ABSTRACT.Business codes are an oft-cited man-agement instrument. But how common are codesamong multinationals? And what is their content? Inan unprecedented study, the codes of the largestcorporations in the world have been collected andthoroughly analyzed. This paper presents the resultsof that study. Of the two hundred largest companiesin the world, 52.5% have a code. More than half of these codes describe company responsibilitiesregarding quality of products and services (67%),adherence to local laws and regulations (57%) and theprotection of the natural environment (56%). Manycodes make reference to principles governing stake-holder relations (e.g. transparency (55%), honesty(50%) and fairness (45%)), corporate core values (e.g.teamwork (43%)), appropriate conduct amongemployees (e.g. discrimination (44%) and intimida-tion (43%)) and treatment of company property byemployees (e.g. conflict of interests (52%), corruption(46%) and fraud (45%)). Monitoring compliance withthe code is addressed in 52% of the codes. Based onthis content study, three types of codes are distin-guished: the stakeholder statute (72%), the valuesstatement (49%) and the code of conduct (46%). Theresults of this inquiry present a benchmark for theevaluation and development of both individual andinternational business codes.KEY WORDS: business code, business principles,code of conduct, compliance, ethics management,international business ethics, mission statement, multi-nationals, norms, values
The interest in corporate social responsibility,sustainable business practice, corporate gover-nance, business ethics, and integrity and com-pliance management has grown markedly in thepast decade (Waddock et al., 2002). It is not onlystakeholders who expect companies to paygreater attention to norms, values and principles;companies themselves are acknowledging theimportance of responsible business practice(Waddock et al., 2002). But what are a company’sresponsibilities? And how can the board andmanagement ensure that the company meets itsresponsibilities? A much recommended manage-ment instrument to achieve this is a business code(also referred to as a corporate code of ethics (e.g.Cressey and Moore, 1983), a code of conduct(e.g. White and Montgomery, 1980) or anintegrity code (e.g. Petrick and Quinn, 1997)).Scholars (see for example McIntosh et al., 2002),international governing bodies (e.g. the UnitedNations, the European Union and theOrganization for Economic Cooperation andDevelopment), business associations (e.g. theInternational Chamber of Commerce) as well asspecial interest groups (e.g. the InternationalLabor Organization and TransparencyInternational) have been calling on companiesto develop their own business codes. But whatis a business code and what is its function?A business code is a policy document thatdefines the responsibilities of the corporationtowards its stakeholders and/or the conduct thecorporation expects of employees (Kaptein andWempe, 2002). A code clarifies the objectives thecompany pursues, the norms and values itupholds and what it can be held accountable for.
Business Codes of Multinational Firms:What Do They Say?
Journal of Business Ethics
: 13–31, 2004.© 2004
Kluwer Academic Publishers. Printed in the Netherlands.Muel Kaptein is professor of Business Ethics and IntegrityManagement at the Erasmus University, Rotterdam, The Netherlands. He also works as a consultant for KPMG Integrity, where he assisted about thirty companies in the development of their code of business.