Organizational Virtue and Stakeholder Interdependence: An Empirical Examination of Financial Intermediaries and IPO Firms

Michael S. McLeod, Curt B. Moore, G. Tyge Payne, Jennifer C. Sexton, Robert E. Evert

Research output: Contribution to journalArticlepeer-review

5 Scopus citations

Abstract

Organizational virtue orientation (OVO), an organizational-level construct, refers to the integrated set of beliefs and values that support ethical character traits and virtuous behaviors. To advance the study of organizational virtue, we examine OVO in firms making their initial public offerings (IPOs), with respect to key external stakeholders that serve as financial intermediaries (i.e., venture capital firms and underwriting banks). Drawing on stakeholder and resource dependence theories, we argue that mutual interdependencies occur between financial intermediaries and IPO firms such that venture capital firms’ ownership levels and underwriter reputation are positively associated with the selection of more virtuous IPO firms. We also argue for the moderating relationship of IPO firm age on these main relationships; since IPO firms have more history and information availability, less importance will be placed on OVO in the selection process. In support of our hypotheses, the results of this study suggest the organizational virtue of IPO firms influences the selection decisions of financial intermediaries by reflecting positively on these key stakeholders to improve legitimacy and reputation.

Original languageEnglish
Pages (from-to)785-798
Number of pages14
JournalJournal of Business Ethics
Volume149
Issue number4
DOIs
StatePublished - Jun 1 2018

Keywords

  • Content analysis
  • Ethics
  • Initial public offerings (IPOs)
  • Resource dependence
  • Stakeholder
  • Virtue

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