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

• Published in: Journal of business ethics Vol. 76; no. 1; pp. 35 - 53
• Main Authors: Berrone, Pascual, Surroca, Jordi, Tribó, Josep A.
• Format: Journal Article
• Language: English
• Published: Dordrecht Springer 01.11.2007; Springer Nature B.V
• Series: Journal of Business Ethics
• Subjects: Applied ethics; Behavior; Business ethics; Business structures; Communication; corporate ethical identity; Corporate governance; Corporate identity; Corporate image; Corporate responsibility; Determinants; Economics; Enterprises; Ethical behavior; Financial performance; Hypotheses; Identity; Marketing; Organization theory; Political ethics; R&D; Reputations; Research & development; Return on assets; Satisfaction; Social ethics; Social responsibility; Stakeholder; stakeholder satisfaction; stakeholder theory; Stakeholders; Statistical analysis; Stockholders; Studies; Values
• ISSN: 0167-4544; 1573-0697
• DOI: 10.1007/s10551-006-9276-1

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.