Research Grants

What leads to upward mobility in labor markets and makes people rise to power? Is being true to the inner-self an effective strategy to achieve and maintain power, or rather should the powerful disguise their true selves? Given the importance of upward mobility in labor markets, in this research we test whether authenticity–defined as the degree to which individuals connect with and act upon their true selves–leads perceivers to accord more power. Because authenticity is considered a virtue reflecting the moral inner-self, we further examine if the effect of authenticity on power affordance is due to its perceived morality. Extending previous research on antecedents of power affordance, we propose authenticity as a novel path to organizational power that can benefit even those with limited resources.

Our work offers a novel path to power and extends prior work on the political dynamics of power affordance and specifically on the role of moral behavior in upward mobility in labor markets. Practically, the results will suggest whether or not managers and employees should follow Polonius's advice: "To Thine Own Self be True".

The Safra Center Grant supported the research for the book Veiled Power: International Law and the Private Corporation 1881-1986, that was published recently with Oxford University Press. The book addresses, inter alia, the corporation as a regulatory concept since it deals with the history of corporate regulation and international law. More specifically, the last chapter of the book delves into the history of the concept of the multinational corporation and discusses its failure to become a signifier for regulatory intervention.

Is there a market for being an ethically good company? And what is the price paid by companies for ethical transgressions? A large body of research shows that practices such as cause related marketing, which highlights social responsibility actions taken by the company (CRM; Varandarajan and Menon, 1988), are being rewarded by consumers, whereas unethical behavior meets dissatisfaction (e.g., Ingram, Skinner, & Taylor, 2005). While those observations are certainly true, they explain only part of the variance in consumer’s moral judgments. In the proposed research I argue that a crucial factor dominates consumer’s moral judgments: the legal status of action taken by a company. In particular, while consumers are perfectly capable of conducting moral reasoning (e.g., Bazerman & Gino, 2012; Greene et al., 2001), they substitute this reasoning with outsourcing moral judgment to the law whenever possible. For example, when asked whether it is wrong for doctors to accept money from pharmaceutical companies, consumers judge instead whether it is legal. This is because of a basic feature of human cognition: the tendency to rely on “communities of knowledge” (Sloman & Fernbach, 2017). In the proposed project I will use behavioral experiments to extend these preliminary findings and empirically examine the circumstances under which consumers outsource their moral judgment to the law; understand why they outsource their moral judgment; investigate the implications of moral outsourcing to consumer behavior; and identify exceptions to this rule. The proposed research sheds light on the role of the law in shaping people’s moral perceptions. Moreover, it suggests a surprising and ironic role for the law, of diminishing consumer’s independent, critical thinking. While illegal behaviors are being degraded to being ‘immoral’ even when having positive consequences, legal behaviors are being elevated to being ‘moral’ even when having terrible consequences. The proposed project has several important implications. First, it advances the understanding of the law’s role in whitewashing negative or even dangerous-but-legal practices of companies (i.e., a class of actions that can be collectively defined as institutional corruption; Amit, Koralnik, Posten, Muethel, & Lessig, 2017). Second, it suggests that in order to shape public’s moral perceptions of practices, it is not enough to portray these actions as negative, and highlights the importance of formal regulations as means of shaping moral perceptions. Finally, it emphasizes the need to develop supplementary moral authority sources of knowledge for industries.

There has been a longstanding, heated debate in corporate governance regarding the purpose of the corporation. On one side of this debate stand those who believe that the sole purpose of the corporation is to maximize value for its shareholders. In an enormously influential 1970 article, the economist and Nobel Laureate Milton Friedman set off the intellectual foundation for this view, known as the shareholder primacy approach, arguing that public companies should focus on maximizing their profits and leave the responsibility of addressing societal or ethical objectives, with no or limited connection to shareholder value, to the government or philanthropists.

On the other side of the debate stand those who believe that corporations should think beyond shareholders, and share a fundamental commitment to all stakeholders who contribute to the success of the corporation, including employees, customers, suppliers, and the community at large. According to this approach, known as the stakeholder approach, by taking a broader, more complete view of corporate purpose, companies can focus on creating long-term value, better serving all of their stakeholders. It has also been argued that shareholders themselves have other social preferences, and therefore maximizing shareholder welfare necessitates the corporation’s pursuit of these social preferences.

In this project, I intend to shed new light on this important debate by providing a comprehensive empirical analysis of the ethical and social preferences of public investors. By constructing a rich setting that includes a wide range of business decisions and different types of investors, the project will examine under what circumstances and to what extent public investors are willing to compromise their profits in order to maximize other social and ethical values. Finally, the project will also examine the considerable policy implications that arise from its empirical findings