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Ethical Codes of Conduct and Organizational


Context: A Study of the Relationship Between
Codes of Conduct...

Article in Journal of Business Ethics March 2001


DOI: 10.1023/A:1006457810654

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

ABSTRACT. Codes of ethics are being increasingly lines for practitioners faced with the tasks of
adopted in organizations worldwide, yet their effects developing and implementing codes of ethics
on employee perceptions and behavior have not been (e.g., Murphy, 1995) while empirical work has
thoroughly addressed. This study used a sample of 613 focused on the properties of existing codes
management accountants drawn from the United (e.g., Montoya and Richard, 1994). A second
States to study the relationship between corporate and
theme which has emerged in studies of codes of
professional codes of ethics and employee attitudes
and behaviors. The presence of corporate codes of
ethics is their prevalence; that is, the extent to
ethics was associated with less perceived wrongdoing which ethical codes have been adopted and
in organizations, but not with an increased propen- implemented in specific countries (e.g., White
sity to report observed unethical behavior. Further, and Montgomery, 1980) or industries (e.g.,
organizations that adopted formal codes of ethics Berenbeim, 1992). Results, to date, indicate that
exhibited value orientations that went beyond finan- about three quarters of American firms have
cial performance to include responsibility to the com- adopted formal codes of ethics with the per-
monweal. In contrast to corporate codes of ethics, centage of adopters rising steadily over the past
professional codes of ethical conduct had no influence two decades (e.g., Fulmer, 1969; White and
on perceived wrongdoing in organization nor these Montgomery, 1980). Finally, an emergent theme
codes affect the propensity to report observed uneth- within this general domain concerns the influ-
ical activities.
ence of codes of ethics on employee behavior in
organizations.
KEY WORDS: codes of ethics, organizational values,
wrongdoing Of these three themes, the behavioral element
appears to be the least researched topic area with
considerably fewer studies addressing the influ-
ence of ethical codes on employee behaviors and
A growing interest in codes of ethics in organi- attitudes (Cassell et al., 1997). Studying the
zations is evident over the past few decades. behavioral and contextual elements of codes of
Research on this topic is characterized by several ethics in organizations necessarily broadens the
themes representing distinct lines of inquiry. One scope of research on this topic because it is
central theme concerns the characteristics of widely accepted that corporate codes of conduct
effective codes of ethics in terms of promoting are only one influence of ethical behavior in
ethical behavior in organizations. Individual organizations. Specifically, such behavior is also
studies have been both normative and empirical. affected by the ethical codes of other groups
Normative work has provided excellent guide- relevant to the work place such occupational and

Journal of Business Ethics 30: 185195, 2001.


2001 Kluwer Academic Publishers. Printed in the Netherlands.
186 Mark John Somers

professional societies, and trade associations (Van ical studies operating from the behavioral per-
Maanen and Barley, 1984). spective lag conceptual development work by a
Perhaps as a consequence of the specialized large margin. Not surprisingly, most of these
knowledge and unique power position of pro- studies have been exploratory in nature typically
fessionals in organizations (Scott and Hart, 1977), addressing research questions rather than testing
professional codes of ethics have received almost formal hypotheses.
as much interest as an influence of employee One area within the behavioral domain that
behavior as have corporate codes of ethics. has received increasing interest is the relationship
Research focused on professional codes has also between the perception of wrongdoing in the
mirrored the themes which are evident in studies organization and the presence or absence of
of corporate codes of ethics. Specifically, the corporate codes of ethics. Corporate codes are
design and development of professional codes of hypothesized to inhibit unethical behavior in
ethics is an area of interest (e.g., Jamal and Bowie, organizations and empirical studies have consis-
1995) as are ethical dilemmas associated with tently supported this proposition (Tsalikis and
professional practice (Brien, 1998). Fritzche, 1989; Murphy et al., 1992). That is,
Research on codes of ethics, in general, thus employees were less aware of unethical or illegal
appears to have a strong emphasis on their activity in organizations that adopted formal
content and on the implementation process. codes of ethics.
These studies have provided a solid foundation This finding, in turn, is central to the behav-
that can be used to begin to study the contex- ioral perspective because it provides some pre-
tual and behavioral aspects of codes of ethics in liminary evidence that codes of ethics have
organizations (Cassell et al., 1997). Contextual tangible effects in the workplace. Recently, atten-
factors refer to organization specific properties tion has been focused on the processes that
and qualities that can fall within the rubric of underlie this outcome. An area that has received
organizational culture and climate (Zalkind, some interest is the interplay between formal and
1987). Behavior, of course, refers to the ethical informal control mechanisms in shaping ethical
behavior of individuals in organizations. As such, behavior in organizations (Cassell et al., 1997;
it seems useful to view exploration of the con- Brien, 1998). The role of corporate culture and
textual and behavioral elements of codes of ethics stated organizational values (informal control) is
in organizations as a natural progression for seen as especially relevant to understanding how
research on this topic, and not as a gap in prior corporate codes of ethics (formal control) influ-
research. ence the ethical dimension of employee behavior
This study is grounded in the contextual- (Zalkind, 1987). Yet, at present, there are few
behavioral perspective. Consequently, the locus (if any) empirical studies directed toward identi-
of this research is the individual. Its specific fying the underlying value orientations of orga-
purpose is to examine the influence of corpo- nizations that have and have not adopted formal
rate and professional codes of ethical on the per- codes of ethical conduct.
ceptions and behavior of professionals (i.e., Assessing the level of employee commitment
management accounts) in organizations. to organizations with and without ethical codes
carries this approach one step further by pro-
viding some insight into degree of support
Codes of ethics and employee behavior for prevailing organizational value orientations
(Porter et al., 1974). While there have been a few
Assessing the influence of ethical codes in orga- studies of the relationship between organizational
nizations on employee perceptions and activities commitment and whistle-blowing (e.g., Somers
is central to a behavioral/contextual orientation. and Casal, 1994), the role of corporate codes of
As such, while the array of attitudes and behav- ethics or that of prevailing organizational values
iors that is of potential interest is broad (Cassell was not considered in these studies. That is,
et al., 1997), it must be emphasized that empir- context was not fully considered in these studies
Ethical Codes of Conduct and Organizational Context 187

in that it was not clear what values employees supported this proposition in that results indicate
were committed to or whether corporate codes less employee awareness of unethical activity in
of ethics were present. organizations that have adopted formal codes of
A behavioral perspective on codes of ethics in ethics (Murphy et al., 1992). As such, Hypothesis
organizations is also grounded in the notion that 1 is grounded in theory and supported by
employees are influenced not only by their prior research findings. It is anticipated that
employer, but by other groups and societies as this study will replicate results from previous
well, many of which often have their own formal studies.
codes of ethics. Most interest has been in pro-
RQ1: Does familiarity with professional
fessional codes of ethics with the assumption that
codes of ethical conduct influence
professional codes of ethics promote ethical
employee perceptions of unethical
behavior in organizations (Jamal and Bowie,
behavior in organizations? More specif-
1995). While a long-standing and continuing
ically, does an employees knowledge
interest in professional socialization is evident in
of the content of professional codes
the occupational sociology literature, studies of
of ethics of groups to which that
the influence of formal professional codes of
employee is a member affect percep-
ethics on employee behavior are very sparse. The
tions of unethical behavior at work?
context of ethical decision-making and ethical
behavior in organizations, thus, is not well Professional codes of ethics are hypothesized to
understood. inhibit wrongdoing in organizations (Jamal and
Bowie, 1995) so that a case can be made that
professional codes of ethics act in much the same
Hypotheses and research questions way as do corporate codes of ethics with respect
to unethical behavior in organizations. However,
Statement of formal hypotheses is restricted to it should be noted that professional socialization
those research issues where there is sufficient is not under the direct control of work organi-
conceptual development and concomitant empir- zations (Van Maanen and Barley, 1984) so that
ical support to justify them. Research questions extrapolating theory and research on corporate
represent exploratory areas where theory and/or codes of ethics and employee perceptions of
empirical findings have not advanced to the point wrongdoing to professional codes of ethics is not
where formal hypotheses are appropriate. As without problems. In this regard, it is not clear
much of this study is concerned with under- if the socialization process that underpins the
researched topics, only one formal hypothesis was adoption of corporate codes of ethics also
stated. operates for professional codes of ethics. Further,
there seem to be few, if any, empirical studies of
H1: Unethical behavior is less prevalent in
how professional codes of ethics influence ethical
organizations that have adopted corpo-
behavior in organizations.
rate codes of ethics than it is in those
It is, therefore, not clear at this point if pro-
organizations that have not formally
fessional codes of ethics do indeed inhibit uneth-
adopted such codes.
ical behavior of members of those professions in
Theory and previous research findings suggest organizational settings. As such, this issue of if
that formal codes of ethics inhibit unethical and how professional codes of ethics influence
behavior in organizations (e.g., Tskalikis and employee perceptions of wrongdoing appears to
Fritchze, 1989). From a conceptual standpoint be best treated as a research question.
coporate codes of ethics are thought to highlight
an organizations commitment to promoting RQ2: What are the value orientations of
ethical behavior thereby acting as part of a social- organizations with and without corpo-
ization process designed to ensure high standards rate codes of ethics? Do they differ, and
of behavior. Empirical research, in turn, has if so, are the differences meaningful?
188 Mark John Somers

The organizational context in which corporate when faced with tangible evidence of wrong-
codes of ethics are embedded has garnered doing. While theory might justify a formal
increasing interest, yet remains an under- hypothesis here, the paucity of empirical research
researched topic area (Cassell et al., 1997). The argues for a research question instead. Finally, as
notion of organizational value orientation has was the case with RQ1, the influence of both
been used to characterize an organizations stated professional and corporate codes of ethics is con-
responsibilities to its various stakeholders (Beatty, sidered.
1998). Thus, an organization can adopt a value
orientation that focuses mostly on financial
results or it may take a more balanced view that Method
includes responsibilities to other stakeholders
such as customers, employees and society at Sample
large.
It, therefore, seems important to explore The sample was drawn from the membership of
whether specific value orientations are related to the Institute of Management Accountants (a pro-
the adoption of a formal code of ethics. Although fessional society based in the United States), and
speculative, it appears likely that organizational was comprised of 613 management accountants
value orientations that go beyond profitability working in a wide array of industries in the
should be associated with the adoption of formal United States. Potential participants were con-
corporate code of ethics. tacted by mail and were asked to complete a
questionnaire focused on ethical practices at
RQ3: Are employees more committed to work. They were identified using a 7 percent
organizations that have adopted codes simple random sampling of the IMAs member-
of ethics? ship lists, and the 20 percent response rate to the
questionnaire yielded 613 usable replies. Replies
This research question represents a more detailed
were completely anonymous.
examination of the contextual issues associated
Respondents were primarily male (81%) with
with corporate codes of ethics by addressing an
a mean age of approximately 40 years. Over half
indicator of employee socialization (Porter et al.,
of the sample (56%) had 6 or more years expe-
1974). In conjunction with RQ2, some insight
rience in their present jobs, 36 percent had a job
is gained into the values that employees have
tenure of 1 to 6 years, and only 8 percent held
internalized. Further, it has been suggested that
their present jobs for less than one year. Over
organizations that have adopted codes of ethics
three-quarters of the sample (76%) were at
facilitate ethical decision-making for their
middle or senior management levels in their
employees leading to positive work attitudes and
organizations (12 percent were first-line super-
possibly to higher levels of organizational com-
visors and 12 percent had no supervisory respon-
mitment (Weeks and Nantel, 1992).
sibility) so that 88 percent of those sampled had
RQ4: Do corporate and professional codes of direct supervisory responsibility in their respec-
ethics affect employee behavior with tive organizations.
respect to the reporting of unethical Breakdown with respect to primary area of job
activities? responsibility is as follows: general management
(15%), corporate accounting (28%), public
While there is a growing body of literature on accounting (7%), general accounting (15%), cost
the topic of employee whistle-blowing, hypoth- accounting (8%), risk management (7%), budget
esized predictors of whistle-blowing have gen- and planning (3%), tax accounting (3%), internal
erally focused on employee characteristics and/or auditing (3%), and accounting systems and tech-
organizational structure (Near and Miceli, 1987). nologies (12%). The following industries were
This research question addresses the linkage represented in the sample: agriculture, forestry
between ethical codes and employee behavior and fisheries (2%), mining (1%), contract
Ethical Codes of Conduct and Organizational Context 189

construction (3%), manufacturing (40%), trans- Perceptions of organizational values. Employee per-
portation, communications and utilities (8%), ceptions of organizational values was measured
wholesale and retail trade (10%), and finance, real with an item from Aupperles (1984) Corporate
estate and insurance (36%). Social Responsibility Scale. Respondents were
asked to rank the relative importance that their
organizations placed on the following value-based
Measures activities: be as profitable as possible; engage in
voluntary and charitable contributions; abide by
Codes of ethics. Unlike many previous studies laws and regulations; and behave morally and
which used objective indicators, employee per- ethically.
ceptions were used to determine the presence or
absence of a formal corporate code of ethics. Organizational commitment. The short form of the
This was accomplished with a single-item indi- Organizational Commitment Questionnniare was
cator which gave respondents one of three used to measure employee commitment to their
choices as to whether their firm had a published organizations. This measure is based on Porter
code of ethics for its employees which included: et al.s (1974) definition of commitment as the
yes, no and dont know. relative strength of an individuals identification
Respondent perceptions were also used to with and involvement in a particular organiza-
assess familiarity with the IMAs Standards of tion (Mowday et al., 1979). Commitment
Ethical Conduct for Management Accountants. includes acceptance of and support for organi-
A single-item indicator was used with three alter- zational values (Porter et al., 1974) ( = 0.92).
natives: very familiar, somewhat familiar,
and not at all familiar.
Statistical analyses
Awareness and reporting of organizational wrongdoing.
Awareness of wrongdoing was measured by Tests of hypotheses and research questions
asking respondents if they had personally required comparisons between observed fre-
observed or obtained direct evidence of finan- quencies or means across groups. Comparisons
cial fraud in their present organizations within between observed frequencies were evaluated
the last five years. Financial fraud was chosen as with chi square analysis with results reported as
an indicator of wrongdoing because of its cen- percentages rather than as raw frequencies.
trality to accounting, and it was operationalized Comparisons between means were analyzed with
with Bolognas (1984) typology which includes multivariate and univariate analysis of variance.
ten forms of financial fraud (e.g., embezzlement
of assets, understating expenses or liabilities).
Respondents who observed at least one of the Results
ten forms of financial fraud were classified as
aware of wrongdoing. Hypothesis 1 was supported in that respondents
Based on their responses to the measure of in organizations with formal codes of ethics were
awareness of wrongdoing, 340 respondents had less aware of wrongdoing than were respondents
observed wrongdoing in their organizations. in organizations without formal codes of ethics.
These respondents were then asked whether or Specifically, a significantly smaller percentage of
not they had reported the observed wrongdoing respondents (40.5 percent) in organizations that
with a single item with a binary response of yes had corporate codes of ethics were aware of
or no. About 35% (121of 340) of those respon- unethical activity in their organizations when
dents aware of wrongdoing in their organizations compared to the percentage of respondents in
reported it. organizations without a code of ethics who were
aware of wrongdoing (65 percent) (2 =13.65
2 df, p < 0.01, See Table I).
190 Mark John Somers

Research Question 1 served as an extension Follow-up analyses using univariate F statis-


of Hypothesis 1 by assessing the influence of tics from ANOVA models were used to deter-
professional codes of ethics on awareness of mine where significant differences between the
unethical behavior in organizations. The non- groups are present. Means for each value state-
significant results suggest that professional codes ment across the three groups are presented in
of ethics have little or no relationship to Table III with significant differences among
employee awareness of wrongdoing in organiza- groups denoted by asterisks. Results indicate that
tions (See Table II). organizations with and without coporate codes
Research Questions 2 and 3 were focused on of ethics differed on three of the four value state-
contextual factors associated with the presence or ments (emphasis on profitability, charitable con-
absence of corporate codes of ethics. Research tributions, and moral behavior) with each value
Question 2 addressed underlying corporate statement being rated as more important in the
value orientations while Research Question 3 organizations that adopted formal ethical codes.
examined differences in levels of organizational Research Question 3 was focused on levels of
commitment. As several dimensions of corporate employee commitment to organizations with and
values were examined, data were analyzed with without codes of ethics. As there is only one
Mulitvariate Analysis of Variance (MANOVA). dependent variable in this case, a simple, one-
MANOVA corrects for Type 1 errors when way ANOVA was used to analyze data. Results
testing differences among a set of variables across indicated that there were significant differences
two or more groups. The multivariate F was sta- between groups (F = 3.89 2, 594 df, p < 0.05)
tistically significant (F = 2.82 8, 1212 df, p < with organizations that have adopted formal
0.001) indicating that differences among the codes of ethics demonstrating the highest level of
groups (codes of ethics, no code of ethics and employee commitment. Specifically, the mean
not sure) were present. level of commitment was 3.65 for these organi-

TABLE I
Awareness of wrongdoing in the organization and the presence of corporate codes of ethics

Corporate code of ethics

Yes No Dont know

Percent unaware of wrongdoing 59.5 35 47.1


Percent aware of wrongdoing 40.5 65 52.9

2 = 13.05; p < 0.05; N = 613.

TABLE II
Awareness of wrongdoing in the organization and familiarity with professional codes of ethics

Professional code of ethics

Very Somewhat Not


familiar familiar familiar

Percent unaware of wrongdoing 40.5 44.5 45


Percent aware of wrongdoing 59.5 54.6 55

2 = 2.77; p > 0.05; N = 613.


Ethical Codes of Conduct and Organizational Context 191

zations, 3.45 in organizations without formal sity to report observed wrongdoing. These
codes of ethics and 3.53 in organizations where findings are summarized in Table IV.
respondents were not sure if a code was adopted.
Finally, Research Question 4 was concerned
with the relationship between the reporting of Discussion
observed wrongdoing and codes of ethics (both
corporate and professional), Results indicated As research on the topic of codes of ethics in
that neither the presence of corporate codes of organizations has progressed, a growing interest
ethics nor a high level of familiarity with the in behavioral and contextual issues associated
Institute of Management Accountants code of with ethical codes of conduct is evident in
ethics had any influence on employee propen- the recent literature. This development can be

TABLE III
Comparisons of mean importance ratings of corporate value statements from MANOVA

Value statement Corporate code of ethics

Yes No Dont know


n = 44 n = 305 n = 264

1. Be as profitable as possible 2.61* 3.06 2.89


2. Engage in charitable contributions 1.15* 1.28 1.17
3. Abide by laws and regulations 2.68* 2.55 2.67
4. Behave morally and ethically 3.25* 3.06 3.25

Notes. * p < 0.05; All significant differences are between the yes and no groups; that is, organizations
where respondents were aware and unaware of a corporate code of ethics. Multivariate F = 2.82 (8, 1212 df ),
p < 0.001.

TABLE IV
Reporting of observed wrongdoing and the presence of ethical codes of conduct

Corporate code of ethics

Yes No Dont know

Percent who reported wrongdoing 44 35 35


Percent who did not report wrongdoing 56 65 65

2 = 0.78; p < 0.05; N = 340.

Professional code of ethics

Very Somewhat Not


familiar familiar familiar

Percent who reported wrongdoing 38 32 40


Percent who did not report wrongdoing 62 68 60

2 = 0.45; p > 0.05; N = 340.


192 Mark John Somers

viewed as a natural progression of a research in organizations without codes of ethical


stream that began when scholars began to conduct.
investigate the implications of formal codes of While this result is encouraging, an ancillary
ethical conduct for both individuals and for finding associated with it raises some cause for
organizations. The first phase of this research concern. Specifically, only 8 percent of study
was (appropriately) focused on the content, participants reported that their organizations had
adoption and communication of ethical codes, formal codes of ethics. This finding stands in
particularly corporate codes of ethics (Cassell et sharp contrast to previous research findings indi-
al., 1997). Continued progress in this area, in cating that nearly 75 percent of American orga-
turn, has provided a solid foundation that is well nizations adopted corporate codes of ethics
suited to exploring behavioral and contextual (White and Montgomery, 1980). Thus, consid-
issues associated with codes of ethics in organi- erable slippage is evident when the unit of
zations. analysis changes from the organization to the
The present study was grounded in the behav- employee suggesting that communication and
ioral perspective. As such, ethical codes were reinforcement of corporate codes of ethics badly
analyzed as antecedent variables (in relation to lags their adoption. This interpretation is sup-
employee behaviors and contextual characteris- ported by our additional finding that 42 percent
tics of organizations) rather than defined as the of study participants were not sure if their
focal or outcome variables that typify most prior organizations had adopted a code of ethics.
research on this topic area. Thus, the primary As there is far less empirical research on the
focus of our research issues and concomitant data topic, a formal hypothesis concerning the rela-
analyses is on (potential) relationships between tionship between professional codes of ethics and
codes of ethics in organizations, contextual employee awareness of wrongdoing was not
characteristics of organizations and employee appropriate. While it had been suggested that
behaviors. professional codes of ethics operate in much the
It seems most useful to organize the discussion same way as do corporate codes with respect to
around these behavioral and contextual themes. employee awareness of unethical activity in orga-
These themes are subsumed under one formal nizations (Ferrell and Greshan, 1985), this study
hypothesis and four research questions, the latter indicated that there was no relationship between
resulting from the paucity of empirical work in knowledge of a professional code of ethics and
this specific area (Weeks and Nantel, 1992). As awareness of organizational wrongdoing.
behavioral issues have received somewhat more As there has been little or no prior research
attention in the literature (with respect to con- exploring the relationship between familiarity
ceptual development and empirical studies), they with professional codes of ethics and awareness
represent a good starting point to consider the of unethical activity in organizations, there is not
implications of our findings. much of an interpretative context to draw upon.
One topic area that is primary behavioral There are, however, some methodological issues
in nature and which has received a good deal that are germane to this finding. Specifically, it
of research attention concerns the degree of can be noted that the Institute of Management
employee awareness of unethical activity in orga- Accountants has a detailed, clear and well
nizations that have and have not adopted formal communicated code of ethical conduct so that
codes of ethics. Prior findings clearly indicate members should be aware of it. Indeed, nearly
that awareness of unethical activity is less preva- 90 percent of study participants reported that
lent in organizations that have adopted codes of they were very familiar or familiar with the
ethics (Murphy et al., 1992). This study provided Associations code of ethical conduct. In addition,
additional support for this proposition in that it can be noted that awareness of unethical
employees in organizations that had adopted activity was restricted to issues related to profes-
corporate codes of ethics were significantly sional practice thereby eliminating possible con-
less aware of wrongdoing than were employee fusion between general unethical conduct and
Ethical Codes of Conduct and Organizational Context 193

unethical behavior tied to the profession. That be perceived to be outside the realm of expected
having been said, it is especially important to be behavior by many employees. A concept that
circumspect when interpreting non-significant might shed some light on this issue is
findings, especially with an issue that has received organizational citizenship behavior (Organ and
such scant attention. Thus, the most appropriate Moorman, 1993). Citizenship for many members
interpretation for this finding seems to be that of an organization might mean following
the relationship between familiarity with profes- the stated code of ethics, but not necessarily
sional codes of ethics and awareness of wrong- reporting those instances where violations are
doing in organizations might not be as strong as present. For example, when police officers
previously thought. A more definitive statement, behave unethically while on duty, investigators
of course, requires additional research evidence. are often faced with a blue wall of silence
The consistent pattern of results suggesting when questioning witnesses who are also police
that corporate codes of ethics are associated with officers.
less employee awareness of wrongdoing sheds A similar argument can be made with respect
little light on the question of how employees will to professional codes of ethics. In this case, the
respond when faced with unethical activity in focal group is the occupational/professional com-
their organizations. That is, do corporate or pro- munity (e.g., Van Maanen and Barley, 1984), and
fessional codes of ethics facilitate the reporting not the organization. Good standing in the com-
of unethical behavior by others? In examining munity almost certainly entails following the
this question, it should be made clear that stated code of professional ethics, but it may well
whistle-blowing is a complex issue that has been not require reporting unethical activity by ones
approached from several different vantage points. professional colleagues. Indeed, blowing the
Most research on this topic has focused on char- whistle in this case can not only lead to strained
acteristics of employees or of organizations with relationships with other members of the occu-
much less attention directed toward the specific pational community, but also serves to lower the
role (if any) of ethical codes (e.g., Near and status of the profession in society.
Miceli, 1987). It should be noted, however that these inter-
The present study did examine this question pretations are speculative and should be viewed
for both corporate and professional codes of as such. Further, it should be made clear that
ethical conduct. Thus, this investigation repre- organizational wrongdoing was measured as
sents a more targeted analysis of the (potential) a perception so that there was no objective
influence of codes of ethics on individual evidence of whether or not actual wrongdoing
behavior in organizations in relation to prior took place. Coupled with the comparatively low
studies. Results indicate that neither the presence response rate for this study, it is also possible that
of corporate codes of ethics nor familiarity with these nonsignificant findings are partly attribut-
a professional code of ethical conduct had any able to methodological issues.
influence on the decision to report observed Turning to contextual issues, there has been
unethical activity in organizations. Discussion an increasing interest in the characteristics of
is focused on why this outcome might have organizations that have and have not adopted
occurred and what it means. formal codes of ethical conduct. This interest has
Beginning with corporate codes of ethics, a gone beyond descriptive characteristics (e.g., size,
case can be made that ethical codes implemented industry group) to include contextual factors
by work organizations serve to set guidelines for such as values, culture and climate. Although the
individual behavior in organizations thereby term ethical climate was introduced some time
inhibiting wrongdoing. Findings from this study ago (cf. Zalkind, 1987), there are hardly any
and prior research clearly support this interpre- studies of the value orientations of organizations
tation. Whistle-blowing with its associated risks that have adopted codes of ethical conduct. In
(Somers and Casal, 1994), on the other hand, this regard, because the interest is in context,
might be a more personal decision that might it is especially important that actual (vs. stated)
194 Mark John Somers

values are examined, and that the analysis is mitment were observed in those organizations
comparative; that is, it is based on a contrast with codes of ethics. This finding, coupled with
between firms with and without ethical codes the results from our analysis of prevailing orga-
of conduct. nizational values, suggests that organizations con-
This issue was addressed in the present study cerned with ethical conduct build a supportive
as a research question. Results indicated that climate (e.g., Zalkind, 1987) that includes values
there were clear differences between firms with that emphasize integrity and ethical conduct and
and without ethical codes on three dimensions: that engenders commitment to those values.
a focus on profitability, use of discretionary funds To summarize, this study suggests that orga-
for charitable contributions and the importance nizations that promote ethical behavior reap
of behaving morally and ethically. In all three several important benefits including less wrong-
cases, employees of firms with ethical codes of doing and higher levels of employee commit-
conduct felt that these three value-based objec- ment. The contextual perspective utilized in this
tives were more important than did employees in study indicates that formal ethical codes are one
firms without ethical codes. component of a milieu that encourages and
The two latter of these three findings are supports high standards of ethical behavior; that
hardly unexpected and are indicative of a value is, these organizations have formal and informal
system and corporate culture that recognizes the mechanisms to ensure that ethical conduct
importance of ethical behavior and a responsi- becomes a way of life. Professional codes of
bility to the commonweal. This orientation, in ethical conduct, in turn, appear to play a less
turn, is consistent with adopting a formal code important role in influencing employee behavior
of ethical conduct. The former finding is more possibly because they are not part of the organi-
interesting because it suggests that firms with zational environment.
codes of ethics might be more concerned This study also points out the importance of
with profitability than are firms without such understanding contextual issues associated with
codes. Although this result might seem counter- codes of ethics in organizations. The metric used
intuitive at first glance, an emphasis on prof- here to assess the presence of a formal code of
itability should provide the resources necessary ethics was employee awareness. It is quite likely
to encourage the highest levels of ethical conduct that many organizations that were classified
as well as the means to make an economic con- here as not having a code of ethics had indeed
tribution to solving social problems. Future adopted one. However, it is also likely that a
studies might explore this line of research with non-supportive context rendered these codes
both survey and more qualitative methodologies. invisible, and thus they had little influence on
A related contextual issue concerns the degree employee behavior.
of acceptance of organizational values; that is, the Future research focused on clarifying the
extent to which members of organizations with dimensions of the context in which ethical codes
and without codes of ethical conduct are com- operate and on understanding the processes
mitted to organizational values, policies and embedded in this context seems highly desirable.
priorities. This issue was examined as a research Studies of this kind are likely to add to the excel-
question in which levels of employee commit- lent knowledge base for promoting ethical
ment to the organization were contrasted across conduct in organizations that is already available.
organizations with and without formal codes of This study points out the importance not only
ethical conduct. As organizational commitment of adopting a formal code of ethics, but also of
reflects acceptance of organizational values and communicating it and reinforcing it with sup-
support for the organization (Porter et al., 1974), portive organizational values.
this variable serves as a good indicator of
employee socialization.
The present study provides some support for
this proposition in that the highest levels of com-
Ethical Codes of Conduct and Organizational Context 195

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