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A Stakeholder Approach to the Ethicality of BRIC-firm Managers’ Use of Favors

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  • Daniel McCarthy
  • Sheila Puffer
  • Denise Dunlap
  • Alfred Jaeger

Abstract

This article investigates the use of favors by managers of BRIC firms to accomplish business goals, the ethicality of which should be determined by the moral reasoning in these countries rather than from a developed country perspective. We define a favor as an exchange of outcomes between individuals, typically utilizing one’s connections, that is based on a commonly understood cultural tradition, with reciprocity by the receiver typically not being immediate, and its value being less than what would constitute bribery within that cultural context. This exchange normally takes place between and among members of networks, and may involve a network outsider contacted by a network insider on behalf of another insider. We see the giver and receiver of the favor, as well as network insiders and outsiders, as stakeholders. Additionally, society could also be considered to be a stakeholder since the practice of using favors generally inhibits the development of legitimate, strong formal institutions, since the use of favors in emerging economies is rooted in cultural traditions that we view as informal institutions. Furthermore, we assert that the practice of using favors can lead to bribery which harms society as a stakeholder both morally and economically. We posit that BRIC-country managers’ behaviors stem from informal, culturally based practices—jeito in Brazil, blat/sviazi in Russia, jaan-pehchaan in India, and guanxi in China. We utilize institutional theory to explain why favors are relied upon, and ISCT to support the argument that the use of favors in environments like the BRICs is generally considered ethical. Copyright Springer Science+Business Media B.V. 2012

Suggested Citation

  • Daniel McCarthy & Sheila Puffer & Denise Dunlap & Alfred Jaeger, 2012. "A Stakeholder Approach to the Ethicality of BRIC-firm Managers’ Use of Favors," Journal of Business Ethics, Springer, vol. 109(1), pages 27-38, August.
  • Handle: RePEc:kap:jbuset:v:109:y:2012:i:1:p:27-38
    DOI: 10.1007/s10551-012-1377-4
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    10. Jasper Hotho & Dana Minbaeva & Maral Muratbekova-Touron & Larissa Rabbiosi, 2020. "Coping with Favoritism in Recruitment and Selection: A Communal Perspective," Journal of Business Ethics, Springer, vol. 165(4), pages 659-679, September.
    11. Geovana Alves de Lima Fedato & Vanessa Martins Pires & Guilherme Trez, 2017. "The Future of Research in Strategy Implementation in the BRICS Context," Brazilian Business Review, Fucape Business School, vol. 14(3), pages 288-303, May.
    12. Diego F. Uribe & Isabel Ortiz-Marcos & Ángel Uruburu, 2018. "What Is Going on with Stakeholder Theory in Project Management Literature? A Symbiotic Relationship for Sustainability," Sustainability, MDPI, vol. 10(4), pages 1-23, April.
    13. Mousseau, Michael & Mousseau, Demet Yalcin, 2023. "The rise of contract-intensive economic structures and democratic development: Are they related?," Structural Change and Economic Dynamics, Elsevier, vol. 65(C), pages 273-285.
    14. Ling Liu & Jose Godinez & John Henley & J. Mauricio Galli Geleilate, 2023. "Corruption distance and the equity-based foreign entry strategies of multinational enterprises in sub-Saharan Africa," Journal of International Business Policy, Palgrave Macmillan, vol. 6(4), pages 492-510, December.
    15. Sheila Puffer & Daniel McCarthy & Mike Peng, 2013. "Managing favors in a global economy," Asia Pacific Journal of Management, Springer, vol. 30(2), pages 321-326, June.
    16. Chatterjee, Sheshadri & Chaudhuri, Ranjan & Vrontis, Demetris & Pereira, Vijay, 2022. "Examining the industrial buying behavior in Indian market: From behavior and cultural perspective for B2B buyers and suppliers," Journal of Business Research, Elsevier, vol. 151(C), pages 86-99.
    17. Cohen, Nissim & Rubinchik, Anna & Shami, Labib, 2020. "Towards a cashless economy: Economic and socio-political implications," European Journal of Political Economy, Elsevier, vol. 61(C).
    18. Kanti Pertiwi, 2018. "Contextualizing Corruption: A Cross-Disciplinary Approach to Studying Corruption in Organizations," Administrative Sciences, MDPI, vol. 8(2), pages 1-19, April.
    19. Berger, Ron & Silbiger, Avi & Herstein, Ram & Barnes, Bradley R., 2015. "Analyzing business-to-business relationships in an Arab context," Journal of World Business, Elsevier, vol. 50(3), pages 454-464.
    20. Ron Berger & Moti Zviling, 2013. "The Relationship between Stakeholder Marketing and Reciprocity in Eastern Europe: A Conceptual Analysis," International Journal of Management, Knowledge and Learning, International School for Social and Business Studies, Celje, Slovenia, vol. 2(2), pages 149-164.

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