Academic journal article Journal of the Australian and New Zealand Academy of Management

The Institutionalisation of Business Ethics: Are New Zealand Organisations Doing Enough?

Academic journal article Journal of the Australian and New Zealand Academy of Management

The Institutionalisation of Business Ethics: Are New Zealand Organisations Doing Enough?

Article excerpt


This paper reports the results of a survey investigating the institutionalisation of business ethics among New Zealand's top 200 organisations. A majority of the respondents indicated that steps were being taken by their organisation to incorporate ethical values into daily operations. However, fewer than a quarter of those surveyed indicated that resources were being set aside to accomplish the objective. The most popular tech-nique for institutionalising ethics was the development of a code of ethics. Training in ethics, ethics officers, and ethics committees were not in common use amongst the companies surveyed. Furthermore, very few organisations indicated that ethical behaviour was specifically rewarded. In contrast, a clear majority indicated that they punished unethical actions and made use of disciplinary processes to regulate employee behaviour. Follow-up interviews with a sample of managers from the organisations surveyed high-lighted a preference for the use of informal processes for the institutionalisation of business ethics.



Well publicised occurrences of unethical practises in many high profile organisations such as Enron, WorldCom, and others has fuelled public interest in the topic of business ethics (Bianco 2002; Byrne 2002; Colvin 2002; Dwyer, Dunham, Cohn, McNamee, Barrett, & Weintraub 2002). Amongst the general public there appears to be increasing concern that many business organisations may only pay lip service to ethical considerations. Indeed, even amongst business people themselves there is a belief that there has been a decline in ethical standards (Vitell, Dickerson & Festervand 2000). At the same time there is a growing body of evidence pointing to the benefits for businesses accruing from an ethical stance. These benefits include enhanced job satisfaction, greater levels of organisational commitment, and reductions in employee attrition (Carlson & Kacmar 1997; Fritz, Arnett & Conkel 1999; Schwepker 1999a; Sims & Kroeck 1994; Viswesvaran & Deshpande 1996; Vitell & Davis 1990). Researchers have also documented positive links between corporate social responsibility and financial performance (Aupperle, Carroll & Hatfield 1985; Pava & Krausz 1996; Stanwick & Stanwick 1998; Zahra & LaTour 1987).

Prompted by concerns about the moral state of business, and the realisation that good ethics can pay dividends, many researchers have focussed their attention on attempts to understand the process by which sound ethical practises can be inculcated into an organisation. Several commentators have noted, that broadly speaking, business behaviour can be made more ethical either through the application of external force (e.g. through government and other regulatory mechanisms, media attention, pressure from stakeholders and other interest groups) or by changes driven from within the organisation (Collins 1989; Izraeli & BarNir 1998; Nakano 1999). While external regulations and sanctions can be effective, they do have drawbacks. Regulatory approaches often introduce additional compliance costs for both society and organisations, and can prove difficult to implement effectively. Moreover, many of the external mechanisms intended to ensure ethical conduct are purely reactive in nature and require a serious incident to occur before taking effect (Izraeli & BarNir 1998). It has even been suggested that when regulations are introduced some individuals may take it as a challenge to try to circumvent them (Gross-Schaefer, Trigilio, Negus & Ro 2000). Consequently, regulatory approaches tend to be most effective in coping with situations that are familiar and where problems have arisen in the past. The vast array of behaviours possible in most work settings, coupled with rapid changes occurring in the workplace and in society in general, mean that we cannot hope to anticipate and encompass all possible moral breaches. …

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