Empirical Investigation of Corporate Moral Development, in the context of rapid and radical changes,

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Empirical Investigation of Corporate Moral
Development, in the context of rapid and radical
changes, case Estonia

• Mari Kooskora
• Researcher, PhD student, lecturer,
• University of Jyväskylä
• E-mail mari.kooskora_at_econ.jyu.fi
• Director of EBS Centre for Ethics, lecturer,
  Estonian Business School
• E-mail mari.kooskora_at_ebs.ee

June 2006
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Short Bio

• Mari Kooskora, MA (TTU), MBA (EBS), PhD Student
  (JYU)
• Business experience 6 years as Marketing
  Manager in Estonian companies
• Academic Experience 7 years, as lecturer,
  researcher, Founder and Director of EBS Centre
  for Ethics, Editor-in-Chief of EBS Review
• Academic Institutions - Estonian Business
  School, University of Jyväskylä, visiting
  lecturer - International School of Management
  Kaunas
• Scientific articles, conference presentations
• E-mail mari.kooskora_at_econ.jyu.fi

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Main key-points of the presentation

• The purpose of my research
• Research questions
• The importance of study and its aspects
• Main theories used in the research
• Research methodology
• Brief presentation of articles
• Illustrative framework of the research
• Conclusions so far

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Purpose of my research

• The aim of the research is to increase knowledge
  and understanding of the phenomenon of corporate
  moral development (CMD) and investigate the
  possibility of applying it into the context of
  rapid and radical changes taken place in one
  business society.
• More particularly to study, describe, analyse and
  interpret the situation of Estonian business
  society in the context of rapid and radical
  changes by analysing and interpreting empirical
  results of several studies of business ethics,
  responsibilities, governance and leadership
  carried out in the organisational context in
  Estonia.

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Research Purposes

• By finding out the characteristic features of the
  business leaders perceptions and understandings
  about balancing business (profits) and ethics and
  responsibilities in business activities to
  identify stages of ethical / moral understanding
  and behaviour among business leaders during the
  situation of rapid changes and uncertainty.
• The theoretical aim of the research is to develop
  the concept of CMD to better portray the
  corporate moral development in the context of
  rapidly changing business environment.

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Research questions

• What is the level of moral development of
  companies and how it has changed in the context
  of rapid and radical changes?
• How the level of moral development of companies
  can be developed through business education in
  this particular context?

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Business Ethics this plant does not want to
grow well on our limestone ground.(EPL, H. Mets,
nov 2005)
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Importance of the research

• Transition from former centrally-planned
  economies in Central and Eastern European
  Countries (CEECs) to market economies has been
  cited as one of the most interesting and most
  important issues in contemporary economics and in
  the development of the world economy (Vensel
  1996).
• Sölvell and Porter (2004) have referred to
  Estonia as one of the best examples of these
  transitions in economic sense.
• Many social scientists in Estonia and other
  countries have done much research and written
  numerous articles about transition in Estonia,
  trying to define why the process has been so
  successful politically and macro-economically,
   but only a limited number of studies have been
  conducted about management and business
  corporations and practically nothing has been
  written in the area of corporate moral
  development (finding balance in ethics and
  profits in business activities) and related
  issues (BE, CSR, CG).
• Our recent studies and examples of business
  practices have shown this as a problematic area
  in our society, which needs to be studied and
  discussed more.

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Rapidly changing environment development (?)

• Estonia has made extraordinary progress following
  independence. Sound macroeconomic policies and
  far-reaching structural reforms have resulted in
  the successful establishment of a market economy
  and EU membership.
• The country is witnessing a remarkable
  convergence in real terms to EU levels, with
  purchasing power parity per capita income
  increasing to 46 percent of the EU15 level.
• Estonia has also achieved significant nominal
  convergence, meeting all of the Maastricht
  criteria, save for inflation.
• Robust economic growth continues, largely driven
  by domestic demand. Real GDP growth increased to
  nearly 8 percent in 2004 (from 6¾ percent a year
  earlier) and accelerated further, to 8½ percent
  year-on-year, in the first half of 2005.
  Inflation has increased since mid-2004 and
  remains significantly above the Maastricht
  criterion. (IMF, Nov 4th , 2005
  http//www.imf.org/external/np/sec/pn/2005/pn05152
  .htm

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Main theories used in the research

• Reidenbach and Robin (1991, 273, Snell 2000)
  suggest that just as individuals can be
  classified into the stage of moral development
  (Kohlberg 1969), so too can organisations.
• Reidenbach and Robin have identified five levels
  of moral development describing the behaviour of
  the corporation as amoral, legalistic,
  responsive, emerging ethical and developed
  ethical.
• The behaviour of the corporations derives mostly
  from the behaviour of its leaders.
• Leaders behaviour and character have great
  impact on the others they influence the lives of
  many people.
• Edward Aronson (2001) finds ethical behaviour a
  necessary condition for the establishment of an
  ethical organisation, but claims this alone not
  to be sufficient, as ethical leadership is
  required.
• Ethical behaviour and effective leadership are
  intertwined and inseparable, leaders set the
  moral tone of the organisation and have great
  impact on others.
• According to Ciulla (1995, 2004) good leadership
  refers not only to competence but also to ethics.

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Using the concept of CMD

• I argue that by using the concept of CMD we can
  describe the changes taken place in the
  perceptions about ethics and profits (also
  revealed in behaviour and activities) in business
  among business leaders in the context of rapid
  and radical changes, starting from the year 1985.
• The stages of CMD exhibit the morality / moral
  maturity of the leader and organisation through
  certain behaviours, attitudes, values, corporate
  culture, explicit, implicit artefacts.
• I approach CMD through studies concerning CSR,
  corporate governance and leadership as these
  results describe different stages of CMD and show
  how, when and why the changes in perceptions have
  taken place.
• CMD is historically and culturally bounded, as
  historical events and cultural factors are
  influencing activities and behaviour of people as
  well as business leaders in their daily
  activities in the organisations.
• Leaders and their behaviour set the moral tone in
  the organisation they are the role models and
  give the face to the whole organisation.
• The highest stage of CMD describes ethical and
  responsible leadership, where there is total
  balance between ethics and profits.

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Methodological Approach

• The analysis of my research is qualitative and
  the chosen perspective is social constructivism
  (Berger and Luckmann 1966)
• The central point is how perceptions of Estonian
  business leaders can be interpreted and
  understandings constructed.
• The design of the study is abductive by nature. I
  particularly want to report the continuous
  dialogue between the empirical research
  materials, the analysis and theoretical
  approaches.
• My research has qualitative approach the methods
  used for data collection include semi-structured
  in-depth interviews, conversations and
  observations, written down during the period of
  last 7 years.
• It can be also looked as a case study research
  (Yin 1994 Stakes 1995), one business society in
  concrete context, building explanation and
  developing a theory.

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Short overview of articles

• Societal level
• The general situation (impetus of the research)
  described and analysed in a chapter of a book
  published by Springer Verlag in Germany.
• Article Kooskora, M. 2004. Estonia 15
  Incubating Radical Political and Economic Change,
  In CSR Across Europe, Springer Verlag (Germany),
  André Habisch, Jan Jonker, Martina Wegner, René
  Schmidpeter (Eds.) November 2004, pp. 195-208
  (refereed)
• In this article attention is paid at the
  societys attitudes towards business, the roles
  of economy, state and society, given a brief
  historic and cultural overview, described main
  drivers of CSR and based on the conducted studies
  analysed CSR situation in leading Estonian
  companies based on the size of the organisations.

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Short overview of articles 2

• Organisational / leadership level
• Topic of ethics in leadership is analysed and
  discussed in mainly theoretical article.
• Article Kooskora, M. 2005. A Discussion of
  Ethical Leadership. Business Ethics and Corporate
  Social Responsibility, EBS Review, No 19, pp.
  42-49 (peer-reviewed)
• Perceptions of corporate responsibility among
  Estonian business leaders, based on the research
  of generalists, - empirical article.
• Article Kooskora, M. 2006. Perceptions of
  Business Purpose and Responsibility in the
  Context of Radical Political and Economic
  Development  the Case of Estonia, Business
  Ethics A European Review, April, Blackwell
  Publishing (refereed)

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Short overview of articles 3

• Business education level
• University education is a way of shaping and
  reshaping individual identities, both personal
  and organizational. Business education and
  training, developing managerial competences and
  modifying values related to business focusing on
  education and training of ethical and responsible
  present and future business leaders are important
  prerequisite for developing ethical and
  responsible business society.
• Article Kooskora, M., Ennulo, J., Virovere, A.
  2005. Developing an Awareness of and Teaching
  Business Ethics in Emerging Societies  the Case
  of Estonia, Journal of Business Ethics Education
  (JBEE), Vol 2 (1) Senate Hall Academic
  Publishing, UK, (refereed)

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Illustrative framework of the research
Article on Societal level
ENVIRONMENT
SOCIETY
COMPANY
COMPANY
QUALITY OF ACTIVITIES
COMPANY
COMPANY
COMPANY
Articles on Org Leadership level
Article on Business Education level
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Illustrative framework of the research
Balancing profits and ethics (Ethical and
responsible leadership, Activities Behaviour)
Articles on Org Leadership level
Org. goals, tasks Corporate culture
Ind. org, values, norms
Internal external Stakeholder relations
Decision-making
communication
Corporate Moral Development
Articles on Societal Org. level
BE CR education training
Article on Business Education level
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Corporate Moral Development Model (adapted from
Robin Reidenbach 1991)
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Kooskora, M. 2005. Business actors, purposes and
perceived responsibilities 1985-2005
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New typology of corporate moral development
(supplemented by M. Kooskora)
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THANK YOU FOR YOUR ATTENTION!Questions?