Corporate codes have increased extensively over the last three decades. Following the path of corporate America, a large number of European corporations have developed some sort of ethical code, and this trend is also evident among Asian companies.
This interest for codes has been prompted to a great extent by legal requirements that were developed in response to the numerous financial and business scandals: for example the Foreign Corrupt Practices Act (1977) signed after the Watergate scandal, or the Sarbanes-Oxley Act (2002) after Enron’s. Simultaneously the attention for corporate social responsibility and sustainable business practices in big corporations has reinforced this fashion.
The content of the code is always a reflection of what companies hold desirable. Hence, it constitutes the basis for defining the indicators for measuring the effectiveness of the corporation and its social responsibility, and it also influences the ethical or unethical behaviour in companies. Codes are usually regarded as the most important component of a corporate ethics programme. They are good tools to state ethical principles and to communicate to its audience the importance the company gives to these principles as necessary conditions for doing business. Therefore they constitute an essential tool to make the company ethical and an important step in corporate image-building.
Speaking in codes
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Ignacio Ferrero is professor of business ethics at the University of Navarra, Spain. He has been visiting scholar at Bentley University, Harvard University, and at NotreDame University in the US.