Ethical Behaviour in Practice: decision outcomes and strategic implications

In this paper I analyse the ethical behaviour of managers confronted with legal compliance and ethical demands of salient stakeholders. Drawing on narratives extracted from a qualitative study in the flavours and fragrances industry, I reveal how managers, in highly regulated and knowledge-intensive industries, make decisions involving ethical content. The findings show that ethical behaviour is determined by a three-stage intuitive process leading to arbitration between ethics and profit. This process generates four decision outcomes: fraud, crisis, competition and innovation. The strategic implications of these outcomes are discussed.