Business Ethics: A European Review

Implementing the ethos of corporate codes of ethics: Australia, Canada, and Sweden
Greg Wood,G˛ran Svensson, Jang Singh,Emily Carasco and Michael Callaghann

Introduction
Along with the rise of globalization has come a greater acknowledgment of the role that business ethics should play in the everyday operations of corporations. In the 20th century, industrialized economies around the world enacted legislation to protect free trade, securities dealings, consumers, suppliers, stockholders and more recently other stakeholders. These legislative initiatives were often precipitated by behavior that initially appeared unethical, but in time was made illegal (Ferrell et al. 1998, Carasco & Singh 2003). As the 20th century closed and the collapse of major corporations around the world was once again at the forefront of business concern, society looked to corporations to behave in more ethical ways than they had in the past. The milieu was becoming more complex as corporations from the industrialized economies spread their influence, not only within their own countries, but to overseas markets as well. Subsequently, as their powers grew they were
n

Greg Wood is Senior Lecturer, Bowater School of Management and Marketing, Deakin University, Warrnambool, Australia. Goran ¨ Svensson is Associate Professor and Head of School of Business, Halmstad University, Sweden. Jang Singh is Professor of Management, Odette School of Business, University of Windsor, Canada. Emily Carasco is Professor of Law, University of Windsor, Canada. Michael Callaghan is Lecturer in Marketing, Bowater School of Management and Marketing, Deakin University, Warrnambool, Australia.

confronted by greater expectations from society to behave in an ethical manner (Cleek & Leonard 1998). Errant companies were lambasted in the media, charged for corporate crimes, and litigation was brought against them by citizens who had fallen victim to their malfeasance. The need for standards that transcended differences in laws and cultures was also the driving force behind various attempts by international organizations to regulate the conduct of global corporations (Carasco & Singh 2003). For example, the Organization for Economic Cooperation and Development (OECD) proposed the Guidelines for Multinational Enterprises and the United Nations constructed its Global Impact document (Carasco & Singh 2003). Many of these corporations turned to codes of ethics as a means of showcasing to society that they had an interest and a desire in being ethical in the marketplace. In a model that goes beyond philosophically based ethics, Stajkovic & Luthans (1997) use social-cognitive theory as a means to identify factors that influence business ethics standards and conduct. They propose that a person’s perception of ethical standards and subsequent conduct is influenced by institutional factors (e.g. ethics legislation), personal factors (e.g. moral development), and organizational factors (e.g. code of ethics). Within the cultural context, the key antecedent factors interact together to influence the ethical standards of people and

r Blackwell Publishing Ltd. 2004, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main St, Malden, MA 02148, USA.

389

Volume 13

Number 4 October 2004

organizations (Stajkovic & Luthans 1997). Codes of ethics are an important organizational factor. Berenbeim (2000) cites three trends as evidence of the growing importance of corporate codes of ethics: the globalization of markets and the need for core principles that are universally applicable; the acceptance of these codes as part of corporate governance as illustrated by increased participation of boards in their development; and the improved ethical literacy of senior managers as illustrated by the increasing sophistication of the codes. While globalization has led to increased competition that may lead to unethical corporate conduct, there is also the possibility that globalization has facilitated the spread of corporate ethics programs. Hence, a code of ethics is viewed as an important adjunct in developing ethical standards in organizations. Based on the Partnership Model of Corporate Ethics (Wood 2002), this study examined the measures in place to communicate the ethos of the corporate codes of ethics to internal stakeholders in three countries: Australia, Canada, and Sweden. It therefore takes a comparative look at the codification of ethics amongst the top companies in these countries. In the current study, therefore, it is important that socio-economic indicators of the three nations from which codes were collected (Australia, Canada, and Sweden) be compared in order to establish the similarities and/or differences of the three societies. The paper then examines the measures put in place by the largest corporations of the three countries in order to communicate the ethos of their codes to their employees.

Socio-economic indicators – Australia, Canada, and Sweden
The economies of all three countries are well developed. Australia has a prosperous Westernstyle capitalist economy, with a per capita gross domestic product (GDP) on par with the four dominant West European economies. As an affluent, high-tech industrial society, Canada today closely resembles the US in its marketoriented economic system, pattern of production,

and high living standards. Aided by peace and neutrality for the whole 20th century, Sweden has achieved an enviable standard of living under a mixed system of high-tech capitalism and extensive welfare benefits. It has a modern distribution system, excellent internal and external communications, and a skilled labor force (CIA 2003). Canada’s GDP is $923 billion ($ US Purchasing Power Parity), Australia’s $528 billion and Sweden’s is $277.4 billion (see Table 1a). In all three countries, the services sector generates the majority of the GDP. Although Canada has a diversified economy, the services sector accounts for 2/3 of the country’s output (Economist 2003). The services sector also dominates in Australia. In Sweden, the services sector generates 60% of the GDP. The labor force in all three countries is largely situated in the services sector (Canada 74%; Australia 73%; and Sweden 74%) (Economist 2003). There is no discernible difference in the GDP per capita for each country (Australia $27,000, Canada $29,400, and Sweden $25,400). In 2002, the inflation rate in all three countries was below 3% (see Table 1a). We contend that the similarities today between the three countries are brought about by a number of factors. The three economies are well developed (OECD members). Each country is a smaller player in its regional marketplace: a smaller economy surrounded by larger economic entities and populations. In Sweden’s case, it is the European Union; in Australia’s case, the Asian region and in Canada’s situation, it is the USA. Historically, each country has had to expand its horizons outside of its home markets in order to survive and forge economic growth. This has forced a mind set in the three countries, which is deeply ingrained in the psyche of each country, that has seen each one of them recognize that they needed to move away from a manufacturing base to one of services, where the intellectual capital of each country’s citizens could be transported more readily. While we are not saying that the cultures mirror each other, one could only but be interested in the similarities that exist between them. This situation makes an interesting platform for this research, when also framed within the context of the ideas and assertions of Hofstede.

390

r Blackwell Publishing Ltd. 2004

Business Ethics: A European Review

......................................................................................................................................

Table 1a: Australia, Canada, and Sweden: Comparative Economic, Population and Health Statistics Socio-economic Indicator Economy GDP (purchasing power parity US$) GDP real growth rate GDP/capita (purchasing power parity – US$) Inflation rate Population Population Population growth rate Life expectancy Literacy Health Infant mortality rate Heart disease Stroke Australia $528 billion (2002 est.) 3.6% (2002 est.) $27,000 (2002 est.) 2.8% (2002 est.) 19,546,792 (July 2002 est.) 0.96% (2002 est.) 80 years 100% 5/1000 110.9/100,000 45.6/100,000 Canada $923 billion (2002 est.) 3.4% (2002 est.) $29,400 (2002 est.) 2.2% (2002 est.) 31,902,268 (July 2002 est.) 0.96% (2002 est.) 79.69 years 97% 4.95/1000 136.4/100,000 50/100,000 Sweden $227.4 billion (2002 est.) 1.8% (2002 est.) $25,400 (2002 est.) 2.2% (2002 est.) 8,876,744 (July 2002 est.) 0.02% (2002 est.) 79.84 years 99% 4/1000 110.1/100,000 45.2/100,000

Sources: CIA Factbook (2002, 2003), SCB (2002), Australian Bureau of Statistics (2002), Bank of Canada (2003), Heart and Stroke Foundation Canada (2003), Statistics Canada (2003). GDP, gross domestic product; est., estimated.
...................................................................................................................................... ................................................................

Australia, Canada, and Sweden were among the countries studied by Hofstede in developing his dimensions of national culture. In that seminal study, he identified the following four dimensions of national culture: Individualism vs. Collectivism (IC); Large or Small Power Distance (PD); Strong or Weak Uncertainty Avoidance (UA); Masculinity vs. Femininity (MF) (Hofstede 1983a: 78). Hofstede’s research, involving a data bank of 40 countries and 116,000 questionnaires, allowed him to assign an index value (between 0 and about 100) on each of the four dimensions. Scores on these dimensions for Australia, Canada, and Sweden are shown in Table 1b. On IC, a measure of the relationship between an individual and his fellow individuals, Australia is the strongest country of the three. On PD, a measure of the unequal distribution of power in society, Canada and Sweden have scores that are fairly close in value whereas Australia is again the strongest on this measure. UA, which is a measure of how a society deals with uncertainty, is related to the propensity of a culture to establish laws and formal rules such as codes of ethics. Societies strong on UA are more likely to establish formal rules to deal with unpredictability. On the UA

Table 1b: Dimensions of National Culture Country Australia Canada Sweden IC 90 80 71 PD 56 39 31 UA 51 48 29 MF 61 52 5

Adapted from Hofstede, 1983b: 52. IC, Individualism vs. Collectivism; PD, Large or Small Power Distance; UA, Strong or Weak Uncertainty Avoidance; MF, Masculinity vs. Femininity.
................................................................

Index, Australia and Canada have almost exact values, while Sweden is considerably lower: the implication being that Australian and Canadian societies are more likely than Swedish society to establish formal rules to create security. The final of Hofstede’s dimensions of national culture, MF, is a measure of the division of roles between the sexes in society. Scores for Australia and Canada are close, but significantly higher than Sweden’s. Sweden was the most feminine of the countries studied by Hofstede, meaning that it puts ‘‘relationships with people before money, minding the quality of life and the preservation of the environment, helping others, in particular the weak, and ‘small is beautiful’’’ (Hofstede 1983a: 85).

r Blackwell Publishing Ltd. 2004

391

Volume 13

Number 4 October 2004

One could postulate for this study that based on the measure of UA, Australia and Canada are more likely to have more formal rules established than Sweden. One could also suggest, that as a result of their more compassionate and caring side, as indicated by their MF index, that even if the Swedes have rules established they may be more sensitive in the ways that they interpret those rules and/or support their employees to attain the corporation’s expectations. Hence, one could suggest that in this study the similarities between the three groups may be sufficient enough to make sensible comparisons and that the differences might lead to some interesting results to explore. A point of interest is that each one of these countries has gone into the international marketplace with gusto and therefore they may well have had their cultures modified by such an involvement. When Hofstede (1983a, b) carried out his study, the degree of internationalization by these countries would have been much less than it was 20 years later when this study was administered. The interest will be to see if the dimensions for national culture do still hold true for Australia, Canada, and Sweden not only in positive terms, but also in relative terms.

Methodology
A questionnaire that was non-sponsored and unsolicited was sent to the top companies operating in the private sector within Australia (Shoebridge 2000), Canada (Financial Post 2001), and in Sweden (SCB 2002). The Canadian sample was drawn from the Summer 2001 edition of the Financial Post that annually ranks the top 500 companies in Canada. A cover letter and questionnaire similar to those used in collecting data in Australia and Sweden were mailed to the CEO or Chair of 490 corporations (contact information was not available for 10). The letter and cover page of the questionnaire briefly described the nature of the research, guaranteed the confidentiality of the information provided and requested a copy of the corporation’s code of ethics. The questionnaire

consisted of 31 questions related to ethics programs. Thirty packages were returned to sender as undeliverable. The 460 packages delivered elicited 140 responses, 24 indicating various reasons for not participating in the study, 16 indicating that they did not have a code and 100 indicating that they have a code (80 sent codes). The useable response rate was therefore 25.2%. The Australian survey document was sent to the public relations managers of the top 500 Australian companies (based on revenue) operating in the private sector (Shoebridge 2000). Companies were asked to answer the same questions as the Canadian survey and to supply a copy of their code of ethics. The 479 packages delivered elicited 173 responses, with 49 companies indicating various reasons for not participating in the study, 30 indicating that they did not have a code, 81 indicating that they did have a code (65 sent codes) and another 13 companies who declined to fill in the questionnaire but who provided their code. The useable response rate was therefore 25.9%. The Swedish survey document was sent to the public relations managers of the top 100 Swedish companies (based on revenue) operating in the private sector (SCB 2002): firms that, for several reasons such as size of turnover, employee numbers, and business profile, are more probable to have developed a formal code of ethics (Brytting 1997). Companies were asked to answer the same questions and to supply a copy of their code of ethics. The response rate was 74% with 72 companies returning the completed questionnaire and 40 companies acknowledging that they had a code of ethics. The reason for the difference in the size of the sample is based on the structural differences in the marketplaces of each economy. The top 100 private sector companies in Sweden were deemed to be a satisfactory and representative sample of Swedish business. The basis of selection was the size of company turnover. All questions asked provided nominal data thus limiting statistical analysis to the reporting contained within this paper. The Pearson w2 test has been used to test the associations between country/national belonging and each question.

392

r Blackwell Publishing Ltd. 2004

Business Ethics: A European Review

Empirical findings – Australia, Canada, and Sweden
This section summarizes the empirical findings of this cross-cultural study in Australia, Canada, and Sweden. The figures reported are those of the companies that specifically answered a question in either the affirmative or the negative. Note that the total population (221) that did possess a code and filled in the questionnaire minus the total number of responses equals the number of nonresponses in Tables 2–10. Consequences for a breach A number of authors (Stoner 1989, Sims 1991, Fraedrich 1992) suggest that within a code of ethics one should outline enforcement provisions for those individuals who do not uphold the code. By having procedures for a breach of the code, an organization signals to its employees the necessity to abide by the code for the sake of both themselves and the organization. The frequencies for a breach of the code (as shown in Table 2a) are high in all three countries

as obviously it is an important issue in all cultures. There is a significant association between the national belonging and the consequences for a breach in the studied companies. The consequences for a breach are more frequent in Canada and Australia than in Sweden. Generally, the consequences of a breach are much more severe in Australia and Canada than in Sweden (see Table 2b). In Australia the most common consequences in rank order (indicated by the number within parentheses) are cessation of employment (91.3%), formal reprimand (87.0%), and verbal warning (84.1%). Legal action (53.6%) and demotion (31.9%) are also common, but monetary fine (14.6%) is not frequent. In Canada, the most common consequences in rank order are cessation of employment (92.7%), verbal warning (90.6%), and formal reprimand (85.4%). Legal action (50.0%) and demotion (25.0%) are also rather common. Monetary fine (8.3%) is not frequent. In Sweden, the most common consequences in rank order are verbal warning (58.1%) followed by cessation of employment (35.5%) and formal reprimand (35.5%). Legal action (32.3%) is also rather common, but

......................................................................................................................................

Table 2a: Consequences for a Breach Australia (n 5 81) 69 8 77 % 89.6 10.4 100.0 Canada (n 5 100) 96 3 99 % 97.0 3.0 100.0 Sweden (n 5 40) 31 8 39 % 79.5 20.5 100.0 Pearson’s w2 testn Value df Significance

Yes No Total (n 5 215)
n

10.97 2 0.004

1 cell (16.7%) has expected count less than 5. The minimum expected count is 3.45.

......................................................................................................................................

......................................................................................................................................

Table 2b: What are the Consequences for a Breach? Australia/Yes (n 5 69) 63 (1) 60 (2) 58 (3) 37 (4) 22 (5) 10 (6) 7 (7) % of Yes 91.3 87.0 84.1 53.6 31.9 14.5 10.1 Canada/Yes (n 5 96) 89 (1) 82 (3) 87 (2) 48 (4) 24 (5) 8 (6) 6 (7) % of Yes 92.7 85.4 90.6 50.0 25.0 8.3 6.2 Sweden/Yes (n 5 31) 11 (2) 11 (2) 18 (1) 10 (4) 1 (6) 0 (7) 9 (5) % of Yes 35.5 35.5 58.1 32.3 3.2 0 29.0

Cessation of employment Formal reprimand Verbal warning Legal action Demotion Monetary fine Others

......................................................................................................................................

r Blackwell Publishing Ltd. 2004

393

Volume 13

Number 4 October 2004

demotion (3.2%) is very rare. Monetary fine (0%) appears not to be a consequence of a breach in Sweden. It is worth noting that other consequences are frequent in Sweden (29.0%). In Swedish companies, it appears to be more important to achieve understanding and dialogue among employees than to impose negative consequences for a breach. This finding is consistent with Hofstede’s (1983a) MF dimension of culture as the Swedish management style seems to be more one of coaching and mentoring, rather than controlling and exacting punishment for perceived transgressions. Ethical performance appraisal The view that organizations should formalize the ethical performance of employees through the employee appraisal system is supported by Harrington (1991), Laczniak & Murphy (1991), and Fraedrich (1992). Harrington (1991), in common with Fraedrich’s (1992) idea, suggests that ethical decision making should become a part of the performance appraisal of individuals. This idea is a commendable one in that it integrates ethics into one’s

perceived organizational performance: it is another way of rewarding ethical behavior and discouraging unethical behavior. The concern in this situation is with the way in which this process would be implemented and its probable vagaries and abuses. Like all performance appraisals that are not necessarily based upon quantifiable data, the subjective opinion of the line manager could be imposed upon the individual subordinate. Consequently, the organization is placing a lot of trust and faith in line supervisors. Therefore, this process would need to be scrutinized in great detail before its introduction and would need to be monitored once it has been introduced. However, the general principle is one that should be considered (see Table 3a). There is a significant association between the national belonging and the ethical performance appraisal in the studied companies. The ethical performance appraisal is more frequent in Australia (70.5%) and Canada (63.3%) than in Sweden (39.4%). Again, cultural dimensions may well be coming into play here as they are shown in Table 3b. Swedish managers tend to shy away from formal rules and regulations to govern their corporations. They work with the belief that

......................................................................................................................................

Table 3a: Ethical Performance Appraisal Australia (n 5 81) 55 23 78 % 70.5 29.5 100.0 Canada (n 5 100) 62 36 98 % 63.3 36.7 100.0 Sweden (n 5 40) 15 23 38 % 39.4 60.6 100.0 Pearson’s w2 testn Value df Significance

Yes No Total (n 5 214)
n

10.61 2 0.005

0 cells have expected count less than 5. The minimum expected count is 14.56.

......................................................................................................................................

......................................................................................................................................

Table 3b: How is the Ethical Performance Evaluated? Australia/Yes (n 5 55) 49 (1) 27 (2) 20 (3) 18 (4) 3 (5) % of Yes 89.1 49.1 36.4 32.7 5.5 Canada/Yes (n 5 62) 53 (1) 35 (2) 7 (3) 7 (3) 3 (5) % of Yes 85.5 56.5 11.3 11.3 4.8 Sweden/Yes (n 5 15) 8 (1) 2 (2) 1 (3) 0 (4) 2 (2) % of Yes 53.3 13.3 6.7 0.0 13.3

By superiors Against company standards By peers By subordinates Other evaluation method

......................................................................................................................................

394

r Blackwell Publishing Ltd. 2004

Business Ethics: A European Review

......................................................................................................................................

Table 4: Conduct Ethical Audits Australia (n 5 81) 18 58 76 % 23.7 76.3 100.0 Canada (n 5 100) 39 57 96 % 40.6 59.4 100.0 Sweden (n 5 40) 25 15 40 % 62.5 37.5 100.0 Pearson’s w2 testn Value df Significance

Yes No Total (n 5 212)
n

16.93 2 0.000

0 cells have expected count less than 5. The minimum expected count is 14.56.

......................................................................................................................................

one should trust one’s employees to perform as expected and hence they may well see little need to monitor individuals’ performances. Why should they do so? Staff will be performing as they should be. Generally, the ethical performance evaluation is commonly done by superiors in Australia (89.1%) and Canada (85.5%) followed by the fact that it is done against company standards in these countries (Australia: 49.1% and Canada: 56.5%). The ethical performance evaluation in Sweden is done by superiors (53.3%), that is, to a much lesser extent than in Australia and Canada. In Sweden, the evaluation against company standards (13.3%), by peers (6.7%), and other evaluation methods (13.3%) are rare. The evaluation by peers is rather common in Australia (36.4%). Australian and Canadian companies appear to be more rule-bound and more hierarchical than their Swedish counterparts. In all three cultures, one’s superiors are perceived as the persons who should be assessing the performance of their staff. The concern here for all three cultures is that according to Baumhart (1961) and Brenner & Molander (1977), it is one’s superior who is the one most likely to place the subordinate in an unethical position which may lead them to compromise their values. Conduct ethical audits Murphy (1988) and Laczniak & Murphy (1991) have suggested the need to incorporate ethics audits. They believe that an organization needs to monitor its ethical performance to ensure that it is indeed performing ethically both internally and in the marketplace. Ethical audits differ from employee appraisal. Employee appraisal is an exam-

ination of the ethical performance of individuals within the organization on a personal level, while ethical audits are an examination of the organization’s ethical performance (see Table 4). There is a significant association between the national belonging and the conduct of ethical audits in the studied companies. The conduct of ethical audits is more frequent in Sweden (62.5%) than in Australia (40.6%) and Canada (23.7%). The use of these audits in Sweden may well be to ensure that all is going as expected in the business and may well be out of a sense of benevolence to assist the staff and not monitor them as may well be the case in other cultures. The Swedish management style is one of guiding and mentoring rather than catching one out and punishing them.

Support of whistle blowers In a situation of recognizing unethical practices and taking steps to expose them, the dilemma that many employees face, is in knowing to whom one can take an issue so as to ensure its integrity; the integrity of the person against whom the complaint is made and usually, most importantly, for the person making the complaint, the guarantee of their own freedom from reprisals (Gellerman 1989, Stoner 1989, Labich 1992, Wood & Callaghan 2003). By its very nature, whistle blowing is a dangerous path to take for any employee. Even though companies may have procedures in place to protect the whistle blower, the act of whistle blowing has historically been fraught with personal danger and the ever-present threat of recrimination (Miceli & Near 1984, Miceli et al. 1991,

r Blackwell Publishing Ltd. 2004

395

Volume 13

Number 4 October 2004

Keenan & Krueger 1992, Barnett et al. 1993, Keenan 1995, McLain & Keenan 1999). If organizations are to evolve into ethical entities, individuals must take both individual and collective action to change the practices that they see may be an antithesis to the ethical health of the organization. Someone must make the move to expose violations of the organization’s ethical principles. Formal guidelines to support whistle blowers should be considered, because if standards are to be set then one needs ways to ensure that either violations or breaches will be reported, reviewed, and corrected. The support of whistle blowers (see Table 5a) is more frequent in Australia (43.6%) and Canada (48.0%) than in Sweden (28.2%). However, there is no significant association between the national belonging and the support for whistle blowers in the studied companies. In Sweden, this apparent lack of support may be more indicative of our contention that business ethics is a concept that Swedish companies have been dealing with more recently than in Australia and Canada. The concept of whistle blowing may also be alien to Swedish culture, which from its feminine side sees no need for this type of action to be formally

codified as individuals would naturally be listened to when they wish to discuss a matter of urgency and of importance to them. If companies do have procedures for whistle blowing in place, then in all three countries these companies state a rather strong support for whistle blowers. Australian companies are extremely supportive in regards to the four common ways to support whistle blowers. These ways are a formal complaint channel (91.2%), formal investigation process (88.2%), guaranteed confidentiality (82.4%), and formal resolution process (67.6%). Other ways of protection are very limited (5.9%) (see Table 5b). Likewise, Canadian companies have common ways of supporting whistle blowers such as guaranteed confidentiality (74.5%) and a formal channel of complaint (72.3%). To some lesser extent these companies have a formal investigation process (55.3%), and a formal resolution process (46.8%). Other ways of protection are very limited (4.3%). The support given to whistle blowers is slightly weaker in Swedish companies as compared to Australian and Canadian companies. For example, the formal complaint channel (63.6%) and formal investigation process (63.6%) are the most fre-

......................................................................................................................................

Table 5a: Support of Whistle Blowers Australia (n 5 81) 34 44 78 % 43.6 56.4 100.0 Canada (n 5 100) 47 51 98 % 48.0 52.0 100.0 Sweden (n 5 40) 11 28 39 % 28.2 71.8 100.0 Pearson’s w2 testn Value df Significance

Yes No Total (n 5 215)
n

4.48 2 0.107

0 cells have expected count less than 5. The minimum expected count is 16.69.

......................................................................................................................................

......................................................................................................................................

Table 5b: How is the Support Provided to Whistle Blowers? Australia/Yes (n 5 34) 31 (1) 30 (2) 28 (3) 23 (4) 2 (5) % of Yes 91.2 88.2 82.4 67.6 5.9 Canada/Yes (n 5 47) 34 (2) 26 (3) 35 (1) 22 (4) 2 (5) % of Yes 72.3 55.3 74.5 46.8 4.3 Sweden/Yes (n 5 11) 7 (1) 7 (1) 6 (3) 3 (4) 1 (5) % of Yes 63.6 63.6 54.5 27.3 9.1

Formal complaint channel Formal investigation process Guaranteed confidentiality Formal resolution process Other protection

......................................................................................................................................

396

r Blackwell Publishing Ltd. 2004

Business Ethics: A European Review

quent ones in Sweden followed by guaranteed confidentiality (54.5%). The formal resolution process (27.3%) and other ways of protection (9.1%) are the least frequent. Ethics ombudsman This area of inquiry has a relationship with the issue of whistle blowing. Companies need individuals who are designated in this position, in order that individuals within the organization who have genuine concerns can feel free to voice these concerns to an independent arbiter. If an organization has a person designated as a confidante to whom staff can go with ethical concerns, then hopefully employees will be encouraged to volunteer information about unethical practices that they perceive are detrimental to the organization. One could contend that such a position in place within the organization can only but enhance the ethical health of that organization. There is a significant association between the national belonging and the existence of an ethics ombudsman or its equivalent in the studied companies. The ethics ombudsman is more frequent in Canada (55.1%) than in Australia (32.9%) and Sweden (33.3%) (see Table 6). The concept of an ombudsman is more prevalent in Canada, one may suggest, because such roles have been a part of North American corporate culture since the early 1980s, whereas in Australia this concept of an ombudsman has been more prevalent in industry regulatory groups than individual companies. In Sweden, it may well be as a result of the cultural link with the concept of whistle blowing, in that it is not perhaps seen as necessary and as such one does not require an ombudsman to protect staff, if culturally this is an

´ accepted more. Why have protection mechanisms if one does not need protection? Guide to strategic planning Robin & Reidenbach (1987) suggested a method for closing the gap that they perceived existing between concept and practice in the area of ethics and corporate planning. They advocated that an organization that is committed to ethics should inculcate those espoused company values into the strategic planning process. The focus of their attention was upon strategic marketing planning, but the principles that they proposed can be adapted to all forms of strategic planning in all organizations. There is a significant association between the national belonging and the guide to strategic planning in the studied companies. Using one’s code as a guide to strategic planning (see Table 7a) is more frequent in Sweden (78.6%) than in Australia (53.1%) and Canada (44.9%). This finding is of interest because it would appear that the companies operating in Sweden may have inculcated the ethos of their ethics philosophy more into the heart of their operations than those in Australia or Canada. A code should be used in conjunction with a company’s strategic planning, for each should complement the other in the marketplace. To have them exist in isolation may tend to devalue the role of business ethics as the cornerstone of company action, for it is the strategic plan that sets the company’s course of action. The last thing that a company should want is an incongruity between its espoused strategic plans and its ethical ethos. For those companies that acknowledge that they use their code as a part of the strategic

......................................................................................................................................

Table 6: Ethics Ombudsman or Equivalent Australia (n 5 81) 25 51 76 % 32.9 67.1 100.0 Canada (n 5 100) 54 44 98 % 55.1 44.9 100.0 Sweden (n 5 40) 13 26 39 % 33.3 66.7 100.0 Pearson’s w2 testn Value df Significance

Yes No Total (n 5 214)
n

10.50 2 0.005

0 cells have expected count less than 5. The minimum expected count is 16.85.

......................................................................................................................................

r Blackwell Publishing Ltd. 2004

397

Volume 13

Number 4 October 2004

......................................................................................................................................

Table 7a: Guide to Strategic Planning Australia (n 5 81) 34 30 64 % 53.1 46.9 100.0 Canada (n 5 100) 35 43 78 % 44.9 55.1 100.0 Sweden (n 5 40) 22 6 28 % 78.6 21.4 100.0 Pearson’s w2 testn Value df Significance

Yes No Total (n 5 170)
n

9.41 2 0.009

0 cells have expected count less than 5. The minimum expected count is 13.01.

......................................................................................................................................

......................................................................................................................................

Table 7b: What are the Guides to Strategic Planning? Australia/Yes (n 5 34) Code is consulted in the planning process (a) 11 (1) Code used as the basis of the planning philosophy (b) 9 (2) Code is compared with the finished plan (c) 3 (5) The code is used in (a) (b) and (c) 6 (3) Code used in other way 5 (4) % of Yes 32.4 26.5 8.8 17.4 14.7 Canada/Yes (n 5 35) 9 (1) 7 (2) 5 (3) 5 (3) 4 (5) % of Yes 25.7 20.0 14.3 14.3 11.4 Sweden/Yes (n 5 22) 8 (2) 9 (1) 3 (3) 2 (4) 0 (5) % of Yes 36.4 40.9 13.6 9.1 0.0

......................................................................................................................................

planning process, one could say that generally, the code of ethics has a low impact on the guide to strategic planning in Australia, Canada, and Sweden (see Table 7b). For example, the code is used as the basis of the planning philosophy (40.919.1%) and consulted in the planning process (36.419.1%) in Swedish companies, while it is less compared with the finished plan (13.619.1%). The code is not used in other ways (0%). In Australian companies, the code is consulted in the planning phase (32.4117.4%) and used as the basis of the planning philosophy (26.5117.4%). It is also compared with the finished plan (17.418.8%) in just over a quarter of companies. Canadian companies use the code less than Australian and Swedish companies. For example, the code is consulted in the planning process (25.7114.3%) and used as the basis of the planning philosophy (20.0114.3%). The code is compared with the finished plan (14.3114.3%) and used in other ways (11.4%). If companies accept that it is good corporate practice to align their codes with their strategic planning processes, then why don’t they make that final comparison of the plan against the code? What if the final plans and the codes are

incompatible? How then does one guard against this situation and ensure that the plan not matching the espoused ethical stance of the organization does not occur? Surely as a part of good governance, all companies should make an obligatory check to be sure of consistency in these areas. ‘A congruence between the strategic plan, which drives the organization’s actions, and the espoused ethical views of the company should also make it easier for employees to act in the marketplace. The organization’s ethical views should not clash with the strategic view of the company’ (Wood & Callaghan 2003: 218). Ethics committee If business ethics is such an important part of the company then an ethics committee may have been an idea that organizations have contemplated and an area in which they may have initiated action (Weber 1981, Center for Business Ethics 1986, McDonald & Zepp 1989). There is a significant association between the national belonging and the existence of an ethics committee or its equivalent in the studied companies. The ethics committee, as shown in Table 8,

398

r Blackwell Publishing Ltd. 2004

Business Ethics: A European Review

......................................................................................................................................

Table 8: Ethics Committee or Equivalent Australia (n 5 81) 21 58 79 % 26.6 73.4 100.0 Canada (n 5 100) 38 60 98 % 38.6 61.2 100.0 Sweden (n 5 40) 20 20 40 % 50.0 50.0 100.0 Pearson’s w2 testn Value df Significance

Yes No Total (n 5 217)
n

6.72 2 0.035

0 cells have expected count less than 5. The minimum expected count is 14.56.

......................................................................................................................................

......................................................................................................................................

Table 9: Ethics Training Committee or Equivalent Australia (n 5 81) 15 64 79 % 19.0 81.0 100.0 Canada (n 5 100) 27 71 98 % 27.6 72.4 100.0 Sweden (n 5 40) 7 32 39 % 17.9 82.1 100.0 Pearson’s w2 testn Value df Significance

Yes No Total (n 5 216)
n

2.44 2 0.296

0 cells have expected count less than 5. The minimum expected count is 8.85.

......................................................................................................................................

is more frequent in Sweden (50.0%) than in Australia (26.6%) and Canada (38.8%). This situation is of interest as companies in Sweden have been involved with ethics for less time than their Australian and Canadian counterparts. Even though Sweden appears to have come later to a realization of the need for business ethics, it would appear that Swedish companies may have embraced the concept with more vigor than perhaps their Australian or Canadian counterparts. If business ethics is important, then surely companies should communicate this fact by having designated ethics committees that are seen by all. Not to have a committee, signals to the employees of the organization and other stakeholders that the company does not see business ethics as an important enough area to warrant such attention.

Ethics training committee and staff training in ethics
The two areas of ethics training committee and staff training in ethics were linked from a theoretical perspective because of the researchers’ belief that one cannot just expect individuals to be ethical to the level of company expectations without having some involvement with training.

An ethics training committee would hopefully provide the focus and initiative to expose employees to discussion and training in ethics in business situations that they might face while in the company’s employ. Without training and education, one could contend, that the desire to incorporate an ethical perspective into the business practices of employees will only be a hope that cannot be translated into reality. A number of writers have advocated the use of training programs as a means of institutionalizing ethics within the organization (Axline 1990, McDonald & Zepp 1990, Harrington 1991, Laczniak & Murphy 1991, Dean 1992, Maclagan 1992, Sims 1992, Wood 2002). The ethics training committee (see Table 9) is not frequent in any of the three countries. Obviously, it appears not to be a concept that any of the three cultures has really embraced. Furthermore, there is no significant association between the national belonging and the existence of an ethics training committee or its equivalent in the studied companies. Staff training in ethics is more frequent in Sweden (55.0%) than in Australia (44.3%) and Canada (45.8%) (see Table 10). However, there is no significant association between the national belonging and the existence of staff training in

r Blackwell Publishing Ltd. 2004

399

Volume 13

Number 4 October 2004

......................................................................................................................................

Table 10: Staff Training in Ethics Australia (n 5 81) 35 44 79 % 44.3 55.7 100.0 Canada (n 5 100) 44 52 96 % 45.8 54.2 100.0 Sweden (n 5 40) 22 18 40 % 55.0 45.0 100.0 Pearson’s w2 testn Value df Significance

Yes No Total (n 5 215)
n

1.31 2 0.519

0 cells have expected count less than 5. The minimum expected count is 18.79.

......................................................................................................................................

ethics in the studied companies. Again, this finding may well be indicative that Swedish companies have inculcated the ethos of their codes into their every day business activities and processes more so than the companies of the other two cultures.

Conclusion
It would appear from the empirical findings presented that while Sweden, Canada, and Australia are extremely similar in their economic and social development, there may well be distinct ´ cultural mores and issues that are informing their business ethics practices. Earlier in this paper, it was postulated that based on the measure of UA, corporations operating in Australia and Canada are more likely to have more formal rules established than those corporations operating in Sweden. Generally (see Table 11), in the current tri-nation cross-cultural survey Sweden is ranked 1 or 3 but rarely 2 (i.e. between Australia and Canada) in any of the areas of regulation and staff support. In the area of the regulation of staff, it is quite clear that corporations operating in Sweden do not appear to have the formal rules in place, as do those corporations operating in Australia and Canada. In Table 12, the actual percentages per item are presented and averaged. The figures presented support the above assertion as the percentage averages conform to the need of Australian (80.1%) and Canadian (78.7%) companies to be more rule bound than their Swedish (59.5%) counterparts. Also it was suggested that as a result of their more compassionate and caring side, as indicated by their MF index, that even if the Swedes have

rules established they may be more sensitive in the ways that they interpret these rules and/or support their employees to attain the corporation’s expectations. If one examines Table 11 in terms of areas of staff support, it can be seen that the ranking order is as one may expect with Sweden (12), Canada (14) and Australia (18), mirroring the ranking on the Masculinity/Femininity dimension as shown in Table 1b. When one examines the actual percentages of support for staff per area and the overall average, Sweden and Canada appear closer than does Australia to either of them. Australia as compared to Sweden and Canada does seem to lack support measures in place to assist staff to understand the ethos of the codes. This finding would be in concert with a parallel longitudinal study to this study conducted by Wood & Callaghan (2003), when they found that in corporate Australia measures in place to support the ethos of the code were not only lacking, but there appeared to be no real improvement in these issues since 1995. Sweden ranks the highest in terms of: conducting ethical audits; using the code as a guide to strategic planning; and having an ethics committee and providing staff training. The areas in which it appears to be behind one or both of the other two countries are: support of whistle blowers, having an ethics ombudsman, and an ethics training committee. The first two of these areas are linked and it was suggested earlier that the concept of whistle blowing may also be alien to Swedish culture, which from its feminine side sees no need for this type of action to be formally codified as individuals would naturally be listened to when they wish to discuss a matter of urgency and of importance to them. Hence, if whistle

400

r Blackwell Publishing Ltd. 2004

Business Ethics: A European Review

......................................................................................................................................

Table 11: Frequency Rank Order of the Responses Table Regulation 2a 3a Sum of Ranks: Staff support 4 5a 6 7a 8 9 10 Sum of Ranks: Area Consequences for a breach Ethical performance appraisal Australia 2 1 3 3 2 3 2 3 2 3 18 Canada 1st/2nd/3rd 1 2 3 2 1 1 3 2 1 2 14 Sweden 3 3 6 1 3 2 1 1 3 1 12

Conduct ethical audits Support of whistleblowers Ethics ombudsman Guide to strategic planning Ethics committee Ethics training committee Staff training

......................................................................................................................................

......................................................................................................................................

Table 12: Percentage of the Responses Table Regulation 2a 3a Average: Staff support 4 5a 6 7a 8 9 10 Average: Area Consequences for a breach Ethical performance appraisal Australia 89.6 70.5 80.1 23.7 43.6 32.9 53.1 26.6 19.0 44.3 34.7 Canada % 97.0 60.4 78.7 40.6 48.0 55.1 44.9 38.6 27.6 45.8 42.9 Sweden 79.5 39.4 59.5 62.5 28.2 33.3 78.6 50.0 17.9 55.0 46.5

Conduct ethical audits Support of whistleblowers Ethics ombudsman Guide to strategic planning Ethics committee Ethics training committee Staff training

......................................................................................................................................

blowing is not a cultural expectation, then why have an ombudsman, because that concept would be culturally superfluous as well. Also, in both Canada and Australia legislation to protect whistle blowers is on the legal statutes. The identification of the role of an ombudsman in business has been prevalent in Australian and Canadian business for at least a decade, as these two countries have recognized that all was not well within their corporate sectors and moves were made to protect those people wanting to take the correct and ethical action, but who were concerned for their welfare if their identity was revealed.

Since this survey was completed, it has become recognized in Sweden that all may not be well in corporate Sweden, as the executives of one of Sweden’s largest companies are being investigated on issues of fraud and misappropriation of company assets for private use (Wallace 2004). These revelations will undoubtedly test the cultural distaste of Swedish business for needing to implement rules and regulations and for not being able to trust each other as fully as they may have done prior to these miscreant actions being made public. It would appear from this study that while corporations operating in Sweden have less formal rules and regulations in place in terms of business

r Blackwell Publishing Ltd. 2004

401

Volume 13

Number 4 October 2004

ethics than corporations operating in Canada or Australia, they do appear to place more emphasis on ensuring that the support for staff is available. It seems that corporations operating in corporate Sweden have embraced the ethos of codes of ethics more so than their Canadian and/or Australian counterparts and that in each culture the approach to business ethics appears to be in line with their national cultural values as proposed by Hofstede (1983a).

References
Australian Bureau of Statistics. 2002. Australian Social Trends. Retrieved June 15, 2003 from: http://www. abs.gov.au. Axline, L.L. 1990. ‘The bottom line on ethics’. Journal of Accountancy, 170: December, 87–91. Bank of Canada 2003. Rates and Statistics. Retrieved June 15, 2003 from: http://www.bankofcanada.ca Barnett, T., Cochran, D.S. and Taylor, G.S. 1993. ‘The internal disclosure policies of private-sector employers: an internal look at their relationship to employee whistle blowing’. Journal of Business Ethics, 12:2, 127–136. Baumhart, R.C. 1961. ‘How ethical are businessmen?’ Harvard Business Review, 16:19, 156–166. Berenbeim, R. 2000. ‘Global Ethics’. Executive Excellence, 17:5, 7. Brenner, S.N. and Molander, E.A. 1977. ‘Is the ethics of business changing?’ Harvard Business Review, 55:1, 57–71. Brytting, T. 1997. ‘Moral support structures in private industry – the Swedish case’. Journal of Business Ethics, 16:7, 663–697. Carasco, E.F. and Singh, J.B. 2003. ‘The content and focus of the codes of ethics of the world’s largest transnational corporations’. Business and Society Review, 108:1, 71–94. Center for Business Ethics. 1986. ‘Are corporations institutionalizing ethics?’ Journal of Business Ethics, 5:2, 85–91. CIA. 2002. The World Factbook. Washington, DC: CIA. CIA. 2003. The World Factbook. Washington, DC: CIA. Cleek, M.A. and Leonard, S.L. 1998. ‘Can corporate codes of ethics influence behavior’. Journal of Business Ethics, 17:6, 619–630.

Dean, P.J. 1992. ‘Making codes of ethics ‘‘real’’ ’. Journal of Business Ethics, 11:4, 285–290. Economist. 2003. Country Briefings. Retrieved June 16, 2003 from: http://www.economist.com/ countries. Ferrell, O.C., Hartline, M.D. and McDaniel, S.W. 1998. ‘Codes of ethics among corporate research departments, marketing research firms, and data subcontractors: an examination of three-communities metaphor’. Journal of Business Ethics, 17:5, 503–516. Financial Post 500. 2001. National Post Business Magazine. Summer. Fraedrich, J.P. 1992. ‘Signs and signals of unethical behavior’. Business Forum, 17:2, 13–17. Gellerman, S.W. 1989. ‘Managing ethics from the top down’. Sloan Management Review, 30:2, 73–79. Harrington, S.J. 1991. ‘What corporate America is teaching about ethics’. Academy of Management Executive, 5:1, 21–30. Heart and Stroke Foundation Canada 2003. Statistics and Background Information. Retrieved June 15, 2003 from: http://www.heartandstroke.ca Hofstede, G. 1983a. ‘The cultural relativity of organizational practices and theories’. Journal of International Business Studies, 14:2, 75–89. Hofstede, G. 1983b. ‘National cultures in four dimensions’. International Studies of Management and Organization, 13:2, 46–74. Keenan, J.P. 1995. ‘Whistle blowing and the first level manager: determinants of feeling obliged to blow the whistle’. Journal of Social Behavior and Personality, 10, 571–584. Keenan, J.P. and Krueger, C.A. 1992. ‘Whistle blowing and the professional’. Management Accounting, 74:2, 21–24. Labich, K. 1992. ‘The new crisis in business ethics’. Fortune, April 20, 167–168, 175–176. Laczniak, G.R. and Murphy, P.E. 1991. ‘Fostering ethical marketing decisions’. Journal of Business Ethics, 10:4, 259–271. Maclagan, P. 1992. ‘Management development and business ethics: a view from the U.K.’. Journal of Business Ethics, 11:4, 321–328. McDonald, G.M. and Zepp, R.A. 1989. ‘Business ethics: practical proposals’. Journal of Management Development (UK), 8:1, 55–66. McDonald, G.M. and Zepp, R.A. 1990. ‘What should be done? A practical approach to business ethics’. Management Decision (UK), 28:1, 9–14.

402

r Blackwell Publishing Ltd. 2004

Business Ethics: A European Review

McLain, D.L. and Keenan, J.P. 1999. ‘Risk, information, and the decision about response to wrongdoing in an organization’. Journal of Business Ethics, 19:3, 255–271. Miceli, M.P. and Near, J.P. 1984. ‘The relationship among beliefs, organizational position, and whistle blowing status: a discriminant analysis’. Academy of Management Journal, 27:4, 687–705. Miceli, M.P., Near, J.P. and Schwenk, C.R. 1991. ‘Who blows the whistle and why?’ Industrial and Labor Relations Review, 45:1, 113–130. Murphy, P.E. 1988. ‘Implementing business ethics’. Journal of Business Ethics, 7:12, 907–915. Robin, D.P. and Reidenbach, R.E. 1987. ‘Social responsibility, ethics, and marketing strategy: closing the gap between concept and application’. Journal of Marketing, 51:1, 44–58. SCB. 2002. Fo¨retagsregister. Stockholm: Statistiska ˚ Centralbyran. Shoebridge, N. 2000. ‘The big list’. Business Review Weekly, November 17, 115–134. Sims, R.R. 1991. ‘The institutionalization of organizational ethics’. Journal of Business Ethics, 10:7, 493–506.

Sims, R.R. 1992. ‘The challenge of ethical behavior in organizations’. Journal of Business Ethics, 11:7, 505–513. Stajkovic, A.D. and Luthans, F. 1997. ‘Business ethics across cultures: a social cognitive model’. Journal of World Business, 32:1, 17–34. Statistics Canada. 2003. Canadian Statistics. Retrieved June 15, 2003 from: http://www.statcan.ca Stoner, C.R. 1989. ‘The foundations of business ethics: exploring the relationship between organization culture, moral values, and actions’. SAM Advanced Management Journal, 54: Summer, 38–43. Wallace, C.R. 2004. ‘Scandal Heads North’. Time Europe, Vol 163, No. 9, March 1st. Weber, J. 1981. ‘Institutionalizing ethics into the corporation’. MSU Business Topics, 29: Spring, 47–51. Wood, G. 2002. ‘A partnership model of corporate ethics’. Journal of Business Ethics, 40:1, 61–73. Wood, G. and Callaghan, M. 2003. ‘Communicating the ethos of codes of ethics in corporate Australia: 1995–2001: whose rights, whose responsibilities?’ Employee Responsibilities and Rights Journal, 15:4, 209–221.

r Blackwell Publishing Ltd. 2004

403