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.     

‘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.     

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.     

Gender Differences in Ethics Judgment of Marketing Professionals in the United States

This empirical investigation reexamines the impact of gender on ethics judgment of marketing professionals in a cross-section of firms in the United States. In the study, gender differences in ethics judgment focus on decisions in the context of marketing-mix elements (product, promotion, pricing, and distribution). The results of statistical analyses indicate that men and women marketing professionals differ significantly in their ethics judgment. Overall, female marketing professionals evinced significantly higher ethics judgment than their male counterparts. Given the changing demographics of corporate America, it is conceivable that ethical decision-making in organizations stands to improve as the ratio of women in executive positions increases. The finding also bodes well with the recent emphasis of moving away from transaction-based in favor of relationship-focused conceptualization of marketing.     

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.     

A Code of Ethics for CorporateCode of Ethics

Are corporate codes of ethics necessarily ethical? To challenge this notion, an initial set of universal moral standards is proposed by which all corporate codes of ethics can be ethically evaluated. The set of universal moral standards includes: (1) trustworthiness; (2) respect; (3) responsibility; (4) fairness; (5) caring; and (6) citizenship. By applying the six moral standards to four different stages of code development (i.e., content, creation, implementation, administration), a code of ethics for corporate codes of ethics is constructed by which companies can be ethically audited for compliance. The newly proposed code of ethics for corporate codes of ethics was then applied to four large Canadian companies representing a variety of industries: telecommunications; banking, manufacturing, and high technology. The ethical audit of the four companies' ethics programs based on the proposed code indicates that all four companies have room to improve the ethical nature of their codes of ethics (i.e., content, creation, implementation, administration).     

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.     

Ethical Decision-Making in Corporate Entrepreneurial Organizations

No research thus far has attempted to examine ethical decision- making in corporate entrepreneurial organizations. Results of such study would provide management executives with insights on what action, if any, is essential for achieving business ethics and corporate entrepreneurship simultaneously. This paper argues, theoretically, that the work characteristics, organizational characteristics, and some individual characteristics in a corporate entrepreneurial organization are conducive to ethical decisions. These characteristics help mitigate the adverse impact of the turbulent environments on ethical decision- making behavior. Based on these arguments, a tentative model of ethical decison-making in corporate entrepreneurial organization is constructed.     

A Model of Ethical Decision Making: The Integration of Process and Content

We develop a model of ethical decision making that integrates the decision-making process and the content variables considered by individuals facing ethical dilemmas. The process described in the model is drawn from Janis and Mann’s [1977, Decision Making: A Psychological Analysis of Conflict Choice and Commitment (The Free Press, New York)] work describing the decision process in an environment of conflict, choice and commitment. The model is enhanced by the inclusion of content variables derived from the ethics literature. The resulting integrated model aids in understanding the complexity of the decision process used by individuals facing ethical dilemmas and suggests variable interactions that could be field-tested. A better understanding of the process will help managers develop policies that enhance the likelihood of ethical behavior in their organizations. Roselie McDevitt Sc.D. is Assistant Professor of Accounting at␣the Charles F. Dolan School of Business at Fairfield University in Fairfield, Connecticut. Dr. McDevitt teaches financial and managerial accounting. Her Primary areas of research are accounting education and accounting ethics. Catherine Giapponi is an Assistant Professor of Management at the Charles F. Dolan School of Business at Fairfield University in Fairfield, Connecticut. Dr. Giapponi teaches courses in management, organizational behavior, and strategy. Her primary areas of research are corporate governance and business ethics. Cheryl Tromley, Ph.D., is a Professor of Management at␣Fairfield University where she has taught management, organizational behavior, organizational communication, organizational␣culture, organization development, and diversity for 19 years. She has co-authored two editions of the text ``Developing Managerial Skills in Organizational Behavior'␣as well authored or co-authored a significant number of professional articles and presentations related to management and management education.     

The Relationship between Unethical Behavior and the Dimensions of the Ethical Climate Questionnaire

This study examined the relationship between unethical employee behavior and the dimensions of the Ethical Climate Questionnaire (ECQ). In order to explore the relationship between the dimensions of the ECQ and unethical behavior, the factor structure of five previously identified empirical models and the hypothesized nine-dimension model for the ECQ was tested with a confirmatory factor analysis. The analysis revealed that the hypothesized nine-dimension model provided as good or even better fit to the data than the five empirically derived models. Therefore, the nine-dimensional model was used to examine the criterion-related validity of the ECQ. The results demonstrated that the nine ethical climate dimensions were correlated with some of the unethical behaviors examined in this study, but not others. However, the results clearly demonstrated that most of the ethical climate dimensions were significantly related to an aggregate measure of unethical behavior. It was suggested that these results might account for the differences in previous studies on the criterion-related validity of the ECQ. The results also replicated a previous report that the association between unethical behavior and ethical climate is stronger in organizations that do not have a code of ethics. Finally, a difference was observed in the ethical climates for organizations with a code of ethics and organizations without a code of ethics.     

The Ethics of Quality: Problems and Preconditions

A number of advocates for TQM contend that firms who embrace TQM will automatically and naturally act in ethically sound ways (Roth, 1993; Pace, 1999; Steeples, 1994). This claim is a strong one. This paper assesses its truth. We consider the many ways in which quality initiatives, if undertaken in good faith, can foster sound ethics. We explore the various ways in which TQM presupposes, and thus cannot engender, ethical behavior. And, finally, we identify some of the ethical blind spots in quality initiatives and TQM. We propose that if TQM is undertaken by thoughtful people who take steps to correct its ethical blind spots and who understand the need for an ethical underpinning, then TQM and ethics will prove mutually reinforcing.     

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.     

A Partnership Model of Corporate Ethics

The stock market crash of 1987 had a profound effect on corporate Australia and the Australian community in general. The fall-out revealed that some of our most respected business figures had not been as ethical, or even as lawful, as we would have hoped. This impropriety produced in Australia an awakening to business ethics. Whilst many companies endeavoured to introduce ethical practices into their corporations, they perceived ethics as a way of minimising damage to the corporation and in some cases as a means of competitive advantage. What was lost was the reason that one should embark on business ethics; and that is to make the society and corporate Australia a more ethical place in which to exist.This paper proposes a model based on 2 factors: commitment and partnerships, as a means of enabling corporate Australia to refocus attention on the main purpose of being inherently ethical in all that we do. This ethical model requires a commitment to partnerships with all stakeholders both internal and external in an attempt to enhance the level of ethical business practices that are contemplated and pursued within corporate Australia. Whilst the research agenda and the information collected is Australian-based, it is hoped that the ideas contained within this paper will have a wider appeal to corporations in similar cultural settings.     

The Influence of Organizational and Code-Supporting Variables on the Effectiveness of a Code of Ethics

Prior findings on the effectiveness of the codeof ethics in promoting ethical behavior aremixed. Perhaps more is required to promoteethical behavior than the mere existence of thecode within the organization. The presentstudy proposes, first, that the extent to whichthe organization communicates, enforces andencourages reference to the code is importantto achieving the desired results. Second,organizational ethics variables (namely, topmanagement support for ethical behavior, theassociation between ethical behavior and careersuccess, and organizational ethical climate)can have a significant influence on ethicalbehavior of organizations over and above theimpact of the implementation and use of thecode. Both propositions are supported based onregression analyses of data from a survey of237 managers, the majority of whom hold middleand top level positions within organizations.     

Corporate ethical consulting: Developing management strategies for corporate ethics

The increase of scandals in the business sector is forcing many companies to examine their corporate ethical behavior with a view toward rebuilding their corporate value system. This article describes how value-system reconstruction must proceed in a company and demonstrates that corporate ethics can only become plausible if based on a corporate ethical ethos. It outlines a five-step development plan of management strategies toward rebuilding a company's value system on this corporate ethos through: corporate policy and strategy reformulation; corporate ethical code promulgation and value-statement formulation; management ethical training and corporate ethical education; and corporate ethical performance evaluation. The role of the corporate ethical consultant is also outlined to illustrate how corporate ethical consulting can provide the specialized services designed to insure an enduring management ethical upgrading and to improve a company's corporate ethical performance record. The discussion indicates how corporate ethical consulting promotes good business through its capacity to deliver industry credibility and company security. Richard Guerrette is a Research Fellow at Yale University Divinity School, where he is conducting a research study in organization management process and corporate ethics. He is also a Lecturer in sociology at the University of Connecticut at Hartford and is an author of two books on ecumenical ministry and social movement organization in the church. He has published extensively in theological journals and has recently contributed an article on Environmental Integrity and Corporate Responsibility for the Journal of Business Ethics 5 (1986). He is the Director of Equipax, an organization/management consulting service in Farmington, Connecticut.     

Can corporate codes of ethics influence behavior?

There is increasing public interest in understanding the nature of corporate ethics due to the knowledge that unethical decisions and activities frequently undermine the performance and abilities of many organizations. Of the current literature found on the topic of ways organizations can influence ethical behavior, a majority is found on the issue of corporate codes of ethics.Most discussions on codes of ethics evaluate the contents of the codes and offer opinions on their wording, content, and/or value. Unfortunately, very little research has been devoted towards discovering whether they are effective in promoting ethical decision-making behavior. Thus, due to the lack of empirical research on this particular topic, this paper attempts to further address this issue.Data was obtained through the use of a fifteen-item questionnaire, in which seven of the items were scenarios on the topic of ethical behavior, and the remaining eight questions were concerned with demographic information. The survey was administered to 150 business students at a large university.The results indicated that corporate codes of ethics are not influential in determining a person's ethical decision-making behavior.     

When Ethics Matters – Interpreting the Ethical Discourse of Small Nature-Based Entrepreneurs

This article examines the unique ethical concerns faced by small nature-based entrepreneurs in their everyday business operations. By using qualitative, empirical data, six kinds of business situations were identified to bring about moral consideration for all the entrepreneurs in this study. The business situations identified were the selection of raw material suppliers, reconciling the quality of production and the lack of resources, the pricing process, the content of marketing information, the close relationships to employees and the collaboration with other entrepreneurs. The ethical argumentation used in these business situations was examined in relation to three ethical theories: utilitarian ethics, deontology and virtue-ethics. This article shows that typical for the decision-making of the small nature-based entrepreneurs in an ethical sense is the variety of ethical arguments used and the important role of customers and employees influencing the ethical views of the entrepreneurs.     

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.     

Using Live Cases to Teach Ethics

This paper describes a live ethics case project that can be used to teach ethics in a broad variety of business classes. The live case differs from regular cases in that it involves a current situation. Students select an on-going or current event that involves ethical violations and write a case about it. They then present their case and run a debate about the challenges and issues outlined in the case and the actions that could have or should have been taken. The dynamic project fulfills the key criteria for effective ethics education since it increases awareness of the complexity of ethical challenges, allows application of concepts, creates a personal emotional engagement in the case, is relevant, holds students accountable for their position, and creates a setting that encourages students to think critically about ethics.Dr. Victoria McWilliams is Professor of Finance in the College of Commerce and Finance at Villanova University. Her areas of interest include pedagogical issues, as well as corporate governance and control. She has distinguished herself for her ability to provide high quality, innovative business education, and for her outstanding leadership achievements at various academic institutions.Dr. Afsaneh Nahavandi is a management faculty at the School of Global management and Leadership at Arizona State University’s West campus. Her areas of interest include leadership, teams, and culture. She has been director of the MBA program at the West campus of ASU, director of the University College, and associate dean of the ASU University College since July 2006.