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Journal of Business Ethics (2011) 99:535548 Springer 2010 DOI 10.1007/s10551-010-0667-y
Corporate Codes of Conduct: The Effectsof Code Content and Quality on EthicalPerformance Patrick M. Erwin
ABSTRACT. Corporate codes of conduct are a practical corporate social responsibility (CSR) instrument commonly used to govern employee behavior and establish a socially responsible organizational culture. The effectiveness of these codes has been widely discussed on theoretical grounds and empirically tested in numerous previous reports that directly compare companies with and without codes of conduct. Empirical research has yielded inconsistent results that may be explained by multiple ancillary factors, including the quality of code content and implementation, which are excluded from analyses based solely on the presence or absence of codes. This study investigated the importance of code content in determining code effectiveness by examining the relationship between code of conduct quality and ethical performance. Companies maintaining high quality codes of conduct were significantly more represented among top CSR ranking systems for corporate citizenship, sustainability, ethical behavior, and public perception. Further, a significant relationship was observed between code quality and CSR performance, across a full range of ethical rankings. These findings suggest code quality may play a crucial role in the effectiveness of codes of conduct and their ability to transform organizational cultures. Future research efforts should transcend traditional comparisons based on the presence or absence of ethical codes and begin to examine the essential factors leading to the effective establishment of CSR policies and sustainable business practices in corporate culture.
KEY WORDS: codes of conduct, codes of ethics, code content, code quality, ethical performance, CSR ranking system
ABBREVIATIONS: BCC: 100 Best Corporate Citizens; CSR: Corporate social responsibility; DJSI: Dow Jones Sustainability Index; GPA: Grade point average; WMEC: Worlds Most Ethical Companies; WMRC: Worlds Most Respected Companies
Introduction
The concept of corporate social responsibility (CSR) is gaining widespread attention from academics, businesspeople, and consumers. Indeed, the benets awarded to socially responsible companies are becoming increasingly clear and tempting rms across all industries to directly address CSR issues. Commitment to ethical standards has been implicated in enhanced overall company performance through a variety of metrics, including increased nancial performance (Orlitzky et al., 2003; Vershoor, 1998), reduced cost structures, product differentiation, and brand equity (Chen and Bouvain, 2005). While some of these...