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The bottom-line benefits of ethics code commitment

Author

Listed:
  • Gilley, K. Matthew
  • Robertson, Christopher J.
  • Mazur, Tim C.

Abstract

Recent corporate scandals highlight that an exclusive focus on financial performance, to the exclusion of broader stakeholder-related performance criteria, can be detrimental to overall firm value creation. Among the ways to enhance leaders' focus on stakeholder value creation is the development and executive championing of an effective code of ethics. Such "Ethics Code Commitment" (ECC)--which incorporates characteristics of the code and behaviors by top management--affects a broad number of organizational stakeholders, yielding value for them, thus increasing their psychological and/or financial commitment to the organization while strengthening the firm's corporate culture. This article develops a model highlighting the various benefits of ECC to key stakeholders and the subsequent effects on an organization's culture and competitiveness. In particular, we focus on the need to include community leaders and key employees in the ethics code development process; the importance of moving away from a purely legalistic document to one that inspires stakeholders; the importance of linking ethics to strategy; and managerial approaches that can enhance the effectiveness of the code of ethics through ethics-related dialog. When developed and implemented correctly, ECC can prove to be an important source of competitive advantage via the effects it has on relationships between the firm and key stakeholders.

Suggested Citation

  • Gilley, K. Matthew & Robertson, Christopher J. & Mazur, Tim C., 2010. "The bottom-line benefits of ethics code commitment," Business Horizons, Elsevier, vol. 53(1), pages 31-37, January.
    • Handle: RePEc:eee:bushor:v:53:y:2010:i:1:p:31-37
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    References listed on IDEAS

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    1. Werther, William Jr. & Chandler, David, 2005. "Strategic corporate social responsibility as global brand insurance," Business Horizons, Elsevier, vol. 48(4), pages 317-324.
    2. Joseph E. Coombs & K. Matthew Gilley, 2005. "Stakeholder management as a predictor of CEO compensation: main effects and interactions with financial performance," Strategic Management Journal, Wiley Blackwell, vol. 26(9), pages 827-840, September.
    3. Falck, Oliver & Heblich, Stephan, 2007. "Corporate social responsibility: Doing well by doing good," Business Horizons, Elsevier, vol. 50(3), pages 247-254.
    4. Christopher J. Robertson & William F. Crittenden, 2003. "Mapping moral philosophies: strategic implications for multinational firms," Strategic Management Journal, Wiley Blackwell, vol. 24(4), pages 385-392, April.
    5. Amy J. Hillman & Gerald D. Keim, 2001. "Shareholder value, stakeholder management, and social issues: what's the bottom line?," Strategic Management Journal, Wiley Blackwell, vol. 22(2), pages 125-139, February.
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    Cited by:

    1. Albert D. Spalding & Gretchen R. Lawrie, 2019. "A Critical Examination of the AICPA’s New “Conceptual Framework” Ethics Protocol," Journal of Business Ethics, Springer, vol. 155(4), pages 1135-1152, April.
    2. Julie N. Y. Zhu & Long W. Lam & Yan Liu & Ning Jiang, 2023. "Performance Pressure and Employee Expediency: The Role of Moral Decoupling," Journal of Business Ethics, Springer, vol. 186(2), pages 465-478, August.
    3. Mary Margaret Rogers & Robert A. Peterson & Gerald Albaum, 2013. "Measuring Business Related Ethicality Globally: Cultural Emic Or Etic?," International Journal of Management and Marketing Research, The Institute for Business and Finance Research, vol. 6(1), pages 1-14.
    4. Maurício José Serpa Barros de Moura & Rodrigo de Losso da Silveira Bueno & Helena Wagner P. Rocha & Patricia Morilha Muritiba & Sérgio Nunes Muritiba, 2011. "An analysis of factors affecting the ethical conduct of microcredit officers," Brazilian Business Review, Fucape Business School, vol. 8(1), pages 1-26, January.
    5. Mishra, Paresh & Schmidt, Gordon B., 2018. "How can leaders of multinational organizations be ethical by contributing to corporate social responsibility initiatives? Guidelines and pitfalls for leaders trying to do good," Business Horizons, Elsevier, vol. 61(6), pages 833-843.

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