Toward organizational integrity measurement: Developing a theoretical model of organizational integrity

• Published date: 01 September 2023
• Author: Madeleine J. Fuerst,Christoph Luetge,Raphael Max,Alexander Kriebitz
• Date: 01 September 2023
• DOI: http://doi.org/10.1111/basr.12329

ORIGINAL ARTICLE

Toward organizational integrity measurement:

Developing a theoretical model of

organizational integrity

Madeleine J. Fuerst

1

| Christoph Luetge

2

| Raphael Max

2

|

Alexander Kriebitz

2

1

Chair of Business Ethics, TUM School of

Management, Technical University of

Munich, Munich, Germany

2

Chair of Business Ethics, TUM School of

Social Science and Technology, Technical

University of Munich, Munich, Germany

Correspondence

Madeleine J. Fuerst, Chair of Business

Ethics, TUM School of Management,

Technical University of Munich,

Arcisstrasse 21, Munich 80333, Germany.

Email: madeleine.fuerst@tum.de

Funding information

Volkswagen Aktiengesellschaft

Abstract

Organizational integrity is a key concept with and

through which a company can assume its responsibility

for ethical and societal issues. It is a basic premise

for sustainable corporate success, as ethical risks

ultimately become economic risks for a company.

Recent research shows the potential of integrity-based

governance models to reduce corporate risks and to

improve business performance. However, companies

are not yet able to assess nor evaluate their level of

organizational integrity in a sound and systematic way.

We aim to develop a theoretical model as a basis for

the measurement of organizational integrity by

conceptualizing the construct and sizing the theoretical

model's scope. We suggest that the theoretical model

follows a holistic approach and involves three types of

dimensions: prerequisite dimensions, independent

dimensions, and dependent dimensions. The

organizational integrity triad—consisting of active

commitments to self-imposed norms and principles,

their transparent institutionalization into corporate

processes and structures, and their implementation

into action—plays a key role in this context.

Received: 13 September 2022 Accepted: 13 July 2023

DOI: 10.1111/basr.12329

This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distrib ution and

reproduction in any medium, provided the original work is properly cited.

© 2023 The Authors. Business and Society Review published by Wiley Periodicals LLC on behalf of Albert P. Viragh Institute for Ethics in

Business at Duquesne University.

Bus Soc Rev. 2023;128:417–435. wileyonlinelibrary.com/journal/basr 417

KEYWORDS

business ethics, measurement, organizational integrity,

theoretical model

1|INTRODUCTION

The board of management oversight role has advanced in recent decades because companies

are becoming more complex; thus, company failures have more extensive impact and

consequences on multiple stakeholder groups. Amid the growing power of companies in

society, corporate governance has become an object of broad public interest (Paine &

Srinivasan, 2019). According to group agent theory (List & Pettit, 2011), a company bears

responsibility not only over its members but also beyond.

1

In fact, companies bear responsibility

for ethical and societal issues, such as human rights, climate change, and poverty—just to name

a few. The organizational integrity construct is a key concept with and through which a

company can assume this very responsibility.

2

Moreover, Fuerst and Luetge (2021) argued that organizational integrity is a basic pre-

mise for corporate success. Integrity-based actions result (among others) in fundamental

trust that is essential for a healthy and sustainably profitable company in the long run.

Ethical risks ultimately become economic ones (Fuerst & Luetge, 2021). An obvious ques-

tion that arises—at least from a board of management perspective in its oversight role—is

how organizational integrity can become an integral part of corporate governance. Recent

research approaches show the potential of integrity-based governance models to reduce cor-

porate risks and to improve business performance (Arjoon, 2017; Cameron et al., 2004;

Fuerst & Luetge, 2021; Hajduk & Schank, 2017; Laufer, 2006; Menzel, 2005). Indeed,

developments in practice indicate that integrity-based governance models are becoming a

vital part of corporate risk management as related research gains attention

(e.g., Arjoon, 2017; Brink, 2017; Calder

on et al., 2018). Simultaneously, practice also shows

that merely compliance-based governance models are reaching their limits: In 2008, the

subprime mortgage crisis, for example, caused Lehman Brothers to apply for insolvency. In

2015, the Diesel emission scandal severely disrupted the entire Volkswagen Group; courts

are still handling compensation cases to this day. Many such examples of varying magni-

tude can be found at the international level. What they have in common is the aftermath:

Integrity-based governance models are needed in a more substantiated concreteness than

has been to date (e.g., Arjoon, 2017; Brink, 2017).

How does a company manage organizational integrity? While integrity-based corporate

governance is gaining attention, companies are not yet able to assess nor evaluate their level

of organizational integrity in a sound and systematic way as a conceptualization of the

construct and a holistic theoretical model are lacking. By calling for a holistic theoretical

model, we refer to a holism understanding coined by Smuts (1926). Accordingly, a holistic

approach refers to the whole of something or to the overall system rather than just its parts.

It is characterized by interconnected parts that can only be explained in relation to the

whole. A holistic theoretical model, in fact, could help companies take on responsibility as

group agent by serving as a new, complementary approach in corporate governance. In

addition, effectiveness assessments of respective activities and benchmarking could become

possible in tandem.

418 FUERST ET AL.