Cultural Values and International Differences in Business Ethics

We analyze ethical policies of firms in industrialized countries and try to find out whether culture is a factor that plays a significant role in explaining country differences. We look into the firm’s human rights policy, its governance of bribery and corruption, and the comprehensiveness, implementation and communication of its codes of ethics. We use a dataset on ethical policies of almost 2,700 firms in 24 countries. We find that there are significant differences among ethical policies of firms headquartered in different countries. When we associate these ethical policies with Hofstede’s cultural indicators, we find that individualism and uncertainty avoidance are positively associated with a firm’s ethical policies, whereas masculinity and power distance are negatively related to these policies. Bert Scholtens received his Ph.D. at the Universtiy of Amsterdam. Since 1999 he has been working at the Department of Finance of the University of Groningen, the Netherlands. His research particularly looks into the interaction between financial institutions and corporate social responsibility. He has published in, among others, Ecological Economics, Journal of Banking and Finance, Finance Letters, Journal of Investing, Sustainable Development, and Journal of Business Ethics. Lammertjan Dam is a Ph.D. student at the Universtiy of Groningen. He expects to defend his thesis about the integration of corporate social responsibility in economic valuation in Summer 2007.     

Using Student Generated Codes of Conduct in the Classroom to Reinforce Business Ethics Education

This paper presents four different contexts in which students practiced implementing business ethics. Students were required to develop Codes of Conduct/Codes of Ethics as a classroom exercise. By developing these codes, students can improve their understanding of how and why codes of conduct are developed, designed, and implemented in the workplace. Using the three-phase content analysis process (McCabe et al.: 1999, The Journal of Higher Education 70(2), 211–234), we identify a framework consisting of 10 classifications that can be used to assess learning outcomes in embedded ethics education. By analyzing the different content within each classification, instructors were able to gain a better understanding of differing application of ethical principles. This analysis indicates that there needs to be more research on codes of conduct for smaller units within an organization and more integration of work group codes of conduct into the business curriculum.     

The External Ethics Audit: A Guided Experience in Self-Directed Web Inquiry

This paper reviews the literature related to internalethics audits and describes a class project thatinvolves the preparation of an external ethics auditvia web-based self-directed student inquiry. Theactivity promotes higher level thinking includingcritical exploration, analysis, synthesis, andevaluation. The assignment includes the followingcomponents: (1) consideration of ideas concerningcomponents of successful ethics programs, as presentedin identified background readings (available infull-text over the Internet); (2) identification ofrecommended elements for building a successful ethicsprogram and an ethical corporate culture; (3)location, via the Internet, of the corporate code ofethics of a selected organization; (4) analysis of theadequacy of the ethics program of the selectedorganization as compared to recommended elements; (5)investigation (through additional reading, interviews,etc.) of the corporate culture of the selectedorganization; and (6) preparation of an ethics auditinvolving the comparison of the selectedorganization's code of ethics to its actual corporateculture and behaviors, and including the areas thatare well addressed by the organization and those thatneed further attention.     

Codes of Ethics,Orientation Programs,and the Perceived Importance of Employee Incorruptibility

The purpose of this study was to determine the degree to which the review of corporate ethics codes is associated with individuals’ perceptions of the importance of virtue ethics, or more specifically, employee incorruptibility. A convenience sample of individuals working for a university or one of several business organizations located in the Mountain West region of the United States was compiled with a self-report questionnaire. A usable sample of 143 persons representing both the public and private industries was secured for use in this study. The results of an analysis of covariance showed that reviewing ethics codes during employee orientation was positively related to individuals’ beliefs that incorruptibility is an important individual virtue. The managerial implications of the findings are discussed along with suggestions for future research.     

‘The Impact of Corporate Ethical Values and Enforcement of Ethical Codes on the Perceived Importance of Ethics in Business: A Comparison of U.S. and Spanish Managers’

This two country study examines the effect of corporate ethical values and enforcement of a code of ethics on perceptions of the role of ethics in the overall success of the firm. Additionally, the impact of organizational commitment and of individual variables such as ethical idealism and relativism was examined. The rationale for examining the perceived importance of the role of ethics in this manner is to determine the extent to which the organization itself can influence employee perceptions regarding ethics and social responsibility. Results indicate that all of the variables tested, except relativism, impacted upon one’s perceptions of the importance of ethics and social responsibility. Perceptions of the importance of ethics and social responsibility also varied depending upon country of residence with the U.S. sample having somewhat higher perceptions concerning the importance of ethics and social responsibility than their counterparts in Spain. Furthermore, when comparing the two samples, the U.S. sample had significantly higher corporate ethical values, greater enforcement of ethical codes, less organizational commitment and both lower idealism and relativism.     

Ethical Codes of Conduct and Organizational Context: A Study of the Relationship Between Codes of Conduct, Employee Behavior and Organizational Values

Codes of ethics are being increasingly adopted in organizations worldwide, yet their effects on employee perceptions and behavior have not been thoroughly addressed. This study used a sample of 613 management accountants drawn from the United States to study the relationship between corporate and professional codes of ethics and employee attitudes and behaviors. The presence of corporate codes of ethics was associated with less perceived wrongdoing in organizations, but not with an increased propensity to report observed unethical behavior. Further, organizations that adopted formal codes of ethics exhibited value orientations that went beyond financial performance to include responsibility to the commonweal. In contrast to corporate codes of ethics, professional codes of ethical conduct had no influence on perceived wrongdoing in organization nor these codes affect the propensity to report observed unethical activities.     

Codes of Ethics as Signals for Ethical Behavior

This study investigated effects of codes of ethics on perceptions of ethical behavior. Respondents from companies with codes of ethics (n = 465) rated role set members (top management, supervisors, peers, subordinates, self) as more ethical and felt more encouraged and supported for ethical behavior than respondents from companies without codes (n = 301). Key aspects of the organizational climate, such as supportiveness for ethical behavior, freedom to act ethically, and satisfaction with the outcome of ethical problems were impacted by the presence of an ethics code. The mere presence of a code of ethics appears to have a positive impact on perceptions of ethical behavior in organizations, even when respondents cannot recall specific content of the code.     

Contents of Codes of Ethics of Professional Business Organizations in the United States

This paper reports an analysis of the content of the codes of ethics of 15 professional business organizations in the United States, representing the broad range of disciplines found in business. The analysis was conducted to identify common ethical issues faced by business professionals. It was also structured to highlight ethical issues that are either unique to or of particular importance for business professionals. No attempt is made to make value judgments about either the codes of ethics studied or of their content. General ethical values identified include honesty and integrity, general legal compliance, discreditable or harmful acts, and obligations related to social values. More business-specific issues include confidentiality, responsibilities to employers/clients, obligations to the profession, independence and objectivity, and business-specific legal and technical compliance issues.     

Similarities in Business and IT Professional Ethics: The Need for and Development of A Comprehensive Code of Ethics

The study of business ethics has led to the development of various principles that are the foundation of good and ethical business practices. A corresponding study of Information Technology (IT) professionals’ ethics has led to the conclusion that good ethics in the development and uses of information technology correspond to the basic business principle that good ethics is good business. Ergo, good business ethics practiced by IT professionals is good IT ethics and vice versa. IT professionals are professionals in businesses; a difficulty presented to these professionals, however, is the number and diversity of codes of ethics to which they may be held. Considering the existence of several formalized codes of ethics prepared by various IT professionals’ associations, a more harmonized approach seems more reasonable. This paper attempts to present a review of the purpose of codes of ethics, the persons who should be covered by such codes and to organize codes of ethics for business in general and IT professionals in particular and to make the argument that, once again, good ethics is good business practice, regardless of the profession or occupation concerned     

Toward a Model for International Business Ethics

This paper briefly examines the topic of business ethics and attempts to suggest a code of ethics for multinational firms. While most companies have basic policies on employee integrity, confidentiality and sexual harassment, relatively few have established policies regarding bribery, exploitive child labor, human rights violations and other issues they may encounter in the global market place (Drake, 1998). Until recently, very few companies had truly global operations. Consequently little attention was paid to the issue of ethical guidelines in a global context. Recent changes in international markets have led to an explosion of corporations with global operations, and the need for a global code of ethics has grown commensurately. In this paper we explore the issue of global business ethics and attempt to provide a framework for future discussion. We also examine some of the unique difficulties surrounding the development of any set of global business standards. Key among these difficulties is the issue of competing ethical values in home and host countries.     

Principles and Influence in Codes of Ethics: A Centering Resonance Analysis Comparing Pre- and Post-Sarbanes-Oxley Codes of Ethics

This study examines the similarities and differences in pre- and post-Sarbanes-Oxley corporate ethics codes and codes of conduct using the framework of structuration theory. Following the passage of the Sarbanes-Oxley (SOX) legislation in 2002 in the United States, publicly traded companies there undertook development and revision of their codes of ethics in response to new regulatory requirements as well as incentives under the U.S. Corporate Sentencing Guidelines, which were also revised as part of the SOX mandates. Questions that remain are whether these new or revised codes are effective means of communicating changed ethical foci and attitudes in organizations. Centering resonance analysis (CRA) is used to identify differences and similarities across time and industries by analyzing word networks of 46 pre- and post-SOX corporate codes of ethics. Analyses focus on content and structure of generated word networks as well as resulting factors that emerged from the texts. Results are interpreted from the structuration perspective that content and structure of codes are constrained and enabled by system structures while they function to produce and reproduce those structures. Results indicate that corporate codes of ethics are formal discourses of ethics, laws, and control. Code structure has changed across time, with an increased emphasis on compliance in post-SOX codes. Implications for research and practice are discussed in light of findings.     

Global Business Citizenship and Voluntary Codes of Ethical Conduct

This article describes the theory and process of global business citizenship (GBC) and applies it in an analysis of characteristics of company codes of business conduct. GBC is distinguished from a commonly used term, “corporate citizenship,” which often denotes corporate community involvement and philanthropy. The GBC process requires (1) a set of fundamental values embedded in the corporate code of conduct and in corporate policies that reflect universal ethical standards; (2) implementation throughout the organization with thoughtful awareness of where the code and policies fit well and where they might not fit with stakeholder expectations; (3) analysis and experimentation to deal with problem cases; and (4) systematic learning processes to communicate the results of implementation and experiments internally and externally. We then identify and illustrate the three attributes of a code of conduct that would reflect a GBC approach. The three attributes are orientation, implementation, and accountability. The various components of these attributes are specified and illustrated, using website examples from six global petroleum companies.     

Codes of Ethics and the Pursuit of Organizational Legitimacy: Theoretical and Empirical Contributions

The focus of this paper is to further a discussion of codes of ethics as institutionalized organizational structures that extend some form of legitimacy to organizations. The particular form of legitimacy is of critical importance to our analysis. After reviewing various theories of legitimacy, we analyze the literature on how legitimacy is derived from codes of ethics to discover which specific form of legitimacy is gained from their presence in organizations. We content analyze a sample of codes to consider the question of whether a strategic, self-interested rationale lies behind the adoption of a code of ethics. We propose that the process of employing codes of ethics in this strategic manner has become, through isomorphism, an institutionalized practice that itself confers a cognitive form of legitimacy to the organization and further distances the codes from their moral foundation.     

The Managerial Law Firm and the Globalization of Legal Ethics

The processes of economic integration induced by globalization have brought about a certain type of legal practice that challenges the core values of legal ethics. Law firms seeking to represent the interests of internationally active corporate clients must embrace and systematically apply concepts of strategic management and planning and install corporate business structures to sustain competition for lucrative clients. These measures bear a high conflict potential with the core values of legal ethics. However, we observe in parallel a global consolidation of these core values through an enhanced cooperation of national professional bodies, the use of international codes, and comparative legal ethics teaching and research. Furthermore, state regulation of the legal profession is concerned with preserving the core values of legal ethics to conserve the lawyer’s role in upholding the rule of law. This article defends that legal ethics is adapting to the pressures exerted by “managerial” approaches to legal practice without this altering core values that underlie legal ethics.

Tone at the Top: An Ethics Code for Directors?

Recent corporate scandals have focused the attention of a broad set of constituencies on reforming corporate governance. Boards of directors play a leading role in corporate governance and any significant reforms must encompass their role. To date, most reform proposals have targeted the legal, rather than the ethical obligations of directors. Legal reforms without proper attention to ethical obligations will likely prove ineffectual. The ethical role of directors is critical. Directors have overall responsibility for the ethics and compliance programs of the corporation. The tone at the top that they set by example and action is central to the overall ethical environment of their firms. This role is reinforced by their legal responsibilities to provide oversight of the financial performance of the firm. Underlying this analysis is the critical assumption that ethical behavior, especially on the part of corporate leaders, leads to the best long-term interests of the corporation. We describe key components of a framework for a code of ethics for corporate boards and individual directors. The proposed code framework is based on six universal core ethical values: (1) honesty; (2) integrity; (3) loyalty; (4) responsibility; (5) fairness; and (6) citizenship. The paper concludes by suggesting critical issues that need to be dealt with in firm-based codes of ethics for directors.     

Dynamics in Responsible Behaviour In Search of Mechanisms for Coping with Responsibility

In this article the authors focus on the emergence, or disappearance, of notions of responsibility in social dynamic processes. Hence, the starting point in this article is concrete behavior within organisational settings. This article presents a systematic overview of mechanisms related to acting upon a sense of moral responsibility. Some of these mechanisms are based on individual characteristics, others are embedded in the social context wherein responsible behaviour emerges or disappears. In this article, various mechanisms are identified and labelled in order to analyse what types of processes are behind the mechanisms. In this way, the article yields important understandings for the conscious use of these mechanisms to strengthen responsible behavior within organisations.     

The Morality of Everyday Activities: Not the Right,But the Good Thing To Do

This article attempts to understand and develop the morality of everyday activities in organizations. Aristotle’s concept of phronesis, practical wisdom, is utilized to describe the morality of the everyday work activities at two call centres of an Australian insurance company. The ethnographic data suggests that ethical judgements at the lower level of the organization are practical rather than theoretical; emergent rather than static; ambiguous rather than clear-cut; and particular rather than universal. Ethical codes are of limited value here and it is argued that by developing phronesis members of the organization can improve their capacity to deal with this ethical complexity.