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Effective corporate ethical codes must be communicated in organizations and assimilated into their cultures. When they exist as separate entities outside the culture or are communicated ineffectively, they can fail to function as key strategic documents. The ethical code from Lehman Brothers investment bank was analyzed using two different methodologies. Results showed the code was clear in communicating facts and information, but was not strong in transformational and visionary aspects that might assist company during a crisis. The study revealed that the culture at Lehman was not tied to the code and it did not play a significant role in the organization.
Betsy Stevens
INTRODUCTION
Corporate ethical codes are documents designed for internal and external audiences which state the major philosophical values embraced by an organization. Effective codes define the responsibilities of the organization to stakeholders, outline expected conduct for employees and set the ethical parameters of the organization by articulating what is acceptable and what is not ((Kaptein & Wempe, 2002; Stevens, 1996). Codes can have significant impact as key strategic documents in organizations or they can be created as artifacts to simply make the organization appear more ethical to its stakeholders. Some firms write codes to create a positive public image while others genuinely attempt to guide and instruct employees on ethical behaviors appropriate to their organizations. Companies with codes may receive a break under Federal Sentencing Guidelines, so there is some incentive to create one for that purpose alone. Codes have emerged as one of the major CSR (corporate social responsibility) instruments by which companies align their actions and values with those of their customers, enacting a concept known as ethical consumerism (Castaldo, Perrini, Misani & Tencati, 2009). They have the ability to transform organizational cultures and function best when communicated effectively and culturally embedded in the organization; otherwise they remain as separate documents that are often seen as external to the company's mission and purpose.
This paper analyzes the corporate code of ethics from Lehman Brothers, the investment bank that failed during the financial crisis of 2008. The code is examined in terms of its role as a strategic document to see if it impacted, influenced, or guided the executives during the financial crisis and is also analyzed for its...