Corporate codes of ethics are written statements about moral norms which are issued by the respective company and which shall obligate corporate actions. In essence, these documents shall promote ethical behavior within the company and make corporate misbehavior to occur less likely. Although codes are widely distributed in many different countries (e.g., Kaptein 2004), their effectiveness is still open to debate. Whereas some studies conclude that codes can be a valid means for enhancing the ethicality of corporate actions (e.g., Trevino and Weaver 2001), other studies found no significant effects (e.g., Cleek and Leonard 1998). In this article, I argue that codes can be helpful for improving the ethicality of corporate actions. However, merely developing and establishing a code is not enough because the code itself cannot guarantee that its addressees act in accordance with its norms. Rather, the company has to carry out serious attempts to implement its code of ethics. Although this view may be widely shared, wisdom about appropriate code implementation is still fragile.
Implementation measures intend to make it more likely that the code norms are obeyed by the code addressees. In this respect, implementation measures are not restricted to the enactment of the code after the document had been developed. Rather, implementation measures refer to all efforts of the company which shall enhance adherence to the code norms. Therefore, implementation measures are only and always necessary under those conditions that the code norms are not observed anyway. In other words, codes that goes beyond codifying common practices need implementation measures in order to become effective.
In principle, code implementation can either be preference- or constraints-based (Talaulicar 2006). Preference-based measures intend to shape the attitudes, motives and beliefs of code addressees. Eventually, actors shall be convinced that the code norms are appropriate and that they deserve to be adhered to due to their deference. Hence, actors shall primarily be intrinsically motivated to act in accordance with the code because they prefer to do so. In contrast, constraints-based measures of code implementation do not intend to influence the actors’ preferences. Rather, these measures modify conditions of the situation actor’s face, in a way that shall make code adherence to be evaluated more favorably by code addressees. As a consequence, the addressees are – primarily – extrinsically motivated to act in accordance with the code because conformity is rewarded and deviance is punished by the company.
Many business ethicists have articulated skepticism that constraints-based implementation efforts can succeed. I agree that preference-based implementation efforts are important. At the same time, however, I argue that constraints-based implementation measures, namely punishments, neither can nor should be discarded. More specifically, I show that properly designed and executed punishments can be viewed as a promising, and even indispensable, measure for enhancing code effectiveness. In the following, I first review the literature on constraints-based measures for code implementation. In doing so, I show that these measures are a common part of ethics programs in practice, although empirical evidence on their effectiveness is far from unanimity. I argue that this ambiguity can, at least partly, be traced back to the different designs of constraints-based measures, which is highly ignored in the empirical studies available. Therefore, the subsequent section outlines recommendations on the proper design of constraints-based measures for code implementation. These recommendations are derived from sanction theories which have a long tradition in legal philosophy and became subject of many empirical analyses, too. On this base, I differentiate outcome and process determinants of constraints-based implementation measures and discuss their characteristics in more detail.
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