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What Is the Relationship Between Corporate Culture and Ethics?

A positive corporate culture reinforces ethical behavior.
For individuals, the role of ethics in organizational behavior helps ensure that each person is treated fairly and maintains personal responsibility.
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  • Written By: Osmand Vitez
  • Edited By: A. Joseph
  • Last Modified Date: 14 December 2014
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Corporate culture and ethics are interrelated in many businesses because the former often drives the latter. A company’s corporate culture is the ideas, beliefs and values that it strives to create in its working environment and employees. Ethics typically are a large part of a company culture. To make the connection between its culture and ethics prevalent, a company can create a mission statement with a direct reference to ethics. Companies must then assess business activities through the prism of its ethical code to determine the effectiveness of the corporate culture.

Ethics can be a difficult concept to define in business. In many ways, they will have a different definition to different individuals. For example, adding morals to an ethical code of conduct is possible under certain scenarios. A significant reason to link corporate culture and ethics is to ensure the same definition and understanding of ethics among a group of people. Companies can define a code of conduct based on their owners’ beliefs, the ethics of society or some other basis.

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A company’s corporate culture typically is an unseen part of a working environment. It dictates how a company should act and react to both internal and external parties. For example, buying low-cost materials and passing finished goods as high quality even though they contain inferior materials might be unethical. Negotiating with other businesses will not be a hostile process when a company desires a strong, ethical corporate culture. Companies foster this behavior by creating a positive corporate culture.

Creating a bond between this culture and ethics starts with a company’s executive management team. These individuals — such as the board of directors or chief executive officer — might write an organizational mission statement and a code of ethics. These two statements should reference what they want the company's culture to be as well as its ethics for the business. In some cases, a well-established company might need to write or change its mission statement. This allows the business to alter its corporate culture as necessary to improve its ethics.

Companies that have a strong corporate culture and ethics code often have increased employee and customer loyalty. Individuals tend to look favorably on a business that self-governs its operations. Customers might even pay a premium if a company has to charge more for products because of its ethics code. Fostering these relationships can also result in a greater market share and higher profits. Together, they can become a competitive advantage for a company.

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Discuss this Article

ZsaZsa56
Post 3

People might wonder how any company could have a culture which promoted unethical behavior. They might be picturing some criminal organization from a James bond movie. But a company can create an irresponsible culture in indirect ways.

At a lot of places the bottom line is everything. If the money is not coming in the business is not working. And there are only so many ways to make more money. Some of these are ethical and others are not.

If a company stresses profitability above all other things there ethics can quickly slip. If people are rewarded for ill gained successes or weakly punished for unethical behavior the culture will only get worse.

nextcorrea
Post 2

I worked for a law firm that had a strong culture of ethics. These ethics applied to both our relationships with clients and with the broader judicial system.

The law is an ethically fraught profession. There are many areas where the line between right and wrong is blurry at best. Our firm had an ethics panel that would discuss any thorny ethical issue that came up and would issue briefs amending company policy and explaining why.

I have worked at other firms since and have never seen a culture of ethics as strict as that one firm. Most people are ethical only as a way of covering themselves if something goes wrong. Their ethics have a pretty short limit. It takes a commitment to principle to go above and beyond that bar

summing
Post 1

The only way their can be a meaningful relationship between corporate culture and ethics is if ethical behavior is at the core of the corporate culture. It is not enough to have an implied ethical code. It has to be a part of the introduction to the company for any new hire and something that is reinforced throughout a career.

I have seen this work both ways in companies. I have seen companies that like to think they were ethical, some that even made a big show of it, but also made no real effort to police themselves or to punish wrong doing.

But I have seen companies that hold themselves to an extremely high ethical standard. They go above and beyond the bar that has been set for themselves and stake their reputations on their record of ethics.

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