cover of 2019 issue of Lubin Business Review with image of group of business people talking

Lubin Business Review Spring 2019 Issue

Ethics and Social Responsibility

Spring 2019 Issue No. 2

Table of Contents

In the Journals

On the Bookshelf

Editors' Introduction (PDF)
Drs. Eric Kessler and Ping Wang

The modern workplace forces business professionals to confront many different types of questions. One of the most frequent is: Can we do it? This is essentially a technical issue, and amidst rapidly advancing technologies the answers are constantly changing. A second is: Will it make money? This is essentially an economic issue, and the repeatedly shifting global dynamics add considerable complexity here as well. However, in the current issue of Lubin Business Review (LBR) we focus on a third type of question that is just as important, but too often does not receive the same type of attention as the above: Should we do it? This is essentially a moral issue. Of course it is intertwined with the first two questions, because it is affected by technology and competition. More than this though, asking it adds another dimension to the conversation by helping managers from all areas of the corporation to both do well and do good. These are not separate either-or choices. They occur simultaneously and can be addressed symbiotically. To this end we have assembled a rich collection of research by Lubin faculty that considers ethics and social responsibility from various disciplinary perspectives.

In the Journals

Exploring Spatial Vulnerability: Inequality and Agency Formulations in Social Space (PDF)
Dr. Canan Corus

This article provides a conceptual framework for analyzing power and control in physical and social space. Space is a medium that shapes stakeholder-company and relations in ways that can liberate or constrain. Marketplace exclusion occurs in spaces as small as the seat on a bus and a place at a lunch counter, or over access to healthcare and workplaces. Retail settings, service contexts, and themed environments (e.g., entertainment parks, brand flagship stores) are at the core of consumer research on space. This article includes in its conceptualization other forms of spaces (e.g., public space, neighborhood, community) in which social struggles take place. Social actors (i.e., consumers, marketers, businesses, and policy makers) exert various forms of agency to achieve power and control in the physical and social space.

Walmart in India (PDF)
Dr. Pradeep Gopalakrishna

Walmart, the world's largest private retailer, has had its mix of successes and failures with its overseas ventures. This case study examines Walmart's foray into India, exploring its retail landscape, business climate and political landscape with legal/regulatory ramifications. Further, this study considers rules and regulations with regard to joint venture agreements, corruption laws, and related ethical issues of doing business in India.

Effects of Wealth Inequality on Entrepreneurship (PDF)
Dr. Casey Frid

A hot button issue currently discussed among management scholars is how, and to what extent, should schools encourage scholarship that bridges theory and practice. At the Academy of Management conference held in Chicago last year (2018), I facilitated a professional development workshop that addressed this issue. The most important point at the workshop—in my opinion, at least—was raised by Per Davidsson, Professor and Chair of the Management Department at Queensland University of Technology. Per said that it was his hope that we do not take this theory-to-practice effort so far as to focus our scholarship only on helping businesses increase their bottom line. Rather, our job as scholars is also to help to foster a socioeconomic environment that improves lives and is accessible by all. The present study attempts to do just that by examining the role of personal wealth (or the lack thereof) in an individual's ability to jump on the ladder of entrepreneurial opportunity.

Urban Sustainability Management: A Deep Learning Perspective (PDF)
Drs. Christian N. Madu, Chu-hua Kuei, and Picheng Lee

One of the challenges in working with big text data is the ability to extract relevant information to make effective decisions. This paper explores the use of text data analytics to examine the types of urban sustainability development incentives in Europe, Asia, and North America. It is important to assure clean air and a healthy environment in urban cities. Corporate governance is needed to drive sustainability and ethical standards that will make our urban areas sustainable. Emphasis is placed on expected economic opportunities, emissions reduction, and methodologies/ guidelines for implementing urban sustainability development initiatives.

Trolling Twitter: Defamation in an Online World (PDF)
Dr. Jessica A. Magaldi

Social media and Twitter, in particular, have the potential to ruin a reputation in an instant. In the new, evolving, and often rough-and-tumble speech community on Twitter, the law of defamation is not always simple and straightforward. Whether a statement is defamatory depends on the language, context, audience, and knowledge and understanding of the speaker. Understanding the boundaries of defamation, therefore, is vital in this context.

Word Power: The Impact of Negative Media Coverage on Disciplining Corporate Pollution (PDF)
Dr. P. V. Viswanath

The optimal functioning of a society requires its several components to work in cooperation. In a capitalist economy, the power of the market can ensure that businesses act in the social interest—if a product or service does not serve customers, they will refuse to buy it and opt for competitors' products. However, where public goods are concerned, the simple working of the marketplace is often insufficient; legislative, civic, and news organizations need to step in to fill the breach. Our paper looks at the ability of the news media to impact environmental pollution by corporate actors. We focus on how an atmosphere of negative news reports following an initial exposure of corporate pollution activity helps stop such activity through their impact on corporate managers.

How We Contradict Ourselves: The Case of John Cochrane – Gliding and Behavioral Economics (PDF)
Dr. Matthew R. Morey

While some angel investors claim to be completely objective in making investment decisions, entrepreneurs are often coached to demonstrate passion and enthusiasm in their pitches, since such qualities are believed to increase investment potential. Indeed, angel investors often make investment decisions based on motivational cues communicated by entrepreneurs during pitches, including emotional enthusiasm, cognitive preparedness, and behavioral commitment to see it through. We examine how these different factors independently and together influence angel investment evaluations of entrepreneurial pitches.

Law and Reporting Compliance Confidence (PDF)
Drs. Kam C. Chan, Barbara R. Farrell, and Patricia Healy

Even with the rapid globalization of financial markets and the widespread uses of International Financial Reporting Standards, significant differences still exist in the quality of financial reporting among countries. These differences are mainly caused by different levels of investor protection among countries. Firms from countries with stronger investor protection have better social responsibilities and ethical practices leading to higher quality of financial reporting. Ernst & Young (EY) published a report in 2016, which shows that there was a wide range of confidence among chief financial officers and heads of reporting units in large organizations in 25 countries/regions relating to their confidence in compliance with their accounting, finance, controlling, and sustainability reporting needs. The objective of this study is to examine the relationship between investor protection and CFO confidence in different countries, as reported in EY's survey.

Do Financially Distressed Firms Misclassify Core Expenses? (PDF)
Dr. Kaustav Sen

When evaluating a firm's performance, analysts and investors focus on a firm's core earnings by excluding nonrecurring special items. Managers can inflate core earnings by shifting operating expenses to income-decreasing special items. This is called classification shifting, and it creates the impression that a firm's operations are better than they are in reality. Financially distressed firms cause large losses to investors and creditors. It is important to understand whether distressed firms, which unlike healthy firms often have negative special items to report, use classification shifting as an easy way to avoid reporting negative or declining core earnings.

The Effect of Commercial Banks' Internal Control Weaknesses on Loan Loss Reserves and Provisions (PDF)
Drs. Myojung Cho and Kwang-Hyun Chung

This study examines whether commercial banks with material internal control weakness (ICW) tend to have more loan loss reserves and related losses than their counterparts. Loan loss reserves are estimates of loss exposure of banks due to impaired loans. They are the single largest component of credit risk estimates for commercial banks, which could be under the discretion of bank management. Furthermore, loan loss reserves are often estimated based on historical loss rates, not on individual assessments of specific loans. Banks could also include substantial amounts of supplemental reserves that are not necessarily linked to the credit risk exposure. Thus, regulators have been keen to improve internal control procedures of banks to ensure accurate credit risk assessment.

On the Bookshelf

Social Media and Mobile Marketing Strategy (PDF)
Dr. Randi Priluck

Social Media and Mobile Marketing Strategy provides an in-depth look at digital marketing strategies that firms can use to effectively reach and engage with their target audiences. The book emphasizes the four P's of marketing, and describes how each element is affected by the changing digital arena. It also explains how businesses have responded by shifting marketing dollars to social media, mobile, and other digital technologies to reach consumers where they live, work and relax. One important concern is the issue of digital privacy and the extent to which users are protected by regulations or company policies. This book also highlights the key privacy issues facing consumers and firms, and discusses the regulations that are important for marketers to consider in executing strategies.

Strategic Management: Text and Cases, 9th Edition (PDF)
Dr. Alan B. Eisner

Today's leaders face a large number of complex challenges in the global marketplace. Leaders can be lauded for corporate success or blamed for failures. We explore these perspectives while emphasizing the fundamentals of strategy with insights and examples from relevant companies and industries. This book highlights the major issues of strategy, corporate social responsibility, and ethics with over 30 well-developed company cases from Apple to Zynga and interesting points in between.

Regulation of Cryptocurrencies and Blockchain Technology: National and International Perspectives (PDF)
Dr. Rosario Girasa

The Bitcoin frenzy has broad implications for a society whose mainly younger inhabitants have moved away from hard currency, printed checking accounts, print media, movie theatres, and the like, to a digital world in which smart cell phones have replaced now outdated methods of communication. The removal of banks, brokerage firms, and other third parties that have added many billions in costs for transactions, almost inevitably has led to a digital means of transmitting modes of payments. The solution is the advent of cryptocurrencies, based on blockchain technology, that seek to provide peer-to-peer transactions that are trustworthy without third-party intervention. Problems with such removal are the social costs due to uses by criminals, terrorists, and other unsavory elements. The text is devoted to a brief exploration of the applicable technologies and regulatory efforts to curb uses that are harmful to society.

Analyzing Strategic Behavior in Business and Economics: A Game Theory Primer (PDF)
Dr. Thomas J. Webster

Business executives, managers, and regulators routinely play "games" that are not dissimilar from parlor games like bridge and chess. Managers make decisions on a daily basis that affect not only their own bottom line, but the bottom lines of their competitors such as when formulating pricing, marketing, product line, resource sourcing, and other strategies in order to maximize shareholder value. This interdependence will invariably prompt rival firms to retaliate to protect their position in the market, which necessitates a corresponding countermove, and so on. Savvy business managers understand that in highly competitive, interactive business settings, the ability to analyze strategic behavior is an essential element in achieving success. While this does not always result in a Pareto optimal outcome, the search for equilibrium in game theory should embody the moral values that define society and the business environment within which Competition Games are played. Decision makers should eschew actions that are socially irresponsible.