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Corporate ethical identity as a determinant of firm performance : a test of the mediating role of stakeholder satisfaction

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2007-11
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Springer
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Abstract
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.
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Business ethics, Corporate ethical identity, Financial performance, Stakeholder satisfaction, Stakeholder theory
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Journal of Business Ethics, 2007, v. 76, n. 1, pp. 35-53