How Deep Is Your Care? Analysis of Corporations' "Caring Level" and Impact on Earnings Volatility from the Ethics of Care Perspective

By Adhariani, Desi; Siregar, Sylvia Veronica | Australasian Accounting Business & Finance Journal, August 10, 2018 | Go to article overview

How Deep Is Your Care? Analysis of Corporations' "Caring Level" and Impact on Earnings Volatility from the Ethics of Care Perspective


Adhariani, Desi, Siregar, Sylvia Veronica, Australasian Accounting Business & Finance Journal


(ProQuest: ... denotes formulae omitted.)

1.INTRODUCTION

Corporate scandals and the detrimental effect of business on society and environment have raised the demands for corporations to be more ethical in running their business. Business ethics is considered to be able to guide business behaviour and establish a moral structure for organizations (Rezaee 2009). Ethics in the workplace is expected to reduce fraud that has been in the past cause public outcry over the corporate ethical practices (such as the case of Enron in the United States (US) and Satyam Computer Services in India). The requirements for more ethical business practices are also driven by several environmental damages such as forest fire in Indonesia driven by land clearing for industry and Samarco mining dam disaster because of activities of BHP Billiton operations. These cases represent the lack of care towards ethical business practices as well as the lack of care in protecting stakeholders' interests.

Some ethics theories can be used as the theoretical perspective for business ethics practices. This research focuses on the ethics of care, which emphasizes the connections to others, primarily the responsibility of care-giver to the other to maintain that connection (Gilligan 1982). Beside its novelty in business literature, the decision to focus on the ethics of care is also based on the raising awareness of the importance to attend to the needs of stakeholders, including women in various stakeholder groups (such as employee, consumer, and community groups).

The concept of care ethics is often juxtaposed with the masculine ethics of justice which views the self as separate from others and uses rights to protect boundaries between the self and others. Feminine way of thinking is represented as a web of relationships and responsibilities, compared to masculine thinking, which is represented by the use of hierarchy (Liedtka 2009). The theory of ethics of care has sparked numerous publications in carerelated topics within the politics field (see Tronto, 1993; Williams, 2001), health care (Schuchter and Heller, 2018; Vijayasingham, 2018) and social work (Parton, 2003; Collins, 2018). However, not much attention has been devoted to it within the business ethics' literature, while it contains relevance to business as a relationship-based ethic and has strong linkages with stakeholder theory (Wicks 1996).

The stakeholder theory views interdependence occurs between groups, while the ethics of care consider it as between and among the individuals in those groups. Both theories view business as a web of relationships and complement each other in dealing with competing claims and inadequate resources. The ethics of care theory also recognizes the importance of clear boundaries to avoid the feeling of overburden on the side of the corporation as the caregiver with caring responsibilities beyond the emotional, intellectual and physical capacity.

Several factors drive organizations to care; for instance, the focus on relationships and connectedness, which is is reflected in the willingness to care for customers and nurture employees and the environment. Since the ethics of care is relatively new, this study explores this type of ethics to fill in the gap in the literature. In this notion, considering the potential contributions that the theory may make to the business literature and practices, this study analyses the business ethics practices from the ethics of care point of view. In addition to the novelty, another motivation to choose this topic is inflicted by greater concern from various parties and stakeholders for corporations to conduct their business ethically. This will not only benefit stakeholders but also benefit the company itself as ethical business conduct will bring about business continuity (Smith 2016, Svensson et al. 2016).

Business continuity is related to companies' long-term goals to have stable and sustained financial performance and avoid high volatility on earnings. …

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