The main goal of this study is to analyze the influence of social capital and corporate ethics on social progress. A theoretical model is proposed, and the hypotheses were tested on a sample of 32 Organisation for Economic Cooperation and Development (OECD) and non-OECD countries between 2011 and 2018 that includes data from the Social Progress Imperative non-profit organization as well as from the World Economic Forum database (Global Competitiveness Reports). The results indicate that, although both social capital and corporate ethics have a direct influence on social progress, social capital also influences corporate ethics so that the latter acts as a mediating variable between social capital and social progress.
Introduction
Social progress is
the capacity of a society to meet the basic human needs of its citizens, establish the building blocks that allow citizens and communities to enhance and sustain the quality of their lives, and create the conditions for all individuals to reach their full potential. (Social Progress Imperative, 2019, p. 3)
It has become an increasingly critical agenda for leaders in government, business and civil society. Citizensā demands for better lives have become evident in uprisings since the Arab Spring and in the emergence of new political movements in even the most prosperous countries (Social Progress Imperative, 2019).
Social progress is a priority in public policies. Many initiatives aim to foster social progress, although some are more efficient than others (Alonso-MartĆnez, 2018). Stiglitz, Sen, and Fitoussi (2009), and the Organisation for Economic Cooperation and Development (OECD, 2015), focus on the design of public policies to promote social progress and inclusive growth. A question that has arisen recently is whether social issues are to be addressed by macroeconomic policies only or also by business behavior (Grifell-TatjĆ©, Lovell, & Turon, 2018). The latter authors agree that social issues are appropriately addressed by macroeconomic policies but are created by business, and management can adopt strategies that enhance the beneficial social consequences of productivity growth and mitigate its adverse consequences before they become macroeconomic policy issues. Moreover, since the financial crisis of 2008, there has also been a growing expectation that business must play its role in delivering improvements in the lives of customers and employees, and protecting the environment for us all (Porter, Stern, & Green, 2016). This chapter adopts this view in order to explain social development using social capital and corporate ethics.
In the collective-good view of social capital, Putnam, Leonardi, and Nanetti (1993) describe social capital as the set of norms and networks that facilitate cooperation and coordinated actions. There is a growing literature suggesting that social capital is positively associated with economic development at the regional/country level (Fukuyama, 1995; Knack & Keefer, 1997; La Porta, Lopez-de-Silanes, Shleifer, & Vishny, 1997; Thompson, 2018; Zak & Knack, 2001, among others). We have also found previous research that supports the relationship between social capital and various issues of social progress such as education and health (Putnam, 2000), poverty (Rupasingha & Goetz, 2007), crime (Buonanno, Montolio, & Vanin, 2009; Putnam, 2000), environmental benefits (Atshan, Bixler, Rai, & Springer, 2020; Kim, Kang, & Lee, 2020; Ostrom & Ahn, 2009; Videras, 2013), climate change (Adger, 2003), ownership enforcement of common property (Katz, 2000) and crowdfunding (Cai, Friedemann, & Stam, 2020). As previous literature argues, social capital plays a relevant role in social progress, because trust-based networks in a country encourage firms to be more generous with their knowledge and collaborate more with other agents in order to improve their societies (Thompson, 2018, for a review).
Moreover, several previous papers consider the relevance of corporate ethics and analyze its implications for society (Blau, 2018; Evans, 1991; Ng, Ibrahim, & Mirakhor, 2015). Corporate ethics can thus be understood as the applicability of ethical dimensions to productive organizations and commercial activities (Moriarty, 2016). Corporate ethics environments have important implications for other firms in the country, for consumers and for all the society in general. Ethical rules are an ever-ready social lubricant that permits voluntary participation in production and exchange (Arrow, 1974). Specially, ethical managerial behavior encourages other managers in the same country to be more generous, to collaborate and transfer knowledge, and allows other firms and agents to progress socially (Crowther & Aras, 2008; De Roeck & Farooq, 2018).
The main goal of this study is to analyze the influence of social capital and corporate ethics on social progress, highlighting the mediating role of corporate ethics on the relationship between the other two concepts. Specifically, our contributions to the research are the following. First, although previous literature highlights the importance of promoting social progress (OECD, 2015; Stiglitz et al., 2009) and of measuring it empiric...
