Corporate values of the 25 largest European banks: Exploring the ambiguous link with corporate scandals

• Published date: 01 February 2018
• Author: Timo L. Fiorito,Michel L. Ehrenhard
• Date: 01 February 2018
• DOI: http://doi.org/10.1002/pa.1700

SPECIAL ISSUE PAPER

Corporate values of the 25 largest European banks: Exploring

the ambiguous link with corporate scandals

Michel L. Ehrenhard |Timo L. Fiorito

NIKOS, Netherlands Institute for Knowledge

Intensive Entrepreneurship, University of

Twente, Enschede, Netherlands

Correspondence

Michel Ehrenhard, NIKOS, Netherlands

Institute for Knowledge Intensive

Entrepreneurship, University of Twente,

Enschede, Netherlands.

Email: m.l.ehrenhard@utwente.nl

Corporate value statements communicate what a firm aspires for and what drives their value cre-

ation. In addition, corporate values often also define which behaviors are acceptable and which

are not. Ideally, corporate values are representations of a firm's informal corporate values and

organizational culture. However, in practice, there is an inherent tension between the aspirations

and actual values and ensuing behaviors of and within a firm—let alone the potentially different

interpretations of abstract corporate value statements. In this paper, we set out to provide more

clarity on what corporate values are, how they are inherently ambiguous, and how in practice

they compare to firm involvement in scandals. For this purpose, we study the corporate values

of the 25 largest European banks after the financial crisis. “Integrity”appeared to be the most

common value among the 25 banks, followed by “customer focus.”Nonetheless, over the past

6 years, 15 out of the 25 studied banks were involved in one or more scandals. Scandals can

be systematic or caused by rogue employees, and benefitting the firm or their customers—in

the latter case, providing an interesting interpretation of the customer focus value. Additionally,

we found that courage or its synonyms were barely mentioned among banks' corporate values,

potentially providing an additional explanation for the fast size of the financial crisis. Finally, we

found that banks that had inclusive social principles such as respect, solidarity, and equality did

not face large‐scale scandals.

1|INTRODUCTION

Leaders of large firms cannot rely on interpersonal relations alone in

inspiring their workforce to contribute to value creation and firm

growth. One important way in which leaders communicate their vision

to thousands of employees and set direction is by defining a set of cor-

porate value statements.

1

Such corporate values signal what the orga-

nization stands for (Hollender, 2004; Humble, Jackson, & Thomson,

1994; Suda & Miyabe, 2016; Turnbull, 2001; Webley, 1999). Indeed,

emphasizing ethical behavior and value‐based decisions is part of

entrepreneurial leaders' role next to visioning and creating and sustain-

ing growth (Kuratko & Audretsch, 2009). Corporate values set bound-

ary conditions on employees' search for value creation, that is,

corporate values can aid decision‐making in difficult moral situations,

whereas nonetheless, the application in context and contradictions

between values leave ample room for interpretation (Berlin, 1996). In

other words, the corporate value of profit seeking is very important

but usually not the only and unbounded corporate value a firm wants

to follow. In this respect, we consider the financial sector an interesting

ground for study as the sector has come under close scrutiny in the

past decade for an overemphasis on profit seeking—often portrayed

as to the detriment to their customers and society. Such behavior

could be considered a form of Mertonian innovation in which actors

aim to achieve institutionalized goals but reject institutionalized means

(Merton, 1957). By looking at the financial sector postcrisis, we

attempt to study corporate values after a period of great uncertainty

and volatility for this sector.

Although most large corporations state their corporate values on

their websites, the research into corporate values is rather scarce.

The existing research studies the effect of corporate values on firm

performance (Dibrell, Craig, Kim, & Johnson, 2015; Donker, Poff, &

Zahir, 2008; Yoshimori, 2005) or managerial behavior (Cambra‐Fierro,

Polo‐Redondo, & Wilson, 2008; Kamoche, 2000; Nwachukwu & Vitell,

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This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided

the original work is properly cited.

© 2018 The Authors. Journal of Public Affairs Published by John Wiley & Sons Ltd.

1

In this study, we focus on explicated corporate values as mentioned in company

mission statements, not on implicit corporate values as part of organizational

culture.

DOI: 10.1002/pa.1700

J Public Affairs. 2018;18:e1700.

https://doi.org/10.1002/pa.1700

wileyonlinelibrary.com/journal/pa 1of9