Extant theory proposes that stakeholders reward organizations that behave ethically and punish those that don’t. Taken at face value, this dynamic implies that organizations prioritizing ethical concerns should have competitive advantages augmenting performance. Unfortunately, hoped-for advantages often fail to materialize. Examining this difficult reality, we explore how pluralistic ethical standards manifest in ways that are not obvious because they are often locally and temporally attached to stakeholder groups. Further, we adopt a resource-based view of organizations and draw on literature related to dynamic capabilities and stakeholder theories to argue that ethics-related organization-level behavior can only lead to sustainable competitive advantages when there is continued competence across present and future-oriented systems. As a whole, our work provides a useful theoretical framework for addressing the pragmatic difficulties associated with enacting universal ethical principles in unique situations.
