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

Journal of Business Ethics 76 (1), pp. 35-53, 2007

19 Pages Posted: 28 Aug 2014

See all articles by Pascual Berrone

Pascual Berrone

IESE Business School - University of Navarra

Jordi Surroca

Universidad Carlos III de Madrid - Department of Business Administration

Josep A. Tribo

Stevens Institute of Technology

Date Written: 2007

Abstract

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.

Keywords: Ethics, Financial performance

JEL Classification: M20

Suggested Citation

Berrone, Pascual and Surroca, Jordi and Tribo Gine, Josep Antonio, Corporate Ethical Identity as a Determinant of Firm Performance: A Test of the Mediating Role of Stakeholder Satisfaction (2007). Journal of Business Ethics 76 (1), pp. 35-53, 2007, Available at SSRN: https://ssrn.com/abstract=2487643

Pascual Berrone

IESE Business School - University of Navarra ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

HOME PAGE: http://wwwapp.iese.edu/faculty/facultyDetail_dev.asp?lang=es&prof=pb

Jordi Surroca

Universidad Carlos III de Madrid - Department of Business Administration ( email )

Calle Madrid 126
Getafe, Madrid, Madrid 28903
Spain

HOME PAGE: http://www.uc3m.es/uc3m/dpto/EMP/profesor/ijordi.htm

Josep Antonio Tribo Gine (Contact Author)

Stevens Institute of Technology ( email )

Hoboken, NJ 07030
United States
9292708869 (Phone)
07030 (Fax)

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