IDEAS home Printed from https://ideas.repec.org/a/kap/jbuset/v176y2022i3d10.1007_s10551-020-04699-8.html
   My bibliography  Save this article

Punishing Vices or Rewarding Virtues? The Motivations for and Benefits of Ethical Ratings for Private Italian Companies

Author

Listed:
  • Fabio La Rosa

    (University of Catania)

  • Francesca Bernini

    (University of Pisa)

Abstract

In A Treatise on Virtues and Rewards, Dragonetti (1769) advances a theory of action based on rewards for virtues. The idea of rewards, especially of awards, relies on the hypothesis that intrinsic motivations drive the actions of good or virtuous citizens. We apply this theory to virtuous entrepreneurs who voluntarily adopt ethical principles as promoted by a recent Italian law. These firms receive an ethical rating (ER) by the Italian Competition Authority (ICA) and can access a set of economic and non-economic benefits (i.e. rewards). We survey a sample of 152 private companies with an ER and examine their views on the economic and social motivations and benefits as well as the perceived usefulness of the ER for improving ethical behaviour. An exploratory factor analysis detects four categories of motivation (economic, competitive, social, and responsiveness) and two categories of benefits (economic and competitive), which we use in regression models to test Dragonetti’s theory. Overall, respondents see the ER as an effective tool, except in terms of improving economic performance. We also find that entrepreneurs with lower economic and higher responsiveness motivations attain higher ERs. However, in the respondents’ opinions, the ER is (still) not producing any concrete benefits since we find no relationship between the ER and economic or competitive rewards. These findings have implications for the ICA as well as for private companies.

Suggested Citation

  • Fabio La Rosa & Francesca Bernini, 2022. "Punishing Vices or Rewarding Virtues? The Motivations for and Benefits of Ethical Ratings for Private Italian Companies," Journal of Business Ethics, Springer, vol. 176(3), pages 467-485, March.
    • Handle: RePEc:kap:jbuset:v:176:y:2022:i:3:d:10.1007_s10551-020-04699-8
    DOI: 10.1007/s10551-020-04699-8
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10551-020-04699-8
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10551-020-04699-8?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Emilia Bonaccorsi di Patti, 2009. "Weak institutions and credit availability: the impact of crime on bank loans," Questioni di Economia e Finanza (Occasional Papers) 52, Bank of Italy, Economic Research and International Relations Area.
    2. Fischer, Klaus & Khoury, Nabil, 2007. "The impact of ethical ratings on Canadian security performance: Portfolio management and corporate governance implications," The Quarterly Review of Economics and Finance, Elsevier, vol. 47(1), pages 40-54, March.
    3. Maria-Gaia Soana, 2011. "The Relationship Between Corporate Social Performance and Corporate Financial Performance in the Banking Sector," Journal of Business Ethics, Springer, vol. 104(1), pages 133-148, November.
    4. Kim Hammond & Samantha Miles, 2004. "Assessing quality assessment of corporate social reporting: UK perspectives," Accounting Forum, Taylor & Francis Journals, vol. 28(1), pages 61-79, March.
    5. Ernst Fehr & Bettina Rockenbach, 2003. "Detrimental effects of sanctions on human altruism," Nature, Nature, vol. 422(6928), pages 137-140, March.
    6. Goss, Allen & Roberts, Gordon S., 2011. "The impact of corporate social responsibility on the cost of bank loans," Journal of Banking & Finance, Elsevier, vol. 35(7), pages 1794-1810, July.
    7. Armitage, Seth & Marston, Claire, 2008. "Corporate disclosure, cost of capital and reputation: Evidence from finance directors," The British Accounting Review, Elsevier, vol. 40(4), pages 314-336.
    8. Luigino Bruni & Vittorio Pelligra & Tommaso Reggiani & Matteo Rizzolli, 2020. "The Pied Piper: Prizes, Incentives, and Motivation Crowding-in," Journal of Business Ethics, Springer, vol. 166(3), pages 643-658, October.
    9. Bert Scholtens & Lammertjan Dam, 2007. "Cultural Values and International Differences in Business Ethics," Journal of Business Ethics, Springer, vol. 75(3), pages 273-284, October.
    10. Carmelo Reverte, 2009. "Determinants of Corporate Social Responsibility Disclosure Ratings by Spanish Listed Firms," Journal of Business Ethics, Springer, vol. 88(2), pages 351-366, August.
    11. Ennio Lugli & Ulpiana Kocollari & Chiara Nigrisoli, 2009. "The Codes of Ethics of S&P/MIB Italian Companies: An Investigation of Their Contents and the Main Factors that Influence Their Adoption," Journal of Business Ethics, Springer, vol. 84(1), pages 33-45, January.
    12. Carroll, Archie B., 1991. "The pyramid of corporate social responsibility: Toward the moral management of organizational stakeholders," Business Horizons, Elsevier, vol. 34(4), pages 39-48.
    13. Isabelle Ducassy, 2013. "Does Corporate Social Responsibility Pay Off in Times of Crisis? An Alternate Perspective on the Relationship between Financial and Corporate Social Performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 20(3), pages 157-167, May.
    14. Christian Voegtlin & Andreas Georg Scherer, 2017. "Responsible Innovation and the Innovation of Responsibility: Governing Sustainable Development in a Globalized World," Journal of Business Ethics, Springer, vol. 143(2), pages 227-243, June.
    15. Aaron K. Chatterji & David I. Levine & Michael W. Toffel, 2009. "How Well Do Social Ratings Actually Measure Corporate Social Responsibility?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(1), pages 125-169, March.
    16. Elena Escrig-Olmedo & Maria Jesus Munoz-Torres & Maria Angeles Fernandez-Izquierdo, 2010. "Socially responsible investing: sustainability indices, ESG rating and information provider agencies," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 2(4), pages 442-461.
    17. La Rosa, Fabio & Liberatore, Giovanni & Mazzi, Francesco & Terzani, Simone, 2018. "The impact of corporate social performance on the cost of debt and access to debt financing for listed European non-financial firms," European Management Journal, Elsevier, vol. 36(4), pages 519-529.
    18. Andreas Georg Scherer & Guido Palazzo, 2011. "The New Political Role of Business in a Globalized World: A Review of a New Perspective on CSR and its Implications for the Firm, Governance, and Democracy," Journal of Management Studies, Wiley Blackwell, vol. 48(4), pages 899-931, June.
    19. World Bank, 2019. "Doing Business 2019," World Bank Publications - Books, The World Bank Group, number 30438, December.
    20. Najah Attig & Sadok El Ghoul & Omrane Guedhami & Jungwon Suh, 2013. "Corporate Social Responsibility and Credit Ratings," Journal of Business Ethics, Springer, vol. 117(4), pages 679-694, November.
    21. Ye Cai & Hoje Jo & Carrie Pan, 2011. "Vice or Virtue? The Impact of Corporate Social Responsibility on Executive Compensation," Journal of Business Ethics, Springer, vol. 104(2), pages 159-173, December.
    22. Giuliana Birindelli & Paola Ferretti & Mariantonietta Intonti & Antonia Iannuzzi, 2015. "On the drivers of corporate social responsibility in banks: evidence from an ethical rating model," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 19(2), pages 303-340, May.
    23. Francesco Perrini & Angeloantonio Russo & Antonio Tencati, 2007. "CSR Strategies of SMEs and Large Firms. Evidence from Italy," Journal of Business Ethics, Springer, vol. 74(3), pages 285-300, September.
    24. Krishna Udayasankar, 2008. "Corporate Social Responsibility and Firm Size," Journal of Business Ethics, Springer, vol. 83(2), pages 167-175, December.
    25. Ping, Robert Jr., 2004. "On assuring valid measures for theoretical models using survey data," Journal of Business Research, Elsevier, vol. 57(2), pages 125-141, February.
    26. Kim, Moshe & Surroca, Jordi & Tribó, Josep A., 2014. "Impact of ethical behavior on syndicated loan rates," Journal of Banking & Finance, Elsevier, vol. 38(C), pages 122-144.
    27. Syed Alwi, Sharifah Faridah & Muhammad Ali, Sulaiman & Nguyen, Bang, 2017. "The Importance of Ethics in Branding: Mediating Effects of Ethical Branding on Company Reputation and Brand Loyalty," Business Ethics Quarterly, Cambridge University Press, vol. 27(3), pages 393-422, July.
    28. Muel Kaptein & Mark Schwartz, 2008. "The Effectiveness of Business Codes: A Critical Examination of Existing Studies and the Development of an Integrated Research Model," Journal of Business Ethics, Springer, vol. 77(2), pages 111-127, January.
    29. Giovanni Garegnani & Emilia Merlotti & Angeloantonio Russo, 2015. "Scoring Firms’ Codes of Ethics: An Explorative Study of Quality Drivers," Journal of Business Ethics, Springer, vol. 126(4), pages 541-557, February.
    30. Christian Voegtlin & Scherer Andreas Georg, 2017. "Responsible Innovation and the Innovation of Responsibility: Governing Sustainable Development in a Globalized World," Post-Print hal-01540972, HAL.
    31. Bruni, Luigino, 2013. "On Virtues And Awards: Giacinto Dragonetti And The Tradition Of Economia Civile In Enlightenment Italy," Journal of the History of Economic Thought, Cambridge University Press, vol. 35(4), pages 517-535, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. La Rosa, Fabio & Liberatore, Giovanni & Mazzi, Francesco & Terzani, Simone, 2018. "The impact of corporate social performance on the cost of debt and access to debt financing for listed European non-financial firms," European Management Journal, Elsevier, vol. 36(4), pages 519-529.
    2. Jannik Gerwanski, 2020. "Does it pay off? Integrated reporting and cost of debt: European evidence," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(5), pages 2299-2319, September.
    3. Lutfi Abdul Razak & Mansor H. Ibrahim & Adam Ng, 2020. "Which Sustainability Dimensions Affect Credit Risk? Evidence from Corporate and Country-Level Measures," JRFM, MDPI, vol. 13(12), pages 1-22, December.
    4. Fabio La Rosa & Sergio Paternostro & Francesca Bernini, 2023. "Corporate and regional governance antecedents of the Legality Rating of private Italian companies," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 27(1), pages 297-329, March.
    5. Danilo Drago & Concetta Carnevale, 2020. "Do CSR Ratings Affect Loan Spreads? Evidence from European Syndicated Loan Market," Sustainability, MDPI, vol. 12(18), pages 1-30, September.
    6. Francesco Gangi & Jérôme Méric & Rémi Jardat & Lucia Michela Daniele, 2019. "Business for society," Post-Print hal-02382307, HAL.
    7. Paolo Capelli & Federica Ielasi & Angeloantonio Russo, 2021. "Forecasting volatility by integrating financial risk with environmental, social, and governance risk," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(5), pages 1483-1495, September.
    8. Maretno Harjoto & Hoje Jo, 2015. "Legal vs. Normative CSR: Differential Impact on Analyst Dispersion, Stock Return Volatility, Cost of Capital, and Firm Value," Journal of Business Ethics, Springer, vol. 128(1), pages 1-20, April.
    9. Giovanni Garegnani & Emilia Merlotti & Angeloantonio Russo, 2015. "Scoring Firms’ Codes of Ethics: An Explorative Study of Quality Drivers," Journal of Business Ethics, Springer, vol. 126(4), pages 541-557, February.
    10. Michał Jurek, 2014. "The genesis and evolution of CSR self-regulation with special refer-ence to the case of financial institutions," Working papers wpaper70, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.
    11. Najah Attig & Narjess Boubakri & Sadok El Ghoul & Omrane Guedhami, 2016. "Firm Internationalization and Corporate Social Responsibility," Journal of Business Ethics, Springer, vol. 134(2), pages 171-197, March.
    12. Ralf Barkemeyer & Jason Miklian, 2019. "Responsible Business in Fragile Contexts: Comparing Perceptions from Domestic and Foreign Firms in Myanmar," Sustainability, MDPI, vol. 11(3), pages 1-18, January.
    13. Othar Kordsachia, 2021. "A risk management perspective on CSR and the marginal cost of debt: empirical evidence from Europe," Review of Managerial Science, Springer, vol. 15(6), pages 1611-1643, August.
    14. Samuel Jebaraj Benjamin & Zhuoan Feng & Pallab Kumar Biswas, 2023. "Negative Social Media Sentiments and Capital Structure," Capital Markets Review, Malaysian Finance Association, vol. 31(2), pages 1-22.
    15. Antonio D'Amato & Camilla Falivena, 2020. "Corporate social responsibility and firm value: Do firm size and age matter? Empirical evidence from European listed companies," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(2), pages 909-924, March.
    16. Maite Cubas-Díaz & Miguel Ángel Martínez Sedano, 2018. "Do Credit Ratings Take into Account the Sustainability Performance of Companies?," Sustainability, MDPI, vol. 10(11), pages 1-24, November.
    17. Francesco Gangi & Antonio Meles & Eugenio D'Angelo & Lucia Michela Daniele, 2019. "Sustainable development and corporate governance in the financial system: Are environmentally friendly banks less risky?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(3), pages 529-547, May.
    18. Halit Gonenc & Bert Scholtens, 2019. "Responsibility and Performance Relationship in the Banking Industry," Sustainability, MDPI, vol. 11(12), pages 1-49, June.
    19. Mario Morales-Parragué & Luis Araya-Castillo & Fidel Molina-Luque & Hugo Moraga-Flores, 2022. "Scientometric Analysis of Research on Corporate Social Responsibility," Sustainability, MDPI, vol. 14(4), pages 1-22, February.
    20. Tina C. Ambos & Katherine Tatarinov, 2022. "Building Responsible Innovation in International Organizations through Intrapreneurship," Journal of Management Studies, Wiley Blackwell, vol. 59(1), pages 92-125, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jbuset:v:176:y:2022:i:3:d:10.1007_s10551-020-04699-8. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.