EFFECTIVENESS OF CODES OF ETHICS

The increasing use of corporate ethical codes is recognised in the literature, but there are concerns that a code may be just an instrument in a company's image management (Marnburg, 2000). Although there is no shortage of academic literature about codes of ethics‟ use, awareness and enforcement, there is very little on how effective a code is in guiding ethical behaviour. Kaptein and Schwartz (2008) identified a relatively small number of studies (79) examining the behavioural effects of codes of ethics, studies that produced conflicting results. In addition, in the literature there appears to be no agreement as to how useful and effective codes of ethics are (Grundstein-Amado, 2001; Valentine & Barnett, 2002, 2003; Weller, 1988; Wotruba, Chonko & Loe, 2001).

Marnburg (2000) contends that the introduction and use of ethical codes must have the intention of achieving behavioural change or the maintenance of already superior behaviour. He claims that previous research has, with some exceptions, failed to demonstrate that the introduction of ethical codes has had any behavioural effect. Therefore, a survey of Norwegian professionals was undertaken in order to analyse the existence or non-existence of ethical codes, and their influence on the professionals‟ attitudes. The main and singular hypothesis tested was that there will be differences in ethical attitudes between employees who work in companies having ethical codes, and employees who work in companies without ethical codes. The findings of the study suggest that ethical codes did not have any attitudinal effects on professionals. Ethical codes seemed to be an inferior document in most organisations. The study suggests that the foundation of ethics is in the mind of the individual, and a further body of research explores this theme (Glenn & Van Loo, 1993; Lee & Yoshihara, 1997; Schwartz, 2001).

Cleek and Leonard (1998) also examine whether codes of ethics are effective in promoting ethical behaviour. Similar to Marnburg‟s (2000) findings, their research results indicate that codes of ethics are not influential in determining a person‟s ethical decision-making behaviour.

Several articles concentrate on the nature of the relationship between codes of ethics and individual behaviour. Schwartz (2001) examines the relationship between corporate

43

codes of ethics and behaviour, interviewing fifty-seven employees, managers, and ethics officers from four large Canadian companies. Unlike Marnburg (2000) and Cleek and Leonard (1998), the results propose that codes of ethics are a potential factor influencing the behaviour of corporate agents. The author suggests eight metaphors (or themes) which emerged from the interview data, and which explain the role of codes in influencing behaviour. Thus, the code is seen as a:

- rule-book that helps to clarify what behaviour is expected from employees; - sign-post that leads employees to consult with other people, peers or corporate

policies to determine if a certain behaviour is acceptable;

- mirror that provides employees with an opportunity to confirm whether behaviour is acceptable;

- magnifying glass that suggests a note of caution to employees before acting; - shield that allows employees to better challenge unethical requests;

- smoke detector that leads employees to try to convince others of their unethical behaviour;

- fire alarm that leads employees to contact the appropriate authority and report violations; and

- club that causes employees to comply with the code‟s provisions.

Schwartz suggests that codes can potentially influence behaviour in a variety of fashions as identified by the various metaphors. However, he admits that codes of ethics and their influence on behaviour have to be studied more fully. Although the study‟s initial concern was to analyse the codes of ethics‟ influence on behaviour and how they make a difference, greater clarification is needed.

McDonald and Nijhof (1999) develop a framework for implementing an ethics programme as this implementation framework may stimulate morally responsible behaviour in organisations and, combined with a code of ethics, could increase the ethicalness in the employees‟ actions and behaviour. It is proposed that for an organisational programme to be effective, five dominant conditions are necessary: (1) awareness of formal organisational goals and corresponding informal norms; (2) suitable procedures for decision-making; (3) correct distribution of resources; (4) existence of necessary skills; and (5) personal intentions for ethical behaviour. Thus,

44

organisational elements, such as codes of ethics have a great importance if brought together with other individual, personal values and intentions to generate an ethical behaviour in the organisation. On a similar note, Doig and Wilson (1998) raise questions about the use of codes of ethics as frameworks for defining ethical conduct and suggest that the use of codes alone may be less effective and may have less impact on managers and employees than expected.

The relationship between codes of ethics and organisational context interest other authors too. Somers (2001) analyses the relationship between codes of ethics, employee behaviour and organisational values. In particular, the relationship between codes of ethics and employees‟ attitudes and behaviour is examined. The results show that the presence of codes of ethics was associated with less perceived wrongdoing in the organisation, but not with an increased propensity to report observed unethical behaviour. It is noted that future research focused on clarifying the dimensions of the context in which ethical codes operate and on understanding the processes embedded in this context seems highly desirable.

The study undertaken by Fisher (2001), examining the use of codes of ethics in British organisations, reflects the idea that codes of ethics contribute to a loss of personal ethical responsibility on the part of employees. Codes of ethics undermine or challenge personal integrity and codes of conduct restrict and limit the development of wider loyalties.

Lee and Yoshihara (1997) studied the ethical behaviour of Korean and Japanese business executives; their study has also found that codes of ethics are an important factor in improving ethical standards, although not as important as the business executives‟ personal values.

Similarly, Glenn and Van Loo‟s (1993) study has shown that codes of ethics appear to be less influential than the individual's strong personal value system. It is suggested that support for codes is declining.

45

In contrast, as seen in the models of ethical decision-making analysed in Section One of this chapter, codes of ethics are regarded as an important factor in generating ethical behaviour. It is however unclear how effective a code of ethics is in dealing with ethical issues and making ethical decisions when required. For this reason, an in-depth analysis of codes of ethics‟ effectiveness appears to be needed in order to provide a better understanding of what constructs and generates ethical behaviour.

Section Summary

Various definitions of a code of ethics have been provided in the literature. Codes of ethics are variously described and known by different names (e.g. code of conduct, code of practice, ethical guidelines, business conduct, operating principles). The literature suggests that there is a level of confusion between a code of ethics and other ethical documents and a lack of clarity around what a code of ethics consists of.

A distinction is made between corporate codes of ethics (i.e. developed by organisations) and professional codes of ethics (i.e. developed by professional bodies) albeit these terms are used interchangeably by corporations and in academic literature.

For the purpose of this study, a code of ethics is defined as ‘a written and

formal document that includes ethical guidelines to be followed by employees/practitioners and is designed to guide their behaviour and conduct’.

Codes of ethics are prevalent around the world – though more present in the United States – and tend to be more present in larger organisations. In New Zealand, however, studies on use of codes of ethics are scarce; these studies suggest that only half of top New Zealand organisations use a code of ethics and that New Zealand organisations give low priority to ethics.

Studies investigating the use of codes of ethics by marketing research organisations are scarce. Recent studies suggest that the lack of use and enforcement of codes of ethics in the marketing research industry is perceived to lead to unethical behaviour.

Codes of ethics are seen as an important tool in creating and establishing an ethical environment. Nevertheless, there is little agreement in the literature on

46

the extent of usefulness of codes and the influence they have on behaviour, with some scholars proposing that a code of ethics has a significant influence on ethical perceptions, judgements and behaviour, while others are more sceptical, suggesting that the foundation of ethics is in the mind of the person, through the personal value system.

Section III – MARKETING RESEARCHER-CLIENT RELATIONSHIP: THEORETICAL CONSTRUCTS

This section examines theoretical constructs seen to generate good and ethical business relationships. Among these theoretical constructs, previous literature identifies trust as a critical element in the success of business relationships and argues that trust enables the development of ethical business relationships (Brenkert, 1998; Ennew & Palmer, 1998; Malhotra & Peterson, 2001; Giacobbe & Segal, 2000). Trust is also seen as a substitute for contracts, an element that is indispensable in business relationships and one that is believed to be a source of confidence (Das & Teng, 1998).

The concepts of trust and ethics are connected. Brenkert (1998) suggests that ethics and trust are bound up together and should be both largely promoted as they provide benefits to the business (such as reduced transaction costs and the possibility of sharing sensitive information). The relationship between business ethics and trust was also examined by Bews and Rossouw (2002). They propose that ethics promotes trust. Similarly, Bews and Palmer (1998) claim that trust and ethics are both determinant factors of relationship satisfaction. In marketing research in particular, studies such as those of Giacobbe and Segal (2000) and Malhotra and Peterson (2001) emphasise the importance of trust development in client relationships and argue that partnering relationships between marketing researcher and clients could solve ethical issues as ethical issues become less of a concern when trust is present within these relationships.

This section, therefore, discusses the meanings of trust, examines and defines trust from the perspective of different disciplines such as sociology, psychology, ethics and business disciplines and discusses trust in business relationships. In a second part, the role of personal values versus organisational values is analysed, providing an overview

47

of ethical perceptions and judgements and their role in making ethical decisions. Last, the concept of reputation is examined.