Ethical codes are the articulation of the ethical values embraced by an organization. The symbolic act of creating codes, finding words which express recondite ideals and value systems, has organizational significance as words shape the perception of ideas (Eccles & Nohria, 1992). Thus, these codes, as expressions of ethical norms, are key organizational documents.
In the early 1980's corporate ethical codes proliferated as a reaction to Watergate, negative attitudes toward big business, and the passage of the Foreign Corrupt Practices Act which forbids bribing foreign officials (White & Montgomery, 1980; Becker & Fritzche, 1987; Brooks, 1989). Confidence in government and public corporations reached a new low during this time (Steiner & Steiner, 1988) and firms focused increasingly upon ameliorating their ethical images (Cressey & Moore, 1983; Berenbeim, 1987). Drafting ethical codes was one response to this pressing exigency.
While the number of ethical codes has increased dramatically in the past fifteen years, they are not a new phenomenon. Heermance (1924) compiled over 130 ethical codes of organizations - mostly associations and cooperatives - active in the 1920's. The growth and interest in ethical codes, however, has created a need for study and attracted the attention of scholars, many of whom have performed content analyses of them.
The present work expands upon these previous studies by examining ethical codes with a new methodology. Rather than using content analysis, a competing values framework (Quinn, Hildebrandt, Rogers, & Thompson, 1991), designed to analyze the more daedal aspects of the codes was used. Instead of focusing on code content, this framework seeks to identify the transformational, instructional, informational, and relational characteristics in the codes. Before summarizing the results obtained from using this model and discussing the implications, this paper provides a definition of ethical codes, analyzes the findings from earlier studies, and discusses the theory and methodology behind the framework used.
Ethical codes are written documents which presume to state the major philosophical principles of an organization. They range in length from one paragraph to more than forty pages and are found in employee handbooks, corporate policy books, and, not infrequently, as separate documents.
Ethical codes differ from mission statements. Mission statements declare what the corporation intends to accomplish, while ethical codes address the values embraced by the corporation (Stevens, 1994). Some ethical code statements require the employee to sign an affidavit of understanding; many, however, do not. Stevens (1992) found 6 of 40 corporate codes required the employee's signature.
Ethical Code Studies
Ethical code studies include those by White and Montgomery (1980), Chatov (1980), Cressey and Moore (1983), Sanderson and Varner (1984), Berenbeim (1987), Mathews (1987), Pitt and Groskaufmanis (1990), Langlois and Schlegelmilch (1990), and Rogers and Swales (1990). In White and Montgomery's study of 30 Fortune 1000 codes, conflict of interest was the most commonly addressed subject (73%), followed by compliance with federal laws (67%) and misuse of corporate assets (67%). In a larger study, Chatov analyzed 281 codes using 12 broad categories. Extortion, gifts, and kickbacks were the most frequently prohibited behaviors, followed by conflict of interest and illegal political payments.
Cressey and Moore (1983) performed a content analysis on 119 corporate codes on file with the Conference Board in New York City and found a strong preference for discussing conduct which might potentially harm the firm as opposed to hypothetical situations. Relations with U.S. governments, customers, suppliers, and competitors were mentioned most frequently along with conflict of interest. They concluded that the codes were mostly concerned with unethical behavior which might decrease profits and exhibited a weak commitment to social responsibility. …