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Managerial Morality and Philanthropic Decision-Making: A Test of an Agency Model

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Abstract

While previous authors have broadly examined the motivations and outcomes of the philanthropic activities of organizations, the present study extends Miska et al.’s (J Bus Ethics 1–12, 2013) rationalistic approach to examine the degree to which managerial philanthropic decision-making behaviour is dominated by morality. This study also tackles the question of whether this relationship is moderated by the strength of the geographical proximity and amount of the donation within an agency framework. To probe the radical agency problem and the effect of intervention, an alternative heuristic scenario is also developed to provide evidence that managers under the same moral level show significant differences in donation intention under a variety of agency conditions. The results indicate a significant difference between the existence and non-existence of agency problems in charitable decision-making by managers high in idealism and relativism; however, at the same time, philanthropic behaviour is intertwined with various dilemma-related contexts. These findings bridge the gap in the literature on ethics and corporate social responsibility, and challenge current thinking on corporate governance mechanisms in this area by offering researchers and practitioners an integrated model that responds to a strong sceptical bias or a high premium placed on morality.

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Notes

  1. Advocators of stakeholder primacy suggest that managers’ decision outcomes must comply with moral norms and meet societal needs (Aßländer 2011; Donaldson and Preston 1995; Gan 2006), while advocators of shareholder primacy asserted the manner that managers spend a firm’s resource on societal improvements is unethical unless such an allocation also benefits its shareholders (Campbell and Slack 2007; Friedman 1970; Ricks and Williams 2005).

  2. Jones (1991) suggested that ethical decision-making involves the recognition of moral issues, ethical judgment, behaviour intentions and ethical behaviour.

  3. The description represented an “existent agency problem” scenario.

  4. The description represented a “non-existent agency problem” scenario.

Abbreviations

CSR:

Corporate social responsibility

EPQ:

Ethics position questionnaire

HRM:

Human resource management

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Acknowledgments

The authors gratefully acknowledge the financial support by National Science Council (NSC 100-2410-H-032-035). In addition, we also appreciate the two blind reviewers’ constructive suggestions for improving the quality of this study.

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Authors and Affiliations

  1. Department of Accounting, Tamkang University, No. 151, Yingzhuan Rd., Tamsui Dist., New Taipei, 25137, Taiwan, ROC

    Cheng-Li Huang

  2. Accounting Section, Graduate Institute of Management Sciences, Tamkang University, No. 151, Yingzhuan Rd., Tamsui Dist., New Taipei, 25137, Taiwan, ROC

    Ju-Lan Tsai

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  1. Cheng-Li Huang
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Correspondence to Ju-Lan Tsai.

Appendices

Appendix: The Content of the Measurement Instrument

There are three parts in the instrument, including design case, the scale of ethics position and demographic profile, but we omit the part of demographic profile here.

Part I: Design Case

Agency Scenario

You are a donation project manager and acting as a junior project manager with a growing industry reputation for managing donation projects. You have recently received an informal job offer from another company involving a promotion and substantial salary increase, and it will be helpful for the offer if you make a decision to continue the philanthropic programme. In addition, all information on the generosity of the offer, geographical proximity, donation amount and donation purpose are known only to the donation project manager and will never be published.Footnote 3 [You are a donation project manager and acting as a senior project manager with a solid industry reputation for managing donation projects over a number of years. The decision to discontinue the philanthropic programme will not damage your well-established reputation. In addition, donation information is available to the public to ensure that stakeholders’ interests are met.Footnote 4]

Philanthropic Donation Programme

Your company is expected to achieve sales revenues of two billion and profits of 200 million this year. You are a donation project manager, and your duty is to formulate a donation proposal. The company plans to make a donation at the end of this year. The philanthropic plan is as follows:

Your company decides to allocate 1% of its current profit [10% of its current profit] to 200 disadvantaged students in South Africa [50 disadvantaged students in Taiwan ] to support educational activities and express their social responsibilities and concerns. These charitable donations also offer some tax advantages.

Part II: The Scale of Ethics Position

 

Items

1

People should make certain that their actions never intentionally harm another even to a small degree

2

Risks to another should never be tolerated, irrespective of how small the risks might be

3

The existence of potential harm to others is always wrong, irrespective of the benefits to be gained

4

One should never psychologically or physically harm another person

5

One should not perform an action which might in any way threaten the dignity and welfare of another individual

6

If an action could harm an innocent other, then it should not be done

7

Deciding whether or not to perform an act by balancing the positive consequences of the act against the negative consequences of the act is immoral

8

The dignity and welfare of the people should be the most important concern in any society

9

It is never necessary to sacrifice the welfare of others

10

Moral behaviours are actions that closely match ideals of the most “perfect” action

11

There are no ethical principles that are so important that they should be a part of any code of ethics

12

What is ethical varies from one situation and society to another

13

Moral standards should be seen as being individualistic; what one person considers to be moral may be judged to be immoral by another person

14

Different types of morality cannot be compared as to “rightness”

15

Questions of what is ethical for everyone can never be resolved since what is moral or immoral is up to the individual

16

Moral standards are simply personal rules that indicate how a person should behave, and are not be applied in making judgments of others

17

Ethical considerations in interpersonal relations are so complex that individuals should be allowed to formulate their own individual codes

18

Rigidly codifying an ethical position that prevents certain types of actions could stand in the way of better human relations and adjustment

19

No rule concerning lying can be formulated; whether a lie is permissible or not permissible totally depends upon the situation

20

Whether a lie is judged to be moral or immoral depends upon the circumstances surrounding the action

  1. Forsyth (1980, 1992)

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Huang, CL., Tsai, JL. Managerial Morality and Philanthropic Decision-Making: A Test of an Agency Model. J Bus Ethics 132, 795–811 (2015). https://doi.org/10.1007/s10551-014-2338-x

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