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Therefore, when leaders embed moral values in their work environment, outline how the job positively influences the company and society, and show respect and dignity to all employees, subordinates are more likely to share ideas and become creative. In fact, the authors see ethical leadership as a group phenomenon and utterly state that it boosts innovation when made a collective belief. If leaders manage to make the work interesting for their employees for the sake of the task itself, not only for external rewards, they will encourage innovative thinking and behavior. Thus, an emphasis of morality in the workplace, respect for followers and dignity, enriching every job’s significance and using ethical leadership as an organizational norm while strengthening it as a shared value amongst all members of an organization, enhances and predicts innovation performance (Yidong & Xinxin, 2013, pp. 451–452).
Discussion, Development of Hypothesis and Research Questions
It was the purpose of this paper to show the benefits of ethical and socially responsible management with regard to innovation performance. The literature review shown above provides a very rich fundament of the interrelations between management ethics and innovation outcomes. Although the terms of “management ethics” or “corporate social responsibility” still seem to be under debate and evolution, there is a common consent of what actually lies behind them: an organizational, moral responsibility for all stakeholders of a company. Further, it was outlined how ethics contribute to innovation in various ways.
Moreover, ethics even positively impact other organizational outcomes such as information exchange and employee motivation, which, in turn, facilitate innovation again. Therefore, a main hypothesis for future GCBF ♦ Vol. 11 ♦ No. 1 ♦ 2016 ♦ ISSN 1941-9589 ONLINE & ISSN 2168-0612 USB Flash Drive 286 Global Conference on Business and Finance Proceedings ♦ Volume 11 ♦ Number 1 research regarding the field is suggested as follows: The more an organization is managed ethically and socially responsible, the higher its innovation performance is.
Furthermore, the following research questions are of specific interest, particularly for the Austrian business
What are the indicators that determine an organization to be managed ethically and socially responsible?
Are there certain aspects of management ethics that show a higher impact on innovation outcomes than others (e.g. is ethical treatment of employees more important to innovation than ethical treatment of suppliers?)?
How much are companies in Austria managed ethically already? Can differences between various industries and company sizes be revealed?
For different industries (e.g. manufacturing vs. tourism industry), is there a dissimilar interrelation between management ethics and innovation outcomes?
For different types of innovation (product, process, marketing, organization), is there a dissimilar dependency on management ethics?
In addition to that, this paper addresses other future fields of research as well. First of all, further questions not fully answered yet regarding ethics and responsibility of companies also go into the direction of diseases at the workplace (e.g. AIDS), water scarcity, and ecological sustainability – which all will have a high impact on business in the future (Waddock, 2004, p. 34). Moreover, these topics will also become more noticeable amongst all industries – resources will become scarce and whole business models are under threat. Therefore, companies have to make a strategic choice whether to intensify their risk management and build up good defense systems for these challenges or whether to invest in innovation to build a more sustainable future for their business (Paine, 2014, p. 94). Secondly, theoretical concepts on environmentally sustainable, successful innovation are still scarce, although consumer awareness for the topic only seems at the rise. The development of ecological processes, products, services, and business models can be seen as a main trend in business practice, because it holds the opportunity to create competitive advantage (Slotegraaf, 2012, pp. 350–351). From the author’s perspective, these kinds of solutions provide tremendous market potential in German-speaking markets. Generally, those markets are highly sensitive to environmental questions already. Various sustainable business models are at the rise, such as grocery stores where customers bring their own recyclable boxes and bags to pack their shopping, for example. Thirdly, this idea could also be transferred to emerging markets: how can companies build products or services that take into account the exponential societal and environmental challenges in these markets while creating profits at the same time? Finally, all good purposes still come down to a matter of implementation. Thus, it remains to be discussed how to actually put management ethics into practice. Clearly, this is an area of high interest for managers, scientists, and consultants. Therefore, it provides rich opportunities for the development of accordant recommendations.
The main limitation of the paper at hand is, that it lacks empirical research for the moment. As a conceptual paper, this was never the aim of the research, though. The approach shown in this paper is a thorough literature review and analysis of recent research. Still, one might also argue that the topic can be turned around: “Innovative culture may well be the most sustainable one” – forcing sustainable metrics into a company necessarily leads to a mindset that requires innovative thinking and creative solutions to old problems. Thus, instead of managing a company in terms of preventing from pollution and all other possibly negative effects, the creation of real value to customers with innovative products or services is encouraged GCBF ♦ Vol. 11 ♦ No. 1 ♦ 2016 ♦ ISSN 1941-9589 ONLINE & ISSN 2168-0612 USB Flash Drive 287 Global Conference on Business and Finance Proceedings ♦ Volume 11 ♦ Number 1 – which basically has always been the core idea of innovators (Gobble, 2012, pp. 65–66). In that, a valid question for future research might also address this: What comes first? Does innovation naturally have a positive impact on sustainability or CSR activities? Does it lead to management ethics in turn, because it deeply wants to find valuable, beneficial solutions for consumers’ needs? So, for the moment, this paper brings to light a number of questions and it is hoped that many of them will be solved and argued back and forth in order to come up with recommendations for managers to create a future worth living in for everyone. For the context of this paper, management ethics were seen as a precondition and an enabler for innovation. Probably, the phenomenon works vice versa, though.
To sum up, it must be admitted, that the interrelations of management ethics and innovation seem very diverse. Overall, there is not much empirical research available, either. Further, measurement instruments are far from being standardized and agreed upon. Generally, organizations certainly do and have to play an essential role in different societal and environmental developments and it is encouraged to intensify research how these important questions can be solved in order to show a positive contribution to organizational performances in terms of innovation. Further, astonishingly, there are only around 10% of US companies having institutionalized sustainability up to now. In fact, the vast majority of organizations lack a committee that reports to the board and puts its entire efforts into corporate responsibility or sustainability (Paine, 2014, p. 88). Therefore, one final challenge regarding the topic is seen in its operationalization. However, the merits of management ethics leading to sustainable innovations provide incredible future market potential. As outlined, it may take capitalism to a next level – which, having survived the crises of 2008 must be in the interest of all researchers, governments, and managers alike.
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