November 3, 2022
Despite the growing focus for more ethical investment and management styles, a new paper from Rotterdam School of Management, Erasmus University (RSM) claims to have uncovered eight unethical effects that can ‘sneak in’, even when organisations are doing their best to act ethically. In his research Muel Kaptein, Professor of Business Ethics and Integrity Management, has looked at how even ostensibly ethical organisations can sometimes facilitate unethical behaviour.
The paper, A Paradox of Ethics: Why People in Good Organizations do Bad Things, published in the Journal of Business Ethics claims that this perhaps surprising outcome is due to four forces that threaten the ‘good’ organisation, which become stronger when as it becomes more ethical—upward, downward, backward, and forward forces.
Each of these directions has two corresponding effects that can arise when organisations actively become more ethical. And each one of them could increase the likelihood of unethical behaviour.
“It helps to know that unethical behaviour isn’t always caused by bad people and bad organisations, and an understanding of these effects and how they come about can help society to change the way ethical standards are set, regulated, inspected and evaluated. Sometimes the unethical effects come from good people in good organisations – and this insight might help to soften evaluations of unethical practices within and by organisations,” says Professor Muel Kaptein.
Delivering a timely warning to business leaders, this research even considers if well-meaning attempts to impose ethical values on investment and consumption might be the cause of the problem. Professor Kaptein has already presented his model of these threatening effects to regulators, compliance officers and managers. They all recognised them, and some described their own examples of the eight effects that lead to negative – and sometimes devastating – outcomes. Perhaps this research is a warning for everyone to watch out for these threatening effects.