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Trustworthiness and self-interest

Journal of Banking & Finance 2002 26(9), 1767-1783
This essay discusses the benefits to a firm from morality – specifically trustworthiness – by exploring the analogy between firms and individuals. It identifies five factors that help to align trustworthiness and the interest of an individual: (1) reputation, (2) the social limits on how much trustworthiness demands, (3) uncertainty, (4) the ambiguities of self-interest, and (5) the role of trustworthiness in constituting an individual's interest. Each of these factors has analogues in the case of a firm, and the essay suggests the slightly paradoxical conclusion that in certain environments firms may serve the interests of their stakeholders by placing moral constraints on their actions.