Corporate Ethical Identity as a Determinant of Firm Performance: A Test of the Mediating Role of Stakeholder Satisfaction

In this article, we empirically assess the impact of corporate ethical identity (CEI) on a firm's financial performance. Drawing on formulations of normative and instrumental stakeholder theory, we argue that firms with a strong ethical identity achieve a greater degree of stakeholder satisfact...

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Bibliographic Details
Published in:Journal of business ethics 2007-11, Vol.76 (1), p.35-53
Main Authors: Berrone, Pascual, Surroca, Jordi, Tribó, Josep A.
Format: Article
Language:English
Subjects:
Applied ethics
Behavior
Business ethics
Business structures
Communication
corporate ethical identity
Corporate governance
Corporate identity
Corporate image
Corporate responsibility
Determinants
Economics
Enterprises
Ethical behavior
Financial performance
Hypotheses
Identity
Marketing
Organization theory
Political ethics
R&D
Reputations
Research & development
Return on assets
Satisfaction
Social ethics
Social responsibility
Stakeholder
stakeholder satisfaction
stakeholder theory
Stakeholders
Statistical analysis
Stockholders
Studies
Values
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Summary:In this article, we empirically assess the impact of corporate ethical identity (CEI) on a firm's financial performance. Drawing on formulations of normative and instrumental stakeholder theory, we argue that firms with a strong ethical identity achieve a greater degree of stakeholder satisfaction (SS), which, in turn, positively influences a firm's financial performance. We analyze two dimensions of the CEI of firms: corporate revealed ethics and corporate applied ethics. Our results indicate that revealed ethics has informational worth and enhances shareholder value, whereas applied ethics has a positive impact through the improvement of SS. However, revealed ethics by itself (i.e. decoupled from ethical initiatives) is not sufficient to boost economic performance.
ISSN:0167-4544
1573-0697
DOI:10.1007/s10551-006-9276-1