Comparing Virtue, Consequentialist, and Deontological Ethics-Based Corporate Social Responsibility: Mitigating Microfinance Risk in Institutional Voids

Subrata Chakrabarty, A. Erin Bass

Research output: Contribution to journalArticlepeer-review

45 Scopus citations

Abstract

Due to the nature of lending practices and support services offered to the poor in developing countries, portfolio risk is a growing concern for the microfinance industry. Though previous research highlights the importance of risk for microfinance organizations, not much is known about how microfinance organizations can mitigate risks incurred from providing loans to the poor in developing countries. Further, though many microfinance organizations practice corporate social responsibility (CSR) to help create economic and social wealth in developing countries, the impact of such CSR practices remains an underdeveloped area of inquiry. We use a normative ethics lens to develop an ethics-based CSR theory that differentiates between three forms of ethics-based CSR—virtue, consequentialist, and deontological. We argue that while all three forms can help mitigate risk, virtue ethics-based CSR is potentially the most useful form of CSR toward mitigating microfinance portfolio risk. We test our hypotheses using a sample of microfinance organizations from across the world. Our findings suggest that virtue ethics-based CSR is not just an important philosophical paradigm; it can actually help mitigate microfinance portfolio risk when implemented in practice.

Original languageEnglish (US)
Pages (from-to)487-512
Number of pages26
JournalJournal of Business Ethics
Volume126
Issue number3
DOIs
StatePublished - Feb 2013

Keywords

  • Bottom of the pyramid
  • Ethics-based CSR theory
  • Institutional theory
  • Social entrepreneurship
  • Stakeholder theory
  • Sustainability

ASJC Scopus subject areas

  • Business and International Management
  • Business, Management and Accounting(all)
  • Arts and Humanities (miscellaneous)
  • Economics and Econometrics
  • Law

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