includes content analysis of ethical value statements of the Fortune Global 500 companies7 and a survey of around 2,500 customers and employees. The VECS allows us to assess the relationship between organisational-level virtue and (financial or non-financial) organisational performance. Table 33.2

The Virtue Ethical Character Scale (VECS) for organisations with its six dimensions and 24 associated items, according to Chun (2005)8

Dimension

Items

Organisational integrity

Honest, Sincere, Socially responsible, Trustworthy

Organisational empathy

Concerned, Reassuring, Supportive, Sympathetic

Organisational courage

Ambitious, Achievement-orientated, Leading, Competent

Organisational warmth

Friendly, Open, Pleasant, Straightforward

Organisational zeal

Exciting, Innovative, Imaginative, Spirited

Organisational conscientiousness

Reliable, Hardworking, Proud, Secure

The results show that the dimension with the greatest influence on the overall performance, according to the Fortune Global 500 list, is OI with its four items of honest, sincere, socially responsible, and trustworthy (Chun, 2005).9 Considering our OI working definition presented at the beginning (see section “Towards a Unified Understanding of OI”), it becomes clear that the study does not analyse integrity-based actions or the institutionalisation of, for example, corporate guidelines or reporting (manifestation degree 2 and 3 according to the organisational integrity triad: transparent institutionalisation, and coherence between commitments and actions) but merely the declaration of intent to actions with integrity (manifestation degree 1 according to the organisational integrity triad: commitment). Still, we can assume that

532  Research handbook on organisational integrity ethical value statements, meaning commitments, experience a form of internal institutionalisation to serve as behavioural anchors or guidelines, resulting in guiding corporate actions. OI is one of six organisational virtues that has a positive influence on business performance. Both studies, Cameron et al. (2004) and Chun (2005), rely on different conceptions of OI, and even virtuousness. Among other challenges, this is one reason why it is so hard to show the (empirical) impact OI has on business success and dimensions of business performance to this day. Higher Levels of Transparency and Trust and Greater Reputation OI, organisational reputation, trust, and transparency are closely interrelated. If we had to put these in sequence, everything starts with OI and leads to transparency. OI leads to higher levels of transparency “Transparency is the perceived quality of intentionally shared information from a sender” (Schnackenberg & Tomlinson, 2016, p. 1788), and a function of information disclosure, clarity, and accuracy. OI means to actively commit to self-imposed norms and principles, to transparently institutionalise these commitments internally, and to assure that these commitments are implemented into actions. In fact, OI significantly contributes to establishing and enhancing transparency and reducing information asymmetries between the organisation and its stakeholders (and among the stakeholders themselves). It contributes to information disclosure, clarity, and accuracy; it increases stakeholder sovereignty. Higher levels of transparency lead to higher levels of trust The trust theory by Mayer et al. (1995) suggests that trust relates to the willingness of stakeholders to be vulnerable to an organisation’s actions. It is “the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party” (Mayer et al., 1995, p. 712). A main research stream calls upon transparency to have an important role in creating, maintaining, or repairing organisational trust – explicitly and implicitly – within the organisation–stakeholder relationships (see, e.g., Pirson & Malhotra, 2011; Rawlins, 2008; Schnackenberg & Tomlinson, 2016). Thereby the key determinant of trust is the perceived organisational trustworthiness, which is estimated according to three dimensions: ability, benevolence, and OI. “The effect of stakeholder perceptions of an organization’s transparency on trust in the organization is mediated by stakeholder perceptions of the organization’s ability, benevolence, and [organisational] integrity” (Schnackenberg & Tomlinson, 2016, p. 1798). Organisations that enhance and allow for public participation, that share comprehensive information for an informed decision-making process, that provide balanced reports with accountability, and that are open to public scrutiny are more likely to be trusted (Rawlins, 2008). A good overview of the trust level ascribed to companies and other institutions like NGOs, governments, and media is given by the annual Edelman Trust Barometer,10 a global survey of more than 36,000 respondents in 28 countries on the topics of trust, important societal indicators, and credibility. Although the 2022 results show that companies outscore government by 26 points on ethics, respondents believe that companies are not doing enough to address societal problems, including climate change, economic inequality, workforce reskilling, and trustworthy information (Edelman Trust Barometer, 2022). The role

Organisational integrity and success  533 and expectations towards companies have never been clearer and neither has the possibility to see and seize this as an opportunity for strengthening the organisation–stakeholder relationship. Because this is where OI, as per definition, comes in. Finally, Lins et al. (2017) suggest that the trust between a company and all its stakeholders is built through investments in social capital and pays off when the overall level of trust in companies and markets suffers negative disruptions, like (severe) organisational reputation damage. Higher levels of trust lead to greater reputation Organisational reputation is a critical success factor in a volatile business world which is characterised by uncertainty and information asymmetry. As today’s society is increasingly sensitive to moral corporate behaviour, a healthy organisational reputation becomes more and more important for stakeholder engagement and consumer decisions. In fact, organisational reputation is something extremely vulnerable. “It takes twenty years to build a reputation and five minutes to ruin it”, Warren Buffett (1995, p. 109) famously said. Lange et al. (2011) see three dimensions of organisational reputation based on a holistic literature review: “being known (generalized awareness or visibility of the firm; prominence of the firm in the collective perception), being known for something (perceived predictability of organizational outcomes and behavior relevant to specific audience interests), and generalized favorability (perceptions or judgments of the overall organization as good, attractive, and appropriate)” (Lange et al., 2011, p. 155). Based on empirical findings, Zhao et al. (2021) show that trust is an important factor that enhances organisational reputation. As organisational reputational damage can occur even when a company acts within legal frameworks, the deliberation of ethical risks concerns every company regardless of the prevailing situation and health. In this context, OI is of fundamental importance as it provides guidance on relevant societal topics and issues, including climate change, economic inequality, and trustworthy information. It reflects the extent to which self-imposed norms towards certain topics and legal standards are translated into corporate action. OI is the baseline for organisational transparency, trust, reputation, and related concepts. This directly leads to the next section: OI and its (positive) relation to risk management. Improved Risk Management We consider the main goal of OI, its purpose so to speak, to be of a proactive and preventative investment nature. OI is “a company investment that translates into avoiding fines for potential violations of the law or ethical missteps” (Fuerst & Luetge, 2021, p. 7). It can protect a company from existence-threatening disruptions. We attribute OI to have a risk-minimising effect as it can prevent ethical missteps and helps avoid fines for potential violations of the law. As a new and broader breed of risk management issues stretch conventional internal control instruments and challenge executive management to provide proper oversight and steering (Menzel, 2005; Paine & Srinivasan, 2019), OI provides an essential asset. Compliance-based governance models have become the minimum standard and, in fact, are reaching their limits. Six well-known scandals across industries evidence how closely interconnected ethical and economic issues are (see Table 33.3).

534  Research handbook on organisational integrity Table 33.3

Six exemplary OI failures of the 21st century (enhanced version based on Ferrell and Ferrell, 2014)

Company

Year

Incident

Enron

2001

Various methods of continued balance sheet ● Company insolvency fraud

(Major) Consequences ● Civil lawsuits ● Cause of the Sarbanes-Oxley Act

WorldCom

2002

Profit manipulations to maintain stock price ● Company insolvency ● Legal proceedings against top managers ● Reinforcing cause for the Sarbanes-Oxley Act

Sanlu

2008

Use of melamine in milk and infant formula ● Company insolvency to simulate a higher protein level (known as ● Legal proceedings against top managers, the Chinese milk scandal)

BP

2010

politicians, and suppliers; incl. death penalty

The use of a low-cost working method

● High company penalties

against expert advice caused the explosion

● Legal proceedings

of the Deepwater Horizon oil rig and led to

● Civil lawsuits

a vast oil spill in the Gulf of Mexico

● 6-month moratorium on deep-sea drilling

Use of illegal defeat devices in diesel

● High company penalties

vehicles to reduce emissions during

● Legal proceedings against top managers

inspection phase (known as the Dieselgate

● 3-year U.S. monitorship

(U.S.) Volkswagen Group

2015

scandal) Wirecard

2020

Misappropriation of trust funds and

● Company insolvency

manipulated financial reporting

● Legal proceedings against top managers

While four of the reviewed companies went bankrupt (Enron, WorldCom, Sanlu, Wirecard), two of them survived with high company penalties and severe organisational reputation damage (BP, Volkswagen Group). Let’s examine Volkswagen Group’s approach in dealing with the Dieselgate11 scandal in 2015. What has the company done? In the rehabilitation process, the company started to (among other things) heavily increase its OI through internal integrity and compliance measures. Figure 33.1 shows a schematic timeline of the internal integrity developments at the Volkswagen Group after the unveiling. What we see are enormous infrastructural efforts being made by the company to prevent a second scandal of this scale and magnitude through OI prevention management. In an interview with the Handelsblatt in 2019, Hiltrud D. Werner, former member of the Volkswagen Group’s Board of Management and from 2017 to 2022 holder of the Integrity and Legal Affairs position, said that the company would not survive a second scandal like Dieselgate.12 The Volkswagen Group case supports developments from business practice showing integrity-based governance models to become a crucial part of the corporate risk management system. Corporate governance research supports the assumption that OI is a key factor in reducing risks and improving business performance (see, e.g., Arjoon, 2017; Calderón et al., 2018; Hajduk & Schank, 2017; Laufer, 2006; Menzel, 2005). Shiu and Yang (2017) argue OI and CSR to have preventative effects on companies’ stock and bond prices; they have buffering effects when stock and bond prices collapse. Shu et al. (2018) find that an OI-orientated culture determines key elements of internal control and has a significant positive impact on internal control systems. Corporate culture plays an important role in the context of risk mitigation (see, e.g., Cabana & Kaptein, 2021; Ferrell & Ferrell, 2014). If companies intend to be

Organisational integrity and success  535

Figure 33.1

Schematic timeline of the internal integrity infrastructure developments at the Volkswagen Group after the Dieselgate scandal in 2015

successful in addressing today’s broader and new breed of risk management issues, there is no way around including OI into corporate governance instruments which, in turn, includes corporate culture. This brings us to the next and final section, focusing on how to strengthen OI.

HOW TO STRENGTHEN OI Despite thin empirical evidence, there are clear indicators that OI has a positive impact on business performance and the company’s overall success. This raises the question, particularly in practice, of how to strengthen OI. Even though this question belongs to a still marginal research area to this day, we want to outline some forward-looking thoughts in this regard by introducing a threefold dimensional structure of OI and an organisational integrity triad concept. Knowing the Dimensional Structure of OI As one cannot manage what one does not comprehend, we need to start with the question of how to make OI holistically tangible. This starts with knowing how to operationalise the concept on the one hand and knowing the OI relevant touchpoints in companies on the other hand. The former becomes possible with the organisational integrity triad; considering companies as autonomous agents, OI is revealed at two levels, the individual level (in and through the decisions, thus actions, of its members) and the organisational level (in and through the decisions, thus actions, of the organisation itself) (Fuerst & Luetge, 2021). The latter requires further elaboration; a new approach by Fuerst et al. (2023) sees three different types of OI dimensions: the prerequisite dimension, the independent dimension, and the dependent dimension.

536  Research handbook on organisational integrity Prerequisite dimension of OI The prerequisite dimension of OI refers to the company’s legal compliance towards civil and criminal law standards. Compliance with legal norms is the company’s most important responsibility (Carroll, 1991); in fact, it is its core obligation (Cosans, 2009). Without legal compliance, corporate actions with integrity become impossible as it forms a mandatory part of the OI concept and constitutes the minimum requirement when conducting business (see, e.g., Fuerst & Luetge, 2021; Paine, 1994). Independent dimension of OI The independent dimension of OI is an enabling dimension (Fuerst et al., 2023). It enables individual but more importantly organisational actions with integrity. It sets the infrastructural and procedural (pre)conditions for OI; it refers to corporate property and artifacts (Fuerst et al., 2023). In other words, the independent dimension forms the preconditions for (individual and organisational) integrity-based behaviour and decisions. Because it is something that can be actively influenced and steered, this dimension is of particular importance for companies’ executive management. Based on Fuerst et al. (2023) and Kaptein and Avelino (2005), we derive five major elements that form the independent dimension of OI: (1) Responsibility and reporting structures. Clear responsibility and reporting structures that define responsibility flow charts as well as formal and informal reporting lines. (2) Incentive and reward structures. Appropriate incentive and reward structures that facilitate and reinforce (integrity-based) decision-making processes, thus behaviour. Sufficient structures and the right incentive systems are critical to the success of virtuous behaviour by management and employees. (3) Corporate (management) instruments. Proper corporate (management) instruments can, on the one hand, prevent misconduct (e.g., code of conduct trainings) and, on the other hand, detect misconduct and ensure that appropriate consequences follow (e.g., Whistleblower system). (4) Corporate culture and climate. The right corporate culture and climate of which integrity builds the basis and sets the common tone of how to get things done. Corporate culture and climate are breeding grounds for unethical behaviour. (5) Tone from the top and internal communications. Continuous role model behaviour by the (top) management and supportive internal communications that ensure the key messages of what behaviour is expected are understood by everyone within the company. All five elements together form a corporate infrastructure that causes individual behaviour which simultaneously transfers to corporate behaviour. As outlined above, our definition of OI refers to an organisational level. To understand how individual behaviour can become corporate behaviour, the corporate moral agency concept by French (1998) assists. Accordingly, individual behaviour becomes corporate behaviour as soon as individual behaviour is rationally intended by the organisation itself. The rational intention makes the organisation an intentional actor. This intention can be embodied by an organisation through the outlined five elements, as they guide and direct individual decision-making processes. Dependent dimension of OI OI is visible in and through corporate actions (Fuerst & Luetge, 2021). Consequently, merely the dependent dimension constitutes OI (in a behavioural sense). And this is where the pre-

Organisational integrity and success  537 viously introduced organisational integrity triad (consisting of (1) active commitments to self-imposed norms and principles, (2) their transparent institutionalisation into corporate processes and structures, and (3) their implementation into action) comes in (Fuerst & Luetge, 2021). When applied to all relevant topics for all stakeholders of the company, OI unfolds. Relevant topics are all societal, social, and environmental topics within the scope of each organisation–stakeholder relationship. To determine what precisely to strive for, it is necessary to clarify which stakeholder demands can be considered legitimate (Kaptein & Wempe, 2002). In other words, it means constructing an organisational integrity triad towards society-relevant topics, employee-relevant topics, customer-relevant topics, and so on. Exemplary topics can be data privacy, artificial intelligence, diversity, equity and inclusion (DE&I), political engagement, human rights, animal protection. We suggest that each company creates its own stakeholder map to best consider and derive their corporate commitment landscape as a first step towards OI. Continuous Striving Rather Than One-Time Effort Our understanding of OI implies that it reveals itself in and through corporate actions. It manifests itself in corporate behaviour, meaning it is nothing a company possesses or inherently is. Manifestation through action, in fact, implies that OI cannot be a one-time effort. Instead, OI must be something a company continuously demonstrates through actions; it is an ongoing effort (Fuerst & Luetge, 2021; Kayes et al., 2007). This means to evolve with the topics and challenges of time. It requires a steady striving to adapt as a company in a continuously evolving environment. To sum up: OI properly understood is not some add-on feature for companies; rather, it is at the core of doing sound business (Koehn, 2005).

CONCLUSION In this chapter, we have provided context and insight into OI impact research and its main challenges to date. We consider these challenges as responsible for the existing lack of stronger empirical evidence. Consequently, we consider the maturity level of the OI impact research field to be (still) young, with great potential for growth. In this context, we see two opportunities for future research. First, to establish a uniform – sufficiently precise – understanding and usage of the OI concept within academics. Second, to enhance cross-disciplinary research between virtue ethics and Positive Organisational Scholarship, for example by exploring concepts of virtue ethics with empirical methods. To sum up: within the OI impact research field, we call for more empirical studies with particular focus on the virtue ethical concept of OI, instead of virtuousness or virtue in general. In this chapter we have also introduced first thoughts on how OI can be strengthened within a company, as it forms the basis for sustainable business success – as opposed to short-term business success (Fuerst & Luetge, 2021). Besides impact research, we see here another promising stream for future research. In fact, this stream would be of great interest to practitioners and top management.

538  Research handbook on organisational integrity

NOTES 1. Regarding the precise use of the terms organisational integrity (OI) versus integrity, we use organisational integrity (OI) to refer to an organisational level of analysis (the company) and integrity to refer to a personal level of analysis (the individual). 2. According to French (1998), corporate internal decision structures consist of organisational flow chart and policies and procedure rules. They provide the ground for moral agency and are inherent in every organisation. 3. For a detailed elaboration on the commitment nature and quality, see Fuerst and Luetge (2021). 4. https://de.statista.com/statistik/daten/studie/12108/umfrage/top-unternehmen-der-welt-nach​ -marktwert [01/15/2023]. 5. In the 2011 Academy of Management Annual Meeting, a symposium entitled “Virtue, Virtuousness or Vice: Conceptual Tensions in the Study of Virtue in Positive Organizational Scholarship” took place. Since then, the symposium has had several editions (Sison & Ferrero, 2015) focusing on these tensions. 6. The highlighting in bold and the prefix “organisational” to the factors were added by the authors of this chapter. 7. https://​fortune​.com/​global500 [01/15/2023]. 8. The highlighting in bold and the prefix “organisational” to the dimensions were added by the authors of this chapter. 9. In the questionnaire, respondents were asked to imagine the organisation as a human being and then assess the organisation’s character (using a five-point Likert scale from strongly disagree (1) to strongly agree (5)). Therefore, all six dimensions relate to an organisational level of analysis; thus, it is about organisational integrity. 10. www​.edelman​.com [01/15/2023]. 11. The Dieselgate scandal concerned not only the Volkswagen Group but also other international automotive companies. However, the Volkswagen Group was the most severely involved in the scandal. 12. http://www.handelsblatt.com/unternehmen/industrie/volkswagen-dieselaffaere-vw-vorstand​ -werner​-einen​-zweiten​-skandal​-wuerden​-wir​-nicht​-ueberstehen/​25216182​.html [01/15/2023].

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PART V MANAGEMENT OF ORGANISATIONAL INTEGRITY

34. Integrity management systems Jeroen Maesschalck, Alain Hoekstra and André van Montfort

The idea that the integrity or ethics of employees can and should be managed is an old one. Yet since the last decade of the previous century, ethics or integrity management has really developed into a field of academic research as well as a separate area of management with its own organisational units, professionals and networks. Some of the drivers of this development in the public sector were the ethical challenges presented by New Public Management, evolving expectations of citizens and the declining trust in government. Similar issues of distrust played a role in the growth of ethics management in the private sector, particularly since a number of high-profile scandals such as Enron and WorldCom and the financial crisis of 2008. This relatively new academic and professional field of ethics or integrity management draws from a broad range of disciplines and professional fields, including public administration ethics, business ethics, behavioural ethics, corruption prevention, compliance, etc. This chapter will not focus on these separate disciplinary perspectives, but takes a more generic ‘systems’ perspective. By ‘systems perspective’, we refer to an approach that emphasises interconnectedness and requisite variety, as well as the dynamic and iterative nature of ethics management and the importance of grassroots participation. This chapter will first explain that perspective and then illustrate it with a few examples of ‘integrity management system’ (IMS) approaches. As will become clear, not all models that take a systems perspective explicitly have the ‘system’ label in their name. Partly depending on the discipline or field in which they were developed, they might be called framework (Maesschalck & Bertok, 2009), programme (Kaptein, 2009; Weaver & Treviño, 1999), infrastructure (Tenbrunsel et al., 2003) or otherwise. Models also vary in the level upon which they focus. For example, many prescriptive models in the area of corruption prevention focus on the national or regional level (e.g., Pope, 2000), addressing the role of a broad range of actors including regulators, actors in the criminal justice system, NGOs, the media, etc. With its focus on ethics management, this chapter will take a narrower perspective and focus on the level of the organisation. While those important actors at national or regional level might be relevant as contextual factors, they are not the focus of the integrity management system approach discussed in this chapter.

THE ‘INTEGRITY MANAGEMENT SYSTEM’ APPROACH In this chapter, ‘ethics’ and ‘integrity’ will be used interchangeably. Both will be defined as ‘the quality of acting in accordance with relevant moral values, norms and rules’ (Huberts, 2018, p. 22). Integrity management refers to the deliberate measures ‘to create an ethical culture and to impede unethical behavior and promote ethical behavior’ (Kaptein, 2015, p. 416) within an organisation. By using the term ‘deliberate measures’, this definition of 542

Integrity management systems  543 integrity management is a bit broader than other definitions such as Kaptein’s (2015, p. 416), which focusses on ‘the formal organizational control system’. Our conceptualisation not only includes formal measures of ethics management such as the introduction of an ethics code or the organisation of formal ethics training, but also informal measures with an impact on (un) ethical behaviour such as messages communicated through day-to-day leadership or informal sanctions (Tenbrunsel et al., 2003). This broader definition fits with the systems approach’s emphasis on the interconnection between various components (see below). Yet our definition is not as broad as for example Tenbrunsel et al.’s (2003) concept of ‘ethical infrastructure’, which also includes an organisation’s ethical climate. We consider the latter as an outcome that the integrity management system is supposed to impact, not an element of the integrity management system itself. With integrity management being a set of deliberate measures, an integrity management system (or IMS) comprises the whole of those measures as well as the actors implementing them. Drawing from Six and Lawton (2013, p. 640), we here define a system as ‘a complex object whose parts or components are held together by bonds of some kind’ (Bunge, 2004, p. 188). An integrity management system model or IMS model is then a systematic representation of ethics management measures. The systems approach to ethics management has a number of characteristics that often return as recommendations in the ethics management literature, also in the discussion of models that do not use the ‘system’ label. We focus on four of these characteristics (see also Maesschalck, forthcoming): interconnectedness, requisite variety, processual perspective, and grassroots participation. We now discuss each of them and summarise this discussion in Table 34.1. Interconnectedness The notion of interconnectedness (or interdependence) is at the core of Bunge’s (2004, p. 188) definition of a system. A systems approach moves beyond the study of individual ethics management components and looks at how they connect and how they jointly impact ethical culture and (un)ethical behaviour. This plays a role within ethics management, between ethics management and other interventions within the organisation, and between ethics management and the organisation’s external environment. We discuss each of these three levels in turn. First, more and more emphasis is put on the interdependence between individual integrity management measures. Like the spokes in a bicycle wheel, the effect of one depends on the effect of the other. Spokes that are missing weaken the wheel, make it run less smooth, which eventually may lead to a malfunctioning bike. Thus, when the resources for one part of the IMS system are reduced, then this will likely have spill-over effects across the whole system (OECD, 2020, p. 33). This also works for more substantive policy choices. For example, when an organisation decides to weaken compliance rules for senior management while maintaining strict constraints on employees lower in the hierarchy, this is likely to undermine the legitimacy of its ethics management and might generate cynicism, frustration and thus perhaps unethical behaviour. Of course, this interdependence can also work in a positive way. Specifically, synergies can occur when the effect of one intervention strengthens the effect of other interventions, generating a joint effect that is stronger than the sum of the effect of the instruments if they would have been applied separately (Kaptein, 2015; MacLean & Behnam, 2010). Hoekstra and Kaptein (2020) describe this as the alignment of instruments. For example, while the distribution of the text of a new ethics code in itself might not make

544  Research handbook on organisational integrity a big impression on employees, the effect might be significantly stronger if that distribution is combined with a training session, repeated references to the document by senior management, etc. Six and Lawton (2013) explicitly embraced this interconnectedness in their ‘theory of integrity systems’ by proposing a configurational approach that helps to develop a non-linear explanation of how various constellations of elements of an integrity system can generate various outcomes in terms of ethics. Many have addressed a crucial practical implication of these interdependencies: the need for coordination. Hoekstra (2016) and the OECD (2020, pp. 35–37), for example, map several ways in which various actors in an IMS can coordinate. Integrity officers will play an important role in this coordination. Yet such coordination can be made difficult by a tendency for actors such as integrity officers, but also other relevant actors within the IMS such as Human Resources, Internal Audit, Finance, or Communications, to remain within their ‘silo’ (Maesschalck, 2019, p. 162). Particularly when resources are constrained, less might be invested in horizontal cooperation (OECD, 2020, p. 33). Second, the interconnectedness also plays with other interventions that might not be part of the IMS per se, but might still have an impact on ethics management. For example, when a sales training promotes aggressive selling techniques that are at odds with what is being taught in ethics training, this is likely to undermine the latter’s effect. Conversely, when the message in both types of training is similar, then their joint positive impact might be stronger than the sum of the impact of the messages in each of the trainings separately. A related phenomenon is that of a ‘decoupling’ between integrity management on the one hand and the rest of the organisation on the other (MacLean et al., 2015; MacLean & Behnam, 2010). When that occurs, ethics management comes down to not much more than ‘window dressing’. An ‘easily decoupled’ policy makes it look like the organisation conforms, e.g., to externally imposed standards, while it actually insulates a large part of the organisation from those expectations (Treviño & Weaver, 2003, p. 127). Treviño and Weaver (2003, p. 128) give the example of a major financial services firm, where middle managers denied knowing about ethics policies that they had actually signed as a condition of employment. Research on the decoupling between formal compliance programmes and the rest of the organisation indeed suggests that such decoupling can be very counterproductive for ethics management (MacLean & Behnam, 2010). Third, interconnectedness also plays with interventions and actors outside the organisation. While we chose to focus on the organisational level to study IMS, that of course does not prevent us from looking at the interaction between the organisation and its environment. This environment consists of various external actors, some of which can be considered an ‘integrity guardian’ or ‘an agency with oversight and control powers concerning integrity violations’ (Six & Lawton, 2013, p. 641). These will have an important impact shaping the IMS itself, but they can also interfere with its functioning, both by strengthening or weakening its impact. Of course, the environment is much broader than these dedicated external integrity actors; there are many other stakeholders that can impact both the design and the effectiveness of an IMS. For example, the implementation of a new gift and gratuities policy for employees will be much easier when contractors or lobbyists are aware of the policy, of the reasons why it has been launched and of its consequences for them if they violate it (e.g., future exclusion from service purchases). That is why many IMS models often recommend involvement of external actors in both the design and the implementation of ethics management measures.

Integrity management systems  545 Requisite Variety An often returning mantra in the ethics management literature is the need for variation as well as comprehensiveness. Hoekstra and Kaptein (2020) argue for a pluralist approach. So do Martineau et al. (2017), who also explicitly refer to systems theory and particularly Ashby’s (1947) principle of requisite variety. Most models offer some kind of classification of ethics management instruments, arguing for sufficient variation across those different types of instruments. As such they argue for a sufficiently broad ‘scope’: the range of measures or instruments included in a system (Kaptein, 2015, p. 419). Integrity systems with a larger scope are then hypothesised to be more effective because they can fulfil more functions or because this renders the message that the organisation takes ethics seriously (Kaptein, 2015). Kaptein (2009, p. 264), for example, argues for a large number of instruments and van Montfort et al. (2018) argue for comprehensiveness, implying that all elements of the integrity system should be present. Even better known than these various classifications of ethics management instruments, are classifications into broader approaches to ethics management. The classic distinction here is between the rules-orientated and values-orientated approaches to ethics management. Introduced by Paine (1994), this opposition was further developed and researched by Weaver and Treviño (Treviño & Weaver, 2003; Weaver, 2014; Weaver & Treviño, 1999) and others. The rules-orientated approach aims at compliance through discipline and a contractual exchange between the organisation and its employees (Weaver & Treviño, 1999). The values-orientated approach aims at shared values by strengthening employees’ ethical role identity and communicating organisational support (Weaver & Treviño, 1999). Many authors have recommended that both should be combined (or ‘balanced’) in a judicious mix (e.g., Maesschalck, 2004; Weaver & Treviño, 1999). The distinction has also been criticised, with, for example, Maesschalck (2004) proposing a fourfold alternative to the dichotomy and Martineau et al. (2017) even a sixfold alternative. Processual Perspective Researchers increasingly emphasise the dynamic and iterative (Hoekstra & Kaptein, 2020) nature of ethics management by taking a processual perspective (Constantinescu & Kaptein, 2020). Several authors (Hoekstra & Kaptein, 2020; Maesschalck & Bertok, 2009) use the ‘Deming cycle’, taken from the quality management tradition, to conceptualise this process. This cycle conceptualises the development, implementation and evaluation of interventions in four steps: plan, do, check and adapt (hence the PDCA-cycle). It is indeed possible and useful to establish such a cycle for ethics management. It ensures that the IMS will learn from its implementation and adapt when interventions do not seem to work from the beginning or need adaptation because of changing circumstances. Such a perspective also helps to avoid the common problem of the ‘implementation deficit’ of ethics management: lofty ambitions that are not being implemented or are quickly forgotten when other concerns (e.g., profit or a pandemic) take centre stage (Maesschalck & Bertok, 2009). The expectation is that such a deficit will be less likely in organisations that commit themselves to systematically monitor, evaluate and adapt their ethics management instruments. A few models (see below) also provide specific guidance on the appropriate sequence for the introduction of particular ethics management instruments.

546  Research handbook on organisational integrity Grassroots Participation While the above discussion of the characteristic ‘interconnectedness’ addressed the interdependence between deliberately designed management instruments and units, this fourth characteristic, ‘grassroots participation’, focuses on the involvement of self-organised groups or individuals in ethics management. We first address employee participation and then grassroots participation from outside the organisation. Probably one of the most outspoken concerns in recent publications on IMS is the importance of participation of employees within the organisation. At least three arguments for increased employee participation are provided. The first stems from a broader critique of the tendency of many models to emphasise control (Tremblay et al., 2017). Stansbury and Barry (2007), for example, explain how an ethics programme can raise the ‘specter of indoctrination’, i.e., a ‘learned unwillingness to consider the relative limitations of a system of thought’ (Stansbury & Barry, 2007, p. 248). This can generate reactance and possibly resistance among employees, thus undermining the very goals of ethics management. Through this emphasis on control, integrity management can also reduce individual employees’ ability to manage ethical ambiguity, thus leading to atrophy of competency (Stansbury & Barry, 2007, p. 253). Stansbury and Barry (2007) hypothesise that such perverse effects of integrity management can be avoided by allowing for more participation, for example by allowing employees sufficient discretion or organising regular criticism of the ethics programme itself. The second argument for increased employee participation is more pragmatic, as it focuses on how such participation can improve the quality and effectiveness of an IMS. Through participation, individual employees can express their needs (Tremblay et al., 2017) and this can in turn increase the likelihood that the IMS will address the issues employees really struggle with, thus making it more effective. Participation can also strengthen a sense of ownership (Andersson & Ekelund, 2022, p. 1096) of the ethics management measures, thus strengthening the willingness of employees to cooperate with their implementation. The third argument in favour of employee participation is less pragmatic and more fundamental. Anechiarico and Segal (2020) discuss the growing role of ‘employee activists’ who use traditional means such as petitions, strikes and walkouts in combination with the power of social media to express, often ethical, concerns about their organisation. A rigid, top-down IMS might not be able to use the many positive effects of such activism or might even suppress it. In the public sector, this issue is even more acute, particularly in a period of democratic backsliding. A populist regime might impose ethically dubious or straightforwardly unethical policies, demanding ‘integrity’ (but actually meaning ‘obedience’) in carrying out those policies (Anechiarico & Segal, 2020, p. 281). Thus, an IMS should allow employees sufficient voice and participation so as to withstand such pressures. Similar arguments can be made for grassroots participation from outsiders (e.g., Tremblay et al., 2017). Indeed, it can help to improve the quality of the IMS itself. For example, taking activists from outside the organisation seriously and giving them voice, also in the development and the implementation of an IMS, can help to prevent damaging policies. In some cases inside and outside participation can overlap. For example, the societal #MeToo movement against sexual abuse and harassment can provide support for bottom-up pressures within the organisation to improve the IMS.

Integrity management systems  547 Table 34.1

Recommendations based on the four characteristics of an Integrity Management System: aims and means

Characteristic

Aim

How

Interconnectedness

Create synergies and avoid

Coordinate at three levels: (1) within ethics management, (2)

decoupling

between ethics management and the organisation’s broader internal environment and (3) between ethics management and the organisation’s external environment

Requisite variety

Be comprehensive and pluralist

(1) Ensure a sufficiently broad scope and (2) balance the various categories of ethics management (e.g., of the rules-based and values-based approaches)

Processual perspective

Avoid implementation deficits

Consider ethics management as a dynamic and iterative process

and adapt flexibly to changing

(e.g., as represented in the Deming cycle)

circumstances Grassroots participation

Avoid excessive control, ensure

Involve employees as well as external self-organised stakeholders

psychological ownership and

in decision making

benefit from bottom-up input

SOME INTEGRITY MANAGEMENT SYSTEM MODELS Having discussed the characteristics of an IMS, we can now turn to a number of IMS models. By means of illustration, we discuss five such models. As mentioned above, while some of these do not explicitly refer to the systems approach, they all share at least to some degree the four characteristics discussed above. What the discussed models also have in common is that they have been described in English and refer at least to some extent to academic literature as a basis for the model and/or have been evaluated. As Lašáková et al. (2021) point out, most models are not developed on the basis of empirical research. Some authors (e.g., Kaptein, 2009) draw their model from guidelines of international organisations or national governments, others build it based on a review of the literature (e.g., Martineau et al., 2017). Many of these models have been applied in various organisations. Essentially, these models are prescriptive, offering recommendations that are to be followed to prevent unethical behaviour and promote ethical behaviour. Some have also been used to describe ethics management and a few studies have attempted to empirically evaluate some of these models (see below). The discussed models also have in common that they have a broad application as they are not restricted to one particular type of organisation in one particular field (e.g., police, health, business). The selected models also all aim at a broad outcome. They do not focus on one type of behaviour, such as bullying, corruption or deception, but aim to reduce integrity violations more generally. Finally, it is also important to emphasise that all discussed models are designed for organisations that function in a stable, democratic environment. They can probably not simply be applied in a hostile, deeply corrupt environment without serious adaptations. We start the discussion with two models originating from the work of two international organisations, an NGO (Transparency International) and an intergovernmental organisation (OECD). We then turn to a relatively new model that is explicitly designed as a critique of the previous two models: the pluralistic ethics management framework. We then discuss Kaptein’s ethics programme model and conclude with the Dutch ‘Integrity Infrastructure’ model. While most of these models originated in the context of the public sector, they are all also relevant for the private sector and NGOs. It is important to reiterate that these are just a few illustrations.

548  Research handbook on organisational integrity There are many other models that also take a systems perspective and could also have been discussed, including standardised models such as the ISO Compliance Management Systems (ISO 37301, 2021). Organisational Integrity System (OIS) The most obvious model to start this list of illustrations is, of course, the model that has ‘integrity system’ in its very name. It is originally drawn from the ‘National Integrity System’, coined by Pope (1996, 2000) for Transparency International. The National Integrity System is represented as a ‘Greek temple’ consisting of pillars that refer to crucial actors in corruption prevention at national level such as the executive, independent anti-corruption agencies, or civil society. Thus, the National Integrity System focuses on the broader system and tends to consider what happens within organisations as a black box (Six & Lawton, 2013, p. 648). That is very different for the adaptation of the National Integrity System to the Local Integrity System (Huberts & Six, 2012; Six & Lawton, 2013), which has been applied in a seminal study in seven cities across the world (Huberts et al., 2008) and within several Dutch municipalities (e.g., Van den Heuvel et al., 2017). The Local Integrity System does explicitly theorise the components of ethics management within the organisation while also addressing the broader environment. Six et al. (2012, p. 366), for example, distinguish between the internal (i.e., operational and corporate) level of the system on the one hand and the external level on the other. Our discussion here focuses on the internal side and hence on the organisational integrity system (Huberts, 2014, pp. 190–197; Huberts & van Montfort, 2020) model or the OIS model. This model draws from the NIS and LIS studies, but also from broader research on ethics and integrity management as well as more specific studies of particular instruments. The OIS model has evolved over time, mainly as part of studies into the broader LIS. A recent comparative study on the LIS of three cities in three western European countries particularly emphasised the intra-organisational part of the LIS and hence the OIS (Hoekstra et al., 2021, 2022). With the OIS taking an explicit systems approach, the four characteristics of an IMS are clearly present. First, the notion of interconnectedness is strongly emphasised in all OIS studies. Importantly, the OIS not only emphasises the interconnectedness among the ethics management instruments per se, but also much more broadly, both within and outside the organisation. As for the former, Six et al. (2012), for example, conceptualise a ‘corporate’ level that includes internal units such as audit, risk management and security, as well as, for example, human resources and finance. Hence, the efforts these actors make to strengthen integrity are fully included in the model. The model also particularly emphasises the important coordinating role of integrity officers. Second, as for requisite variety, the OIS identifies six elements that are all said to be essential for an integrity management system to be complete: awareness of the integrity issue, clarity about integrity and integrity management, ethical leadership, a strategy that balances rules-based and values-based approaches, specific integrity measures (e.g., ethics codes, training, procedures for reporting violations, and integrity risk assessment tools), and critical reflection on what matters and what works. An assessment framework further specifies each of these elements in a number of indicators (Hoekstra et al., 2021, pp. 87–88). Third, with its emphasis on critical reflection, the OIS model also takes a processual perspective. It prescribes periodical monitoring and evaluation of the implementation of the measures as well as of their effectiveness, with the aim to continuously improve. Six and Lawton (2013) also include this dynamic element in the conditions of their config-

Integrity management systems  549 urational theory of integrity systems. Fourth, as for grassroots participation, the OIS model acknowledges the importance of the involvement of internal key actors. Less developed is the active participation by other employees as well as the involvement of external grassroots stakeholders. Integrity Management Framework (IMF) The Integrity Management Framework or IMF was developed for the OECD by Maesschalck and Bertok (2009). It has been applied to political parties in Sweden (Andersson & Larue, 2022), the Swedish public sector (Andersson & Ekelund, 2022), British local government (Macaulay et al., 2014), Brazilian local government (De Bona, 2022) and sports management (Maesschalck & Vanden Auweele, 2010; Robertson & Constandt, 2021). It was also used to organise a literature review on financial fraud (Gotelaere & Paoli, 2022). Maesschalck and Bertok (2009) argue that, for an ethics management framework to be effective, it needs to implement a number of instruments, establish processes, and anchor ethics management in the organisation through structures. Together, these are considered the three pillars of the IMF. The first pillar consists of a number of ethics management instruments (Maesschalck & Bertok, 2009, pp. 28–59). These are organised according to their function for ethics management. Rather than simply accumulating as many instruments as possible, organisations should only apply those instruments that really contribute to the fulfilment of those functions in the particular context of their organisation. These functions are determining and defining integrity (e.g., risk analysis, ethics codes), guiding to integrity (e.g., training, communication, leadership), monitoring integrity (e.g., surveys, whistle-blowing systems), and enforcing integrity (e.g., disciplinary sanctions). The second pillar of the IMF consists of processes. These should be established to make sure that the instruments are not only implemented, but also evaluated and, if necessary, adapted. The third pillar concerns the structural anchoring of ethics management. This of course refers to appointment of ‘integrity actors’ (e.g., integrity coordinators, compliance officers, and ethics bureaus) for whom ethics management will be their main responsibility. Yet it also refers to the important role of all managers and to the role of those who are responsible for management instruments that are not at the core of ethics management, but are nevertheless important to achieve the goals of ethics management such as Human Resources or the legal department. The four system characteristics can indeed be recognised in the IMF. First, as for the interconnectedness, Maesschalck and Bertok (2009) emphasise a holistic approach looking at the framework as whole. They emphasise the importance of coordination among the ‘core’ integrity management instruments as well as coordination with ‘complementary instruments’. The latter do not have integrity as their main goal, but are nevertheless crucial to achieve the goals of ethics management (e.g., recruitment or procurement procedures). Maesschalck and Bertok (2009, pp. 23–27) also see the IMF as an open system, embedded in a wider context. Second, as for requisite variety, they recommend to combine rules-based and values-based approaches for all four functions. Third, with ‘development processes’ as one of its three pillars, the IMF clearly embraces the processual and iterative nature of ethics management. It also provides some suggestions for the sequence with which instruments can be introduced. For example, it proposes to emphasise the rules-based approach when ethics management is introduced following a corruption scandal and to emphasise the values-based approach when ethics man-

550  Research handbook on organisational integrity agement is introduced as a preventative measure independent of any scandal (Maesschalck & Bertok, 2009, p. 60). Fourth, as for grassroots participation, there is a recommendation to consult staff and stakeholders, for example when formulating ethical standards (Maesschalck & Bertok, 2009, pp. 31–34), but this remains limited. Integrity Infrastructure The Integrity Infrastructure was originally developed in 2006 at Nyenrode Business University in close cooperation with the Dutch Ministry of the Interior (Hoekstra & Karssing, 2007). It builds on academic literature and practical experience and has evolved over time with its last version being published recently (Hoekstra & Zweegers, 2022, pp. 10–15). The model is essentially defined by seven elements, represented as an atom. At the core is the element ‘coherence and coordination’. This is surrounded by leadership and strategy, values and standards, rules and procedures, personnel and culture, reporting and enforcement, and monitoring and accountability. It comes with a 35-item questionnaire (‘quick scan’), with five questions for each of the seven elements, that can be used to assess the comprehensiveness of an ethics management system in an organisation, which has been used in more than 500 organisations (Hoekstra, 2022). The Integrity Infrastructure model addresses the four characteristics of an IMS. With its ‘coherence and coordination’ as core of the atom, it clearly considers interconnectedness as crucial. The model strongly emphasises the importance of coordination with the many actors that have a role to play in ethics management. For this coordination, it particularly emphasises the role of a central coordinating function, for example in the form of an integrity office(r). The latter should operate like a spider in a web ensuring internal coherence. The model also implies requisite variety as it prescribes that organisations should sufficiently develop all seven elements. Its 35-item quick scan can help organisations with this. The processual aspect of the model is expressed by the ‘monitoring and accountability’ element, intended to ‘track its process and operation’ with the aim to improve (Hoekstra & Zweegers, 2022, p. 12). Finally, like the OIS and IMF models, the Integrity Infrastructure model does indeed address some aspects of grassroots participation, but this remains limited. Pluralistic Ethics Management Framework (PEMF) At the core of the ‘pluralistic ethics management framework’ (Martineau et al., 2017; Tremblay et al., 2017) or PEMF is a new, sixfold classification of ‘ethics practices’: normative practices (e.g., ethics codes), detection practices (e.g., whistle-blowing protection), structural practices (e.g., ethics officer), social and environmental responsibility practices, consultation and participation practices, and experiential ethical development practices (Tremblay et al., 2017, p. 227). This is presented as a ‘pluralistic’ alternative to the traditional rules-orientated vs. values-orientated dichotomy, which is not only deemed too simple, but also seen as based on a flawed understanding of the underlying motivation mechanisms (Tremblay et al., 2017, pp. 224–226). The PEMF is also explicitly presented as an improvement of earlier models and particularly the IMF, because it presents a broader array of instruments. The model’s ‘pluralistic’ approach implies that all six orientations should be in the balance: their instruments should be present to some degree, but with none of them dominating (Martineau et al., 2017). A comparison of

Integrity management systems  551 the PEMF’s practices with the IMF’s instruments shows that many of the former also feature in the latter. In contrast to what Tremblay et al. (2017, pp. 227–229) maintain, the IMF, like many of the other discussed models, not only refers to instruments at individual level, but also to instruments that Tremblay et al. (2017) situate at the ‘collective’ or ‘strategic’ level such as the organisation of surveys on ethics (an instrument under IMF’s function ‘monitoring’) or the appointment of an advisory ethics committee and ethical leadership (both mentioned in the IMF’s pillar ‘structure’) (Maesschalck & Bertok, 2009). Some of PEMF’s practices are not in the core of the IMF, but are mentioned as complementary instruments of ethics management. There are also a few practices that are mentioned in the IMF, but with less emphasis than in PEMF, such as participation and empowerment practices. Finally, a few practices seem to be specific to the PEMF and are (almost) entirely absent from the IMF and other models. Most notable is the category ‘experiential ethical development practices’ (Tremblay et al., 2017), which includes practices such as artistic training, mind-body approaches and spiritual practices. In the PEMF model, these are considered instruments of ethics management per se and not instruments of a relevant adjacent area (e.g., employee wellbeing, health and safety), as they might be considered in most other models. The same goes for some practices under the PEMF model’s ‘social-environmental orientation’ such as the commercialisation of fair-trade products or the promotion of sound environmental practices such as recycling or energy conservation (Martineau et al., 2017, p. 802). Martineau et al. (2017) provide empirical support for the model. Drawing from research as well as practice, they developed a questionnaire to measure the six orientations, which was validated in a survey among employees in eight Canadian organisations. They also find that organisations with more requisite variety are indeed perceived to have better ethical performance. The PEMF particularly emphasises two of the four characteristics of an IMS. ‘Requisite variety’ is mentioned explicitly as a core characteristic (Martineau et al., 2017; Tremblay et al., 2017), particularly applied on its six groups of instruments. Likewise, with ‘participation-consultation’ as one of its six orientations, it clearly emphasises participation. Martineau et al (2017) rightly present this as an advantage over other models and particularly the IMF. As for the processual perspective, the PEMF does not explicitly theorise a PDCA-type management cycle. Yet it does theorise and observe self-reinforcing dynamics that can lead a particular orientation to become dominant and thus undermine requisite variety (Martineau et al., 2017, p. 808). Likewise, the issue of interconnectedness is not explicitly addressed. To some extent, the PEMF avoids the issue of interconnectedness between integrity management instruments and instruments of adjacent fields by expanding the scope of ethics management to practices that other models would rather situate in adjacent fields such as employee wellbeing or corporate social responsibility. Kaptein’s Ethics Programme Model Kaptein’s (2009, 2015) ‘ethics programme’ model distinguishes between nine different ‘components’ of ethics programmes: a code of ethics, a dedicated ethics officer or office, formal ethics training and other types of communication, an ethics hotline, policies for accountability for unethical behaviour, investigation and corrective policies, policies on incentives and rewards for ethical behaviour, internal monitoring and ethics audits, and pre-employment

552  Research handbook on organisational integrity screening. He assessed the model in two studies, both based on a survey among a large group of employees in the US. The first study (Kaptein, 2009) assessed the impact of the nine components on eight ‘corporate ethical virtues’ (Kaptein, 1998), which might also be seen as eight functions or aims of ethics management (Kaptein, 2009, 2015): clarity about what is expected, role-modelling behaviour by management, role-modelling behaviour by supervisors, feasibility (i.e., providing those resources employees need to behave ethically), supportability (i.e., stimulating identification with and commitment to ethical expectations), transparency about (un)ethical behaviour and its consequences, discussability of ethical issues, and sanctionability of unethical behaviour. The combination of these eight corporate ethical virtues indeed turned out to be impacted by the components of the ethics programme, with the exception of pre-employment screening. Interestingly, when looking more in detail at the impact of the individual components on the individual ethical virtues, Kaptein (2009) found that some components have a positive impact on some virtues while having a negative impact on other virtues. He therefore concluded with the recommendation to managers to be very clear on what (in terms of the eight corporate virtues) they want to achieve, because their goals might be variously impacted by various instruments. The second study (Kaptein, 2015) assessed the impact of the nine components on unethical behaviour. Again with the exception of pre-employment screening, Kaptein found all other eight dimensions to either directly or indirectly impact unethical behaviour. He concluded that an IMS should therefore include those eight components. Interestingly, the 2015 study also investigated the impact of the order in which the various components are introduced, leading Kaptein to recommend a particular sequence. The model has also been applied in other studies. Molina (2018), for example, applied it to analyse a particular case in the US (albeit referring to it as the organisational integrity systems approach). As for interconnectedness, the first of the four IMS characteristics, Kaptein (2015) not only theorises synergies but he also identifies empirical examples of this when finding higher interaction effects: components which had no separate effect on unethical behaviour turned out to have an indirect effect (p. 425). Kaptein’s model also embraces requisite variety, pointing at the importance of all components (with the exception of pre-employment screening) and thus of a sufficiently broad scope. By noting that some components have more impact than others and that some components might even have a negative impact, he adds to this a complexity and nuance that is not present in the other models. Kaptein’s model also addresses the processual nature of ethics management by including this in the component ‘internal monitoring and ethics audits’. Yet he goes beyond this, by proposing a particular sequence for the introduction of the components that takes into consideration their relative importance (the more important, the earlier it should be implemented) and their relative dependence (Kaptein, 2015). Finally, while there are some references to grassroots participation (e.g., in the corporate virtue ‘discussability’) this is the least developed characteristic of the four IMS characteristics.

CONCLUDING REFLECTIONS This chapter focused on those integrity management models that take a systems approach. It identified four characteristics of a systems approach (interconnectedness, requisite variety,

Integrity management systems  553 a processual perspective, and grassroots participation) and then discussed five examples of models that, at least to some extent, exhibit these characteristics. The discussion of these models suggests some reflections and recommendations. First, there clearly is variation in the delineation and operationalisation of ethics management systems. As for the operationalisation, while each model has its own classification of instruments, there are many similarities between the actual categories. Further research that would compare the internal consistency of these classifications would be useful. As for the delineation, most models seem to have a similar scope of what is included in ethics management and what is not, with the IMF explicitly introducing a grey zone of ‘complementary’ instruments. The PEMF is an exception as it proposes to strongly push the boundaries of what ethics management is, expanding it to issues that are commonly considered to be in adjacent fields such as employee wellbeing and sustainability policies. The question is whether, in the long run, such an ever-expanding scope will not weaken the focus of ethics management (when everything is ethics, ultimately nothing is specifically ethics) and whether this will not generate unproductive turf wars with those responsible for those other fields. We would argue in favour of a narrower focus for ethics management itself, but with close cooperation and coordination with adjacent fields. Second, one of the most important characteristics of the systems approach is the ‘requisite variety’ maxim. Many models essentially reduce this advice to a simple indicator of scope: the more of the prescribed components an organisation has, the better. Arguably, this requires much more nuance, particularly from the perspective of parsimony. Are all these components really necessary? As Kaptein (2015, p. 419) points out, the more components a system already has, the more overlap there might be and the less added value a new component might bring. At some point, the piling up of components might even have adverse effects (see below). Perhaps the absence of a component can be compensated for by the strengthening of another component? Perhaps the synergy effects that the requisite variety maxim hypothesises might make it less necessary that all components are present? To answer these questions, we will need sophisticated research, for example through multivariate analyses that not only assess the combined impact of ethics management components but also their interaction effects. Kaptein’s (2009, 2015) and Martineau et al.’s (2017) studies offer some initial examples of such studies, but this deserves further development, both in quantitative and qualitative research. Moreover, such research should not only focus on the mere presence or absence of IMS components, but also address the nature of these components. It is not enough to merely have, say, ethics training or a whistle-blowing policy, the actual shape these instruments take, both on paper and in practice, is at least as important. Third, as Kaptein (2015) convincingly argues, it is also important to look at the actual sequence in which the instruments are introduced. While some of the other models (most notably OIS (Six & Lawton, 2013)) recognise this as well, Kaptein’s (2015) is most explicit in prescribing, based on his empirical research, a specific order in which the components of his model should be implemented. While this provides an interesting starting point, this deserves further development and nuance. A case in point is Kaptein’s (2015) recommendation to introduce investigation and corrective policies relatively late in the process. While this might be good advice for most situations, those organisations who introduce ethics management immediately following a major scandal might first want to emphasise the more rule-based approach (Maesschalck & Bertok, 2009, p. 60).

554  Research handbook on organisational integrity The latter example is an illustration of the fourth recommendation we would like to make, which concerns the importance of context. While most models do recognise that context plays an important role, this certainly deserves more theorising and empirical testing. Again bearing parsimony in mind, one might find that particular components might be more important in particular contexts than in others. For example, the impact of the introduction of a whistle-blowing policy is likely to be very different depending on the degree of interpersonal trust within the organisation. Likewise, the overall impact of the introduction of an IMS might be very different if it is introduced in the wake of a major scandal. The extra-organisational context is also likely to be very important. The same intervention could have very different effects, depending on the jurisdiction or the sector (e.g., banking, policing or sports) within which the organisation is situated. More generally, such research would help to avoid the risk of exaggerating the impact of ethics management interventions. However important an IMS might be, there are many factors that might be at least as important to explain ethical or unethical behaviour of employees. Fifth, future research into IMS should pay serious attention to the undesirable side-effects of ethics management. Some of the prescribed interventions might not only be ineffective, they might also have an adverse effect. Most discussed models explicitly address one such set of side-effects: those generated by ethics management that is not appropriately balanced between the rules-orientated and the values-orientated approaches. Indeed, an overemphasis on the rules-orientated approach can generate a culture of distrust and a general fear of making mistakes that hinders creativity in dealing with ethical dilemmas. Conversely, undue emphasis on the values-orientated approach might lead to abuse of trust or to chaos. Yet these are just two ways in which ethics management might backfire (Maesschalck, 2019). There are many other side-effects to be taken into consideration. A case in point is the appointment of ethics office(r)s, as recommended by all models. While this has many advantages, it also creates the risk of developing a silo of ethics management professionals, residing in an ivory tower, perhaps even taking away ethical responsibility from line managers. Most models suggest preventing this risk by ensuring that these integrity office(r)s take up a coordinating role. Whether they succeed in this of course depends on the extent to which the other actors are willing to be coordinated by the ethics officer, which in turn is likely to depend on the support of senior management. Such complications might help to explain Kaptein’s (2009, pp. 273–274) finding that, in his sample, the presence of an ethics officer correlates negatively with perceived role-modelling behaviour of supervisors. This is just one example of an often recommended intervention that deserves more research into adverse effects, which in turn can generate more nuanced versions of the IMS models. Given the complexities and contradictory mechanisms at play, in-depth qualitative research might be at least as interesting for such research as quantitative research. Another set of undesirable side-effects can occur when ethics is taken too seriously, leading to ‘integritism’ (Huberts, 2014), which occurs when ethics becomes too pervasive in the organisation (Maesschalck, 2019, p. 163) or when ‘integrity’ is wrongfully used to damage people’s reputations (Huberts, 2014, pp. 64–65). Such side-effects should also be taken on board by the IMS models. Sixth and more broadly, further understanding of integrity management systems and their effectiveness, will require a view that goes beyond the limitations of this chapter. All the proposed models were developed in and for European and North American organisations. Inevitably, this implies a narrow focus and further research will have to look beyond this and assess the extent to which the observations and hence recommendations are relevant in

Integrity management systems  555 a broader context. Likewise, further research on IMS should look beyond disciplinary borders and take into consideration insights from behavioural ethics, neuro-ethics and other relevant fields. Given that IMS models ultimately aim to improve actual integrity management in organisations, it is appropriate to conclude this chapter with a reflection on practice. Most importantly, the concerns expressed above should not distract from the important improvements these models generated. They helped many organisations move away from practices that often emphasised merely the rules-based approach and that tended to overlook the importance of interconnectedness, requisite variety, the processual approach and participation. Many of the abovementioned texts offered very practical advice and, in the case of Integrity Infrastructure, even an online assessment tool. Nevertheless, there remains room for improvement. Indeed, the abovementioned theoretical concerns will also be relevant to improve practice. In times when organisations face austerity, unpredictability and many other challenges, it will be very important for them to be economical with their resources. Hence, more nuanced models that specify which elements are really necessary under which conditions and that take possible side-effects into consideration would be very welcome for practice as well as research. In fact, this would not only be relevant for managers and integrity professionals, but also for policy makers. For example, it might help legislators who, as they aim to impose ethics management interventions on organisations, grapple with a difficult dilemma. On the one hand, they might want to develop detailed legislation with clear instructions on what organisations should do, so as to avoid window dressing. On the other hand, they also might want to formulate very vague legislation, allowing organisations to take measures that are adapted to the requirements of their specific context. Current legislation offers examples of both (de Sousa & Almeida, 2023). A systems perspective, based on the type of research proposed above, might offer a way out of this dilemma. Legislators might be relatively specific in prescribing an IMS, but leave the further development of the system to the organisations.

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35. The weak point analysis as a method for measuring and improving organisational integrity Carsten Stark and Yannik Morbach

The weak point analysis (WPA) is a process-orientated, qualitative method for measuring organisational integrity. WPA serves to develop recommendations for action to minimise weak points in organisational work processes. It was developed by us over many years in research projects (Stark, 2019; Stark & Balzer, 2017). The WPA is grounded in the principles of a participatory, bottom-up approach, wherein decision-making is a collective process involving staff, leading to a final decision in alignment with a top-down structure. Since in this way recommendations for action are developed by the staff themselves, the probability of effective implementation increases significantly. In this chapter we describe the WPA. We begin by clarifying our terminology regarding the concept of ‘organisational integrity’ and highlight the importance of a qualitative approach in studying this phenomenon. We explain what terminology we use when we speak of ‘organisational integrity’ before we explain the sense of a qualitative approach to the topic. Then we explain the method of the WPA as bottom-up approach and describe the method in practice. Finally, we present a simple case to illustrate what results can be obtained from a WPA.

UNDERSTANDING ORGANISATIONAL INTEGRITY The reason for the existence of organisations is to direct people to adopt a specific behaviour so as to pursue the organisational goals (Goffman, 1961). The power underlying each organisational objective may not be immediately apparent, but it exists nevertheless determining the relations and interactions between individuals in organisations (Weber, 1922). But we have known for a long time: the relationship between the individual and the organisation is not that simple, and not a one-way street. At least the connection is not as simple as classical theories on the structural level (Weber, 1947) or on the process level (Taylor, 1911) suggest. We can identify internal rules as part of the formal structure of organisations (Mintzberg, 1979) on the one hand, and informal rules that might be labelled ‘organisational culture’ (Schein, 1985) on the other hand. While formal structures and rules provide a framework for how things should be done, it is crucial to ensure that they align with the actual behaviour within the organisation, which is influenced by both, the formal and informal rules. When discrepancies arise between the formal rules and actual behaviour within an organisation, it is important to understand both the formal and informal rules to effectively manage the actual behaviour and therefore the organisation. To do so, Meyer and Rowan (1977) distinguish between ‘talk’ (formal structures) and ‘action’ (actual behaviour) to gain a comprehensive understanding of the organisation. 558

Weak point analysis for measuring and improving organisational integrity  559 Building upon the understanding that both formal and informal rules are essential for effective management, it is important to consider how informal rules can shape behaviour within organisations. In fact, the informal side of organisations often plays a significant role in shaping behaviour (cf. Falkenberg & Herremans, 1995). The view of economic theory, that human beings are purely self-interested (Smith, 1776), has been shown by studies in psychology, sociology, and criminology to be incomplete and does not reflect the complexity of human motivation and behaviour (cf. Granovetter, 1985; Güth et al., 1982; Kahneman, 2013). Therefore, it is necessary to recognise the influence of organisational culture, as the shared values and beliefs, and informal rules, as specific patterns of behaviour, on behaviour in order to develop effective management strategies that align with the actual behaviour within the organisation, rather than relying solely on formal structures and rules that may not reflect reality. After all, people always move in the confines of a specific culture that has emerged in the course of time. In the context of an effective management, organisational culture turns out to be pioneering and guides all actions and therefore influences informal rules (Bussmann, 2010). The influence of cultural factors on people’s actions highlights the possibility that individuals may engage in deviant or even illegal behaviours, even if they contradict their organisation’s formal rules and do not serve their own interests. Over time, these actions might become habitualised in an organisation (Clausen, 2011). In the wake of this habitualisation, staff members can slip into problematic areas unnoticed, since certain practices from the past are considered standard for their current behaviour (Schröder & Schmidtke, 2010). Organisational culture and informal rules, alongside formal structures and rules, shape social norms and encourage conformity among members. Paradoxically, individual deviant behaviour can contribute to achieving organisational goals and align with the organisation’s interests (Stark, 2015). However, organisational culture and informal rules may foster an environment that promotes opportunistic behaviour. While moral action involves adhering to rules of coexistence within an organisation, it is worth noting that the established rules and regulations can sometimes inadvertently create obstacles themselves. This can create a conflict between informal rules on the one hand and formal rules and legal standards on the other. The tragic thing in this context is that particularly moral actors, especially members of staff, are more geared to keeping to conventions and respecting conformity. Thus, organisational integrity refers to the formal and informal rules of an organisation that promotes and expects legal and moral behaviour from its members. Scientific discussion offers various approaches to deal with the theme of organisational integrity. Based on holistic or systemic approaches in organisational research, it is certainly possible to speak of an analogy between a healthy organism (human body) and an integer organisation (Finser, 2007). This very old structural-realistic approach is currently replaced with more functionalist approaches discussing the function of leadership and the moral orientation of management (Ciulla, 2004; James, 2000; McGregor, 1966; Paine, 1994, 1996; Price, 2004). In this context, Weaver et al. (1999) underline the particular significance of the moral, as part of informal sphere, orientation of an organisation’s top management as this is the crucial prerequisite for the successful implementation of integrity management. A more organisation-scientific foundation of organisational integrity reveals, however, that it is not sufficient for managers just to know what is appropriate according to moral standards. They also have to create an organisational situation that enables the members of the organisation to do the right things (cf. Palazzo, 2007). Yet, this form of self-regulation,

560  Research handbook on organisational integrity where the members are generally enabled to do the right things (Parker, 2002), often reaches its limits when economic principles and organisational interests come into play. Informal rules might create certain circumstances that make the actors believe they should violate valid laws for moral reasons (Palazzo, 2007). Hence, organisational structures may turn out harmful to moral action (James, 2000; Jansen & Von Glinow, 1985), especially if they do not supply clear answers to ambivalent situations. However, such situations occur in the daily routine of management (cf. Chen et al., 2016; Shafer, 2002). Their causes are rooted in the organisations’ contradictory rationalities that are mirrored by economical, legal, technical, scientific, or personal expectations (cf. Ashforth & Gibbs, 1990).

EXPLORING THE IMPORTANCE OF QUALITATIVE METHODS IN MEASURING ORGANISATIONAL INTEGRITY This chapter addresses the challenges associated with measuring deviant behaviour in organisations and introduces the WPA as a methodology to overcome these challenges by capturing actual behaviour and the underlying motivations while focusing on organisational structures, rather than individual deviant behaviour. The reporting of deviant behaviour, which involves deviating from formal and ethical rules, is often avoided by members of staff due to the personal and professional consequences of admitting to such behaviour, including potential legal implications. Organisational staff would not be very happy to provide detailed information about their own deviating behaviour. Moreover, there is, at least to keep up appearances, a societal expectation for individuals to conform to formal rules, even if their actual adherence in practice is lacking (cf. Meyer & Rowan, 1977). This is why it is necessary to distinguish between ‘talk’ and ‘action’. It is hardly possible to obtain information about ‘action’ (actual behaviour) when the methods are supposed to cover the theme of ‘talk’ (formal structures). The problem of social desirability can be circumvented by shifting the perspective, away from the criminalisation of staff members, towards analysing organisational structures instead. Shifting the focus from individual staff members to organisational structures avoids the blaming and sometimes criminalisation of the individual. By recognising that deviant behaviour can arise from systemic issues within the organisation, it becomes possible to identify and address the underlying factors that contribute to such behaviour. The issue in question is not which members of staff will be more or less compromised by deviant behaviour, but rather what risks are inherent in the organisation under review – detached from the individual? So where is the difference here? The difference is that by analysing the organisational structures it is also possible to identify the risks resulting from the staff’s compliant behaviour. This means that they might violate valid laws by acting precisely in line with the organisational structures and culture. Deviant behaviour within complex working processes can be difficult to accurately measure and understand its underlying motivations involved. Studies have demonstrated that using structured questionnaires and surveys to assess deviant behaviour in organisations has limitations in capturing detailed accounts of actual behaviour (Tourangeau & Yan, 2007; Zuber & Kaptein, 2014). This is because only individuals directly involved in the process possess the requisite knowledge to provide an accurate and comprehensive depiction of actions and their underlying motivations. Furthermore, recent research has indicated that reliance on

Weak point analysis for measuring and improving organisational integrity  561 self-reports may be problematic, as individuals may underreport deviant behaviour (Zuber & Kaptein, 2014). The WPA approach has been developed to address the challenges in measuring deviant behaviour within complex working processes. The WPA is designed to gather the actual behaviour by directly involving individuals who have first-hand knowledge of the processes under investigation. By using a semi-structured interview approach, the WPA can capture the ‘action’ as well as the underlying motivations, providing a more accurate and comprehensive understanding of actual and therefore deviant behaviour. The WPA also addresses the issue of self-report bias by providing a safe and confidential environment for individuals to disclose their actions and motivations without fear of negative consequences. In the following, we will provide a detailed description of the methodology employed in conducting the WPA. This methodology facilitates open and candid discussions among staff members who are responsible for managing the same processes within the organisation, creating a safe space for them to share their experiences and insights. In each case, about four or five people will be assembled in a small group and required to provide a common explanation of their processes. Any disaccord or disagreement in the group discussions will be noticed by the interviewers. Very often group members are insisting on their formal process description. But mostly, this description is so alien to them that they are not able to recall it at all. To evaluate the results of these discussions, the members of the small groups will be asked to present their results to a larger group of employees. This larger group includes employees from other departments or other organisations that are also involved in the process under review. One of the interviewers starts a discussion by asking the larger group whether they would agree with the description of the smaller group. In most cases, they disagreed. After that second discussion, the facilitators are better equipped to provide their expert analysis on the issues at hand and offer a more informed opinion on the problems with the process in question. It should be underlined that in these discussions individual deviant behaviour never should be mentioned. The ‘explanandum’ is just the actual situation in the organisation, and a possible correlation to deviant behaviour has not to be made by the discussion groups. Establishing this correlation is instead the task of a subsequent analysis. The researchers’ job is to identify the possible link to deviant behaviour or the weak points of the specific focused processes. The analysis task is not to accuse individuals of deviant behaviour, nor is it about looking for criminal activities. The goal is instead directed to minimising the risk. The participants regularly appreciate this scientific stance greatly and are therefore eager to cooperate in an accurate and honest way. This is the reason we are labelling this a WPA. A WPA helps to discuss different expectations related with the process. Furthermore, it is possible to elaborate complex contradictions regarding the expectations made, which might involve ambivalent assessments among the staff. Low-integrity organisations can benefit from ambivalent situations to control behaviour without having to expressly issue any instructions. In this way, unspoken expectation patterns can easily clash with formal rules. In this case, it is more difficult and even irrational in individual cases to respect the rules.

METHODICAL DESCRIPTION OF THE WEAK POINT ANALYSIS A WPA means the process-orientated representation of risks and hazards. Due to its process-orientation, the method stretches across departments and positions. The method

562  Research handbook on organisational integrity aims to enlighten specific work processes and, if possible, irrespective of their organisational positioning (process organisation). The WPA concerns complex processes that cannot be sufficiently assessed when individual positions are looked at only. However, a WPA can also be applied to processes that are essentially worked on at one single position. A WPA is reasonable only for specific processes. In this context, the first question that springs to mind covers the criteria according to which such processes for a WPA should be selected. In practice, this frequently occurs because of a recent case of illegal behaviour or breach of trust. Having uncovered – usually by accident – a concrete problematic situation, the question arises as to how it has been possible in that particular case to circumvent the existing control mechanisms. Obviously, such a retroactive analysis of processes cannot be but the second-best solution. Instead, it is far more reasonable to apply a WPA as a preventive measure and, in this context, assume the worst-case scenario of deviant behaviour, at least in methodical terms as a thought experiment. Hence, on the methodical level, the weak point’s benefit is its attempt to anticipate illegal and deviant behaviour in cooperation with the members of staff and to scrutinise the existing processes with regard to their suitability to avoid this behaviour beforehand. A WPA does not use any standardised quantitative tools, but rather hermeneutical measures. The latter are usually carried out together with an organisation’s staff in one-day workshops serving an analysis of working processes. The WPA is, therefore, not a tool that can be implemented in a business unit in a directive way. Instead, it depends on the cooperation of all those individuals who are involved in daily routines. Of course, the WPA is an extremely elaborate, resource-intensive procedure and cannot be carried out for all processes within an organisation. Alongside the belated analysis due to some current cases there are another two criteria that might be helpful when it comes to selecting the processes to be analysed. On the one hand, this concerns a qualitative aspect, and on the other hand a quantitative one. The quantitative criterion refers to the selection of all those processes that may involve substantial damage for the organisation due to their frequency during productive actions. Although each individual process manipulation would cause a minor damage only, the quantity might lead to substantial problems. For instance, the possibility of minor data manipulation represents somewhat of a problem even when these manipulations occur during a myriad of processes to a minor extent. The common practice of quantitative risk analysis, which is to assess processes involving smaller amounts of money as less prone to risks, must therefore still be seen as critical. The qualitative criterion refers to the analysis of all those processes that are understood only by a few insiders due to their complex nature, but which at the same time present a vast potential for damage. In these qualitative cases, the WPA also serves the internal transparency and helps the control and supervisory bodies to gain a contents-related overview of the internal habits of the expert knowledge involved. Carrying out a concrete analysis on the spot is done in a modular manner. Hence, the WPA is sub-divided into various analytically isolated areas which are worked out individually together with the participants. The reconstruction of the different areas in risk assessments or the formulation of specific recommendations for action is done in a second step by the advisory body. Summarising our discussions so far, we can say that the WPA: ● focusses on processes, but not individual organisational units; ● has a methodical-experimental character, since it anticipates the possibility of deviant behaviour;

Weak point analysis for measuring and improving organisational integrity  563 ● draws on the expert knowledge of those staff members who are currently involved in the process in question; and ● proceeds in an analytical-modular way.

EXECUTING A WEAK POINT ANALYSIS This section provides a practical guide to conducting a WPA. We describe, as illustrated in Figure 35.1, the step-by-step process from the training of the employees before the actual analysis to recommending preventive measures with the final feasibility considerations. Throughout this section and the following section, we will use the term ‘employees’ to refer to individuals who are directly involved in the processes under analysis in practice.

Figure 35.1

Weak point analysis process

Step 1: Train the Employees The first step of the WPA has a preparatory character. Since the analysis itself depends strongly on the cooperation of the employees, it proves to be useful to organise a training

564  Research handbook on organisational integrity session prior to the proper analysis. Depending on whether an authority or a business on the market is concerned, these training sessions provide information about possible criminal acts. This is not about creating a problematisation of everyday processes in legal terms. The main issue is rather to make the employees aware of matters that might lead to topics like corruption, disloyalty, fraud or distortion of competition. In practice, it proves to be reasonable to quote examples of cases of data abuse, data manipulation, but also human resources management and laws on equal treatment as early as on this level. The training is particularly important with regard to the WPA’s methodical and analytical procedure. In general, employees find it hard to apply such an analytically deconstructing tool themselves. They are more used to keeping an overview of the process and considering it a unity right from the start. This procedure, which is definitely useful in management practice, turns out to be more of a disadvantage in the field of analytical deconstruction. As a result, the training session includes an introduction to the methods of weak point analysis, which underlines the tool’s structure by using existing practical examples. Step 2: Describe the Process The second step of the WPA covers the classical representation of the working process or, rather, of an operation in a flow diagram. This may include the processing of any kind of applications, the acquisition of working equipment, or the allocation of projects by a public tender just as well as the selection of human resources etc. Some working processes – for instance in the case of a public tender – are extremely standardised. In other cases – such as for an independent allocation – they may be very flexible. Possible deficits may become obvious at this point already such as a person’s double responsibility within an operation or the lack of control possibilities. Typical issues in this context include the lack of administrative or expert supervision; spin-off of individual employees or organisational units; concentration of tasks on individual employees (dual control); too comprehensive margins of decision-making and discretion; too many or too complicated rules along with missing expert knowledge; and/or missing transparency of the documentation and decision-making at hand. Experience shows that the situation is particularly difficult when a control body does not possess enough expert qualification or information to meet these functions. In the case of complex working processes, mainly authorisation procedures in the fields of trade law, construction law or environmental law, an informal decision-making procedure often takes place prior to the actual formal authorisation. As a rule, these informal procedures are not standardised and lack transparency. However, the more the actual decision-making occurs in the framework of such pre-discussions, negotiations and consultations, the more important it is to make these procedures transparent enough. From a preventive viewpoint, it makes only little sense to focus on formal procedures. The WPA describes the entire working process down to the last detail and optimally depicts it in a process diagram. Step 3: Identify the Actors Involved When it comes to identifying the actors, it is a matter of what persons, groups of persons and/ or institutions are directly or indirectly involved in a working process. It is important to find out who can exert influence at what point both in formal and informal terms. Contrary to many prejudices this is also significant when the actors involved include other organisations,

Weak point analysis for measuring and improving organisational integrity  565 employers or even political bodies. This step of the WPA serves, above all, to find out how problematic networks may possibly organise themselves (see also Höffling, 2002). A reference to informal processes is particularly important here, since actors frequently take part in informal consultations that are not scheduled for informal authorisation processes. Hence, it is not only the administration, the staff or applicants that appear as actors here. On the local level, above all, the political level – i.e., the political public – plays a role along with parties and mandate holders. The latter in particular possess substantial opportunities to exert influence on administrative processes. Here, too, it appears hardly reasonable from a preventive viewpoint to focus on internal weak points of the administration only. The actors involved can at best be presented in a network or sociogram. Step 4: Identify the Interests of the Actors The next step serves to work out the actors’ interests. In the case of processes between authorities or businesses, at least two actors with different interests face each other, as a rule. One actor assigns material services or resources under certain terms (services, orders, funds, subsidies etc.), while the other actor wants to acquire these allocations or even bids for them. In the framework of the WPA, not only material interests should be in the foreground here. As far as authorities are concerned, for instance, interests may also cover the fast processing of a request that satisfies the clients, meeting some index figures, or means of simplifying control procedures. Problematic administrative actions are often not based on corruptive motives, but are rather due to the positive valued motive of a simplification of decision-making in the ‘interest’ of the employer. For instance, a concrete working process may violate existing rules, but not in a move to gain personal advantages but rather to ‘reach the best result’ for the employer or department. When advantages are accepted to reach this end – for instance, by way of an invitation to a comprehensive dinner – this is usually not regarded as deviant behaviour. Local examples in this context include business development, commercial estate planning, and also the provision of comprehensive municipal jobs to local companies whereby procurement rules are avoided flexibly. The WPA needs to work out these ‘non-criminal’ motives of the employees to avoid creating unnecessary control bodies that might impede work in some way and whose usefulness appears questionable for the employees. The interests of the actors on the receiving end should definitely be included in the analysis. These interests are often diametrically opposed to those of the donor side, and knowing the other side may help to identify possible points of conflict in the process. When administrative actions are controlled by political targets it makes little sense to work on formal processes. Analysing the interests affecting the administrative process is therefore only sensible when the potentially involved actors have been identified and included in the weak point analysis. Step 5: Describe the Situational Context The persons directly involved in a working process are seldomly confronted with the question of its situational context since they consider it an everyday feature and therefore not necessary to mention. Nevertheless, it is completely indispensable for a sociological WPA. Many problematic situations are recognisable only when the working process in question is assessed within the related context. For prevention, it does make a difference whether an

566  Research handbook on organisational integrity evaluation is made for an establishment in a red-light district or whether an entire hotel chain is to be assessed. Furthermore, the job of an undercover agent at the Office for the Protection of the Constitution takes place in a different situational context than the processing of an application at a municipal authority. In view of the complexity of the civil service, similar or identical administrative jobs often differ due to the context they are embedded in. Regarding the economy and organisations dealing in a complex, sometimes global markets, the situation becomes more and more complex. International business seems to be, from that point of view, sometimes more influenced or determined by different cultures and law, than by internal organisational regulations. It is precisely that context that sometimes leads to problematising an administrative act in the sense of prevention, or which makes criminal or deviant behaviour completely improbable in other cases. This appearance is deceiving, however, when it is assumed that some behaviour is more probable in some fields than in others. It is crucial to see that criminal behaviour assumes varying forms depending on the context – for instance, displacement, requirement, approval or performance corruption (see Liebl, 1992) – and therefore makes different preventive measures necessary. The situational context, in particular, influences the possibilities of preventive tools. Staff rotation, for example, only makes sense when a solidification of personal relationships in networks is regarded as part of the concrete situation. In situations defined by changing customer contacts, a rotation (usually letter rotation) makes little sense, since it frequently affects those employees that stand out due to their high level of integrity. Situations that are mainly characterised by exclusive data access and the chance for data manipulations require other preventive measures than, for instance, situations marked by a strong networking with other organisational units. Step 6: Identify Possible Standard Violations The crucial step of a WPA is the description of possible criminal actions. The best option is to entrust those employees who worked out the first points together with a very intensive deliberation of concrete measures of how to ‘earn money’ illegally using the previously described process, the established actors, their interests and the established situational context without running the risk of being caught out. This part of the WPA stresses the actors’ cost-benefit considerations and inspires them to understand the function in explorative terms as a ‘maximising unit’. In this context, the findings we explore together with the employees correspond to van Klaveren’s (1957) definition of corruption. From the viewpoint of the economic theory, standard violations can be considered a symptom of process-related and organisational weak points but are not their reason. Starting from the Public Choice Theory (cf. de Graaf, 2007), people will choose corruptive behaviour whenever the benefit (probability of success and profit) exceeds the costs (probability of being discovered and number of sanctions) (Beck & Nagel, 2012). Experience from numerous workshops teaches us that employees in a company reveal an admirable criminal energy at this point of the WPA and present unexpected ‘opportunities for earning’. In this way, the actual weak points of the working become visible with regard to the employees who possess the necessary criminal energy also in reality and use these weak spots to maximise their own profits. This part of the WPA aims primarily at individual deviant behaviour instead of singular one, since this enrichment almost exclusively affects the organisation. From an actor-theoretical viewpoint, this is the most crucial step of the analysis to unveil the possibilities of individual deviant behaviour. Nevertheless, these weak points of individual deviant behaviour also

Weak point analysis for measuring and improving organisational integrity  567 open up gates for common behaviour and can act as starting points for illegal networks. It is, however, easily possible in this context to include individual typical weak points in the discussion and use them accordingly. In this way, standard violations may arise from the opportunity of data manipulation, uncontrolled exertion of discretionary power, the exclusive insight into technical relationships, independent definition of needs or holding informal negotiations. At this point, previously established preventive measures can also intervene. Their effectiveness is, however, questionable. As far as the multiple-eyes principle is concerned this means, for example, to ask whether the controlling or cooperating colleagues are technically in a position to exercise their control function, whether the bosses will actually look into a matter or simply put down their signature, whether random controls are carried out, or whether complete processes and decision-making powers have been delegated. Hence, reflecting on possible standard violations offers an excellent framework for evaluating existing preventive measures and, at the same time, unveils the foundations of the more or less successful implementation of such measures. Step 7: Identify Critical Situations (Micro-Political Games) As far as the critical situations are concerned, the focus is not on the actor showing a rationally intended criminal behaviour. The question here concerns far more the organisational integrity or the criminal energy of third parties. It is important to look into all those weak points that might ensure that employees in organisations commit illegal or deviant actions without having intended this out of criminal energy (affectual). What we talk about here is the so-called ‘baiting’, which can take a number of different forms in practice (cf. Niehaus, 2012, p. 61). Social-scientific research generally speaks of ‘micro-political games’ in this context, i.e., standard situations that are appropriate to make people adopt a behaviour in their own interest, even against their intentions. Various forms must be examined in a move to find out whether they are appropriate for the working process under review. This item was included in the WPA to show employees clearly that prevention also serves their protection. It is therefore not only a question of assuming the employees’ criminal energy in order to eliminate vulnerabilities. It is, instead, just as important to identify all those situations that may involve a problem even for an employee with high integrity. Here are four of these strategies. Make (being) guilty: A special form of ‘baiting’. The victim is placed into a situation in which he/she commits a not too serious breach of rules. This rule violation makes the victim prone to blackmailing and prepared to commit further rule violations (from the breach of duty right through to criminal acts). This strategy is particularly popular in mafia-like structures, organised criminality, and secret services (cf. Heinrich & Schulz zur Wiesch, 1998). Examples of this include, for instance, welcoming new superiors with a glass of champagne – although there is a formal ban on alcohol; Christmas parties with a tombola where larger presents are given – although the acceptance of rewards and gifts is strictly prohibited; exaggerated contributions for superiors or colleagues in the framework of birthday parties, etc. In part, such situations are covered by the cultural frame, which means the deviating behaviour is expected morally. The difference between legality and legitimacy must be highlighted in this respect. A possible donor side can easily appear in public when the recipients’ side is morally legitimated to accept gifts or contributions. In practice, such public phenomena of being guilty can be found as donations for carers, garbage collectors, or firefighters. Such small, amusing examples should not hide the fact that large sums of money are being worked on at a large

568  Research handbook on organisational integrity political or economic level. The strategy also works with the use of sex and drugs. There are no limits to the imagination and the reality of cases that have become public often goes beyond that. Don Corleone principle: Favours out of ‘charity’. In this case, the victim feels morally obliged by receiving small favours without any return service (cf. Hunholtz, 1998, p. 58ff.). This is particularly dangerous, since some employees think that an action is only criminal when a return service is given. In the long run, however, no favour will ever be granted out of pure charity. The only exception in this case is the general forms of courtesy. The question to be asked here is: Would this favour be given to me even if I did not hold this position? This form is particularly popular for suppliers in the electronic data processing sector, among construction companies, and in the health sector. It is also found in the form of ‘privileges’ such as ‘free beer for municipal employees’ or reduced entry fees for private events (cf. Bosetzky, 1974; Heinrich & Schulz zur Wiesch, 1998). The Don Corleone principle has also been culturally determined. It appeals to the reciprocity norm, which is principally effective in every sphere of society, any culture and between individuals. You will oblige yourself in return for a favour you received. This binding agent of interaction, which is effective in common relationships, can do completely without any concrete agreements or even arrangements of injustice. That is why the mafia is so effective and resistant, but that is also how some political parties are working and economic networking on a high level is producing effective results. Social constraints: The victim is made to violate his/her duties by a trustworthy third party. This third party can be a superior, colleague, friend or even partner. The third party refers to the personal relationship with the victim and points out that a rejection would involve personal conflicts. In the victim’s individual and rational considerations, the very concrete personal sanction appears far more unpleasant than the merely hypothetical prosecution. This method is particularly popular among colleagues, superiors ‘briefing’ their successors, police groups, but also in the rural area and the administration in general. Social constraints are also effective when employees observe the deviant behaviour or even criminal actions of their colleagues. While colleagues witnessing deviant behaviour tend to avoid reporting the observed behaviour for communality reasons (whistleblowing), offenders among the colleagues committing deviant behaviour usually tend to make possible witnesses violate their duties. In this sense, social constraints are the cause of why deviant behaviour among colleagues is only ever rarely reported (cf. Schweitzer, 2016). Hence, the issue of informants’ systems must start precisely at this point. Without the implementation of a suitable informants’ system, social constraints can see to it that obvious deviant behaviour is not punished. Affectualisation: The victim is ‘spontaneously’ confronted with massive offers. The offer must be so attractive that all concerns are put aside due to the shortness of time available. The time argument is crucial in this context. The victim is robbed of the opportunity to deal with the offer in rational terms: 200 euros suddenly appear on the desk (the benefactor has already left the room), the hotel room or the sumptuous dinner have already been paid for. Enquiries are shrugged off. This is a popular game to bait newcomers who can more easily be taken by surprise in this sense. All these micro-political games have one thing in common: They serve to induce employees to illegal or deviant behaviour who would otherwise not become active and possess only little criminal energy. These games exist in a myriad of varieties and they can easily be combined with each other! When carrying out a WPA, it is very important right from the start to iden-

Weak point analysis for measuring and improving organisational integrity  569 tify the games to be expected and to prepare the employees concerned preventively for such games. This can best be done by working out concrete recommendations for action. Step 8: Develop Preventive Measures and Consider Their Feasibility It is only on the basis of the previously described steps that it is reasonable to work out concrete preventive measures. Alongside the usual features such as rotation and multiple-eye principle, the WPA focuses mainly on concrete measures orientated on the working process in question. This may include changes in the process organisation just as well as changes in space, staff or technology. It may, for instance, be reasonable to change the data processing system or subdivide risky points of the process flow or have them proceed in parallel streams. It can also be reasonable to restrict access to certain information or control the provision of rights to access. Particularly in cases when micro-political games are to be expected, the best prevention measure is to train the staff accordingly and work out recommendations of action related to the situation. This is particularly the case when employees at an international level come into contact with cultures whose social standards and micro-political games they are not sufficiently familiar with. This must definitely be part of a training course for expatriates. But in the end, the cardinal point is to ensure that such measures are not considered and implemented as controls but rather as protecting the staff against unjust accusations or annoying baiting attempts. Otherwise, a concretisation of the measures by those concerned will not be accepted without any troubles. When reflecting on prevention, the question of feasibility and implementation should not play any role. It is far more favourable to raise all these questions in a separate final step. This is mainly because a too precocious consideration of the feasibility would stop the decision-making process regarding preventive measures at a too early stage. In this way, crucial measures cannot be recognised. Feasibility considerations are a process that should not place the economic marginal benefit in the foreground. Questions of prevention do not necessarily cover economically reasonable measures – though this may be the case in individual cases. The legal interest to be protected is the integrity of the employees, the reputation of the organisation and – in HR terms – the protection of the employees against general suspicions, unjustified accusations and concrete temptations. Ultimately, any organisation must decide for itself how much these interests are worth. Practical experience shows that smaller HR-related measures, organisational measures, and so on can be implemented in a relatively cost-neutral way. Summary The WPA introduced here is a measure that includes the individual employees right from the start, hence it is a cooperative management measure. It relies on the detailed knowledge of the individual employees that cannot be provided by organisations and HR departments. This detailed knowledge creates the necessary flexibility for the preventive measures and, also, generates the motivation required for an implementation that may at times be rather work-intensive. A sociological weak point analysis, which uses the employees’ faked criminal energy to take preventive measures, could be rejected by claiming that it might give the employees ‘stupid ideas’. The picture of a human being behind the first objection speaks for itself. In the long run, it is not possible to work against the employees, but only together with

570  Research handbook on organisational integrity them. General suspicions have a merely counterproductive effect. The second objection relates to the problem of the weak point analysis far better. It can only be countered by the empirical insight that informed criminal knowledge will always be a few steps ahead of the uninformed organisational knowledge. This fact can only be counteracted by generating basic knowledge – which is admittedly full of risks. Nevertheless, the risk is reduced to the fact that the weak point analysis will not control things that would have escaped control anyway, even without the analysis.

A REAL CASE In the previous section, we provided a comprehensive explanation of the theoretical foundations of the WPA methodology. To further illustrate its practical application, we present a real-world example in this section. Specifically, we demonstrate how the WPA approach was utilised to evaluate the process of issuing or withdrawing a driving licence in a German local authority. We together with two consultants from the Institute for Corruption Prevention (Institut für Korruptionsprävention) conducted the WPA in 2021 as part of the further development of anti-corruption efforts within the authority. We express our sincere gratitude to the involved authority for its openness to the WPA and support in allowing us to use this case in our research. However, due to confidentiality and anonymity reasons, we are unable to disclose further information regarding the reasons and circumstances surrounding the WPA. Step 1: Train the Employees To clarify, the training of the eight employees as described above was conducted prior to the analysis and lasted approximately one hour. Step 2: Describe the Process The process under analysis was the withdrawal of the driving licence, which involves the revocation or suspension of an individual’s driving privileges due to various reasons such as traffic violations, impaired driving, or failure to comply with licensing requirements. The withdrawal of a driving licence can occur in two scenarios. First, the withdrawal of the driving licence can be ordered by law. Second, the process can start in the wake of a check ordered by an authority (courts, police, the German Federal Motor Transport Authority KBA) or a complaint lodged by a citizen. Only in the latter case a suitability assessment can be requested from the official in charge. The results of a suitability assessment may lead to an instruction demanding a suitability check. In this case, a list of possible institutions carrying out such a check will be enclosed. If the check leads to the withdrawal of the licence, this must be differentiated. The first scenario is about an unlimited withdrawal. This is the case if the expert report justifies the withdrawal of the driving licence, the withdrawal will always be unlimited. There is no possibility to regain the driving licence. The second scenario is about a temporary withdraw. A temporary withdrawal follows as soon as eight or more penalty points have been entered into the driver fitness register of the

Weak point analysis for measuring and improving organisational integrity  571 Federal Motor Transport Authority in Germany, and the driving permission will be withdrawn for a period of six months. Usually, an additional medical-psychological examination is required to regain the driving licence. In the case of a temporary withdrawal, individuals may apply for re-issuing for a driving licence. After the withdrawal of the driving licence, the citizen applies for re-issuing by submitting an application. It is important to note that there are additional possibilities to consider, which were excluded in this WPA. These excluded possibilities are the exchange of a foreign driving licence or the granting of a foreign driving permission. However, we focused on the specific procedures related to the re-issuing of the driving licence after the temporary withdrawal. To initiate the application process, the citizen must submit an application in writing accompanied by various documents. These documents comprise a certificate of good conduct including the candidate’s criminal file, an excerpt from the driver fitness register, a sight test, a passport photo, a certificate of first-aid training, and the documentation regarding the withdrawal of the driving licence. Along with the application, the candidate’s identity is controlled based on his/her ID card. The final decision on whether to approve the application is based on the record and rests with the official in charge. In critical cases, the head of department will be included in the decision-making process. Furthermore, the examination makes it possible to request an expert report or have the candidate undergo a suitability test. When reaching the final decision, there are two potential outcomes. In the case of a positive result of the examination, the driving licence will be handed over. In the case of a negative result of the examination, the applicant will be heard, and a negative decision will be issued. Steps 3 and 4: Identify the Actors Involved and Interests of the Actors Table 35.1 presents the identified actors who were involved and their interests in the process of re-issuing a driving licence. Using the format of a short table provides a concise overview of the various actors involved and their interests in this process, which makes it easier for understanding the different perspectives that need to be considered when addressing the issue at hand. Table 35.1 shows that the interest of the staff of the Motor Transport Authority is to ensure that all administrative procedures related to driving licence withdrawal are conducted in compliance with regulations. The applicant’s interest is to have their driving licence reinstated as quickly as possible, with minimal requirement for additional expert reports. The interests of citizens affected by the withdrawal of a driving licence may include avoiding the withdrawal of their driving licence altogether or ensuring that any withdrawal occurs at a specific point in time. Finally, the service providers have economic interests. Table 35.1

Actors and interests

Actors involved

Interest in situation

Staff of the Motor Transport Authority

● Proper administrative acts

Applicant requesting re-issuing

● Receiving the driving licence (again) as quickly as possible

Citizens affected by the withdrawal of a driving licence

● No withdrawal of the driving licence or withdrawal at a certain

Service providers (TÜV – Technical Supervisory Association,

● Economic interests

involving no or only very few expert reports point in time experts)

572  Research handbook on organisational integrity Step 5: Describe the Situational Context In this step, all those aspects that the participants in the analysis considered relevant for the situational context of the process were listed. These aspects were: ● Every year, around 1,000 cases of withdrawal and around 500 cases of re-issuing of driving licences are worked on. Added to this is the handling of cases for resubmission. ● The cases to be handled are relatively complex, for instance because of the dynamic legal situation in this field. ● When compared to the number of cases to be worked on the department’s staff level is rather low. Furthermore, no actual substitutes for staff on sick leave are available. ● For those concerned, the department’s decisions may be of crucial significance for their private or professional lives. ● Cases of corruption are likely where evaluators are involved since those concerned can choose their evaluators independently. Step 6: Identify Possible Standard Violations Within the framework of the process, the following corruptive actions by office holders were shown to be possible. Possible standard violations include the granting of advantages or bribery. These aspects were: ● Violations of professional duties due to sympathy or because the applicant belongs to the office holder’s kinship or acquaintances. ● Money might be taken (or asked for) to accelerate the issuing or delay the withdrawal. ● Evaluators or driving schools might be recommended for payment of a commission. Step 7: Identify Critical Situations (Micro-Political Games) Within the framework of the process, the following two corruptive actions taken by the citizen were shown to be feasible. Critical situations contain the accepting of advantages and corruptibility. These aspects were: ● Threats or coercion might be produced by the citizens. ● Gifts might be offered to thank the office holder for the handling. Step 8: Develop Preventive Measures and Consider Their Feasibility This step presents the recommendations derived from the results of the WPA, which aim to identify issues and enhance process compliance. The analysis revealed that the most vulnerable aspect of the process was the coverage of the matter by a single person in charge, and that the substitution of employees on sick leave was applied only in exceptional cases. To address these issues, four recommendations were developed collaboratively by us and involved

Weak point analysis for measuring and improving organisational integrity  573 employees. These recommendations were, according to involved employees, highly feasible to implement. ● Accepting rewards or gifts should be generally avoided to protect the staff, even if these are below the existing value threshold. ● In the case of bias, a representative employee of the authority should be chosen. ● Overall, random controls by the department head are advisable. ● To address the issue of a single employee in charge, contacts should be established between both offices to enable interference in critical cases. This measure can help to mitigate the risk of process disruption or failure due to the absence or incapacity of a single employee. Summary The presented example shows how the unique approach of the WPA can lead to significant improvements through sometimes simple measures. Conducting a comprehensive analysis of working processes to identify areas for improvement and to develop feasible recommendations is emphasised by the holistic approach of the WPA. By utilising the knowledge and insights of those directly involved in the process, organisations can achieve more effective and efficient processes, ultimately leading to improved outcomes.

LIMITATIONS OF THE WEAK POINT ANALYSIS No research is without limitations, and the WPA is no exception. It should be clear throughout the WPA that an expectation to the staffs’ personal integrity can only be implemented both in HR and organisational terms when there is a corresponding organisational integrity on the opposite side. In organisations that support deviant behaviour of their staff, a WPA is of no use. So, there are definitely some limitations on that method. These limitations are based on the context of organisational culture and leadership, formal organisational structure and organisational environment. The first limitation of the weak point analysis is the potential challenge of modifying organisational structures. If organisational structures are responsible for a lack of integrity but are not up for negotiation, then such a bottom-up approach only leads to frustration. This is similar to other qualitative approaches in quality management or corporate culture. One can think of very bureaucratic organisations with large and rigid hierarchies. But not only formal, also informal organisational structures can be a hindrance. Especially when the staff are not used to such approaches of participation and trust. But participation and trust are the most important basis of the WPA. Authoritarian leadership, or only transactional leadership, have a worse effect here than participatory and transformational leadership. However, changing the management and organisational culture cannot be the task of a WPA. Rather, there is a general tension between this and the compliance strategy of a company. Compliance strategies and departments themselves often play a negative role. Another limitation of WPA is about the situation or the organisational environment, because the WPA is a resource-intensive procedure. Financial constraints or unfavourable market conditions can hinder efforts to improve organisational integrity. This is particularly the case when there is a lack of financial means for more or better trained staff. It should also be noted

574  Research handbook on organisational integrity that international companies are sometimes confronted with a market situation in which integrity is not the yardstick. Finally, general limitations are rooted in the focus of management and compliance work only on formal rules. When faced with new challenges, private and public organisations should according to textbooks react by issuing a new directive in the first instance. Usually, these directives interdict what has been forbidden by criminal law anyway. What is more important here are the parts of the directives giving instructions for action to prevent deviant behaviour. What tools need to be implemented and who is responsible for the implementation? But paper doesn’t blush. Just because something has been instructed, it does not mean that it is employed in practice. An organisation with integrity should not only set down its integrity in writing, but also implement it in practical terms and should, above all, give all those positions the necessary power that are entrusted with the practical implementation. Only then can relevant sanctions be imposed in case of non-conformity of the directives.

IMPLICATIONS OF THE WEAK POINT ANALYSIS FOR ACADEMIC RESEARCH The WPA presents several implications for academic research in the field of organisational integrity. By employing a qualitative and process-orientated approach, the WPA offers a valuable methodology for studying actual behaviour in organisations, identifying weak points in working processes and therefore improving process compliance. The following implications highlight the significance of the WPA for academic research into organisational integrity. First, the WPA provides a framework for exploring the concept of organisational integrity and its relationship with formal structures, informal rules, and actual behaviour within an organisation. Through in-depth analysis of processes and discussions with staff members, the WPA enables researchers to uncover the complexities and nuances of organisational integrity, going beyond traditional structural and process-level theories. Second, measuring deviant behaviour within complex working processes can be challenging using structured questionnaires and surveys alone. The WPA offers an alternative approach by directly involving individuals with first-hand knowledge of the processes under investigation. By using semi-structured interviews and group discussions, the WPA captures not only the actions but also the underlying motivations, providing a more detailed and nuanced understanding of deviant behaviour. Third, the insights gained from the WPA can inform the development of effective integrity management strategies that build upon the actual behaviour within an organisation. By identifying weak points and risks in organisational processes, the WPA enables researchers to design feasible recommendations for action that contribute to strengthening organisational integrity and minimising potential deviant behaviour. Fourth, the WPA follows a participatory and bottom-up approach, involving staff members in the decision-making process and fostering a collective understanding of weak points and risks. This collaborative approach bridges the gap between academic research and organisational practice, promoting the effective implementation of recommendations for action and increasing the likelihood of organisational change.

Weak point analysis for measuring and improving organisational integrity  575 Fifth, the WPA serves as a replicable and adaptable methodology that can be employed by other researchers in their studies on organisational integrity. By documenting the processes and procedures involved in the WPA, researchers can gain insights into its application and tailor it to their specific research contexts. This enables the wider adoption of the WPA as an effective approach for studying actual behaviour, identifying weak points, and improving organisational integrity in various organisational settings. In summary, the WPA’s qualitative approach and focus on understanding actual behaviour provide a comprehensive understanding of complex working processes. This understanding not only enriches academic research but also has practical implications for effectively managing and optimising these processes, leading to improved organisational integrity.

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36. Organisational integrity, culture, and performance Abidoun Owoloja and Louise Manning

Moral standards and ideas are of value in describing and explaining the conduct of individuals in governance and leadership positions (Huberts, 2018), as well as the conduct of the organisation itself. Developing an insight into good governance requires an understanding of the concept of integrity. The Cambridge Dictionary describes integrity as the characteristic of being honest and holding moral principles, complying with standards of behaviour and having the capacity or agency to make decisions on that basis. There are different levels of integrity. Personal integrity is about being honest, responsible and truthful in one’s actions and behaviours. Team integrity is made up of four elements: behavioural integrity, trust, transparency and performance where behavioural integrity can operate at the individual and the team level (Palanski et al., 2011). In studies on corporate governance, as well as policy development, integrity as a concept has gained increasing relevance (Huberts, 2018). Organisational integrity reflects an organisation’s capacity to combine responsibility, transparency, and multi-level behaviours with its declared vision, mission, goals, objectives and values. Palazzo (2007, p. 113) describes organisational integrity as “the ethical integrity of the individual actors, the ethical quality of their interaction as well as that of the dominating norms, activities, decision making procedures and results within a given organisation.” Organisational integrity infers that an organisation operates in compliance with existing moral or socially accepted values and is responsive to, and mindful of, an ever-changing external environment. The specific strategy used to embed organisational integrity within a business may well vary, depending on particular individual corporate values and how these are drawn together in their mission and strategic goals. The interrelationship between organisational integrity and organisational culture is therefore of interest especially as organisational culture emerges from a set of shared values. These shared values can be positive or negative, the latter arising in the case of corruption, where individuals can commit corrupt acts whilst still valuing aspects such as fairness, honesty and integrity (Hechanova et al., 2014). All positively focused organisational culture programmes require the design, adoption, modifying and embedding of integrity-related procedures in every organisational function. Exemplary conduct starts with clear organisational objectives that prioritise integrity over simply focusing on legal compliance (Manning, 2020). However, a lack of incentives to comply, and additionally an absence of penalties for failure to comply, means that even in the presence of organisational codes of conduct, employees can still behave badly (Hechanova et al., 2014). Although legal and market compliance is essential for organisations, and often it is a prerequisite for ethical standards, it cannot replace integrity. This means that organisations that view their moral obligations as ticking the box, or complying with a normative checklist, may simply endorse morally mediocre codes of practice and “ways of doing” (Manning, 2020). Thus, organisations may lack transparency in their practices and as a result fail to develop trust-based relationships with their own employees, suppliers and customers. 577

578  Research handbook on organisational integrity Organisational integrity, and more particularly trustworthiness (Cui & Jiao, 2019), is crucial for customer and staff satisfaction, and business performance. Indeed, the most effective way to address organisational risk, including the potential for unethical outcomes from business activities, is to develop a comprehensive strategy to embed organisational integrity at all levels of the organisation (Kayes et al., 2007). Aspects of organisational integrity, organisational performance, and mechanisms for organisational improvement have been studied previously, but consideration of the connection between organisational integrity and organisational performance has previously focused on the actions of managers and staff in particular. This chapter will explore the connections between organisational integrity and organisational performance via the following questions: What are organisational integrity and organisational performance, and how do they differ? How can organisational integrity and organisational culture be measured and as a result how can organisational integrity be enhanced, and to what benefit? The chapter is structured as follows. The first section is an introduction and the subsequent section frames organisational integrity through four aspects, i.e., operational controls, principles and purpose, core values, and culture. The following section brings together aspects of organisational integrity, organisational culture, and organisational performance and evaluates how they can be measured and the final section concludes the chapter and returns to the questions of interest.

ORGANISATIONAL INTEGRITY, ASPECTS, AND PERFORMANCE Organisational integrity reflects the organisation’s ability to practice self-control in that its actions are based on “an internally consistent framework of principles and reflects to what extent self-legislated norms and legal standards in force are implemented into organisational standards” (Fuerst & Luetge, 2023, p. 30). Choi et al. (2018) define organisational integrity as the totality of people acting morally inside an organisation, which is itself influenced by its culture, structure, and employees. They propose that increasing the diversity of the workforce, to better reflect the diversity of the customer base, serves to enhance perceptions of the integrity of the organisation, reducing the risk of a singular culture that drives poor or unethical behaviour. Recent research has considered the role of diversity on organisational integrity in terms of gender (Arif & Farmanesh, 2020) and more generally workforce diversity and inclusion (Tessema et al., 2019). Diversity within organisations relies on developing mutual trust to minimise the impact of any potential conflict on organisational performance. By making organisational declarations about objectives, social commitments, and purposes, organisations can present themselves to the outside world as internally coherent, self-consistent, and integrated, setting expectations for their stakeholders that are unique to the organisation (Pope et al., 2018), thus offering a point of difference in competitive markets. Tessema et al. (2019) describe seven value dimensions that link to these organisational commitments and declarations: commitment to customers, diversity, employees, entrepreneurship, integrity, stakeholders, and social responsibility. Their work suggests that individual organisations may not have equal commitment to all seven value dimensions, but that commitment to customers and commitments to integrity sit at the heart of organisations’ articulated and shared discourse. Pulay (2017) suggests there are three aspects to organisational integrity: legality, i.e., compliance with legal requirements; legitimacy which builds on legality by aligning with the

Organisational integrity, culture, and performance  579 spirit as well as the provisions of the law, and legacy, i.e., the mission, contribution, and value of the organisation in its activities and reach. Chang et al. (2020) propose that organisational integrity is comprised of policy or procedural integrity, i.e., the protocols and procedures are fit for purpose, process integrity, that the practices are appropriate, and information integrity, describing how the information is of a known provenance and is thus trustworthy. Organisational integrity also requires an organisation to demonstrate it has embedded mechanisms that drive increasing cultural maturity to move from compliance-focused to delivering excellence in terms of commitment to specific values (Fuerst & Luetge, 2023; Manning, 2020). Indeed, key performance indicator (KPI) metrics can be used to chart both status of organisational integrity within a business and the “maturity” transition of the organisational culture (Chang et al., 2020). KPIs, in particular ethics-related KPIs, can drive organisational accountability and improve ethical performance (Subramaniam et al., 2022). Organisations can thus uphold integrity by aligning their decisions and actions with their professed values and those of other stakeholders to continually deliver organisational performance at the levels expected. Organisational performance has been described as the facet of how well workers perform their knowledge and skills to deliver stated goals and how they can, when needed, adapt to their environment (Adam, 1994). Organisational performance against defined goals and objectives requires the organisation to deliver to prescribed outcomes in terms of productivity, safety, quality, consistency and so forth, where organisational structure frames such activities that are identified as being of importance (Maduenyi et al., 2015). Operationalisation is the process of converting a predetermined concept or goal so that in a given situation it can be used to drive performance and is communicated effectively so it is understood by all employees and appropriate stakeholders (Ismail et al., 2009). For example, decision-support toolkits that contain appropriate KPIs can be operationalised through effective training programmes (Subramaniam et al., 2022). Kayes et al. (2007) propose the operationalisation of organisational integrity through four different organisational aspects: operational controls, principles and purpose, core values, and culture. This framework is informed by the work of Weber (1946). These aspects are now considered in turn. Operational Controls Operational controls are a compliance-based system that use internal policies or guidelines to define how tasks and processes should be conducted. Controls guarantee adherence to internal and external policies for any size of organisation, across any scope of operation. Indeed, the greater the scope of operation, for example, with a multinational corporation operating an organisational management system in multiple locations, the greater focus there needs to be on operational controls, to ensure consistency of operationalisation of corporate vision and mission, primarily without the influence of national or regional cultures. This argument however can be tempered by local influences which may cause operational goals to vary e.g., national legislation, the need to comply with localised customs, e.g., religious prescription over diet for a multinational food service business that may need to cater for halal food products, or restricted diets, or labelling for foods which are declared allergens in some countries but not others. Operational controls minimise ethical lapses, reduce risk, establish accountability within the organisation, establish communication channels and training programmes, provide a means to

580  Research handbook on organisational integrity measure performance, and build the organisational structure needed to drive legal compliance and efficiency (Kayes et al., 2007). Thus, operational integrity is delivered through the continuous and consistent implementation of these appropriate operational controls (Atan et al., 2017). Examples of such controls are compliance, oversight, accounting, and audit functions (Kayes et al., 2007). Operational controls form a key aspect of an organisational risk management strategy, informed by risk identification, characterisation, and risk assessment processes (Atan et al., 2017). Increasingly operational controls are being mechanised, automated and in some industries, humans are being replaced by technology, e.g., artificial intelligence (AI) and machine learning in warehousing (Azadeh et al., 2019; Custodio & Machado, 2020) or manufacturing (Ding et al., 2019). Indeed, as AI applications are being adopted to empower decision-making, their use must be considered in terms of their ethical implications (Manning et al., 2022) and how their use influences the operational controls that are in place. Operational controls drive organisational performance. Otley (2003, p. 320) stated: “It is not so much the formal control techniques that are utilised that are of central importance, but rather the ways in which such control systems are used, and the specific measures of performance that are emphasised.” However, this may well be mediated by the control system concerned, e.g., inventory operational controls may have more direct influence on organisational performance as compared to security operational controls. These aspects of the degree of direct or indirect influence of specific operational controls on organisational performance is worthy of wider exploration. Principles and Purpose Organisational integrity is underpinned by principles, standards, and purpose. Processes provide transparency through disclosure principles that respect corporate confidentiality and justifiable private concerns, and also relevant legislation on the sharing of personal and business data (Kayes et al., 2007). Transparency is associated with the degree of accessibility of information and data for multiple stakeholders, where such access can increase productivity, improve services to supply chain partners and consumers and reduce costs (Centobelli et al., 2022). Transparency enables informed decision-making by single and multiple stakeholders (Wallace & Manning, 2020). Transparency too, means that specific information will only be kept from the public by the organisation for valid legal and privacy reasons. Transparent businesses adhere to principles of disclosure regardless of their size or industry, where disclosure is the ability to provide the unbiased, accurate information that is required or requested by others. In some instances, such as financial information, mandatory disclosure is required for certain information in line with legal requirements, e.g., through periodic reports or other communications. For other information, disclosure may be voluntary as in the content of corporate social responsibility reports, sustainability reports or net-zero declarations. Failure to disclose both mandatory and non-mandatory data can be perceived as an intention to omit or mislead. For example, failure to disclose a known organisational risk to shareholders, or a quality problem to customers of data breaches may harm (Trautman & Ormerod, 2016) organisational reputation, and as a result brand value or share price. Trust rests on the rationale used by organisations to disclose or not disclose such information. Examples of where principles and purpose can influence operational performance are the adoption of lean management principles focused on cost reduction (Thoumy et al., 2022),

Organisational integrity, culture, and performance  581 or sustainability principles such as improving resource efficiency, introducing circularity or reducing consumer waste. Core Values The core values of the organisation are an integral driver of organisational integrity, team integrity and personal integrity operationalised through decision-making and behaviour(s). Paine (1994) distinguishes between legal (extrinsic) and values based (intrinsic) motivators of behaviour. The effective functioning of an organisation can be promoted through five distinct cultural dimensions: altruism, courtesy, civic virtue, conscientiousness, and sportsmanship (Organ, 1988). Integrity has been described as the “appropriate behaviours of organisational members as honest, faithful and caring” (Al-Abrrow et al., 2018, p. 974). These cultural dimensions have been described as organisational citizenship behaviours (OCBs) by Podsakoff et al. (1990). OCB in its totality, arises from employees’ awareness of their impact on individuals, across a team, the entire organisation and then externally with suppliers and customers as well as other stakeholders (Prottas & Nummelin, 2018). Indeed, OCB has been shown to be associated with positive performance outcomes such as improved efficiency, profitability, delivery of performance targets, customer satisfaction, and also with negative outcomes, where negative OCB is evidenced such as increased costs, and absenteeism (Podsakoff et al., 1990; Prottas & Nummelin, 2018; Whitman et al., 2010). In summary, OCB reflects how an individual within an organisation demonstrates discretionary behaviour that is neither directly nor explicitly recognised by a formal reward system (Manning, 2020), where this behaviour can be negative or positive in terms of its characteristics. A core value statement is a “brief definition of an entity’s values, articulated in an official setting such as a strategy document or a publicly available webpage” (Wæraas, 2018, p. 55). Pope et al. (2018) highlight that statements of core values can be created at organisational level and describe the qualities of the organisation in terms of its actorhood or “personhood,” i.e., the personification of core values to create business qualities such as efficiency, reliability and repeatability and human qualities such as accountability and trustworthiness. Others cite respect, acting ethically, collaboration and delivering on promises as key core values (Fuerst & Luetge, 2023). Pope et al. (2018) differentiate between purposive actorhood focused on legitimised goals and outcomes and autonomous actorhood where the organisational focus is on innate aspects of character and behaviours, allowing employees more autonomy in delivering OCB in practice. Wæraas (2018) states the benefit of a core value statement is evidencing: ● Rationality, i.e., how the defined values link to control systems and performance measurement and the rewards or sanctions that support compliance/non-compliance or delivery/ non-delivery; ● Identity of the organisation and its actorhood, signalling that the organisation is coalescing around a set of values and that these link to deliverable goals; ● Duality, operating at the interface between similarity and difference showing where values are shared with other stakeholders and where the values held are also unique, thus creating a point of different even unique selling point; ● Relational identity through being people orientated such as a focus on integrity, respect, transparency, openness, loyalty, listening;

582  Research handbook on organisational integrity ● Organisational identity, where the workplace is orientated towards values such as diversity, inclusivity, formality/informality, fairness; and ● Professional identity reflecting knowledge, professionalism, safety, leadership, and effectiveness. Private standards, such as Fairtrade or the Marine Stewardship Council Sustainable Fishing Standard, prescribe socially responsible practices that can elicit OCB at individual employee and organisational level and also promote the delivery of organisational performance (Jajja et al., 2020). Jajja et al. (2020) determined that OCB can influence both operational performance and quality performance. Culture Culture is promoted through ethical consciousness, implicit behaviours and beliefs that frame practices (Kayes, 2006). Tacit organisational beliefs and practices can influence informal behaviours that underpin the implementation of corporate controls and processes. It has long been acknowledged that social aspects of the workplace are crucial to driving effectiveness. Jacques (1952) used the term “culture” in relation to organisations in the book The Changing Culture of a Factory. Leidner and Kayworth (2006) state that culture is positioned in the literature with multiple meanings and measures proposed, meaning that multiple methods can be used to determine culture, as will be explored in the next section of the chapter. Culture can reflect the pattern of shared values and attitudes in a social system, supporting individuals in understanding how society works and establishing norms for appropriate behaviour (Deshpandé et al., 1993), i.e., it is normative, persistent and constrictive (Grover et al., 2022). Schein (2004, p. 1) defines organisational culture as a: “dynamic phenomenon that surrounds us at all times, being constantly enacted and created by our interactions with others and shaped by leadership behaviour, and a set of structures, routines, rules, and norms that guide and constrain behaviour.” Schein proposes that organisational culture has three levels differentiated by their degree of visibility, observability, and measurability. The outer level (level 1), the surface culture, embodies the visible artefacts that are the operationalisation of organisational culture, i.e., the organisational structures and processes. Level 2, the espoused culture, is the strategies, goals and targets that are captured by the mission and vision of the organisation. This level is observable through evidence such as mission statements, position statements and communications both within and outside the organisation. This level is where compliance activities are developed and enabled. Level 3, the core culture, reflects the invisible and assumed core values of what the organisation actually is and how it behaves (Manning, 2020). These levels are summarised in Figure 36.1. Organisational culture is related to the behaviour patterns, associated meanings and understandings that define an organisation and these may be linked to culturally expressive organisational symbols, narratives, and myths, images, objects, apparel, structures, and other artefacts that serve as physical representations of the culture (Linstead, 2001). Another school of thought proposes two meanings to describe organisational culture (Grover et al., 2022): firstly, the collective meaning, regulative (Gallivan & Srite, 2005), shared values perspective (Barney, 1986; Leidner & Kayworth, 2006; Weber & Dacin, 2011), and secondly, the toolkit perspective, as both significant, but antagonistic, viewpoints. From the toolkit perspective, culture is considered to be non-regulative, an aggregation of cultural resources for individual,

Organisational integrity, culture, and performance  583

Source: Adapted from Leidner and Kayworth (2006); Schein (2004).

Figure 36.1

The levels of organisational culture

team or organisational use, e.g., stories, justifications, roles, scripts, rituals, and arguments, that individuals then use to justify or strategise their actions (Grover et al., 2022; Weber & Dacin, 2011). Cultural tools can include use of existing networks, social media, workshops, meetings and other communication methods (Richey & Ravishankar, 2019). Organisational culture offers a people-centred perspective on the organisation’s intangible elements, and its structure resists singular objective measurement. Instead, various value dimensions often reflecting universal values may be of greater benefit when conceptualising and measuring culture (Schwartz, 2006) and organisational performance. These are considered in the next section of the chapter.

MEASURING ORGANISATIONAL INTEGRITY, ORGANISATIONAL CULTURE, AND ORGANISATIONAL PERFORMANCE The narrative so far in this chapter when considering organisational integrity, organisational culture, and organisational performance has described characteristics and aspects that are largely values based and as a result are difficult to quantitatively measure. In this chapter we have considered personal values, team values, and organisational values. Personal values are abstract ideals such as honesty, devotion, equity, and politeness that express desirable goals and guide behaviour and are relevant in a range of situations (Miles & Yeh, 2022). Cultural values shape and in turn are socially constructed by organisations, especially the ideals and values that are communicated and the behaviours that are encouraged, rewarded or condoned

584  Research handbook on organisational integrity (Hofstede, 2001). Thus, values are desirable goals that vary in importance and are guiding principles that shape individuals or social entities (Schwartz, 1994). Schwartz’s 10 basic value types are both complementary and opposing (Schwartz, 1992) and have been measured across a range of research using the Schwartz Value Survey which contains 57 different values (Spini, 2003). These are collated in Table 36.1. Values operate at multiple levels operationalised through “shared symbols, rituals, norms, and practices” (Knafo et al., 2011) and these have been characterised as national level (Hofstede, 2001), organisational level, and individual or personally held values (Knafo et al., 2011). Knoppen and Saris (2009) consider whether the Schwartz values operate at the individual, the organisational level, or in the interface between the two (see Table 36.1). Table 36.1

The Schwartz value types and their associated values

Value type

Associated value

Achievement: personal success through the

Ambitious, capable, influential, intelligent, self-respect, Individual,

Locus

demonstration of competence according to social

successful.

organisational, interface

standards. Benevolence: concern for the welfare of others in

Forgiving, helpful, honest, loyal, mature love, meaning Individual,

everyday interactions.

in life, responsible, spiritual life, true friendship.

Conformity: restraint of actions, inclination, and

Honouring parents and elders, obedience, politeness,

organisational, interface Individual,

impulses likely to upset or harm others and violate self-discipline.

organisational,

social expectations or norms.

interface

Hedonism: pleasure and sensuous gratification for Enjoying life, pleasure, self-indulgent.

Individual

oneself. Power: attainment of social status and prestige, and Authority, preserving my public image, social power,

Individual,

control or dominance over people and resources.

organisational,

social recognition, wealth.

interface Security: safety, harmony, and stability of society, Clean, family security, healthy, national security,

Individual,

of relationships, and of the self.

reciprocation of favours, sense of belonging, social

organisational,

order.

interface

Creativity, choosing own goals, curious, freedom,

Individual

Self-direction: independent thought and action.

independent, private life. Stimulation: excitement, novelty, and challenge

A varied life, an exciting life, daring.

Individual

in life. Tradition: respect, commitment and acceptance of Accepting portion in life, devout, humble, moderate,

Individual,

the customs and ideas that one’s culture or religion respect for tradition.

organisational,

impose on the individual.

interface

Universalism: understanding, appreciation,

A world of beauty, a world at peace, broad-minded,

Individual,

tolerance, and protection for the welfare of all

equality, inner harmony, protecting the environment,

organisational,

people and for nature.

social justice, unity with nature, wisdom.

interface

Source: Adapted from Knoppen and Saris (2009); Schwartz (1994); Spini (2003).

However, Ralston et al. (2018) argue that with the advent of globalisation and globalism and associated universal issues such as climate change, that markets and organisations operating at the global scale will embrace diversity, inclusivity and equity so that business values dimensions may emerge. Their work proposes five business values dimensions which are synthesised in Table 36.2. Three dimensions, ethical achievement, globally responsible innovation, and power, are described by Ralston et al. (2018) as focusing on individual self-actualisation,

Organisational integrity, culture, and performance  585 where the individual in this case can be a person or organisation. The other two dimensions, benevolence and universal order, can be described as being about global rather than personal self-actualisation. Table 36.2 Dimension

Five business value dimensions Items within dimension

Summary

Individual self-actualisation Ethical achievement

This dimension consists of seven items: capable (competent,

Effective personal and organisational

effective, efficient); clean (neat, tidy); choosing own goals (selecting

integrity and responsible behaviour

own purposes); honest (genuine, sincere); intelligent (logical

towards self and others through

thinking); loyal (faithful to my friends, group); and responsible

personal capability and competency.

(dependable, reliable). Globally responsible This dimension consists of six items: a varied life (life filled with

Exploring the unknown and

innovation

embracing innovation in ways that

challenge, novelty and change); a world of beauty (beauty of nature

and the arts); creativity (uniqueness, imagination); curious (interested respect the world around you. in everything, exploring); freedom (freedom of action and thought); and unity with nature (fitting into nature). Power

This dimension consists of six items: authority (the right to lead or

Self-centred need for authority,

command); influential (having an impact on people and events);

influence, social recognition and

preserving my public image (preserving my “face”); social power

power and reward.

(control over others, dominance); social recognition (respect, approval by others) and wealth (material possessions, money). Global self-actualisation Benevolence

This dimension consists of 10 items: accepting my portion in life

Collectivistic, others-orientated,

(others-orientated)

(submitting to life’s circumstances); a spiritual life (emphasis on

deferential demeanour with

spiritual not material matters); devout (holding to religious faith

a self-effacing predisposition to

and belief); forgiving (willing to pardon others); helpful (working

follow social rules aimed at harmony

for the welfare of others); humble (modest, self-effacing); moderate

and minimising conflict.

(avoiding extremes of feeling and action); obedient (dutiful, meeting obligations); privacy (the right to have a private sphere) and self-discipline (self- restraint, resistance to temptation). Universal order

This dimension consists of five items: a world at peace (free of war

Promoting a dependable, peaceful

and conflict); family security (safety for loved ones); national security social environment. (protection of my nation from enemies); politeness (courtesy, good manners) and social order (stability of society).

Source: Adapted from Ralston et al. (2018).

These dimensions of Ralston et al. (2018) are of interest in considering the operationalisation of OCB and also concepts such as organisational justice and commitment from organisation to employees; employees to organisation; employee to team; and employee to employee (Cohen, 2009). Cohen found that the benevolence dimension was strongly associated with multiple aspects of commitment and connectedness with those who you work with (employee to employee), and universalism particularly with group commitment. In this context, benevolence relates to concern for the welfare of those you know, whereas universalism, or universal order, relates to the welfare of wider society, and also welfare in the context of the environment, biodiversity, the impact of climate change, and so forth (Schwartz, 2012). These five business value dimensions can be used to measure, albeit in most cases qualitatively, organisational culture at individual, team and organisational level.

586  Research handbook on organisational integrity Jajja et al. (2020) argue that organisational performance can be measured in terms of operational performance and quality performance of given products and/or services, e.g., delivery on time, minimising waste in production processes, the unit cost of production, and the organisation’s flexibility in terms of delivering volume and product/service mix. Quality performance is essentially individuals, products, and services and the organisation consistently conforming to customer expectations and delivering customer satisfaction. Alrobaish et al. (2022) have considered defining measures for integrity whereby they are assessed by the level of agreement with statements for product integrity, process integrity, people integrity, and data integrity. These statements have been critiqued and relevant aspects are included as performance factors in Table 36.3. The performance factors drawn together in Table 36.3 are of value in determining performance at individual, team, organisational, supply chain, and national levels. They link to the development of mission statements, policies, organisational plans, and team or personal development plans. Quality performance and operational performance have been merged as operational performance in totality as quality performance can be considered as a subset of operational performance. Table 36.3

Performance factors for organisational integrity, organisational culture, and operational performance

Organisational integrity

Organisational culture

Operational performance

Core values

Individual self-actualisation

Customer-related performance

● Articulation of core standards and

● Ethical achievement: capable, clean,

● Conforming to customer expectations

values. ● Availability of necessary resources. ● Enabling environment.

choosing own goals, honest, intelligent, loyal, and responsible. ● Globally responsible innovation:

(product/service quality). ● Delivering customer satisfaction. ● Delivery on time.

● Environment facilitates.

a varied life, a world of beauty, cre-

● Internal product defect rates.

● Reporting of non-compliance.

ativity, curious, freedom, and unity

● Number of product recalls.

● Openness throughout organisation

with nature.

● Number of product returns.

(transparency).

● Power: authority, influential, preserving my public image, social power, social recognition and wealth.

  Culture

  Global self-actualisation

● Importance of people-related and

● Benevolence: accepting my portion in ● Cash flow.

data-related integrity is communicated. ● Importance of product/service integrity is recognised.

life, a spiritual life, devout, forgiving, ● Cost of quality. helpful, humble, moderate, obedient,

● Debt ratio.

privacy and self-discipline.

● Operating income.

● Improving people integrity is rewarded. ● Universal order: a world at peace, ● Organisation recognises honest behaviour.

  Financial

● Return on investment.

family security, national security,

● Sales revenue.

politeness and social order.

● Unit cost of production.

Organisational integrity, culture, and performance  587 Organisational integrity

Organisational culture

Operational performance

● Sufficient investment is made.

 

Operationalisation

Operational controls

● Cycle time.

● Clear communication with employees.

● Employee satisfaction rating.

● Employees have awareness of risk,

● Hours of machine breakdown. ● Investment in employee facilities.

hazards, and threats.

● Level of training provided.

● Employees have a realistic picture of

● Minimising waste in production processes.

hazards.

● Organisational flexibility.

● Employees act constructively to solve

● Productivity.

issues.

● Staff turnover rates.  

 

● Suggestions implemented per employee. ● Time invested in staff programmes. ● Usage of resources.

Source: Adapted from Alrobaish et al. (2022); Baird and Su (2018); Hechanova et al. (2014); Jajja et al. (2020); Khanna (2018); Ralston et al. (2018).

The ability to assess organisational similarities and differences, as well as to analyse organisational culture, is crucial to business performance and business resilience and more research needs to be undertaken to understand the relationships that play a role. It is important to note that the focus on improving organisational culture is linked to the wider goals of adopting globally responsive innovation and increasing organisational effectiveness and success, especially in challenging external operational conditions. In circumstances where the organisation wishes to transition to meet the demands of that external environment, it is vital to anticipate any potential support or indeed resistance that may arise from organisational culture (Karma & Vadi, 2016). Adopting compliance procedures can assist organisations to reduce organisational risk, but effective initiatives must go beyond compliance to create an environment where organisational integrity is valued (Manning, 2020). A comprehensive strategy for fostering organisational integrity is the most viable way to reduce a company’s organisational risk and improve organisational performance.

CONCLUDING THOUGHTS This chapter has explored the linkage between organisational integrity and organisational performance, through considering what organisational integrity is and how it can relate to organisational performance. The chapter has also identified criteria that can be drawn together within a specific organisation to measure organisational integrity, organisational culture and organisational performance. Developing such a programme and linking it to organisational mission and strategies can provide benefit to the business itself, supply chain actors (suppliers, customers and service providers) and the wider stakeholders it interacts with. Upholding high ethical standards can support an organisational drive for excellence and create trust with society as well as the workforce (Grojean et al., 2004). Employees’ willingness to engage and their faith in management is impacted by such values and whether they align with management behaviour in practice, and embedding organisational integrity can increase internal confidence and support organisational change especially where competitive advantage can be gained in trust-based relationships (Cui & Jiao, 2019). Further

588  Research handbook on organisational integrity research is needed to apply these performance factors to organisational integrity, organisational culture, and organisational performance in practice and to develop additional toolkits that can be used by organisations to determine the level of organisational integrity and pathways to continued improvement within their organisation.

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37. Operationalising integrity within supply chains Louise Manning

Organisational integrity encompasses behaviour, processes and procedures that ensure an individual, or an organisation, complies with agreed morals, rules and values (Huberts, 2018). Organisational integrity also reflects the capacity of an organisation to be responsible, transparent, and to deliver a declared vision, mission, goals, objectives or values (Owoloja & Manning, chapter 36 in this volume). Organisational integrity has both organisational and supply chain aspects, i.e., it is the activities, interactions, decision-making processes and behaviours of the individual actors in a given organisation and within a wider supply chain, and the degree to which they are honest, truthful and transparent (Palazzo, 2007). Organisational integrity, and the associated degree of trustworthiness are attributes that downstream underpin customer satisfaction and business performance (Cui & Jiao, 2019), and upstream deliver better engagement with suppliers in order for them to deliver to business needs. Operationalisation is the process of converting a concept or customer requirements into a measure or operational definition so it can be understood, implemented and delivered by all actors (Ismail et al., 2009; Tustin, 1992). Operationalisation has also been described as putting ideas and theories into action (Abbasi & Nilsson, 2012). Abbasi and Nilsson (2012) propose a number of factors that can impact on the effectiveness of operationalisation: ● Culture: behaviours, habits and rituals that prevent ideas being transformed into action; ● Interpretation: the capacity to understand the ideas and theories in order to put them into action; ● Inertia: the aspects of the business (internal environment) and the external environment that are barriers to change; ● Mindset: individual and collective ways of thinking that can prevent ideas being put into action. One example is linear thinking rather than holistic thinking. ● Trade-offs: action requires the prioritisation of some factors over others; there is a lack of a win-win solution; and ● Uncertainties or lack of clarity: where the pathway or options to implement action are not clear. Interoperability at the supply chain level is the process of cooperating and collaborating, sharing and exchanging data and information to effectively manage tasks and activities, new product and service development, delivery to customer requirements and maximising value addition and operational and supply chain performance e.g., in terms of safety, quality, lead times and costs (Chapurlat et al., 2008). Collaboration has been defined as the “ability to work across organisational boundaries to build and manage unique value-added processes to better meet customer needs” (Fawcett et al., 2008, p. 93). Collaboration requires organisations within a supply chain to exchange information around planning, management, operationalisation and performance measurement (Daugherty, 2011). Interoperability relates to the streamlining of supply chain collaboration which can be challenged by differences in priorities and time scales 591

592  Research handbook on organisational integrity that, depending on the processes involved and the ability to transfer information within and between different systems (Piddington, 2005), can be incompatible or misaligned. Thus, the process of interoperability is essential as it ensures that a supply chain composed of multiple organisations, that are managed separately, can operate “as seamlessly as a vertically integrated organisation” (Whitman & Panetto, 2006, p. 233). Trust is the foundation for collaborative alliances in supply chains. Trust is built on benevolence and capability; or more specifically performance capability and commitment capability (Fawcett et al., 2012). Trust can be based on good intentions (benevolence) and consistent compliance with supply chain norms, standards and behaviours and consistently meeting expectations, i.e., there is evidence of being capable and thus trustworthy (Cui & Jiao, 2019). Fawcett et al. (2012) split this interaction into four stages: limited trust, transactional trust, relational trust and collaborative trust where supply chain relationships develop over time increasing the potential for value creation, improved performance capability, relational investment, information sharing, skills enhancement and empathy. Effective mechanisms for interoperability will provide the framework to deliver organisational integrity and promote supply chain collaboration and supply chain robustness (Keogh et al., 2020). Effective interoperability will also promote trust, transparency, cooperation and collaboration and in doing so supply chain performance. The aim of this chapter is to consider organisational integrity at supply chain level, exploring in particular the linkage between organisational integrity, operationalisation, interoperability, trust and supply chain performance. This linkage will be considered via the following questions: What is interoperability at the organisational and supply chain level? How can organisational integrity be enhanced through interoperability, and to what benefit? What is the mediating role of trust in addressing interoperability and delivering supply chain performance? The rest of the chapter is structured as follows: The first section considers technical and managerial interoperability and critiques how they relate to organisational integrity. The subsequent section positions interoperability in the context of supply chain digitalisation and introduces aspects such as traceability, transparency and visibility. The next section brings together aspects of how organisational integrity, culture and organisational performance can be measured and the final section concludes the chapter and returns to the questions of interest.

TECHNICAL AND MANAGERIAL INTEROPERABILITY Interoperability encompasses both technical and management aspects, where the former focuses on the characteristics of technical systems to exchange information and the latter on the business processes that support effective information exchange. The European Interoperability Framework (EIF, 2017) capture these two aspects defining interoperability as the “ability of organisations to interact towards mutually beneficial goals, involving the sharing of information and knowledge between these organisations, through the business processes they support, by means of the exchange of data between their ICT systems.” Thus, aspects of interoperability are addressed in the literature from a single, binary and interconnected approach leading to different sources proposing different meanings for what interoperability is and how it is enacted in practice in supply chains.

Operationalising integrity within supply chains  593 Technical Interoperability Technical interoperability is “the ability of two or more systems or components to exchange information” and then for the systems to use that information (IEEE, 1990, p. 42), to deliver agreed operational goals. Alternatively, technical interoperability has been described as the capability for different information communication technology (ICT) systems to transfer, exchange and accept data from each other such and utilise and interpret that data effectively without additional intervention by an operator (Corcho et al., 2021; Kumar et al., 2023; Vernadat, 2006; Whitman & Panetto, 2006). Technological frameworks can improve technical interoperability in supply chains including cloud computing, distributed ledger technology (DLT) such as Blockchain, internet of things (IoT), and the design of digital twins (Khan & Abonyi, 2022). DLTs, such as Blockchain, “can provide a cryptographically secure and immutable record of transactions and associated metadata (origin, contracts, process steps etc.) linked across whole supply chains” (Pearson et al., 2019, p. 145), supporting a robust “evidence chain.” This means that DLTs such as Blockchain provide the means to identify in a supply chain what data-associated actions have been performed, when, and in what location(s), providing greater auditability of the data exchange and transactions undertaken by different supply chain actors (Kshetri, 2017; 2018; Manning & Kowalska, 2021). Syntactic interoperability is described in the digital/technology context as ensuring that “the precise format and meaning of exchanged data and information is preserved and understood throughout exchanges between parties, in other words ‘what is sent is what is understood’” (Corcho et al., 2021, p. 9). This goes beyond the technical aspects of being able to accept and evaluate data to the meaning of data being automatically understood. Semantic interoperability is achieved when information transferred in its communicated form retains its inherent meaning, which is then correctly interpreted by the receiving system, such as ICT, human etc. (Corcho et al., 2021). Whilst the term semantic interoperability is primarily used in the digital context (technology to technology), in this chapter human to human (informed by access to information) and human to technology and technology to human interactions are also considered in terms of effective interoperability. In all aspects of sharing of information, the reduction of potential ambiguity associated with the meaning associated with the data is very important (Khan & Abonyi, 2022; Lehväslaiho et al., 2019). Language, its syntax (the structure of statements, words or phrases), and associated behaviours and culture(s) influence semantic interoperability (Whitman & Panetto, 2006). In terms of human–human communication between supply chain actors the “word within language within discourse within person within situation within environment” dimension is important (Boyd & Schwartz, 2021; Muhammad et al., 2022, p. 14) as it shapes and bounds both technical and managerial interoperability. Neiva et al. (2016) consider the concept of semiotics within the communication process and its three elements: syntactics (where syntax is the sign, message or words used), semantics (what the sign, message or words relate to) and pragmatics (the effect the sign, message or words have on the user). This can be considered at the technical and human level. In short semiotics addresses: what is communicated, the intention behind the communication and the impact when the communication is received. Legal interoperability encompasses the processes required to ensure regulatory and policy measures are complied with at the organisational and supply chain level. This can be a challenge when products and services are produced in one country and then exported to another. There is a need to comply with the legislation in both the producing country and the destination

594  Research handbook on organisational integrity country. With regards to data interoperability regulatory requirements on data curation, storage and use must be complied with by all supply chain actors. Examples include compliance with intellectual property law or regulations, such as GDPR (Corcho et al., 2021). Managerial Interoperability Managerial interoperability differs between organisational operability within one organisation, or intra-organisational interoperability, and aspects of collaboration between multiple organisations described as inter-organisational interoperability (Chapurlat et al., 2008). Organisational interoperability is the processes that an organisation uses, or multiple organisations use to align their “business processes, responsibilities and expectations to achieve commonly agreed and mutually beneficial goals” (Corcho et al., 2021, p. 9) in order to deliver supply chain performance (Weichhart, 2014). Inter-organisational interoperability can be characterised in terms of structures, the available resources (human, physical, financial, natural and social), capabilities, and abilities of each collaborative organisation (Chapurlat et al., 2008). Interoperability can be operationalised within different dimensions and cultures of an organisation e.g., between departments such as procurement, commercial production, technical, engineering and legal (Piddington, 2005). Whilst interoperability links with integration (Rad et al., 2022), it is less dependent and less coupled than full integration of managerial systems across supply chains (Weichhart, 2014). Integrated supply chains involve horizontal or vertical integration, formal contracts and supplier approval and preference protocols (Abebe et al., 2017). Integration can drive supply chain management through the alignment of end-to-end key processes that support products, services, information flow with the objective of adding value for customers, supply chain actors and other stakeholders with the objective of improving organisational and supply chain performance (Abbasi & Nilsson, 2012; Mentzer et al., 2001; Lambert, 2006). Others describe this integrative linkage from a quality perspective as a “chain of conformance” (Tustin, 1992). In summary, integration involves collaboration and cooperation through restructuring and reconfiguring organisational processes and interactions within a supply chain to align and more efficiently deliver goals and outcomes (Adams et al., 2014). Supply chain integration can add value to all actors, but by its nature it involves “some degree of functional dependence” (Panetto, 2007; Whitman & Panetto, 2006). This could cause an organisation(s) to become locked into a specific mode of practice preventing agility in switching to alternative methods of operationalisation. Weichhart (2014) argues that being interoperable means an organisation is more resilient and sustainable than being focused purely on supply chain integration. Dynamic, or pragmatic interoperability requires agility in interactions between supply chain actors (Vernadat, 2006) which may not be possible within regimes of practice in integrated supply chains. Pragmatic interoperability is the willingness of supply chain actors to engage with the ways necessary for effective collaboration (Whitman & Panetto, 2006), where supply chain collaboration is “the ability to work across organisational boundaries to build and manage unique value-added processes” (Fawcett et al., 2008, p. 93). Asuncion and Van

Operationalising integrity within supply chains  595 Sinderen (2010) differentiate between pragmatic interoperability at the system level and the organisational level: ● at the system level, pragmatic interoperability is the sharing and exchange of an equivalent understanding of the intended and actual meaning of the data or information in a given context, whereas/ ● at the organisational level, pragmatic interoperability reflects the compatibility of business intentions, norms, rules, policies and the positioning of trust between collaborating organisations. For supply chains to be sustainable, individual organisations need to engage, develop strong interactions, negotiate and then create and enhance interoperability (Cretan et al., 2012). Managerial interoperability contributes to cost reduction (Ferreira et al., 2013), reduces transactional friction and supports delivery of strategic mission and vision in an effective way (Molina et al., 2004; Whitman & Panetto, 2006). Interoperability governance describes the mechanism for ensuring interoperability of existing systems and activities to promote efficiency and reduce risk (Jovanovic et al., 2022). Chen et al. (2022, p. 150) differentiate between digital (on-chain) and non-digital (off chain) governance mechanisms for developing collaboration processes between organisations addressing aspects such as “sharing of resources, provision of information, conferring autonomy, giving rewards, access control, output control, behavioural control, and external relationship control.” Thus, interoperability requires organisations to adapt to new supply chain requirements, new actors and external stakeholders, and internal business and external market and social conditions (Cretan et al., 2012). Supply chain governance systems extend beyond collaboration, driving structures and processes to limit non-conformance that could affect trust, brand reputation or regulatory compliance (Abebe et al., 2017). However, embedding governance systems such as supplier relationship systems or upstream prevention comes with transaction costs (Abebe et al., 2017) and implementation costs which can be a barrier to adoption of such governance systems in low margin supply chains. Interoperability governance establishes enablers for alignment of policy objectives, guiding transition in management practices, knowledge diffusion, and setting foundations for the sustainability of interoperability (Kouroubali & Katehakis, 2019). Many barriers can arise which can prevent effective managerial interoperability. These include secrecy (Ramkumar et al., 2022), siloed knowledge (Manning et al., 2021; Whitman & Panetto, 2006), a lack of shared culture or common language (Whitman & Panetto, 2006), and divergent policies relating to privacy (Powell & Alexander, 2019). Hellman (2010) identified multiple barriers to organisational interoperability (shown in Table 37.1), although it could be argued that many of these reflect aspects of operational integrity rather than organisational integrity at the supply chain level. Operational integrity is focused specifically on the ability of operational processes and controls to deliver specific goals (Atan et al., 2017). In contrast, organisational integrity encompasses the capacity of the organisation to be responsible and transparent, in delivering the declared vision, values and goals of the organisation (Owoloja & Manning, chapter 36 in this volume). The themes that emerge are commitment, competency, enablers, regulatory requirements, resources and values. These themes link with the levels of interoperability governance as determined by Kouroubali and Katehakis (2019) as political and legislative, strategic, tactical and operational. Lack of senior management commitment may encompass the strategic management of many of the other themes identified. Weak commitment by

596  Research handbook on organisational integrity Table 37.1

Barriers to organisational interoperability

 

Operational

Organisational

integrity

integrity aspects

aspects Commitment

 

X

X

 

X

X

 

X

X

 

 

X

● Lack of senior management commitment so strategies for organisational interoperability are inadequate. ● Lack of individual(s) commitment to practices that deliver organisational interoperability, cooperation or collaboration. Competency ● Low competency in terms of understanding of organisational processes, tasks, routines and procedures by the organisation or other supply chain actors. ● Low competency in terms of digital literacy and use of technology. ● Low competency in terms of the available technologies and equipment. Enablers ● Lack of best practice examples which demonstrate the value and benefits of organisational interoperability to all actors. ● Lack of performance measures, tools and instruments to determine organisational interoperability. Regulatory requirements ● Conflicting regulatory requirements can lead to uncertainty re. norms and rules. ● Conflicting market requirements can lead to uncertainty re. norms and rules. Resources ● Lack of economic resources means that supply chain actors are unable to invest in the physical resources needed to deliver interoperability. Values ● Mismatched priorities between actors impact on efforts to deliver collaboration

Source: Adapted from Hellman (2010).

individuals reflects organisational integrity in terms of values, behaviours and organisational culture. A lack of competency can only be addressed by effective skills analysis and associated training and development programmes for individuals. A lack of resources can also impact on organisational competency and a resource appraisal should be undertaken to inform an investment plan for new technology and capital investment programmes. Conflicting market and regulatory requirements can impact on organisational interoperability as can mismatched values between the supply chain actors including regulators. A lack of best practice examples that demonstrate the value and benefits of organisational interoperability to all actors and a lack of performance measures, tools and instruments, and a lack of willingness to drive continuous improvement using these processes will influence the ability to deliver organisational interoperability, cooperation and supply chain collaboration. Interoperability-Based Frameworks Interoperability frameworks can be considered in terms of technical interoperability and the technical specifications that need to be in place to allow the collection, curation and sharing of data (Guijarro, 2007). The European Open Science Cloud (EOSC) interoperability framework reflects four layers of interoperability: organisational interoperability, legal interoperability, technical interoperability and semantic interoperability (Corcho et al., 2021; Khan & Abonyi,

Operationalising integrity within supply chains  597 2022), which have all been considered in this chapter. Thus, an interoperability framework also positions the context in which the data will be used and the governance structures that mediate its use and the empowerment of data users (Kouroubali & Katehakis, 2019). Interoperability frameworks need to address organisational structures, roles, responsibilities and decision-making processes as equally as addressing quality and scalability of ICT systems, access and privacy protocols (Kouroubali & Katehakis, 2019). Beranger (2018) developed a governance architecture for the use of data with five dimensions: assessing the technical aspects of data; assessing the ethical aspects of the use of technology in supply chains; assessing the ethical aspects of the practice itself that uses data and technology; the impacts of the practice; and embedding ethical deliberation within the planned management processes (Manning et al., 2023). Data trust frameworks are one form of collaborative, participatory data governance in highly complex situations (Brewer et al., 2021). A data trust framework is developed by actors across a supply chain together with regulators, non-governmental organisations and others with the objective of delivering specific goals (Manning et al., 2023). Brewer et al. (2021) propose four elements of a data trust firstly: a governance, legislative and contractual framework, a security and permissioning normative framework controlling accessibility, security and privacy, a knowledge mapping element that establishes interoperability, and an operational element where interactions and processes occur. So how can we reflect on interoperability, integrity, trust and supply chain performance in the context of supply chain digitalisation?

INTEROPERABILITY IN THE CONTEXT OF SUPPLY CHAIN DIGITALISATION One option to improve operational integrity and supply chain performance is to increase supply chain digitalisation and evolve to what is often termed in the literature Industry 4.0 (Khan & Abonyi, 2022). Govindan et al. (2022), when listing the essential features of Industry 4.0, include interoperability and information transparency. Recent advances in IoT technology aim to overcome barriers to interoperability at technical (technology to technology), communication (human to technology) and governance (complexity and security) levels (Narwane et al., 2022). Industry 4.0 offers, through the combination of IoT, AI and big data, an opportunity to enhance interoperability to drive supply chain performance (Mahmoodi et al., 2022) and smart systems. Smart Systems Smart systems allow for improved business and supply chain performance through facilitating faster information flows and more rapid and accurate decision-making (Schmidt et al., 2022). Smart systems, via the adoption of appropriate technology, can establish and maintain information flows and communication structures with all actors in a supply chain, and as a result improve processes and efficiencies and deliver enhanced supply chain performance (Avelar-Sosa et al., 2019). Schmidt et al. (2022) from an operational integrity viewpoint define

598  Research handbook on organisational integrity six characteristics that are necessary for effective implementation of smart systems across supply chains. These are: ● Effective performance of business, i.e., measured through productivity, delivery of agreed outcomes, compliance levels, etc.; ● Efficiency of the supply chain, i.e., cooperation and collaborations between organisations especially at the business to business and supplier to customer interface; ● Addressing of the strategic or operational challenges related to technology use such as privacy, security and lack of capability or skills, as mentioned previously in this chapter; ● Use of appropriate technology; ● Adequate managerial skills to manage the smart systems effectively; and ● Effective control of financial aspects such as reducing costs, or increasing profit. Pan et al. (2021) list five aspects that need to be addressed so that smart systems can deliver interoperability, operational integrity and organisational integrity in supply chains. These aspects are summarised in Box 37.1.

BOX 37.1 FIVE ASPECTS OF INTEROPERABILITY WITHIN SMART SYSTEMS (ADAPTED FROM PAN ET AL., 2021) 1. Legal interoperability at the supply chain level in smart systems needs to address restrictions associated with security, access and privacy especially in cloud-based and DLT systems. 2. Organisational interoperability at the supply chain level is achieved through effective and open inter-organisational communication. 3. Pragmatic interoperability needs to be considered especially with regard to product-orientated and order-orientated data that is specific to products, processes and services. 4. Semantic and syntactic interoperability need to be addressed so the intrinsic meaning associated with data is retained and communicable. 5. Technical interoperability is achieved through effective and open inter-organisational data sharing formats where consensus is reached on how information is structured, formatted, arranged, configured and queried so it is useful and accessible. Pan et al. (2021) argue that other than Global Standard 1 or GS1 standards, it is difficult to apply a single standard for all supply chain actors. GS1 is an international standards organisation associated with product identification bar codes, electronic documents etc. (Koo & Kim, 2017). The GS1 system of interoperable standards “assigns and manages globally unique identification of firms, their locations, their products, and assets” (Keogh et al., 2020), and thus is of value for supply chain traceability, logistics and resource management. Smart systems need to be able to transfer, with as little friction as possible, data and information in a range of formats, both unstructured such as emails, or written communications through to highly structured and organised data. Not only must this data be transferable, its meaning must be retained through all use cases within the supply chain. Therefore, smart

Operationalising integrity within supply chains  599 systems can support operational integrity and interoperability in order to deliver supply chain performance. Smart Systems and Interoperability Organisational integrity in supply chains goes further than technical interoperability and reflects the ethical aspects of integrity with collaboration and cooperation. Emerging research is considering integrity culture, integrity climate and integrity performance at the organisational level, between national cultures, and the means for its assessment, albeit in the food supply chains rather than more widely in other sectors (Alrobaish et al., 2021, 2022a; 2022b, 2022c, 2023). Extending this work to other supply sectors and at the supply chain level would be of interest. Blockchain, when used as a mechanism for supply chain digitalisation is an enabler of visibility (Rogerson & Parry, 2020). Trust can be achieved through interpersonal and digital mechanisms that provide greater visibility of activities and processes between supply chain actors. Trust is built on the foundations of traceability, visibility and transparency (Keogh et al., 2023). Supply chain visibility demonstrates both traceability and transparency of processes (Tse & Tan, 2012); i.e., being able to see or be seen (Roy, 2021). Visibility extends beyond traceability to encompass transparency, the how and why decisions are made and what information was used in that decision-making (Keogh et al., 2023). Traceability is a transactional process of tracing ingredients forward to finished products and tracking food products back to their source ingredients, through activities such as mixing, splitting and recirculating (Manning et al., 2022). Transparency provides visibility of how and why decisions were made, what information was used to make those decisions at any step in the supply chain (Keogh et al., 2023). Transparency of the supply chain through data sharing such as with Blockchain will lead to greater promotion of supply chain standards and improved perceptions of trustworthiness and reduce information asymmetry in buyer–seller relationships (Yavaprabhas et al., 2023). Accessibility is important here for verbal, written and digital information. Information may not be accessible to specific supply chain actors if they lack the processes or technology required to do so (Roy, 2021), affecting the efficacy and integrity of supply chain relationships. Accessibility in terms of the data may be assessed in terms of characteristics such as being useable, findable, reusable, and interoperable or in terms of its permissioning and which data can be considered private and public (Manning et al., 2022). Visibility Visibility provides information about what happened at each stage—along with the people, processes, equipment, and materials involved—and as a result, the likely food safety impact. Visibility in sustainable supply chains has been described as “the extent to which stakeholders within a supply chain have access to or share information that is key or useful to their operations and that is considered of mutual benefit in achieving sustainability objectives [supporting] the minimisation of risk” (Apeji & Sunmola, 2022, p. 1516). Roy (2021) states that visibility can be considered from a technology viewpoint, and as a form of supply chain collaboration, in terms of the product and its characteristics, and its links to supply chain performance. Visibility supports timely information management in terms of sharing, competitive advantage, increased flexibility at meeting customer requirements, lead times and improved

600  Research handbook on organisational integrity Table 37.2

Attributes of supply chain visibility

Information management

Value addition (management)

Supply chain relationship

Archiving

Benefit of internal/external linkages

Commitment (management,

Collection

Better time management

staff, stakeholders)

Curation

Capacity (acquisition, assimilation, exploitation, transformation)

Interdependency

Deletion

Communicating information to drive change

Integration

Dissemination

Competencies (internal and external dynamic capability)

Power dynamics (beneficial or

Receipt

Continuous improvement

negative)

Retrieval

Context awareness (general, economic, environmental, technical,

Shared benefits

Sharing

social)

Transparency

Storage

Ethical compliance

Trustworthiness

Supply

Faster corrective action

Visibility

Internal processes defined and controlled Knowledge of legal requirements Leanness Legal adherence Legal compliance Meeting stakeholder data sharing standards Moral disposition Policy and standards that are fit for purpose Resource use (financial, technological infrastructure and non-technological infrastructure) Value addition (information-related aspects)

Interoperability

Accuracy

Isolated system failure

Foundational interoperability

Completeness

Mobilisation of data to multiple devices and systems

Pragmatic interoperability

Compatibility

Reducing duplication

(instrumental)

Consistency

Reducing unintended consequences

Semantic interoperability

Integration

Secure access

Structural interoperability

Information/ system characteristics

Interdependency

Synergistic benefits from

Linkage

interoperability

Real-time Relevance Reliability Timely Trustworthiness Usefulness

Source: Adapted from Apeji and Sunmola (2022).

organisational performance with a number of transactional and relational attributes (Apeji & Sunmola, 2022) as shown in Table 37.2. This chapter has considered organisational integrity at supply chain level, and explored organisational integrity, operationalisation, interoperability, trust and supply chain performance, where supply chain performance can be considered transactionally in terms of traceability and delivery to customer requirements and more subjectively in terms of perceptions of trustworthiness, and integrity through values and norms. The next section of the chapter brings together aspects of how organisational integrity, culture and organisational performance can be assessed and measured.

Operationalising integrity within supply chains  601

ORGANISATIONAL INTEGRITY, CULTURE, AND ORGANISATIONAL PERFORMANCE ASSESSMENT AND MEASUREMENT Organisational integrity can be positioned as “the appropriate behaviours of organisational members as honest, faithful and caring” (Al-Abrrow et al., 2018, p. 974). Alternatively, organisational integrity and the information that supports it can be seen as being completeness and reliability (Drďgan & Metz, 2017), correctness, compliance (Pulay, 2017), and being responsible, accountable and efficient (Huberts, 2018). The second type of framing means that organisational integrity can be linked to organisational core values and the accountability and responsibility to deliver them (Pope et al., 2018). In contrast, operational integrity is the processes that allow the technical and managerial system to continue to function either within one organisation or across supply chains. A strong ethical culture underpins organisational integrity (Boardman & Klum, 2001). Pulay (2014) differentiates between internal and external integrity controls and hard integrity controls driven by regulation, market standards or organisational policy, e.g., a code of conduct and soft integrity controls that are adopted on a voluntary basis. Compliance versus Integrity Integrity extends beyond compliance (Pulay, 2014); where compliance is “the act or status of complying with an imperative regulatory or normative requirement, that is, compliance means working within boundaries defined by contractual, social, or cultural standards” (Manning, 2020, p. 995). Paine (1994) uses the terms extrinsic to describe the driver of legal compliance and intrinsic to reflect values-based compliance differentiating between compliance to avoid legal sanctions and organisational integrity which is based on self-governance through guiding principles, the promotion of ethically sound behaviour and shared accountability for outcomes. Thus, integrity is conscious and active commitment to a morally justifiable set of principles and values rather than a passive acceptance of normative values. In terms of organisational integrity at the supply chain level, commitments can be based on compliance to normative standards or alternatively integrity where aspects such as mutual engagement to deliver desired organisational outcomes, trust building and shared recognition of responsibility and accountability promote behaviours, engagement and culture (Boardman & Klum, 2001). Questionnaires are one of the most frequently used tools to determine cultural maturity followed by interviews, observation, score cards, document analysis and matrices (Goncalves Filho & Waterson, 2018). Aspects of culture that relate to organisational integrity and the management tools to deliver, assess and measure culture have been synthesised in Table 37.3. Maturity Models Maturity models describe essential attributes that would be expected to characterise an organisation at a particular level or state (Goncalves Filho & Waterson, 2018). Maturity models are tools to “evaluate a current state of a given culture, system, business or process, and to develop improvement plans against a scale of maturity” (Jespersen et al., 2016, p. 176). Enke et al. (2017) describe maturity models as being either assessment models that evaluate individual elements, components, and dimensions of culture, and optimisation models that focus on the

602  Research handbook on organisational integrity Table 37.3

Aspects of culture that relate to organisational integrity

Aspects of culture ● Communicating values and expectations both within and outside of the organisation. ● Delivering staff commitment and job satisfaction. ● Focus on delivery of desired organisational outcomes rather than on unquestioning acceptance of “this is the way we do it round here.”

Management tools to deliver, assess and measure Delivery: ● Codes of conduct, which help communicate values and provide benchmarks for behaviour. ● Corporate strategies, levels of awareness and engagement. ● Embedding of validation, monitoring and verification systems including auditing.

● Impact of external environment on culture of organisation. ● Providing administrative structures to deliver agreed mission, goals ● Level of trust between staff especially management and others. ● Sense of common purpose and recognition of the

and objectives. ● Providing appropriate levels of resources to deliver desired organisational outcomes.

importance of individuals’ contributions to achieving the

● Reviewing job descriptions and standard operating procedures.

common purpose.

● Reviewing processes, procedures and strategies to ensure delivery

● Strong sense of public duty and a natural tendency to use agreed values to guide actions and decisions. ● Understanding of, and support for, mechanisms for handling complaints, grievances and reports of poor behaviour.

of objectives. ● Reviewing recruitment, and performance management procedures. ● Systems, policies and procedures, which assist in maintaining shared values and translate them into practical, flexible and effective actions and decisions.

● Willingness of staff to take ownership and participate in

● Training and development, which enable individuals to apply values

decision-making, discuss concerns, seek advice about

effectively to their work. Reviewing training and development pro-

ethical dilemmas, suggest improvements, attend training, contribute to corporate activities and so on. ● Willingness to share responsibility for ethical performance.

grammes on a regular basis. Assessment and measurement: ● Through questionnaires, interviews, document analysis and application of matrices

Source: Adapted from Boardman and Klum (2001); Goncalves Filho and Waterson (2018).

transition process with cultural maturity levels based on best practice. Manning (2020) defines seven phases of cultural maturity: 1. Unaware and non-compliant, 2. Minimal compliance, 3. Reactive approach to compliance, 4. Compliance based systems positioned as legal liability, 5. Compliance based above minimal legal compliance, e.g., complying with market standards above legal compliance, 6. Optimising culture and embedding continuous improvement programmes, and 7. Integrity-based organisational climate that exceeds the requirements of minimum legal and moral liability and drives continuous improvement. Alrobaish et al. (2021, p. 6), building on Manning (2016), describe integrity climate in the context of food supply chains as “the employees’ shared perception of [climate components] leadership, communication, commitment, risk awareness, and resources regarding food integrity within the company’s working environment in terms of product, process, people, and data integrity” where climate strength reflects the strength of food integrity climate. Using maturity models to measure organisational culture, in particular organisational development beyond the transactional processes of “this is what we do” to “this is who we are,” is difficult (Goncalves Filho & Waterson, 2018). Determining the organisational positioning of a business or indeed a whole supply chain along a maturity journey and extending beyond pragmatic often qualitative approaches to more measurable outcomes-based maturity scales has been the focus of some research (Goncalves Filho & Waterson, 2018). Data governance maturity models have been critiqued in terms of their structure and their applicability towards both transactional and cultural elements of data management and the

Operationalising integrity within supply chains  603 maturity level the organisation has achieved (Rivera et al., 2017). The domains of management (data principles, data lifecycle, data quality, metadata, information technology, information security) are considered in terms of six maturity levels. These are similar to Manning (2020) as they both scan maturity from maturity levels of none through to optimised (Rivera et al., 2017), with Manning (2020) then introducing a seventh level focused on integrity. Organisational integrity, culture and organisational performance assessment and measurement is often given a numerical value or a score to reflect both the level of maturity and the movement of the business through a maturity scale (Goncalves Filho & Waterson, 2018; Jespersen et al., 2016; Rivera et al., 2017). The challenge with level descriptors is firstly the multiplicity of maturity model-level descriptors (as shown in Table 37.4) across the scale and at particular levels, secondly aspects of organisational integrity and how they embed currently in maturity models and thirdly the scoring itself. The use of scoring infers a meaning to the numbers used in terms of improvement, rate of improvement and also brings into question the scoring itself, reliability and inter-organisational validity, i.e., if two organisations both score an aggregated score of 2.9 in terms of maturity modelling what does that imply in practice? Rivera et al. (2017) consider aspects of aggregation and disaggregation based on domains and evaluation criteria, but are some domains, data governance, information technologies, or leadership, communication, commitment, risk awareness, and resources as in the Alrobaish et al. (2021) model, equivalent in terms of delivering technological and management integrity (i.e., a maturity level of 5 (optimised) in leadership will influence organisational integrity, operationalisation and culture in a different way to a maturity level of 5 with regard to metadata). These areas are all worthy of further exploration when considering organisational integrity across supply chains. The other factor to consider in the use of maturity models in terms of the meaning associated with scores is the assumption of linearity especially in terms of legal compliance, risk reduction or continuous improvement programmes, what Lasrado and Vatrapu (2016) describe as the “underlying assumption of a single linear path to maturity.” Carvalho et al. (2019) describe the levels as 1. Adhocracy (where there is a lack of business intelligence (BI) capabilities and analytical technologies); 2. Starting the foundations (embedding BI at the functional level) where critical success factors (CSFs) are focused on the function, e.g., personal safety, yield, product and service quality; 3. Centralised dictatorship through the development of dashboards and reports that use key performance indicators (KPIs) at department level; 4. Democratic cooperation using BI to drive strategic decision-making often through high-level scorecards using KPI across multiple activities within the organisation or across the supply chain; 5. Entrepreneurial opportunity, i.e., using BI for improving profitability, service and product quality and continuous improvement; and 6. Integrated relationships that drive intra-organisational and inter-organisational operationalisation, and integrity. This articulation of a maturity model demonstrates clearly that this is a systems-based and not a linear process and to ascribe numerical meaning to each level or sub-level suggests that assumption. Dehaene et al. (2008) describe this as the difference between log and linear thinking. They argue that Western cultures use linear mapping with small, symbolic numbers to associate meaning and logarithmic mapping when counting is difficult, i.e., the concept of a linear number line is a cultural invention. Instead, we could develop indexes of non-linearity which are more pragmatic and better reflect reality. Non-linearity is an important consideration.

604  Research handbook on organisational integrity Table 37.4

Maturity model-level descriptors related to scoring approaches

Score

Maturity model-level descriptors

 

Data governance

Food safety

Safety maturity models

Health system

maturity model

(safety)

maturity model

Goncalves Filho & Waterson

Carvalho et al. (2019) Manning (2020)

Rivera et al. (2017) Jespersen et al. 0–1

Initial

(2016)

(2018)

Doubt

Amoral calculators,

Adhocracy

Maturity climate model

Unaware and

documenting, doubt,

non-compliant

emerging, initial, pathological,

Minimal compliance

starting blocks, uncertainty, uncommitted. 1–2

Managed

React to

Controlling, core, dependent,

Starting the

drifters, getting going, react to, foundations

Reactive approach to compliance

reactive, managed. 2–3

Defined

Know of

Bureaucratic, calculative,

Centralised

Compliance based

doubters, engaging, extended,

dictatorship

systems (legal)

Award winners, cooperating,

Democratic

Compliance with legal

leading edge, matured,

cooperation

and market standards

Continually improve,

Entrepreneurial

Optimising culture and

generative, institutionalising,

opportunity

embedding continuous

improvers, involving, know of, preventative, walking. 3–4

Quantitatively

Predict

Managed

participating, predict, proactive, proactive compliers, running. 4–5

Optimised

Internalise

improvement

internalise, leaders, optimised,

programme

sprinting, world class. 5–6

 

 

 

Integrated

Integrity-based

relationships

organisational climate

Linearity versus Non-Linearity Cost–benefit analysis such as transparency and its impact on economic growth (Law et al., 2022), corporate governance and organisational performance (Ullah et al., 2021) have shown non-linear relationships. However, Ullah et al. (2021) highlight how non-linearity at sub-indicator level can be smoothed out in the use of indexes. Indeed, it is essential to consider that ecosystems such as supply chains can respond in both linear and non-linear ways (Fu et al., 2020), so the assumption should not necessarily be that an intervention to improve organisational integrity will lead to a linear response across a supply base, indeed, it is highly unlikely. In summary, non-linearity explains why intended actions, reactions and their outcomes in implementing organisational integrity across dynamic supply chains are often non-proportional, e.g., the relationship between effort and reward (Lichtenstein & Mendenhall, 2002). Non-linearity they argue is driven by interdependence and mutual causality operating at the system rather than the function level. This explains the weaknesses in purely top-down linear management approaches to deliver organisational and supply chain trust mechanisms (Jucevicius & Juceviciene, 2015). Thus the mediating role of trust terms of building organisational integrity, interoperability and delivering enhanced supply chain performance is not linear in nature.

Operationalising integrity within supply chains  605

CONCLUSION The aim of this chapter was to consider organisational integrity at the supply chain level, exploring in particular the linkage between organisational integrity, operationalisation, interoperability, trust and supply chain performance. The narrative sought to explore the following questions: What is interoperability at the organisational and supply chain level? How can organisational integrity be enhanced through interoperability, and to what benefit? And, what is the mediating role of trust in addressing interoperability and delivering supply chain performance? Whilst contemporary knowledge can position aspects such as interoperability, operational integrity and organisational integrity, there is still a lack of extant research that has considered these concepts in detail with a focus on organisational integrity at supply chain level. Integrity at the supply chain level reflects the ethical positioning of all actors and the completeness of processes that allow for integration, interoperability and collaboration. Organisational integrity is supported by a set of core values that need to be accepted by all supply chain actors to then inform supply chain functions that are developed to achieve desired and often mutual, goals and outcomes. Technical and managerial interoperability is the underpinning aspect of organisational integrity from both the technology and the human perspective. If accountability, transparency, trust and visibility are not defined as desired goals, i.e., supply chain relationships are positioned at a lower maturity level, whilst the supply chain can show it delivers or exceeds agreed performance targets (operational integrity); it cannot be said to have organisational integrity. This nuance between organisational integrity and operational integrity is important. Interoperability, its relationship with organisational integrity at the organisation and supply chain level has been examined in this chapter, as well as how organisational integrity can be enhanced through improved interoperability, transparency and visibility. Supply chain digitalisation offers promise in terms of providing the BI needed to move from adhocracy to integrated relationships as does the application of data governance and supply chain governance maturity modules to drive better compliance and performance. However, the use of both approaches needs to be embedded within a clear understanding of how BI, data and metrics are being used in supply chains and the meanings associated with them, that many relationships in supply chains are not linear and that further research is required to understand the complex linkage between organisational integrity, operationalisation, interoperability, trust and supply chain performance.

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Index

360-degree accountability 421, 424–425, 426 360-degree feedback 421 Abbasi, M. 591 accountability 306, 415–417, 422–427, 498, 532 conception 416 cycle 424, 426 as mechanism 417 versus virtue 418 perspectives 420 in practice 423 process 426 improvement 427 questions 421 types and functions 419 as virtue 417 accuracy 475, 481 achievability 463, 491 A Climate of Justice: An Ethical Foundation for Environmentalism 319 active representation 341, 342 actors 258, 564, 571, 593 adaptive responses 137 adherence 88 Ad Hoc organisations 454, 455, 456, 457 administrative conservatorship 335 administrative evil 58 Adorno, T. 308, 309, 311 affectualisation 568 After Virtue 442 agency 359, 361 agency model 165 agency theory 181, 184, 280–282, 284, 286 perspective 147 agent-centeredness 177 Agnew, R. 116, 117 AI see Artificial Intelligence (AI) Akella, D. 308 Akers, R. L. 119 Akrivou, K. 219, 220, 221 Alchian, A. A. 180 Aleksovska, M. 423 Almandoz, J. 267 Alrobaish, W. S. 586, 602, 603 Althusius, Johannes 228 altruism 84 American Psychological Association (APA) 512 AmerisourceBergen 10, 11 Anechiarico, F. 546

anti-corruptive missions 26 anti-integrity pursuits 26 appeal to higher loyalties 120 Appelbaum, S. H. 113 applied spirituality 100 Aquinas, Thomas 211 Aquino, K. 132 Archer, A. 364, 367, 369, 370, 371 Argyris, C. 515 Aristotle 24, 211, 214, 313, 337, 339, 369 Arjoon, S. 213 Armstrong, S. 9 Arnold, A. G. 399 artificial humans 30 artificial intelligence (AI) 28, 30, 236, 354, 409, 516, 518, 537, 580, 597 networks 30 systems 31 ASA framework see attraction, selection, attrition (ASA) framework Asch, Solomon 437 Ashby, W. R. 545 Ashford, S. J. 143 Ash, T. L. 452 Astakhova, M. N. 436 Asuncion, C. H. 594 A Theory of Justice 230 Atlantic slave trade 326 attraction, selection, attrition (ASA) framework 511, 514, 515–516 Audi, R. 363, 364, 366, 369, 371, 500 auditing 492 augmented reality 30 Austin, Hayley 74 authenticity 25, 260 autonomous actorhood 581 Avelino, S. 536 Avolio, B. J. 345 Babaloba, M. 130 Badaracco, Jr. J. 504 baiting 567 Baldwin, R. 244, 252 Ballew, Tim 80 Bal, P. M. 515 Bandura, A. 131 banks 333 Bardach, E. 249 Barrett-Lennard, Lance 71, 72

610

Index  611 Barry, B. 163, 546 Basic Structure of Society (BSS) 231, 232 Bass, B. 345 Bauman, D. C. 245, 363, 364, 370, 371 Baumeister, R. F. 136 Bazerman, M. H. 291 Becker, T. E. 83, 163, 306, 364, 366, 374 Beck Jørgensen, T. 339 behaviour 577 participants 56 behavioural artifacts 344 behavioural consistency 260 behavioural ethics 38, 129, 134, 136, 138, 142, 149, 150 positive 130, 139, 149, 151 behavioural impression management 89 behavioural integration 92 behavioural integrity (BI) 141, 260, 303, 305, 314, 577 defined 141 behemoth mammals 70 Behn, R. D. 416, 421, 422, 423, 424, 425 Behnam, M. 270 being, concept of 359 being guilty phenomena 567 Benjamin, M. 304 Bennett, M. 201 Bennett, R. J. 145 Bennis, W. 474 Benson, M. L. 121 Bentham, J. 313 Benyus, Janine 75 Beranger, J. 597 Bertok, J. 549 Bhaskar, Roy 168 Big 5 personality characteristics 141 bioethics 497 biointegrity 75, 76 biolaw 497 biological-evolutionary perspective 90 biological explanations 83 biological functions 86 biological relatives 84 biomimicry 75 Bion, Wilfred 172 Björnsson, G. 399 Black, J. 244, 252 Blackness 321 Black Resource Group 458 black swan crises 36 blame 405, 408 Blasi, A. 132 Blockchain 599 Boal, K. B. 288

board of directors 8, 9, 15, 16, 280, 282–287, 290–291, 294, 322 Boegershausen, J. 133 bottom-up approach 558, 573–574 Bouarif, N. 102 Bovens, M. 417, 418, 421, 422, 423, 424 Bowie, N. E. 440 Boyd-Swan, C. 338, 340, 346, 348 Brădăţan, C. 432 Braiding Sweetgrass 327 brain response 137 brain structure 86 Braithwaite, J. 418 Brandsma, G. J. 416, 424, 425 Breakey, H. 303 Brenkert, G. 305 Brewer, S. 597 Brien, A. 305 Bromley, P. 247 Brown, M. E. 140 Brown, M. T. 353 Bruno, E. A. 143, 144 Bruyneel, Kevin 326 BSS see Basic Structure of Society (BSS) Buck, John 80 Burbano, V. C. 147 bureaucracy theories 311 Burger, J. M. 122 Burgess, R. L. 119 Burke, Tarana 168 Burrell, D. 442 Burris, E. R. 436, 437 Bush, George W. 301, 305 business development 565 business environments 97 business ethics 3, 9, 13, 36, 38, 40–41, 43–45, 47, 55–56, 129, 167, 191, 226–227, 230, 232, 239–240, 246, 312, 324, 363, 395–396, 403, 499 business frames 134 business and human rights (BHR) 36–38 business legitimacy 498–499, 501–505, 507–508 business outcome 527 business performance 525, 530, 532, 534, 578 business practice 534 business qualities 581 business reporting 478 business success 529, 537 business values 584 Cable, D. M. 518 Caiden, G. E. 61 Calhoun, C. 164, 306, 307, 373 Cameron, K. S. 527, 530, 531, 532 capitalism 329

612  Research handbook on organisational integrity capital punishment 115 Carroll, A. B. 41, 42, 45 Carter, S. L. 164 Carvalho, J. V. 603 Cendón, A. B. 419 Chang, V. 579 ChatGPT 30, 31 Chen, A. 134, 139, 142, 436, 437 Chen, D. 465 Cherry Point 79 Chiles, B. 147 Chinook salmon 72–74, 76–77 Choi, H. 30 Choo, C. W. 384 Cho, Y. 436 Chugh, D. 149, 150 Chui, C. 148 Chun, R. 530, 531, 532 citizen-administrator value congruence 345, 346, 348 Citizen-Administrator Value Congruence Survey (C-AVCS) 346 civic community 322 civicism 329 civic system 319, 330 coherence of 329 perspective 324 power 328 providing food 331 of provision 331–332 realm 319 spaces 328 civil disobedience 48 civil rights movements 328 civil societal organisations 471, 478–479 civil society groups 237 claim of normality 120 Clair, J. 150 clarity 463, 475, 481, 491, 552 Clark, M. A. 137, 138 climate change 19 climate crisis 327 Clinard, M. B. 111 CMS see critical management studies (CMS) Coast Salish Gathering 71 Coast Salish people 71 Cochrane, Andrew 320 code of ethics 37, 246, 247 Coglianese, C. 249 cognitive empathy 137 cognitive moral development 149 cognitive processes 86, 290 cognitive resource depletion 135, 137, 147 Cohen, A. 585

coherence 1, 4, 319–320, 327, 332–333, 372, 378, 486 of food and money 333 coherent integrity 319, 331 cohesion 437 cohesive force 265 Colella, A. 519 Coleman, J. W. 114 collaboration 591 collective ethics 455 collective moral entities 394 collective moral responsibility 394, 402 collective responsibility 396, 398 collective social entity 408 Collier, J. 246 Colquitt, J. A. 434 commitment 464 commodity 333 communication 198–199, 473, 593 processes 196 communitarianism 240 compassion 91, 136–137 compensation 519 systems 10, 11 competitive cowboy capitalism 502 compliance 40, 116, 123, 191, 193–194, 196, 203–204, 222, 244, 249, 252, 285, 292, 348, 435, 450, 454, 465 enforcement 30 limits of 194 procedure 504 programmes 8, 11–14, 18, 30, 195, 249, 253, 270 strategy 13, 307 system 193 violations 194 Compliance-Focused organisation 454 condemnation of the condemners technique 120 confirmation bias 384 conflict 489 management 459 resolution mechanism 84 situations 84 congruence 5, 91, 266, 335, 346, 486, 491 Connor, J. C. 385 conscientiousness 366 consciousness 105, 327 constancy 212 Constantinescu, M. 403, 405, 406 contemporary workers 97 continuous role model behaviour 536 contract breaches 516 control theories 121 convergence 183 cooperation 348

Index  613 cooperative human activity 212 Cooper, H. M. 122 Cooper, T. 335, 337 coordination mechanism 84 Copes, H. 120 Copp, D. 400 core culture 582 core values 581 Cornell law school 80 corporate accountability 478 corporate behaviour 536–537 corporate boards 285 corporate citizenship 36, 40, 45, 48, 498–499, 506–508 corporate civic obligation 498 corporate collective intentions 400 corporate communities 322 corporate conduct 165 corporate crime 111–112 corporate culture 435, 536 corporate ethical virtues (CEV) model 169, 401 corporate ethics 9, 17–18, 499 corporate governance 8, 16–17, 177, 179, 280–281, 283–284, 286, 293, 534–535, 604 mechanism 291 corporate identity 321, 323 corporate integrity 18–19, 37, 175, 186, 218, 221, 319, 326, 331, 363–367, 499 agreements 322 corporate internal decision-making (CID) structures 398–399, 526 corporate malfeasance 10, 12 corporate (management) instruments 536 corporate misconduct 8–10, 12 corporate moral agency 400 corporate moral responsibility 394–397, 399–401, 403 corporate political activity (CPA) 48 corporate power 284 corporate practical reasoning 186 corporate responsibility 227, 488 corporate social irresponsibility (CSIR) 42, 47 corporate social performance (CSP) 36, 41 corporate social responsibility (CSR) 36, 41–42, 45, 137, 139, 175, 198, 324, 328, 502, 505, 580 corporate social responsiveness 36, 40–42, 45, 49 corporate strategy 435 corporations 322–323, 334, 367, 394 community 322 legal property 321–322 moral actor 323 as providers 323

corruption 15, 24, 26, 40, 58–60, 62, 64, 237–239, 303, 312, 314, 421 Corruption Perceptions Index 24 cost–benefit analysis 77, 79, 134, 604 courage 143, 144 covenantal relationships 101 Covid-19 pandemic 97, 516 Cox, D. 363, 369, 370 Crawford, R. G. 180 Creating Shared Value (CSV) model 178 criminal behaviour 566 criminal breaches 248 criminological thinking 112 criminology 111 criteria for action 337 critical consciousness 308 critical data studies 308 critical integrity studies 302, 308–313 critical legal studies 308 critical management studies (CMS) 308, 313 critical race studies 308 critical studies 302, 308, 309, 310 critical media 301 critical realism 168 critical situations 567, 572 critical success factors (CSFs) 603 critical theory 308 cross-disciplinary research 537 CSR see corporate social responsibility (CSR) Cullen, J. B. 144–146 cultural competence 348 cultural identity 455 cultural norms 196 cultural tools 583 cultural values 103, 196, 583 culture(s) 149, 582, 591, 600, 601 culture of silence 292 Cummins, R. 87 Customs and Border Protection (CBP) 38 Dachler, H. P. 357 Dacin, M. T. 27 Damasio, Antonio 327 data governance maturity models 602 data integrity 586 data trust frameworks 597 David Suzuki Foundation 72 Davis, J. H. 511 De Bree, M. A. 247, 250, 251 decision frames 134 decision-making 14, 103, 203, 263, 289–290, 322, 381, 386, 492, 503, 507, 564–565, 580, 597 decoupled organisational design 269 decoupling 247–248, 252, 257, 270–271, 544

614  Research handbook on organisational integrity deep values 185 defence procurement 9 De George, R. T. 56, 303 DeHart-Davis, L. 465 DEI see diversity, equity, and inclusion (DEI) deliberative thinking 147 Deming cycle 545 democratisation 48 Dempsey, J. 402 Derfler-Rozin, R. 147 Desai, S. D. 135 descriptive representation 341, 342 design qualities 1, 2, 4, 5 deterrence 115, 116 deterrence-based model 243 deterrence theory 114, 116, 119 Detert, J. R. 143, 144, 437 Devine, P. G. 452 de Waal, F. B. 84 Dickson, M. W. 515 digitalisation 19 Dingwerth, K. 476 directive leadership 504 dirty hands dilemma 488 discourse ethics 197–200, 204, 440 integration of 196 discourse-opening role 196 discrete emotions 136 discursive justification 201 discussability 169, 171–172, 492, 552 dishonest signalling 89 dis-integrity 327 dissent 432–434, 437, 440, 443 distributed ledger technology (DLT) 593 diverse workforce 449 diversity 449, 457, 458 champions 457 management 451 science 452 diversity, equity, and inclusion (DEI) 149 activities 457, 459 training 461–462 values 459 Dmytriyev, S. D. 46 Dobel, J. P. 26, 335 Dölling, D. 115 Donaldson, T. 39, 143, 196–197, 228, 229, 230, 401 Don Corleone principle 568 Doomsday Book 416 Doors of Perception 431 Drahos, P. 418 driving license, withdrawal 570, 571 dual function 90 duality 581

Dubnick, M. J. 415, 416, 417, 419 Du Bois, W. E. B. 320 Du Contrat Social 228 Dufresne, R. L. 150 Dukerich, J. M. 269 Dunfee, T. W. 39, 143, 196, 197, 401 DuPont 40 Dutch Integrity System 29 Dutton, J. E. 136, 269 duty of candour 284 duty of care 284 duty of loyalty 284 Dworkin, R. 501 Earth’s integrity 326–327, 329 Ebbers, Bernard 403, 404 Eberl, P. 260 ecological civilisation 44 economic integrity 505 economic reasoning 238 economic responsibility 42 economic stability 24 economic theory 197, 559 Edmondson, Amy 171 effective interoperability 593 efficiency 176, 182 Ehrenhard, M. 441 Eichinger, M. 476 Eisold, K. 172 Ekberg, S. 28 Elkington, J. 527 Ellsworth, R. R. 504 embedded organisational values 261 emotional intelligence 151 emotional regulation 290 emotions 137 emotive automaticity 86 empathy 137–138, 280, 286–287, 290 Empirical Organisational Psychology 215, 217, 219 employee citizenship behaviour 141 development mechanisms 97 deviance 141 training 570 value proposition 514 Employee Polygraph Protection Act of 1988 519 employee resource groups (ERGs) 460–461 employer sources 518 employment agreements 514 enacted organisational values 262 enforcement 465 Enke, J. 601 enlightenment thinking 308 Enron 11, 17, 18

Index  615 entangled hands dilemma 488 Enterprising-Inclusive quadrant 459 Enterprising organisations 458–462 environmental, social, and governance (ESG) framework 36, 41, 45 goals 472 epistemic culture and epistemic infrastructure 385–388 blind spots 384 integrity 380, 388 virtue 377, 379–380, 382, 385 Equal Employment Opportunity Commission (EEOC) 462 equity 584 ERGs see employee resource groups (ERGs) ESG see environmental, social, and governance (ESG) framework espoused culture 582 espoused values 261, 266, 269, 274 contradicting 266 ethical 492 organisational 261–262 ethical action 129, 131 ethical ambiguity 546 ethical awareness 151 ethical behaviour 129–132, 134–136, 139, 147–148, 150–151, 280, 287, 291, 401, 408, 435, 438, 504, 525, 542, 547 ethical blind spots 507 ethical business practices 11 ethical challenges 150 ethical climate 132, 133, 137, 144–146, 149, 343, 543 ethical conduct 287 ethical culture 144, 146, 270, 542, 601 ethical decision-making 132, 144–146, 150–151, 237 ethical fallacy 291 ethical frames 134–135, 148 ethical frameworks 252 ethical governance mechanisms 194 ethical infrastructure 144, 147, 280, 286 ethical integrity 57, 111, 190, 498, 577 ethical issues 10 ethical judgment 506–508 ethical language 312 ethical leadership 130–131, 140–141, 145, 195, 491 ethical learning 150 ethical morality 454 ethical norms 148, 194 ethical organisational climate 145 ethical perspectives 78 ethical reasoning 438 ethical responsibility 42, 501

ethical rules multi-faceted concept of 26 ethical self-responsibility 30 ethical system 29, 30 ethical theories 197, 226 ethical values 292, 338, 487 ethical voice 142, 143 ethical work climate 144 ethicality 25, 28 ethically positive behaviours 129 ethics 8–9, 15, 17, 24, 26–28, 32, 39, 57, 63, 181–182, 285, 287, 291, 303, 313, 435, 463, 503, 525, 529, 542 communication 504 curriculum 438 education 130 management 151, 190, 435, 542–545, 548º–549, 551, 553, 554 system 191 programme 14, 16–18, 503–504 model 551 strategies 12 training 551 eudaimonia 214 European Interoperability Framework 592 European Open Science Cloud (EOSC) interoperability framework 596 Eva, N. 141 evolutionary history 83, 84 evolutionary perspective 84 evolutionary psychology 88 existential ontology 358 Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States 433 experience sampling methodology (ESM) 132 extant scholarship 265 Fawcett, S. E. 592 feasibility 569, 572, 573 Federal Sentencing Guidelines (FSG) 193, 249 Fehr, R. 137 Feldman, D. C. 140, 141 Felin, T. 258 female public administrators 342 Ferrero, I. 528, 529 fiduciary duty 283, 284, 285 financial crisis 387 Finlayson, J. G. 199 Fiorito, T. 441 fishing practices 78 Fisk, J. M. 451, 453 flawed incentives 18 flexibility 569 Flynn, J. 519 Folger, R. 434

616  Research handbook on organisational integrity forced labour 470–471, 477–478, 480–481 forgiveness 139 defined 138 formal accountability 291 Forst, R. 199 Foucault, M. 309 Frederick, W. C. 44, 45, 47 Frederickson, G. H. 417 Freeman, R. E. 46, 179, 527 Freilich, J. D. 113 French, P. A. 399, 536 Freudenreich, B. 180 Fried, Jason 431 Friedman, M. 38, 42, 45, 47, 48, 227, 526 FSG see Federal Sentencing Guidelines (FSG) FTX cryptocurrency 40 Fuerst, M. J. 39, 217, 220, 221, 363, 367, 368, 369, 370, 535, 536 Fung, A. 472, 476 Gade, D. 343 Gailliot, M. T. 136 Gauthier, David 230 GBES (global business ethics) survey 170 gender equity issues 143 general deterrence 115 General Motors 406–407 generativity 99 genetic determinism 84 Gen Z workers 149 Germany 38 Giacalone, R. A. 98, 99, 129 Gibbons, P. 98 Giddens, A. 202 Gilbert, M. 402 Giving Voice to Values (GVV) 438–441, 443 global ethics 64 global financial system 176 global interconnectedness 32 global trade 19 Godfrey-Smith, P. 87 Goleman, D. 474 good corporate citizenship 498 Goodin, R. 417 Goodpaster, K. E. 39 Goodstein, J. D. 363, 364, 367, 369 Gottfredson, M. R. 121 governance 55, 56 defined 55 government bureaucracy 342 Govindan, K. 597 Graham, J. L. 363, 368–370, 372, 374 grassroots participation 546 gratitude 6, 138 “Great 8” programme 11

Great Resignation 97 Greek municipality 177, 178 Greenleaf, R. K. 356 Grieder, M. 148 Grimmelikhuijsen, S. 423 group levels 101 Guerrilla employees 63 Gupta, P. 98 Gutierrez, C. 519 GVV see Giving Voice to Values (GVV) Habermas, J. 191, 197, 198, 199 habit 212 Hafenbrack, A. C. 136 Haider-Markel, D. P. 343 Haidt, J. 84 Halfon, M. S. 306, 372, 500 Hanapiyah 102 Hannah, S. T. 132, 144 Hanson, David Hanemier 431 Hardin, A. E. 135 Hare, R. M. 506 harmony in thinking 247–248 harm principle 432 Hart, O. 179 Hart-Zingales model 180 Hauerwas, S. 442 Haun, C. N. 451 healthcare organisations 344 Heidegger, M. 352, 357, 358, 359 “Spielraum” 359–361 Hellman, R. 595 Hendricks, C. G. 28 Hendricks, K. T. 28 Heng, Y. T. 137 Herman, Arthur 320 Hertz, S. G. 132, 133 Hess, K. 399 Heugens, P. 401 Hewlin, P. F. 437 HEXACO model 131 H-H see honesty-humility (H-H) hierarchy 381, 382 Hirschi, T. 121 Hirschman, Albert O. 433, 434 Hobbes, T. 228 Hoch, J. E. 140, 142 Hoekstra, A. 24, 29, 543, 544, 545 Hoffman, D. 62 Holdfast Collective 352, 353, 357 holistic character 2, 4 holistic concept 1 Holtfreter, K. 117 Holt, M. K. 102 honesty-humility (H-H) 131

Index  617 disposition 131 personality trait 131 Hong, S. 342 Hörisch, J. 46 Horkheimer, M. 311 Hosking, D. M. 357 Hosmer, L. T. 511 House, R. J. 511 HR functions 520 practices 517–520 processes 517 -related measures 569 systems 520 Huberts, L. 27, 335, 451, 471 human brain 87 human cognition 290 human dignity 338 human evolution 90 human integrity 327 humanism 99 humanity 327, 329, 331, 354 human nature 433 human resources see HR Hume, D. 85, 286 humility 6, 131 Huxley, Aldous 431 Huy, Q. N. 269 hypernorms 143, 197, 230 hypocrisy 257, 485–490, 492 leaders 489 hypocrites 485, 487 IASB (International Accounting Standards Board) 285 ICMA see International City/County Management Association (ICMA) identification theory 165 identity 259, 265–266, 272–273, 365, 373, 581 subgroups 268, 271 IMF see Integrity Management Framework (IMF) impression management 29, 89 skills 28 improved risk management 533 IMS see integrity management system (IMS) incentive systems 15, 528 inclination 15 inclusion 448, 450, 452–453, 455–456, 459, 464–465, 578 inclusionary programmes 450

inclusive climates 452 inclusive fitness theory 88 inclusive integrity 448, 451–453, 455, 457, 462–467 inclusive organisations 449 inclusive strategy 467 inclusivity 584 indecisiveness 26 indicators 340 individual actions 371 individual differences 130 individual integrity (II) 26, 28, 30, 88, 92, 211, 212, 257, 302, 304, 405, 497 individualist-collectivist debate 395, 399 individual-level accountability 423 individual-level integrity 83 individual-level pay transparency 519 individual responsibility 405 industrial corporation, U.S. 9 inertia 591 influential agency theory 282 informal organisational climate 287 informal organisational integrity 294 informal responsibility 291 information asymmetry 147 information communication technology (ICT) systems 593 information disclosure 532 information integrity 579 information systems 382, 387 inherent conditions 319 injury, denial of 120 innovation 170 Instagram 14 institutional bricolage 264 institutional corporate governance 281, 294 institutional corruption 373 institutional integrity 373 institutional investors 19 institutional leadership 335 institutional pluralism 258, 264, 266, 272 institutional prescriptions 263 institutional theory 264 integrated self 365 integrated supply chains 594 integrative approach 314 integrative control mechanism 86 integrative social contracts theory (ISCT) 39, 196–197, 200, 230, 401 integritism 3, 54, 61–65, 310–311, 554

618  Research handbook on organisational integrity integrity 1, 3, 5–6, 15, 24–32, 37, 39–40, 49, 54–56, 63–65, 70, 76–78, 80, 83–84, 86, 88–92, 97, 101–103, 116, 123, 162–164, 166–167, 175–177, 191–192, 194, 196, 201, 210–222, 243–246, 252–253, 257–259, 262, 271–272, 280–282, 285–293, 301–306, 308–313, 319, 323–324, 326–328, 333–335, 339, 345, 352–353, 355, 357–358, 360, 363–369, 371–375, 377–379, 385, 388, 394, 403–406, 408–409, 438, 442, 448–453, 456, 458, 460, 462–463, 465–466, 470, 474, 485–488, 492, 497–507, 513–516, 519, 525–526, 528, 542, 549, 574, 577, 586, 601 -based assessments 492 -based trainings 491 as behaviour 57 conceptions of 220 demands of 371 epistemic virtue 378, 379 evolutionary analysis of 83 as exemplary moral behaviour 55 of governance 54, 55 inter-relational level of 220 limits of 195 as moral quality 56 -oriented approach 15 pacts 90 polysemy of 364 problems 373 risk factors 451 strategy 13 temporal nature of 353 theory 226, 227 threats 485, 488, 492 value of 370 versus compliance 601 virtue of 368 integrity violation 54, 58, 60, 61, 62, 63, 64, 312, 465, 544 integrity-based theories for business ethics (IxB) 227, 233–240 integrity guardian 544 Integrity Infrastructure model 547, 550 integrity management 3, 5, 63, 301, 542 models 552 Integrity Management Framework (IMF) 549, 551, 553 integrity management system (IMS) 543, 544, 546, 548, 550, 554, 555 approach 542 models 547 inter-agency conflict 213 interconnectedness 543, 544, 546, 552

Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) 82 Global Assessment 77 internal goods 212 internal integrity 321 internalisation dimension 132 internal subgroups 269, 271 international accountability standards (IAS) 203 International City/County Management Association (ICMA) 450 international corporate governance 283 International Finance Corporation 283 International Labour Organization Forced Labour Convention 481 international political boundaries 71 international reporting system 32 interoperability 591–592, 594, 596, 605 frameworks 596 governance 595 inter-organisational interoperability 594 interpretation 591 Inter-Processual Self (IPS) paradigm 220 intersubjective integrity 162, 164–165, 167–168, 173 intersubjective organisational integrity (IOI) 162, 167, 169, 171, 173 intersubjectivist integrity 166 inter-translatability 178, 183, 187 intra-organisational dynamics 258 intrinsic motivation 307 intrinsic value 319 intuition 90, 92 investment assessment 36 IOI see intersubjective organisational integrity (IOI) IPBES see Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) ISCT see integrative social contracts theory (ISCT) isomorphism 485 ISSB (International Sustainability Standards Board) 285 IxB see integrity-based theories for business ethics (IxB) Jajja, M.S.S. 582, 586 Jennings, R. E. 137 Jensen, M. C. 282, 505 Jiang, W. Y. 436 job satisfaction 141 Johns-Manville Corporation 9 Jung, D. I. 345 Jurkiewicz, C. L. 98, 99 justice 99

Index  619 Kaepernick, Colin 430 Kagan, R. A. 249 Kahai, S. S. 370 Kang, Y.-C. 42, 43 Kant, I. 228, 308, 313 Kantianism 39 Kaptein, M. 24, 57, 60, 146, 165, 169, 171, 172, 192, 218, 245, 246, 260, 400, 403, 405, 406, 440, 441, 462, 465, 488, 490, 516, 536, 543, 545, 551, 552, 553, 554 Kasdorp, A. 250 Katehakis, D. G. 595 Kayes, D. C. 30, 579 Kayworth, T. 582 Keeley, T.T. 45 Kelly, Erin 231 Kennedy, B. 343 Kennedy, J. P. 111 Keon, T. L. 113 Kern, M. 149, 150 Kets De Vries, M. F. R. 28 key performance indicators (KPIs) 579, 603 Khatri, P. 98 Kim, D. 140 Kimmerer, Robin Wall 327 King, B. G. 258 King, Martin Luther Jr. 328 Kirby, N. 363, 367, 370, 371 Kish-Gephart, J. 146 Klein, B. 180 Knoppen, D. 584 Koehn, D. 363, 366, 369, 370, 372 Koenig, H. G. 102 Ko, J. M. B. 141, 143 Kolodinsky, R. W. 28 Kosack, S. 472, 476 Kouchaki, M. 135 Kouroubali, A. 595 Kraatz, M. S. 267, 268, 270 Kramer, M. R. 41, 178 Kramer, R. M. 511 Krettenauer, T. 132, 133 Kristjánsson, K. 363, 369, 372 Kristof-Brown, A. 515 Kuenzi, M. 145 Kwon, M. 436 labour division of 381 LaCaze, M. 363, 369, 370 Langton, L. 117 language 176, 178, 309, 457 of deep values 175 of efficiency 175, 177 of values 175

Lašáková, A. 547 Lasrado, L. A. 603 Lasthuizen, K. 58 Laurver, K. J. 515 law enforcement agencies 348 Lawton, A. 252, 543–544, 548 Lazer, D. 249 leaders 489 leaders embedding contradicting values 267 leadership 504 development 439 exceptionalism 358 industrial paradigm of 357 integrity 352, 359, 364 challenge(s) of 355 styles 345 succession 284 learning opportunities 459 Lefebvre, J. P. 133 legal compliance 289, 291, 454, 601, 603 legal interoperability 593 legalistic governance practices 281 legal power 281 legal sense integrity 498 legitimacy 46, 291–293, 312, 342–343, 346, 485, 497–498, 578 of government actions 342 legitimate owners 291 Leidner, D. E. 582 Lencioni, P. M. 268 LePine, J. A. 435 Levine, M. P. 363, 369, 370 Lewin, K. 511, 512 Liang, L. H. 136 Liao, Z. 132 liberal capitalism 325–326 Lincoln, Abraham 79 Lindberg, S. I. 415, 420 linguistic befuddlement 178 Lins, K. V. 533 Lirtzman, S. I. 511 List, C. 400 Local Integrity System 548 Locke, E. A. 83 Locke, J. 197, 228 Loewenstein, G. 475 loyalty 365–367, 373 Luetge, C. 39, 217, 220, 221, 363, 367, 368, 369, 370 Machiavellianism 39 Machiavelli, N. 29, 31 Machs 31 MacIntyre, A. 211, 236, 337, 349, 442, 443, 444 MacLean, T. L. 270

620  Research handbook on organisational integrity Maesschalck, J. 63, 549 Malhotra, D. 517 managerial interoperability 594 managerial wisdom 288 “Managing for Organizational Integrity” 8, 430, 435 Man-made Disasters model 383 Manning, L. 602 many hands dilemma 488 Marques, J. 100 Martineau, J. T. 545, 551, 553 Maruna, S. 120 maturity models 601 Matza, D. 119 Mayer, D. M. 143 Mayer, J. W. 558 Mayer, R. C. 511, 512, 513, 532 McAlister, D. J. 511 McFall, L. 163, 369, 371, 526 McGrath, J. 249 McKenna, B. 288 McNeeley, S. 114 meaningful work 130 mediators 142 Meier, K. 341 Menzel, D. C. 415, 417 Meospotamia 24 Messick, D. M. 134 metacognitive control mechanism 85, 88 effort 85 process 85 rationality 91 meta-ethical proposition 162, 163, 164 objectivism 163 metaphors 488 methodological collectivism approach 400 #MeToo 168 Meyer, J. W. 247 MI see moral integrity (MI) micro-political games 567, 568 Midden, C. J. 465 Milgram, Stanley 9 Mill, J. S. 87, 432, 433, 434 Milton, C. L. 102 mindfulness 136, 150 defined 136 mindset 591 minority public administrators 341 misconduct 148 mitigation 76 MNCs see multinational corporations (MNCs) moderated-mediation model 132 moderators 142 Modern Slavery Act 2015 477 Modern Slavery Act 2018 477

Mol, A. P. J. 472 Molina, A. D. 338, 340, 346, 348, 371, 451, 464, 465, 552 monitoring 492 Montefiore, A. 55 Moore, E. 121 Moore, G. 221, 443 Moore, J. H. 268 moral actors 259, 323 agency 165, 210–212, 222, 322, 397–399, 401 agents 214, 353, 398, 408 assessment 234 awareness 130, 135 behaviour 84, 134 blame 404, 406 codes 246 coherence 499 commitment 301 conation 132 conscience 131 convictions 380 corruption 498 courage 79, 132 decision making 85 disengagement 135, 437 duty 39 efficacy 131–132, 152 egoism 163 elevation 139 emotions 84, 86, 87, 92, 133, 134, 138, 398, 399 excellence 139 exemplars 135 hazard 181 identity 132–134, 139, 141, 149, 307 imagination 360 issues 130 judgements 84, 85 justification 486 legitimacy 260 manager 140 mediocrity 291 motivation 313, 436 muteness 142 norms 60, 61, 64, 167–168, 173 obligation 486 ownership 132 perplexity 439 psychology 84 reasoning 196, 198, 491 responsiveness 260 schizophrenia 312 scrutiny 257

Index  621 self-direction 305 self-governance 194, 367 selfhood 304 self-indulgence 302 symbols 135 thinking 506 values 57–58, 60, 64, 195, 246, 441, 505 virtue 213, 377–379, 388, 394, 498 moral attentiveness 130 defined 130 moral integrity (MI) 36, 71–73, 76, 81, 245, 304–305, 352–353, 363, 369–371 moral responsibility 37, 394–400, 402–406, 408–409 morality 83, 84, 86, 102, 135, 246, 260, 280, 303, 313, 442, 486 Morrison, E. W. 142, 435, 439, 443 motivation 113 motivational frameworks 114 Motor Transport Authority 571 multicultural values 32 multilingual approaches 178 multinational corporations (MNCs) 190–191, 193–198, 200–204 multinational organisations 288 multi-party contract 227 multiple identities 265–266 multiple identity groups 268 multiple organisational identities 264 multi-stakeholder approach 25 Murphy, P. E. 363–364, 366, 369, 371, 500 Murphy, W. T. 244 mutuality 99 Nabatchi, T. 335 National Integrity System 24, 548 natural integrated system 70 naturalistic fallacy 196 negative capability 172 negative cognitive processes 129 negative emotion 112, 118, 129, 136 negative individual differences 129 Neiva, F. W. 593 Nemeth, Charlan 434 neuroscience 137 neutralisation framework 119 techniques 118, 120 Newman, A. 144, 145 New Public Management (NPM) paradigm 336 New Public Service model 336 Ng, T. W. 140, 141 Nicomachean Ethics 396 Nilsson, F. 591 nonconformity 432 non-linear relationships 604

non-profit organisations 448 normal accident theory 383 normative basis 234 normative ethics 442 norms 57, 58 noxious stimuli 117 objectivism 163 Oblog, T. 519 OCBs see organisational citizenship behaviours (OCBs) occupational crime 112 Occupational Safety and Health Administration (OSHA) 404 ODID see Organisational Dissociative Identity Disorder (ODID) Ogunfowora, B. 132 OI see organisational integrity (OI) OIS see organisational integrity system (OIS) Olsthoorn, P. 366, 368 On Liberty 432 ontological collectivism approach 399 Oosterhout, J. 401 openness 440–441, 464, 471 operational controls 579 operational integrity 580, 595, 597, 605 operationalisation 579, 591, 605 operational performance 586 opportunity 113, 114, 169 opportunity theory 113, 114 option-excluding moments 196 orcas 70–73, 76 organisation members 489 organisation–stakeholder relationships 532 organisational actors 258, 259, 266, 269, 453, 460 organisational archetype 454 organisational attribute 210 organisational authenticity 260 organisational behaviour 383, 434 organisational boundaries 459 organisational change 455 organisational citizenship behaviours (OCBs) 131, 137, 140, 436, 581 organisational commitment 464 organisational competency 596 organisational crime 111, 117 organisational culture 26, 31, 97–99, 101, 106, 262, 268, 292–293, 322, 340, 344–345, 386–387, 406, 500, 502–503, 507–508, 558–559, 573, 577–578, 582–583, 587–588 change 344 levels 344 organisational decoupling 247 organisational design 268

622  Research handbook on organisational integrity organisational deviance 112, 116 organisational differences 467 organisational disasters 385 Organisational Dissociative Identity Disorder (ODID) 511–512, 514–515, 517, 519, 520 organisational diversity 459 organisational epistemic culture 385 organisational epistemic infrastructure 386 organisational ethics 8, 28, 61, 378 organisational factors 13 organisational hierarchy 437 organisational hypocrisy 485, 488–490, 493 organisational identity 259, 264, 271, 273, 582 processes 264 organisational inclusion 450 organisational inclusive-integrity 453 organisational indifference 455 organisational integrity (OI) 1–6, 8–9, 13, 15, 18, 24–33, 36–37, 39, 45, 47, 49, 54, 57, 65, 81, 97, 101–103, 114, 123, 162, 165–166, 169–170, 173, 190, 199–201, 203, 210–211, 214, 217, 220–222, 243, 245, 248–249, 253–254, 257–259, 263, 265, 271–272, 287–288, 290, 302–303, 307, 314, 335–337, 341–342, 345, 349, 353, 363, 367, 371, 374, 378, 382–383, 385, 394, 403, 405, 408, 415, 418, 423, 425–427, 430–434, 436, 438, 440–441, 443, 448, 451, 454–455, 457, 463, 467, 470–471, 475, 477–481, 486, 488, 492, 497–498, 500–502, 504–508, 511, 514, 517–520, 525–526, 528–529, 531, 533, 535, 537, 558–559, 573–574, 577–580, 583, 587–588, 591–592, 599–601, 604–605 complexities of 265 dependent dimension 536 dimensional structure 535 hierarchy and division of labour 380 impact research 527 independent dimension of 536 neo-Kantian approaches 440 organisational integrity, defined 2 positions of 4 prerequisite dimension of 536 prevention management 534 triad 526, 531, 535, 537 as wholeness and integration 259 organisational integrity system (OIS) 548 organisational interoperability 594 organisational leadership 31, 266, 269, 456, 462 organisational learning 171 organisational level 101–102, 105, 487 integrity 260 organisational life 433, 452

organisational misconduct 382 organisational moral responsibility 402, 409 organisational performance 578–580, 583, 586–588, 600, 604 indicators 531 organisational practices 359, 401, 486 organisational process 452 organisational reality 356 organisational reputation 532 organisational responsibility 356, 397–402 community approach 401 non-agential approach 401 practices approach 400 organisational scholarship 132, 430 organisational self 260, 367 organisational spirituality 98 organisational strain 118 organisational structures 560, 573 organisational transparency 533 organisational unethical culture 407 organisational values 98–99, 105, 195, 257, 261, 263, 272, 274, 344–345 organisational virtue 527 organisational virtuousness 529–531 organisations actorhood 258 organisations-as-actors approaches 440 Organizational Culture and Leadership 322 OSHA report see Occupational Safety and Health Administration (OSHA) Osswald, S. T. 78 O’Toole, J. 474 Ott, J. S. 344 Overman, S. 418, 423 Owens, B. P. 131 Packard Commission 9 Packard, David 9 PACs see public action committees (PACs) Paine, L. S. 2, 193, 245, 250, 307, 367, 409, 430, 435, 441, 444, 499, 501, 503, 505–507, 581, 601 Painter, M. 310 Palanski, M. E. 220, 303, 370, 529 Palazzo, G. 57, 577 Pan, S. 598 Pareto optimality 180, 185 Patagonia 352, 360 Paternoster, R. 113 pathological altruism 85 pay transparency 520 PCA see problem of collective action (PCA) PEMF see pluralistic ethics management framework (PEMF) Peng, A. C. 140 people integrity 586

Index  623 performance 577 performance evaluation systems 81 performance factors 588 performance management systems 519 performative contradiction 197 performativity 475 personal conscience 288 personal identity 499, 500 personal integrity (PI) 166, 192, 287, 304–307, 363, 369, 371, 417, 505, 577 personality 131 five-factor model of 131, 141 personal values 104, 583 Pettit, P. 400 philanthropy 352 Phillips, A. 171 Phillips, R. 179 philosophical housekeeping 304 philosophical reflection 314 photosynthesis process 326 phronesis 339 PI see personal integrity (PI) Pidgeon, N. F. 383 Pincoffs, E. 439 Pinto, J. K. 121 Piquero, N. L. 117 Pirson, M. 517 Pitts, D. W. 450, 451 Plato 24, 211, 228 pluralism 268 pluralistic community 322 pluralistic environment 264 pluralistic ethics management framework (PEMF) 550–551, 553 Podsakoff, P. M. 581 policy congruence 341 policy ethics 56 political accountability 420, 423 system 419 political actors 48, 499 political community 211 political dysfunction 19 political leadership 504 political morality 500 political theory 227 Pope, S. 581 Porter, M. E. 41, 178 positive behavioural ethics 130, 139, 149, 151 positive discrete emotions 136 positive emotion 139 positive ethical behaviour 143 positive leadership styles 140 positive moral emotions 150 positive organisational psychology 149

positive organisational scholarship (POS) 129, 217–218, 528–530, 537 positive organisational virtuousness 528 positive social science 529 POS see positive organisational scholarship (POS) possessive individualism 357 Powell, W. W. 247 power 309–311, 313 imbalances 381 inequalities 312 practical discourse 200, 201, 202 practical reasoning 175, 183, 185–186, 444 practical wisdom 210–211, 213, 220 practice 337 practitioner-identified tools 462 pragmatic interoperability 595 Pratt, M. G. 267 preventive measures 569, 572 Principles of Morals and Legislation 313 private ownership 333 proactive regulatory strategies 249 problem of collective action (PCA) 232, 233 procedural fairness 292 procedural integrity 579 process compliance 572, 574 process integrity 579, 586 process under analysis 570 processual perspective 545 product integrity 586 professional ethics 363 professional identity 249, 582 professional integrity 417 proposed integrative framework 45 prosocial behaviours 84, 138 psychological contracts 511, 514, 515, 516 psychological safety 172 psychological well-being 142 psycho-social factors 467 public accountability 421, 425 public action committees (PACs) 328 public administration 418, 423 accountability 415 ethics 3 public administrators 341–342 public bureaucracies 342 public choice theory 566 public institutional integrity 367 public integrity 363 public regulators 243, 250–251 public responsibility 41 public service integrity 335, 342, 349 public service values 336–340, 345, 346 and virtue ethics 337 public trust 346

624  Research handbook on organisational integrity public values perspective (PVP) 336 Puget Sound 70, 71 Pulay, G. 578, 601 punishment 114–116 pure spirituality 100 “purpose, principle and people” 506 purposive actorhood 581 qualitative criterion 562 quality of governance 342, 346, 348, 349 quality performance 586 quandary ethics 432, 439 quantitative risk analysis 562 Quinney, R. 111 racial injustice 19 Ralston, D. A. 584, 585 Rand, Ayn 83, 163 rational actors 114 rational choice theory 113, 180 rational decision-making processes 89 rational egoism 163 rationality 83, 91–92, 163, 581 rational metacognitive process 83 Rawls, J. 197, 228, 229, 230, 231, 232, 378, 440, 499 Reagan, Ronald 9 real entities 396 realistic job previews (RJPs) 518–519 real-world discourses 201 reasonableness 292 receptivity 99 reciprocal altruism 88 reciprocity 253, 329 recoupling 248, 252, 253 recruitment 518 Reed, A. 132 Reed, D. L. 527 Rees, M. R. 134 reflective regulation 252 regulation 244 traditional framing of 244 regulators 245, 248–250, 253–254, 387 reflective role of 252 rehabilitation 534 Reich, Robert 328 relational complexity 353, 355–356 relational identity 581 relational intelligence 360 relational wholeness 352, 355, 357, 360 religion 32 religiosity 102, 103 religious congregations 25 replenishment 135 representation 342

representative bureaucracy 336, 340, 341, 343 theory 343 Republic 228 reputation 533 requisite variety 542, 545, 551 research gaps 451 resilience 137, 149 resource extraction 80 resource intensiveness procedure 573 responsibility 49, 354, 356 denial of 120 responsible inquiry 380 responsible leadership 352, 354–356, 360 responsible management 36–37, 44, 49 responsiveness 40, 203, 260, 419 Riccucci, N. M. 342, 343 Ricoeur, P. 500 Riggio, R. E. 151 risk denial 384 risk intelligence 289 risk management 533 Rivera, S. 603 Rizzo, J. R. 511 RJPs see realistic job previews (RJPs) Robinson, S. L. 145 robotic entities 30 Robson, A. 219, 221 Rock, E. 422 Rohr, J. A. 56, 335 Rokeach, M. 26, 337 role-modelling 463 role-play research 9 Romzek, B. S. 415, 419 Rooney, D. 288 root cause analysis 74 Rosenbloom, D. 336 Rost, Joseph 357 Rousseau, D. M. 515 Rousseau, Jean-Jacques 228 routine activities theory 113 Rowan, B. 247, 558 Roy, A. 146, 147 Roy, V. 599 Rubin, R. S. 151 rubric “pluralism” 39 Ruhl, J. B. 245 rule-breaking 147 Salem, Enrique 355 Salish Sea 71 Sea ecosystem 71 salmon whales 72 sanctionability 492 sanctions 116 Sandel, Michael 238

Index  625 Sarbanes-Oxley Act 17, 21, 387, 534 Saris, W. 584 SCA see social contract argument (SCA) Scalzo, G. 219, 220, 221 Scanlon, T. M. 177 Schabram, K. 137 Schauber, N. 372 Schein, E. H. 322, 515, 582 Schell-Busey, N. 115 Scherkoske, G. 363, 364, 365, 369, 373, 379, 380 Schillemans, T. 416, 417, 418, 421, 422, 423, 424, 425 Schmidt, I. 597 Schnackenberg, A. K. 474, 517 Schneider, B. 515 scholarly-identified tools 462 Schoorman, F. D. 511 Schwartz, M. S. 42, 45 Schwartz, S. H. 151 SCxB see social contract theories for business (SCxB) secondary moral agency 398, 400, 402 Segal, L. 546 self-assessments 462 self-efficacy 131 self-fidelity 220, 367, 526 self-governance 13, 192, 304, 367, 601 self-identity 100 self-preservation 85 self-regulatory resources 135 self-reports 30 “self-unifying” integrity 373 Selznick, P. 244, 259, 335 semantic interoperability 593 semi-structured interview approach 561 Sen, A. K. 180, 185, 440 sentimentalist approach 399 servant leadership 141–142, 356 service advisers 10 settler memory 326–327 sexual harassment claims 431 shared values 262, 577 shareholders 283, 284, 291, 378 Shiu, Y. M. 534 Shore, L. M. 450 Shoshone-Bannock Tribes 75 Shu, W. 534 Siloed organisations 456–457 quadrant 457, 459–460 Silvera, G. A. 451 Simmel, Georg 253 Simons, T. 141, 260 Simon, T. L. 489 Simpson, P. F. 172 Simpson, S. 113

Sims, R. L. 113 Sison, A. J. G. 528, 529 situational context 566, 572 Six, F. 252, 451, 543, 544, 548 SMART goal framework 463 smart leaders 290 smart pragmatism 294 smart systems 597, 598 smart transformation 333 Smets, M. 269 Smith, Adam 38, 40, 286, 320 Smith, Anna 74 Smith, George 354 Snake River dam removal proposal 76 Snook, S. A. 385 social actor approach 272 perspective 258–259 social actors 258 social capital 355 social change 78–79 social-cognitive theory 131 social coherence 5, 319, 324 social cohesion 269 social connectedness 101, 105 social constraints 568 social constructionism 162, 167–168, 173 social constructs 310 social contract 234–236, 238 approach 240 theory 200, 226, 234, 239–240, 401 social contract argument (SCA) 227–229, 231 social contract theories for business (SCxB) 228–230, 233–240 social developments 91 social entities 322, 394 social evaluation 261 social identity 100 social intercourse 258 socialisation processes 43 social issues 518 social learning 112 perspectives 121 theories 118–119, 121 social norms 79 social organisations 329 social responsibility 306, 499, 504, 526 social-scientific research 567 social system 214, 304, 324, 329, 333 social values 265 social virtue 164, 287 social welfare 47, 352 social worlds 325, 326, 331 societal indicators 532 society basic structure of 230

626  Research handbook on organisational integrity closed system 232 conception of 232 socio-ethical behaviour 281 socio-ethical goals 286 socio-ethical reasoning 280 socio-ethical values 285 sociological weak point analysis 569 Socrates 228 Solinger, O. N. 267 Solomon, R. C. 166, 213, 219, 365, 367, 502, 529 Somera, K. 102 Sørensen, D. L. 339 Spano, R. 113 Sparrow, M. K. 250 specific deterrence 115 “Spielraum” 359–361 spirit of the law 245 spiritual capital 101 spiritual culture 104 spirituality 97–98, 100–104, 106 organisational benefits of 103 spiritual leadership 105 spiritual survival 372 spiritual workplace culture 104 SSA Marine 79 stakeholders 195, 203–204, 237, 290, 356, 359–360, 378, 455–456, 459, 470, 475, 477, 479, 488–489, 491, 497, 500, 502, 506, 526, 578 salience 354 sovereignty 532 stakeholder theory 167, 179, 239, 530 standard violations 566, 572 Stansbury, J. 440, 546 Stapleton, Claire 431 Stark, C. 58 Staw, Barry 434 Stephens, C. U. 163 stewardship 356, 360 Stoopendaal, A. 247, 250, 251 Stout, J. 439 strain 116, 118 theory 117, 118 strainful events 117 structural-realistic approach 559 structural secrecy 383 subjectivist integrity 163 successful companies 526 supply chain 593, 605 actors 587, 596, 598, 605 digitalisation 605 governance 595 integration 594 level 591, 592 performance 592, 594, 597, 604–605

visibility 599 supportability 491 surface culture 582 surrogacy approaches 181, 182 sustainability 36, 37, 42, 44–47, 49, 505 principles 267 sustainable business success 527 sustainable development 44 Sustainable Development Goals (SDGs) 44, 236, 527 Sutherland, Edwin 111, 119 Svanberg, C. F. C. 163 Svanberg, M. K. 163 Svara, J. 463 Sykes, G. M. 119 symbolic representation 342, 343 symbolisation dimension 132 syntactic interoperability 593 system based regulation 250. 252 system of thought 546 systems approach 543 Taylor, Charles 180 Taylor, G. 364, 369–371 team integrity 577 “Team Production” model 182 technical compliance 449 technical interoperability 593, 596, 599 technical systems 592 technological advances 91 technology 30 temporal flexibility 166 Ten Bos, R. 310 Tenbrunsel, A. E. 134, 291 Terry, L. D. 335, 466 Tessema, M. 578 T’Hart, P. T. 421 The Changing Culture of a Factory 582 The High Country News 74 The Power of And: Responsible Business without Tradeoffs 178 The Price of Altruism 85 The Souls of Black Folk 320 The Wealth of Nations 320 Theobald, N. A. 343 Theory of Mind 90 Theory of Moral Sentiments 38 Tilcsik, A. 247, 271 Tomlinson, E. C. 474, 517 Tonawanda Coke Corp. Explosion 404, 405 traceability 599 trade barriers 19 trade-offs 591 traditional accountability 421 systems 424

Index  627 traditional crimes 111 traditional ethical theory 197 transaction cost economic theory 181 transactional leadership 345 transcendence 100 transcendental institutionalism 440 transformational leadership 141, 345 transformative change 77 transparency 386, 388, 464, 470–475, 477–480, 498, 516–520, 532, 577, 580, 592, 599 action cycle 476 as organisational virtue 474 trap 473 transparency-integrity relationship 474 Transparency International 312 Treviño, L. K. 139–140, 142, 146, 436 tribes 80 triple bottom line (TBL or 3BL) framework 44 trust 415, 424, 426, 478, 480, 511, 517, 532–533, 577, 592, 599, 605 trust-based relationships 587 trustee 513 trustor 513, 532 trustworthiness 499, 511, 516, 578, 591 truth-telling 498 Turing Pharmaceutical price raise 405 Turner, B. A. 383 Tyco 17, 18 Tyler, T. R. 251, 252, 511 Ullah, W. 604 UN 2030 Sustainable Development Goals see Sustainable Development Goals (SDGs) UN Convention Against Corruption (UNCAC) 40 Unerman, J. 201 unethical behaviour 58, 60, 130, 136, 144–146, 148, 169–171, 181, 288, 375, 382, 547, 552 unethical leadership 268 UN Global Compact 40, 44, 236, 237 UN Human Rights Council 37 United Nations Convention against Corruption (UNCAC) 238 United States Department of Housing and Urban Development (HUD) 449 universal governance principles 293 universalisation 199, 200, 204 universalism 585 unredistributability thesis 398 unreliable quality control 377, 380, 382–383, 385 UN Sustainable Development Goals see Sustainable Development Goals (SDGs) U.S. Business Roundtable 440 U.S. defence contractors 9 U.S. Department of Veterans Affairs (VA) 449

U.S. Environmental Protection Agency 72 value 2 value congruence 335–336, 339–341, 343, 345–346, 348–349 methodological approaches 343 value creation 179, 354 value expectations 346 value rationality 309 values 57, 98–100, 176, 258, 260–262, 267, 272–273, 335–336, 344–345, 348, 353, 401, 438, 463, 504–505, 513, 583–584 pluralism of 266 values-as-preferences approach 179, 180 values-based approach 549 values-based cultures 99 values-based complexity 265 values-based ethics policies 252 values-based identities 263, 266 values-driven leadership 432, 504 values-driven management 505 values-oriented approach 554 value system 336 value terminology 177 Vandekerckhove, W. 171, 302, 306 Van der Wal, Z. 336 Van Dooren, W. 419, 420 Van Dyne, L. 435 Vanhommerig, I. 421 Van Houwelingen, G. 139 Van Montfort, A. 545 Van Sinderen, M. J. 595 Van Twist, M. 421 variety, requisite 545 Vatrapu, R. 603 Vaughan, D. 121, 383 VBA (value, balance, accountability) approach 45 verifiability 475 versatility 1, 2, 3 Victor, B. 144, 145, 146 Vines, D. 55 virtue 212, 213, 214, 219, 368, 529 approach 444 defined 211 virtue-centred approaches 441 Virtue Ethical Character Scale (VECS) 531 virtue ethics 210–211, 214, 218–219, 221–222, 226–227, 233, 240, 337, 363, 432, 443, 527–528, 537 approach 526 concept 526 system 369 tradition 215 virtuous actions 213 virtuousness 401, 527–530, 537

628  Research handbook on organisational integrity visibility 491, 599 vocation 105 voice 438, 439, 443 contemporary empirical scholarship 435 voice behaviours 437 “voice” of practitioners 449 voice scholarship 432, 436–439, 444 voluntary citizenship actions 47 Vonnegut, Kurt 91 Waeraas, A. 581 Waldo, D. 337 Walker, C. 249 Walker, M. 306, 307 Walzer, Michael 328 Wang, X. 117 Wang, Z. 131 Wanous, J. P. 519 Warnock, G. 305 Watson, Robert 77 weak point analysis (WPA) 558, 560–575 executing 563 implications, academic research 574 limitations of 573 methodical description 561 wealth creation 323 Weaver, G. 246, 271, 559 Weber, M. 309 web of connectivity 354 Wee, E. X. 137 Weenig, M. W. 465 Weichhart, G. 594 Wells, C. 165 Wempe, B. 165 Wempe, J. 57, 218, 246, 260, 400 Werhane, P. H. 400 western bias 60, 64 Whetten, D. A. 258 whistleblowing channels 170–172 “hotlines” 12 studies 143 white-collar crime 58, 111–112, 118–119, 121–123 Whitehead, Alfred North 176 white supremacy 334

Whittaker, Meredith 431 wholeness 352–353, 355, 357–358, 363, 367–368, 394, 486, 498 whole person 357, 361 wicked problems 36 Wilkins, V. 342, 343 Willems, T. 418–420 William I of England 416 Williams, B. 342, 371, 373, 379 Williams, M. 512 Windsor, D. 46 win-win proposition 513 wisdom 292 defined 288 wise leadership 289 Wittgenstein, Ludwig 176 Wood, D. J. 41, 42, 43, 47 work engagement 137 work of management 18 workforce diversity 578 workplace 119 courage 143, 144 spirituality 28, 97–106 employee benefits of 103 World Bank 237 WorldCom 17, 18 fraud 403 WPA see weak point analysis (WPA) Xu, X. 133 Yammarino, F. J. 303, 370 Yang, K. 415 Yang, S. L. 534 Zaleznik, A. 28 Zenger, T. R. 519 zero-sum game 181, 310 zero-tolerance policy 193 Zhao, Y. 533 Zimbardo, P. 9, 463 Zingales, L. 179 Žižek, S. 312 Zumofen, R. 418