Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Download
Standard view
Full view
of .
Look up keyword
Like this
1Activity
0 of .
Results for:
No results containing your search query
P. 1
Singh, Carasco, Wood, Svensson

Singh, Carasco, Wood, Svensson

Ratings: (0)|Views: 50 |Likes:
Published by isabelle

More info:

Published by: isabelle on Nov 19, 2007
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

06/16/2009

pdf

text

original

 
A comparative study of the contents of corporate codes of ethicsin Australia, Canada and Sweden
Jang Singh
a,
*, EmilyCarasco
b
, Goran Svensson
c
,Greg Wood
d
, Michael Callaghan
d
a
Odette School of Business, University of Windsor, Windsor, Ont., Canada N9B 3P4
b
Faculty of Law, University of Windsor, Windsor, Ont., Canada N9B 3P4
c
School of Business, Halmstad University, Sweden
d
 Bowater School of Management and Marketing, Deakin University, Australia
Abstract
This paper reports on and analyzes the contents of 197 corporate codes of ethics (78 Australian, 80 Canadian and 39Swedish). Among other things, it was found that the contents of the Australian and Canadian codes were similar, reflecting thesimilar histories and cultures (as measured by Hofstede’s dimensions) of these two countries. Further, the contents of theSwedish codes were found to be very different from the Australian and Canadian codes in some areas, reflecting the culturaldifferences between Sweden and the other two countries.
#
2005 Elsevier Inc. All rights reserved.
Two of the most important issues in business todayare globalization and ethics. Globalization has led toincreased business competition which is one of thefactors in the increased concern over ethics inbusiness. This study examined corporate codes of ethics in three countries: Australia, Canada andSweden. It therefore takes a comparative look at thecodification of ethics in these countries: whileglobalization has led to increased competition, whichmay lead to unethical corporate conduct, there is alsothe possibility that globalization has facilitated thespread of corporate ethics programs.Codes of ethics are one aspect of such programs.Corporate codes of ethics are one of severalinfluences on business ethics across cultures. In amodel that goes beyond philosophically based ethics,Stajkovic and Luthans (1997)use social-cognitivetheory as a springboard to identify factors influencingbusiness ethics standards and conduct. They proposethat a person’s perception of ethical standards andsubsequent conduct is influenced by institutionalfactors (e.g., ethics legislation), personal factors (e.g.,moral development), and organizational factors (e.g.,code of ethics). Within the cultural context, the keyantecedent factors triadically interact to influenceethical standards (Stajkovic & Luthans, 1997, p. 32).The current study examines a major organizational
www.socscinet.com/bam/jwbJournal of World Business 40 (2005) 91–109* Corresponding author. Tel.: +1 519 253 4232x3141.
E-mail address:
jang@uwindsor.ca (J. Singh).1090-9516/$ – see front matter
#
2005 Elsevier Inc. All rights reserved.doi:10.1016/j.jwb.2004.10.007
 
factor, code of ethics, across Australian, Canadian andSwedish corporations.Langlois and Schlegelmilch de
ne a corporatecode of ethics as
a statement setting down corporateprinciples, ethics, rules of conduct, codes of practiceor company philosophy concerning responsibility toemployees, shareholders, consumers, the environ-ment, or any other aspects of society external to thecompany
(1990, p. 522).These documents vary in length, breadth of topicscovered and extent to which topics are covered.Berenbeim (2000)cites three trends as evidence of thegrowing importance of corporate codes of ethics: theglobalization of markets and the need for coreprinciples that are universally applicable, the accep-tance of these codes as part of the corporategovernance as illustrated by increased participationof boards in their development and the improvedethical literacy of senior managers as illustrated by theincreasing sophistication of the codes.In some circumstances, as a condition of doingbusiness, corporations are required to have a code of ethics. For example, listed companies on the NewYork Stock Exchange must not only have a code butonewhichcovers stipulatedissues and isaccompaniedby appropriate compliance standards and procedures(Verschoor, 2002).There are several other business reasons for theincreasing importance of corporate codes of ethics(TheGlobalBusinessResponsibilityResourceCentre,2001). First, a code of ethics enhances corporatereputation and brand image. Familiarity by internaland external stakeholders with the code creates apositive impression about the business practices of thecorporation. Second, the code conveys the messagethat the corporation is committed to ethical behaviorand, in the event the company is accused of thecontrary, this is seen as the exception. Third, acorporate code of ethics could rally employees arounda corporate culture, the values of which are expressedin the code: a sense of community is developed amongemployees throughout the organization. Fourth, insome jurisdictions, having a code could lead toreducedpenaltiesforcorporationswhentheybreakthelaw. For example, United States Federal SentencingGuidelines allow penalties to be reduced if a companycan demonstrate an effective ethics complianceprogram at the time of the violation (McKenall,Demarr, & Jones-Rikkers, 2002, p. 367). A
fthbusiness reason underlying the growing importance of corporatecodes ofethics isthatit isthoughtthatsoundbusiness practices, rooted in strong ethical founda-tions, will enhance development prospects in emer-ging economies in Africa, Asia and Latin America byestablishing universal standards which transcenddifferences in laws and cultures (The Global BusinessResponsibility Resource Centre, 2001).The need for standards which transcend differencesin laws and cultures was also the driving force behindvarious attempts by international organizations toregulate the conduct of global corporations. Theproblem of differing standards is best exempli
ed bythe
ght against bribery. AsBehrman (2001, p. 60)argues,
such bribery is not only a tax on business (upto 20% in some countries) butalso an anti-competitivemeasure, given the unequal tax treatment in somecountries and the criminal penalties imposed on theU.S. transnational corporations in 1997
’’
. The UnitedStates of America, Canada, Australia and Sweden, forexample, are all signatories to the OECD Conventionon Combating Bribery of Foreign Public Of 
cials inInternational Business Transactions and have passedenabling legislation but not all countries havefollowed suit (OECD, 2003).Multinationals headquartered in countries with nolaws such as the U.S. Foreign Corrupt Practices Acthave an advantage in securing overseas contracts andthe cost to U.S.
rms in 1997 was estimated to be atleast $15 billion in contracts and German
rms(
despite Germany being a signatory to the OECDConvention
) were thought to spend more than $5billion annually in bribes (Behrman, 2001). Inter-governmental action such as the UN
s Code onTransnational Corporations or the OECD
s Guidelinesfor Multinational Enterprises have not been veryeffective in achieving uniformity of action acrosscountries. Action by multinationals themselves havealsonotbeeneffective,e.g.,theInternationalChamberof Commerce
s Guidelines for International Invest-ments (1972) and Rules of Conduct on Extortion andBribery in International Transactions (1978). What ismore effective in the
ght against bribery andunethicalpracticesgenerallyisgovernmentlegislationcoupled with what
rms do internally (Gordon &Miyake,2001).Foremostamongtheinternalmeasuresavailable to corporations are corporate codes of ethics.
 J. Singh et al./Journal of World Business 40 (2005) 91–109
92
 
With multinational corporations such codes governtheir operations worldwide and promote uniformity.However, what is covered by such codes andcommitment to enforcing them vary among corpora-tions (Carasco & Singh, 2003), multinational or not.Moreover, there is some disagreement amongresearch
ndings on the effectiveness of corporatecodes of ethics in in
uencing behavior withinorganizations. While it may be impossible to establisha causal relationship between codes and ethicalbehavior, studies have attempted to establish anassociation between these variables. The
ndings of these studies on the effectiveness of codes are mixed.Adams, Tashchian and Stone (2001)in a study of therelationship between codes and perceptions of ethicalbehavior found that respondents from companies withcodes rate employees of their companies andthemselves as more ethical than respondents fromcompanies without codes. They also found thatrespondents from
rms with a code saw companysupport for ethical behavior as being higher and weremore satis
ed with the outcomes of ethical dilemmasthey had faced (p. 204). The existence of the codeswere seen as having a positive in
uence on the wayemployees rated their
rms.Somers (2001)similarlyfound that codes of ethics were perceived to beassociated with less wrongdoings in organizations.Further,he found a statistically signi
cant higher levelof employee commitment to organizations with codes.Schwartz (2001), in a study of four large Canadiancompanies, found that codes of ethics are potentially afactor in
uencing the behavior of employees, man-agers and ethics of 
cers.Stohs and Brannick (1999),in a study of 348 managing directors of Irish-ownedbusinesses found a statistically signi
cant relationshipbetween the existence of corporate codes andmanagerial behavior: this result implies that whenmanagers confront issues directly affecting the
rm
sconduct, a code partially guides managerial thinkingabout ethical wrongdoing (p. 322). Several otherstudies have found a signi
cant relationship betweencodes and behaviors (e.g.,Ferrell and Skinner (1988);McCabe, Trevino, & Butter
eld (1996);Pierce &Henry, 1996).Wotrumba, Chonko, and Loe (2001)found that themere existence of codes may not in
uence behaviorbut codes can impact managers in their judgments anddecision making, but only if they are familiar with thecodes contents and intentions (p. 67). Thus, the clearimplication is that not only codes development andcontents but implementation and monitoring arecritical to their effectiveness.Studies have also found insigni
cant relationshipsbetween the existence of codes and behavior.Ford,Gray, and Landrum (1982),in an empirical study of the relationship between codes of ethics and employeebehavior, found little difference between the decisionsmade by two groups, one aware of the existence of acode and the other not. They concluded that the codeswere essentially ineffective. Similarly,Clark andLeonard (1998)in a study of 150 business studentsfoundthatcorporatecodesofethicsarenoteffectiveindetermining a person
s ethical decision makingbehavior.Mathews (1998)compared civil actionstaken by four U.S. regulating agencies againstcorporations with codes and those without. Hersample was drawn from the most pro
table manu-facturing corporations in the United States and shefound that contrary to expectations, there is littlerelationship between codes andcorporateviolations of government regulations. Her
ndings were supportedbyMcKendall et al. (2002)who studied 108 largecorporations in the United States and found thatethical compliance programs, inclusive of ethicalcodes, did not lessen violations of the OccupationalSafety and Health Act.Despite the mixed
ndings of research studies onthe effectiveness of corporate codes of ethics inin
uencing behavior, these codes are potentiallyvaluable in corporate decision making and also as asignal to stakeholders of organizational values.Moreover, the research
ndings indicate that theestablishment of a code is not enough: it must besupplementedbystrictcompliancemeasuresandotherethics initiatives.In light of the comparative nature of the currentstudy,itisusefultoconsiderwhetherornotculturehasan impact on the existence and nature of corporatecodes of ethics. This issue was addressed byLangloisand Schlegelmilch (1990)in a study comparingEuropean and American corporate codes of ethics.They found differences between the European andAmerican codes, the
rst being that the Europeancodes were more recently developed than theAmerican. Moreover, they found that while mostethical issues transcend national barriers there were
 J. Singh et al./Journal of World Business 40 (2005) 91
 – 
109
93

You're Reading a Free Preview

Download
scribd
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->