Organizational Virtue and Stakeholder Interdependence: An Empirical Examination of Financial Intermediaries and IPO Firms

• Published in: Journal of business ethics Vol. 149; no. 4; pp. 785 - 798
• Main Authors: McLeod, Michael S., Moore, Curt B., Payne, G. Tyge, Sexton, Jennifer C., Evert, Robert E.
• Format: Journal Article
• Language: English
• Published: Dordrecht Springer 01.06.2018; Springer Netherlands; Springer Nature B.V
• Subjects: Banking; Behavior; Beliefs; Business and Management; Business Ethics; Companies; Education; Ethics; Influence; Initial public offerings; Interdependence; Interest groups; Investment bankers; Legitimacy; Management; Morality; Organizational behavior; Ownership; Philosophy; Quality of Life Research; Reputations; Stakeholders; Underwriting; Values; Venture capital; Venture capital companies; Virtue; Resource dependence; Ethics; Initial public offerings (IPOs); Stakeholder; Content analysis
• ISSN: 0167-4544; 1573-0697
• DOI: 10.1007/s10551-016-3021-1

Organizational virtue orientation (OVO), an organizational-level construct, refers to the integrated set of beliefs and values that support ethical character traits and virtuous behaviors. To advance the study of organizational virtue, we examine OVO in firms making their initial public offerings (IPOs), with respect to key external stakeholders that serve as financial intermediaries (i.e., venture capital firms and underwriting banks). Drawing on stakeholder and resource dependence theories, we argue that mutual interdependencies occur between financial intermediaries and IPO firms such that venture capital firms' ownership levels and underwriter reputation are positively associated with the selection of more virtuous IPO firms. We also argue for the moderating relationship of IPO firm age on these main relationships; since IPO firms have more history and information availability, less importance will be placed on OVO in the selection process. In support of our hypotheses, the results of this study suggest the organizational virtue of IPO firms influences the selection decisions of financial intermediaries by reflecting positively on these key stakeholders to improve legitimacy and reputation.