Morally motivated individuals behave more cooperatively than predicted by standard theory. Hence, if a firm can attract workers who are strongly motivated by ethical concerns, moral hazard problems like shirking can be reduced. We show that employers may be able to use the firm's corporate...

We study a firm with ethical employees who can adopt a profitable working practice that may harm their customers. Their response to this dilemma reflects their compensation contract as well as their ethical willpower. We identify optimal compensation contracts under utilitiarian and...

Ethical work climate (EWC), introduced by Bart Victor and John Cullen, plays a central role in the business ethics literature due to its influence on employee’s ethical decision-making. Yet, the often-used framework is limited as a descriptive and prescriptive model because it lacks a...

We introduce ethical agents into an analysis of decision making in a profit-maximising firm. Agents can adopt a profitable new practice that may harm customers. Their decision reflects moral considerations, organisational culture, and compensation contracts. We analyse both utilitarian and...