IntroductionIn recent years Australian business organizations have increasingly followed the trend in the USA and the UK to adopt codes of ethics. The actual proportion of companies in each country tends to be a matter of some disagreement. For example, in the USA, Davis[1] has stated that "more than 200 of the Fortune 500 now have a code of ethics", while Murphy[2] has written "Ninety percent of Fortune 500 firms, and almost half of all other firms, have ethical codes". Sweeney and Siers [3] have reported the frequency of codes as 56 per cent for all companies of net worth in excess of $5 million in their sample. Schlegelmilch and Houston[4] report a 42 per cent presence of codes in their survey of the top 200 companies listed in The Times Top 1,000 in the UK. This was based on a completed survey return of 37 per cent.In 1992, the Ethics Research Group in the School of Accounting at the University of Technology, Sydney commenced a programme of broad based research investigations into ethical codes and culture among Australian enterprises. Three areas of study have been undertaken, with this article reporting findings from the first two.The first study established the extent to which codes of ethics have been adopted by these enterprises. Likelihood of code adoption was investigated in relation to such variables as organization type (public, private, government owned, foreign corporation), size, income and major activity sector.The second study was concerned with the actual nature of the content of the codes to determine the level of their ethical content and whether codes were being designed to provide high level guidance on corporate values in ethical issues rather than law based and predetermined resolution of what should be handled as moral dilemmas.The third study involved a postal survey of all the enterprises identified in the first study as having a code of ethics either in situ or in preparation. The purpose was to determine the extent to which enterprises have established a comprehensive approach towards the development of a corporate ethical culture and the degree to which codes of ethics have been integrated into the mainstream processes of the enterprise. Factors investigated included code authorship, policies of revision, extent of involvement of employees, promulgation of the code and evidence of training in ethics and other ethical initiatives.
The paper identifies in the literature two categories of codes of ethics, inspirational and prescriptive, and introduces new classification categories of allodial and decretal. The first classification is based on the identity of the ethics decision‐maker – the authors or the addressees of codes. The second classification is based on whether operational definitions are applied by the codes. Such concrete definitions may be in the rules themselves, in related documents or be known from shared knowledge. The second classification has importance if national associations of accountants use codes as a means for assurance of specific outcomes of defined ethical behaviours. For the study, a survey of 57 codes of ethics issued by national associations of professional accountants was undertaken to determine the basic features of codes and to analyse their content. The areas of ethical concern in national associations were identified and compared to the IFAC model code for professional accountants. The paper reports that national organisations of accountants have promulgated decretal codes in 96% of cases examined. As these codes contain operational definitions, their outcomes can be scientifically measured and sanctions for breaches fairly and reasonably imposed.
The paper investigates the effectiveness of codes of ethics to influence the behaviour of employees. Vignettes are not part of the methodology as the core data come from the direct observations of behaviours reported by 25 top managers and 545 employees from eight large Australian enterprises. One aim of the research is to measure the consistency of the observed behavioural patterns among employees and to investigate the possible association of high consistency with particular ethics strategies. The research models are based on medians and tallies of percentage frequencies of behavioural patterns. Two matters of importance are concluded from the investigation. First, there is no discernible association between the consistency ratings of the enterprises and their particular strategies in ethics. Second, the analysis suggests that the strongest ethical culture affecting behaviour in the respondents comes from an external, shared source.
Focuses on the status of ethics in the larger and more significant Australian business corporations, using a survey instrument. The findings cover the origins of Australian enterprise codes, their implementation, the use of comprehensive strategies to support them, the sanctions imposed for their breach and the level of ongoing review and reporting. Uses these as criteria of “mainstreaming” ‐ the establishment of a company’s ethics function as a major and central focus of management activities, systems and procedures. Suggests that the extent of “proprietary interest” afforded addressees of codes is an element of code effectiveness and ethics mainstreaming.
This paper analyses the ethical cultures of the international accounting profession by using the concept of ‘mainstreaming’ to describe the commitment of an organisation to the ethical function in its operations. The objective of the research on which the paper is based was to rate the efforts of 62 respondent national associations of professional accountants worldwide to incorporate the ethics function into the core operations of their organisations. Sixteen environmental factors were used in the analysis. They were set up as a group of criteria to assess the ethics procedures and systems of the accounting associations, and were divided into two categories. The first group was code based and contained items on code of ethics development and functions which would indicate whether ethically‐friendly management attitudes and systems were in place as a central focus of operations. Some of these elements were capable of fostering a ‘proprietary interest’ attitude on the part of members towards their codes of ethics, which in turn encourages code compliance. With the second group, other key operational aspects were examined to provide a balanced set of criteria. Interrelated elements among factors important to an ethical environment are included in the findings. The study concludes that on average the international accounting profession has attitudinal and systemic approaches that are ‘mainstream’. In general addressees were involved in code authorship and the public had adequate access to codes. However, increased use could be made of ethics professionals in the development of codes, of professional development courses to further the ethics skills of members, and of communication channels to foster a unifying approach to ethics. The study provides criteria for individual associations to assess their mainstreaming status against the international findings.
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