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Can Ethical Behaviour Really Exist in Business?

Andrew Bartlett David Preston

ABSTRACT. Our soft survey reveals that the assump- tion underlying much of the business ethics litera- ture — that the conduct of business can and ought to support the social good - is not accepted within the workplace. This paper considers an apparent dichotomy, with companies investing in ethical programs whose worth their employees and managers question. We examine the relationship between work, bureaucracy and "the market" and conclude that employees often question the existence of business ethics because there is no good and bad between which to choose. The choice is between success and failure. A common view of success and the "good life" is one determined by hard work in a well-organ- ised company operating in a free market. Analysing the three aspects of this view (the free market, hard work, bureaucracy) we suggest these are mere fictions. A major problem we identify in business is that organ- isations are designed as profit making mechanisms and have no interest in the good of society. Th e chal- lenge is to convince such organisations that a direct benefit accrues to them through their own ethical behaviour. In order to do this organisations must first be shown the importance of long termism. Executives, managers and other employees can be expected to attain high ethical standards only when they feel they are a integral part of an organisation and the organisation itself respects those standards. One of the keys to unravelling the undesirable situa- tion of a perceived absence of ethics in business is in encouraging a greater identity community, company and workforce. We provide some examples of ways companies can meet the challenge of encouraging more ethical, long-sighted behaviour. In addition, we highlight ways in which the expectations of the organisations of the organisation can be communi-

Andrew Bartlett is Director of Knowledge Workers, London



Management at

e a postgraduate Student at University of East

Preston is Reader in Information

University of East


cated more strongly through corporate structures that foster ethical action that benefits the long term interests of the individual and the organisation. Overall implementing a successful ethical program is shown to parallel that of the implementation of a quality program.

A soft survey on business ethics

In discussion recently with friends and colleagues about our research in business ethics their almost uniform reaction was, "But there aren't any." We generally smile mysteriously as if knowing some- thing they do not but in truth their responses unsettled us. We had already read books and

articles listing the benefits of codes of conduct, describing systems for ensuring distributive justice in organisations, weighing up the com - peting claims of deontological and utilitarian approaches to the subject and analysing any number of fine-tuning issues in business ethics. With internal programs of team-working and empowerment or public announcements of ethical initiatives, businesses themselves add to the burgeoning body of literature regarding

Ou r own

experiences in business lead us to feel some dis- comfort with much of what we read because it somehow did not seem to address the real concerns of a person having to make their way in working life. However, it had not occurred to us that the whole subject may not refer to anything that actually exists in the real work.

organisational and commercial ethics.

Worse still, our acquaintances - let's call them the BE Sceptics - do not even find it necessary to ask, "So what is business ethics", before despatching it to the land of the non-existent.


of Business Ethics 23 : 199-209, 2{)()0.


2000 Kluwer Academic Publishers.

Printed in the Netherlands.



Bartlett and David Preston

The common opinion among them seems to be that the term "business ethics" is an oxymoron. From this perspective, ethics is about being nice, controlled and altruistic whilst business is nasty, chaotic and self-interested. The assumption underlying much of the business ethics literature - that the conduct of business can and ought to support the common social good - is not accepted. So, can business ethics, as conceived in the literature, really exist in a social setting populated by BE Sceptics? And where do the BE Sceptics come from? The BE Sceptics of our acquaintance are not rampant "profit at any cost" capitalists; nor cynics hardened from spending too much time as small, unappreciated servants of large and uncaring organisations; nor college graduate with too little experience of work. In general, we hear these comments from relatively successful women and men with between five and twenty years of work in commercial firms or the professions behind them as directors, managers, technicians, doctors, lawyers or engineers. They are generally people to be expected to be sensitive to social and moral issues. We estimate that of the hundred or so people with whom we have had this conversion, 90% to 95% of them are BE Sceptic. We had anticipated disagreements about the extent to which ethics impinges on business or about the ethics that are relevant to business but we were not prepared for a complete denial of the applic- ability of ethics to business at all. Some of our friends work in large companies that we felt sure would have ethical programs or codes of conduct and this turned out to be the case. However, no-one could tell us anything about their contents and no-one believed that anyone else paid any attention to these codes either. Others work in professions such as medicine or law and hence are aware that they are bound by strict codes of conduct. The preva- lent attitude here seemed to be that whatever is allowed by the code is acceptable (although we have to say that this is more noticeable among lawyers than medics). There is no requirement for any additional responsibility. Of course, this is not to say that every person we know is unethical or amoral. It is just that they cannot see that any ethics are active in

business other than the view of Friedman that the only "social responsibility of business is to increase its profits" [lj. The fact is however, that we all have moral standards, whether we recog- nise them or not. We do not personally know anyone who would really be prepared to do anything at all to attain success in business. Even the lawyers insisting that their code of conduct is all they recognise are at least applying some level or moral reasoning (and one suspects that, although they will not admit it, their personal ethics would place additional restrictions on them in reality). The opinion being expressed by our acquaintances is not that they themselves wish to be absolved of responsibility for their actions at work but that they do not believe they or anyone else in business is required to be morally responsible. Bird and Waters have written about the phenomenon of managers refusing to acknowledge the moral content of their thought and behaviour, preferring to explain apparently altruistic acts in terms of utility to the company. The Moral Muteness of Managers is the term they use to describe the phenomenon [2].

These observations become especially puzzling when one looks at other types of evidence regarding the behaviour of business organisations. In the U.K., the Business In The Community (BITC) organisation is made up of 400 of the largest British companies, 300 of which con- tribute 0.5% of pre-tax profits to charitable projects. The purpose of BITC is to get compa- nies involved in social and economic problems in the communities in which they operate. Further, whilst it may be true that there is little aware- ness of ethical issues among managerial and clerical staff, there does seem to be an increasing readiness of companies to attempt to change this situation. Between 1987 and 1991 a quarter of companies surveyed internationally had spon- sored new ethics programs and there was a 40% increase in the number of European company CEOs making ethical pronouncements [15]. Why do companies seem to becoming more ethical (or least seem to be trying to do so) whilst their employees appear to believe that the organ- isations for which they work and the people with whom they work are interested only in profits?

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Ethical values communicated by the organisation

The answer may lie with the values implicitly communicated by the organisation itself. The majority of large corporations may have estab- lished codes of ethics but it seems to be the case that they have failed to reinforce the message they contain. The presence of a sidelined code of ethics could actually have a more deleterious efFect on the ethical mindset of workers and managers than the absence of a code altogether. Organisations spend a great deal of time and effort in implementing new initiatives for profit making and cost cutting. The same commitment of resources is often lacking from the imple- mentation of ethical programs. By publishing and failing to reinforce a code of ethics organisations may be sending the message that talk of ethics is - to use Friedman's phrase - "hypocritical window dressing" and incidental to the real business activity that takes place. Alternative, the impression may be given that adherence to the letter of the code is sufficient rather than under- standing and embracing its spirit. Either way, by emphasising the need for rneasurable financial success above the methods used to achieve it, many companies have created environments in which ethical considerations are regarded as no more significant than the choice of plants in the office. The fact is that the methods used by organi- sations to communicate and reinforce the values of efficiency and profitability to their employees are far more advanced and sophisticated than those used to promote ethical awareness. Messages encouraging ethical neutrality in decision making are generally far stronger than those imposing ethical constraints. In the words of Saul Gellerman, "Ethics must be Setting a high moral tone at the top levels of management is necessary, but not sufficient" [16]. Techniques must be employed to balance the potentially conflicting goals of financial success and high moral standards. The volume of the "anything goes" message must be attenuated at the expense of a stronger exhorta- tion towards good ethics. When this does not happen, and as we shall see, the difference in

attitudes between corporate oflficers and those of their managers suggests that it is rare that it does, then the individuals in the organisation are likely to believe that the only goal of the corporation is profit maximisation. In turn, if it is true that the only goal o the organisation is to maximise profits then the only responsibihty of the individual in that organisa- tion is to contribute towards higher profits. It is normal for the contribution an individual makes to an organisation to be measured in this way with no consideration given to the morality of the methods used to achieve results. The Protestant Ethic tells us that to be a good person we must work hard to achieve success and the business organisation tells us that success means profits and nothing else. Against this background, even the morally sensitive come to believe that ethics does not apply to business because the organisation provides no motive for any moral consideration. Inside, we may feel that this is not quite right, that something has gone missing, but we have no reason to think that others feel the same. We may be torn between economic requirements and, for example, our desire for fairness to other people but the business envi- ronment fails to validate our disquiet since it recognises only one side of the dilemma. Since those around us are the organisation we end up thinking that they share the ideals of the organ- isation and hence are ethically clueless. Due to the difference between the stated values of the business organisation and the personal values of the employee, manager or executive, it is also possible that individuals come to think them- selves less worthy than their colleagues of their place in the organisation. This in turn creates pressure to conform to the perceived require- ments of behaviour and to treat personal values as a kind of weakness. It is this that leads to the ethical blindness encapsulated in the statement, "There is no such thing as business ethics."

Ethical standards in the organisation

There is a growing body of literature and research indicating that the ethical standards applied by individuals at work may be different [3] and



Bartlett and David Preston

probably significantly lower [4-6] than those they follow in situations outside the business envi- ronment. There is general agreement that social factors such as the ethical climate of the organ- isation and conformance to behaviour of peers and superiors play an important part in mediating ethical reasoning. An organisation encouraging the view that profits are the only consideration will tend to be populated by individuals thinking and functioning on a lower ethical level. This standard of ethics will apply just as much to their dealings with and within the organisation as much as to their dealings with external parties. Other literature has suggested that specialised ethical theories should be applied to business to

better understand behaviour in the context of the business organisation [7]. Ulrich and Thielemann investigate the "kind of thinking pattern (managers) have personally evolved for them- selves in order to be able to legitimise their activ- ities within the field of tension between ethics and economic success". Following research among managers in Switzerland they identify

a dominant thinking pattern they name

"economism", under which managers "regard any more or less strictly success-oriented courses

of action as ethically legitimate." The model used

to derive this result divides managers into

Harmonists who believe "good business is good ethics" and Conflict-Perceivers who see ethics as a factor independent of success and therefore imposes additional responsibilities beyond merely satisfying business objectives. Harmonists, repre- senting 88% of the group of managers inter- viewed by Ulrich and Thielemann, place their faith in mechanisms such as Adam Smith's "Invisible Hand" to spontaneously reconcile self- interested behaviour with a greater social good.

An individual subscribing to the Harmonist view now finds herself equipped with a consis- tent set of beliefs that relieves the tension

between personal (The Protestant Ethic), organ- isational (profit maximisation) and societal ethics.

By working hard to achieve success she is able

to satisfy all constituencies and lead a "good life"

in the Aristotelian sense. She is able to identify with the Aristotelian principle that the interests of the community are largely common with her own interests. This appears to be the only way

of justifying or understanding our working lives in the context of our lives in society. Of course there is nothing Aristotelian about this kind of existence at all. When we share inter- ests with the community in the Aristotelian sense we are expected to put the interests of the com- munity before our own and have faith that our own interests will be well served. Economism and Friedman put it the other way - we serve society by pursuing our own ends. We occa- sionally hear versions of this point of view from business people as a justification for the inap- plicability of ethics to business and it reminds us of Alisdair Maclntyre's theory regarding emo- tivism [8]. In his book After Virtue Maclntyre suggests that Western liberal democracy is in a state of moral fragmentation with no consistent set of beliefs to which one can appeal to justify ethical standards. He further posits that in such an environment the moral statements made by an individual - the emotivist — are merely those she finds convenient to support her own position. Evidence that individuals manufacture justifi- cations for ignoring the ethical content of situ- ations has been provided by Darley and Latane [19]. Their work specifically applied to the reactions of people to "emergency" situations such as a theft or a potential fire. They found that when exposed to these situations, the subjects were much more likely to respond to the emer- gency if they were alone than if they were in the company of one or more strangers. When the subjects were interviewed after the event, the most frequently reason given for a lack of response was that the subject did not perceive an emergency situation or believe it was real. However, those that responded reported that they had no probleni noticing the emergency at all and other incidental evidence indicated that the non-responders had done also. The researchers commented that the non-responders seemed genuine in their belief that they had not noticed anything unusual requiring their attention, the implication being that they had at least convinced themselves with their post-justification if no-one else. Generalising from emergency situations to any situation with an ethical content, it may be possible to conclude two things. Firstly, it seems that social factors play a part

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in determining whether any individual "does the right thing" in any given circumstance. Darley and Latane suggested that the presence of others can inhibit action in situations in which reacting would require one to behave differently to the others. In other words, if everyone else is doing nothing then it is easier to continue to do nothing oneself. The second conclusion that may be drawn is that the route frequently taken by individuals to explain a lack of ethical consider-

ation in their behaviour in a given situation is to deny that any ethical content is present in that situation. These conclusions may be summarised in the phrase "pluralistic ignorance". Pluralistic ignorance is the condition in which members of

a group will ignore the need to take notice of

certain conditions provided all members of the group do the same. Applying these conclusions to the work setting begins to get to the bottom of why it is that so few of the people we have spoken to believe in business ethics, if we start

from the position in which the majority of individuals support the view that business is purely about profits, then the socialisation effect of the organisation will tend to propagate this view. Any given corporate individual may find himself subscribing to an opinion purely because

it is the opinion of the majority of people around

him. His critical faculties are paralysed by the socialisation effect. This is surely the case for the manager who justifies an unadulterated profit motive with a belief in the Invisible Hand. Such a belief takes on an almost mystical quality when one compares it with the methods of control used within organisations. On the one hand we have the common good for society arising spontaneously from a largely unregulated market of companies pursuing their self-interest and on the other hand we have the common good for the corporation

arising from the application of a rigid bureau- cracy expressly designed to suppress the effects of self-interest that may be harmful to the organi- sation. In both cases the benefits are supposedly efficiency and fair distribution. Taken from the level of the corporation this appears to be an entirely desirable and rational situation offering

a minimum of restriction on market behaviour and maximum control over internal affairs.

(Obviously it is only rational provided one ignores the paradoxical suggestion that both maximum control and minimum control are the best way to run eflScient systems of transaction humans.) The claim that this arrangement is also good for the community and the individual worker emerges as entrepreneurial emotivism. It is a sleight of hand that deceives us as a society into recognising demands from the business sector for deregulation as legitimate whilst as individuals we are exhorted from the same quarter to submit ourselves to an ever more constraining bureaucracy.

Work, bureaucracy and the market

The situation reflects the distribution of power in late 20th century western democracy in which the economy or "the market" is the primary organising and driving force. Society is required only to legitimate the status quo through the democratic process. Individualism is tolerated only to the extent that it fuels consumerism. Employees, managers and executives are expected to subordinate the interests of society to the interests of the economy and for reasons of personal welfare they do so. They are provided with economism as a salve for their conscience. The hegemony of the economy over society is exposed by Gary Teeple when he says, "The idea that politics determines national policies has gradually dissipated and in its place has come the open assertion that economics is the deciding factor in more and more aspects of society" [13]. However, we believe that for most people economism is not sufficient to relieve moral disquiet. It is a crutch for disjointed values rather than a true justification for the way we all have to live. There is not perceived to be any ethics in business because there is no good and bad between which to choose. The choice is between success and failure. So success and "the good life" is determined by hard work in a well-organised company operating in a free market. (The importance of each of these terms varies depending on position - hard work is important for the worker, organ- isation for the manager and free trade for the



Bartlett and David Preston

entrepreneur - but everyone is encouraged to believe in all three.) In reality all three of these terms are somewhat imperfect. It has been pointed out many times before that the market always has been and always will be regulated in some form or another. Some regu- lation (and an implied system of ethics) is required to protect buyers and sellers from unscrupulous trading partners. Without this kind of protection there could be no market at all. Other regulations e.xist to protect the interests of groups such as workers, local communities and nations. The importance of hard work may also be called into question. The market is not designed as a system to reward hard work or merit and it does not operate as one. Success in the market is arbitrary. As already mentioned, it suits the business organisation for its employees to believe that hard work will lead to success but this is also open to doubt and the idea has been called into question by Robert Jackall [9]. Jackall recounts the result of interviews with managers in U.S. corporations. Far from supporting the work ethic the U.S. managers indicated that the qualities needed for success were conformism to expected norms of thinking and behaviour, political skill in building relationships with the right people and the ability to outrun one's mistakes. Even then, success is capricious and disaster looms for anyone unfortunate enough to be in the wrong place at the wrong time. The picture Jackall paints of the bureaucratic hierarchy is of a system populated by kow-towing bureaucrats serving the interests of the organisation only when it happens to suit them to do so. What of the third term, the bureaucratic- organisation? Certainly in the light of Jackall's findings and to the extent that the managers' behaviour is influenced by the system they inhabit, it is hard to claim that bureaucracy is really the means by which the corporation can get the most from the human resources at its disposal. At best it is a tool used by executives and managers to give the impression, to them- selves and to their directors or shareholders, of being in control. For Maclntyre, managerial expertise is a fiction used for social control. He refers to Bittner who noted the gap between the

concept of managerial effectiveness and the absence of any actual criteria by which it may be measured.

The dangers of scepticism

It may be said that if the unregulated market, the well-organised bureaucracy and the indi- vidual coerced by the work ethic are all fictions then there is no problem. Why does it matter if we speak one way and act another? We can think of three main reasons. Firstly, by pretending that our values are different to how they are we leave ourselves vulnerable to the ethical opportunist. It provides a justification for the "We Don't Make The Laws' attitude identified by Albert Carr in his often cited article "Is Business Bluffing Ethical?" [10]. As an example, he describes a key manufacturer who supplied keys for cars to mail-order customers. Although it was obvious that many of the customers would be car thieves, the manufacturer justified his actions by pointing out that he had not broken any law. In the absence of any values other than success measured by profit there is no argument against the key manufacturer however much it may offend our intuition. Although he avoids disap- proval of the key manufacturer, Carr cannot bring himself to explicitly defend his behaviour and one suspects that this is because he is also subject to the intuition that there is something wrong with it. Secondly, there could be a psychological impact of "living a lie" likely to operate at the level of the individual and the community. The main effect may simply be to make us less happy although the result of placing oneself in a false position can be despair, schizophrenia and paranoia. On the societal level, this self-decep- tion is a false consciousness closely related to the alienation of man from himself and his activity described by Marx [11]. The third reason that it is important to recog- nise the difference between our statements about business ethics and our actual behaviour contains within it a clue to the way we might escape from the situation. Bad ethical practice, encouraged by a denial of the existence of ethical values in

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business, can be detrimental to the efficiency of the economy and the corporation. The problem we face is that the commercial business organisation is designed as a profit making mechanism and has no interest in the good for society. It is playing a zero-sum game against the rest of the economy and can be expected to have no particular orientation towards ethical behaviour beyond the laws that constrain it. Attributes, such as trustworthiness and co-operation, that tend to favour long term stability and success are not likely to be displayed by organisations with profit maximisation as the dominant value. When populated by organisa- tions of this type, the economy functions as a system of non-co-operating agents and offers neither the optimum return on resources spent by society nor the ideal operating environment for individual companies. The challenge is to convince the organisation (and hence the people in the organisation) that a direct benefit accrues to it through its own ethical behaviour. This is not the same as saying it is better for everyone if organisations have higher moral standards. It must be shown that the ethical organisation is likely to be more successful than the unethical one whilst operating in a system that delivers no guarantee of the ethical standards of other organ- isations. (Note that a further challenge exists to arrange the relationships between the economy and society as whole such that an efficient economy made up of co-operating agents will deliver the greatest benefit to society, however we may choose to measure it.)

The economic benefits of business ethics

Whether "good ethics is good business" is a matter of some debate. Among the academic community it seems to be an article of faith but it is a belief that also appears to hold a degree of credibility in business seems to be an article of faith but it is a belief that also appears to hold a degree of credibility in business circles. A survey conducted among U.S. executives, directors and business school deans in 1988 by Touche Ross found that 65% of the respondents believed that high ethical standards improved a firm's compet-

itiveness [12]. (The same survey also found that 94% said that "the business community as a whole is troubled by ethical problems \ This is perhaps further evidence of the conflict between the way we would like to be and the way we are forced to be.) Also, Galaskiewicz [14] has reported on the "Emerald City" of Minnesota — St. Pauls which has a reputation for corporate benevolence and public spirit. Focusing on the area of corporate donations, he reported that in he found that 67% of com- panies gave donations out of a sense of moral obligation or social responsibihty. (In fact, only 30% of organisations explicitly articulated their reasons in terms of "enhghtened self-interest" but there is probably a good deal of overlap in the two categories.) There are a variety of benefits an organisation can expect to accrue from taking a positive ethical stance: higher sales through improved public image; enhanced employee commitment to corporate goals through higher regard for the organisation; greater job satisfaction; efficiencies through improved internal and external relations and so on. O n the other hand, there are obvi- ously there are those who dispute the connec- tion between good ethics and good business. Carr and Friedman are the most often quoted examples. Their argument focus on the fact that companies or businessmen will only act ethically if it benefits them to do so. They say that since this is self-interested behaviour it cannot be deemed ethical. However, Carr and Friedman are here referring to specific acts that have an obvious positive outcome for the organisation. There is no reason to assume that the corpora- tion cannot be convinced that a positive ethical outlook in general can be a factor in success irrespective of whether there is any immediately identifiable business advantage from it. In order to be able to adopt this position it is necessary for the organisation to be able to take a long term view and trust that over a period of time they will benefit. Short-termism is the enemy of good ethics in business since it obscures the connec- tion between responsibility and success. In the Touche Ross survey pressure for short-term results was one of the main threats to business ethics perceived by managers.


.Andrew Bartlett and David Preston

In his book Theory Z [21], William Ouchi contrasts the success over recent decades of Japanese firms with the poorer performance of companies in the West over the same period. Generalising the Japanese and Western forms and referring to them as Type Z and Type A organ- isations respectively, he find the difference to be in the long-term approach adopted by Type Z compared to the short-termism of Type A. Long- terniism allows the development of trust, co- operation and shared values between the corporation and its customers, employees and suppliers. Type A organisations, in the absence of shared values and stable relationships, require a strong bureaucracy to prevent individuals from sacrificing the long-term interests of the company for short-term gain. The costs of bureaucracy can be high. Not only are there costs attached to running the bureaucracy itself — the accounting system used for "untangling the inter- dependencies between people" - but also the system prevents the organisation responding to the need for change since it precludes cross- functional co-operation. Ouchi makes plain the connection between success and concern for long term relationships. Many large corporations have already embraced the idea that their long term interests are served through a positive involvement in the community. Business In The Community and the 5% club are just two examples of large organisa- tions with the motivation to invest resources in their surrounding environment. It is perhaps not surprising that it is large companies that are more willing to take part in such initiatives. Not only do they have greater visibility and hence their behaviour is likely come under closer scrutiny than their smaller counterparts, they are also likely to be around for longer and are therefore able to reap the long term rewards for co-oper- ation and trust with customers, suppliers, com- munity, regulatory bodies and even competitors. Smaller companies are more likely to succumb to the temptation to overlook ethical considerations in the bid for short-term profits. Large com- panies are not immune to this however and the pressure to show year on year profits is increasing with increasing shareholder promiscuity. Also, the long-term success of an organisation only

becomes relevant when the decision making executives identify their reputations with that of the company.

Unravelling the contradictions

Short-termism is prevalent at all levels of business as shown by Jackall's analysis of the attitudes of managers to the criteria for success. To the extent that merit plays any part in success it is merely in "keeping ones nose clean" or having "a safe pair of hands". In the absence of any system for tracking the consequences of decisions once a manager has moved to another position, even in the same company, individuals are invited to sacrifice long-term goals and stability for short- term results. As Ouchi points out, "in a short- run oriented firm, a manager who fails in the short run will be around to see the long run". Like executives, managers and other employees can be expected to attain high ethical standards only when they feel they are an integral part of the organisation and the organisation itself respects those standards. Perhaps this is a root of the contradiction that so many apparently believe in the beneficial effects of good ethics on corporate well-being whilst so few are willing to acknowledge the relevance of ethics in the business arena. Those questioned in the Touche Ross survey were classified as "executives, directors and business school deans". The statements analysed by Galaskiewicz regarding corporate donations came from high ranking executives. Conversely, the evidence cited against business ethics, including our own anecdotal evidence, is generally gathered by investigating the views of middle-managers. It appears that business leaders believe and espouse a positive view of business ethics has nothing to do with them. We can return to pluralistic ignorance to explain this difference. Middle- managers' views on appropriate modes of conduct in the business setting are formed by contact with people and experiences within the organisation. The company itself forms the socialising environment and as we have seen, if the company is sending mixed messages regarding the relative importance of success and ethical

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behaviour then it is hardly surprising if corpo- rate individuals become cynical. Senior executives have a different socialising environment to set the tone for their ethical behaviour. Their contacts and dealings are to a much greater extent external to the corporation. Furthermore, since senior executives are more closely identified with the organisation they work for, they are more likely to extend their corpo- rate persona beyond business and into the com- munity. Galaskiewicz found that Minnesotan companies with CEOs closely linked socially to community leaders gave more in corporate donations than others. He also noted that on average the community leaders had considerably higher standing in husiness than the CEOs. In other words, the Minnesotan community leaders could apply pressure to CEOs to conform to expectations of charitable behaviour because the failure to do so results not only in exclusion from elevated social circles but from elevated business circles as well. He says that "company executives give to keep their places in the network" [17]. One of the keys to unravelling the undesir- able situation of a perceived absence of ethics in business therefore is in encouraging a greater identity between community, company and workforce rather than allowing companies to manage their relationship with the community and their relationship with their employees as if they were entirely separate entitles. In the U.K. there is growing support for the concept known as stakeholding. If iniplemented, this would give a say in the running of a company not just to shareholders via their appointed board but to other interest groups such as employees, the local community, customers and so on. Such a move would significantly raise the likelihood that the company would adopt a longer-term, more ethical posture that should reap its own rewards. Galaskiewicz quotes Talcott Parsons [18]: "if the goals of the organisation are in line with the dominant values, not only will the organisation operate unencumbered in its environment, but participants in the organisation will be all the more loyal to the organisation." This is the double effect caused by the fact that as members of society we legitimate the role of business and yet we benefit from its success by our participa-

tion in it. (Note that there is a danger here however Organisational goals and dominant community values may be aligned by changing either one of them. Organisations may find it more convenient to alter the values of the com- munity they serve than their own values. This is one of the traditional criticisms of advertising expressed for example by J. K. Galbraith in The Affluent society.)

Managing ethics in the organisation

These days, most corporations are aware of the need to be at least seen to be in step with the values of the surrounding community and many are adept at achieving this by actively projecting their ethical values into the marketplace. Few organisations manage to effectively communicate the corresponding values to their employees and instead give the impression that the company expects them to behave as if financial consider- ations outweigh all others. To reverse this situa- tion the organisation must learn to manage and communicate through the social system rather than through the bureaucracy. In addition to the hierarchy and the market, Ouchi's Theory Z recognises a social system he calls a "clan'\ Clans are "intimate associations of people engaged in economic activity but tied to each other through a variety of bonds". Through long term associations with clans, individuals are socialised are socialised to pursue the common good since it is only through the success of the clan that the individual can succeed. The business organisation that can develop and communicate rationally with the collective consciousness of the clan will have no need to exert control over the individual through the bureaucracy. This can only occur in an environment in which the expecta- tion of persisting relationships enables the devel- opment of trust and co-operation and it is only those at the top of an organisation who can decide to create this environment. This will not be achieved without consider- able difficulty. Ouchi points out that it is rare that a Type A organisation becomes Type Z. Rather, Type Z companies are those that have managed to maintain the values of trust and long term



Bartlett and David Preston

commitment instilled by the founders. Once these values are lost it is difficult to re-establish them. Clan arise from intimacy in human rela- tions and cannot be bullied into existence by a hierarchy. It may be that the many failed attempts at forcing Typo Z management styles into unre- sponsive bureaucracies have created the ethical vacuum that now exists. The challenge for companies is to employ their often considerable expertise in shaping ort^anisational activity to encourage more ethical, long sighted behaviour and discourage self-inter- ested, short sighted behaviour. Gellerman has suggested some practical methods for the latter. He identified the need to reduce inducements to unethical behaviour such as unusually high rewards for good performance or severe punish- ments for poor performance. For e.xample, a number of recent incidents in the City of London involving misconduct of highly incen- tivised individuals or teams have caused The Bank of England to issue warnings to city firms regarding the size of bonus payments for high fliers. Reducing disproportionate incentives or increasing the surveillance ot individuals in a position to personally benefit from excessive corporate profits will reduce the risk of uneth- ical behaviour. At the same time, the expectations of the organisation must be strongly communicated through corporate structures that foster ethical action that benefits the long term interests of the individual and the organisation. Patrick Murphy points out that in large organisations corporate ethical credos are only sufFicient in companies with a pre-existing "cohesive corporate culture, where a spirit of frequent and unguarded com- munication exists" 120]. In other (more preva- lent) cases. Murphy suggests that extensive ethics education programs are required to reinforce and standardise interpretation of the ethical code. Trevino [4] supports this with the proposition that, "Codes of ethics will affect ethical/ unethical behaviour significantly only if they are consistent with the organisational culture and are enforced." Within the organisation there is much that can be done to improve the ethical climate provided the top levels of the company hierarchy are

prepared to use their power to foster the correct atmosphere. In some ways, implementing an ethical program is similar to implementing the quality programs that many organisations have been persuaded to take one. It must be woven into the culture of the organisational and cannot be tacked on as an afterthought. It requires a loosening of bureaucratic control and a willing- ness to allow each individual to think creatively within the context of their own role. Through tramuig the organisation must provide the moral reasoning skills to the workforce to allow ethical considerations to become a feature of operational decision making. Through reward and if neces- sary punishment the organisation must reinforce ethical behaviour in individuals. In this way the people in an organisation may gradually become less afraid to admit to the existence of an ethical conscience in their business personae and perhaps more able to identify their long term interests with those of the company.


There will always be openings for opportunists. There will always be companies and individuals that take advantage of the goodwill of others to make a quick profit. Laws and regulations are there to discourage and detect such behaviour but we should not pretend that they define the limits of our expectations of ourselves or others. To do so is to deny what we know to be true about ourselves. Business ethics does exist but it should not be limited to a search for normative systems. Business ethics should search for ways to allow people in the business environment to do what they think is right for themselves, their company and their community rather than what they think is expected of them.


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