Journal of Business Ethics (2006) 64: 17–29
Springer 2006

DOI 10.1007/s10551-005-2408-1

A Comparison of the Contents

of the Codes of Ethics of Canada’s
Largest Corporations in 1992 and 2003 Jang B. Singh

ABSTRACT. This paper compares the findings of con- The current paper compares the findings of Lefebvre
tent analyses of the corporate codes of ethics of Canada’s and Singh (1992) to those of a similar survey of
largest corporations in 1992 and 2003. For both years, a Canada’s 500 largest corporations, as identified by
modified version of a technique used in several other the Financial Post, conducted in 2003.
studies was used to determine and categorize the contents Corporate codes of ethics are one of several
of the codes. It was found, inter alia, that, in 2003, as in
influences on ethics in organizations. In a model (see
1992, more of the codes were concerned with conduct
against the firm than with conduct on behalf of the firm.
Figure 1) that goes beyond philosophically-based
Among the changes from 1992 to 2003 were a significant ethics, Stajkovic and Luthans (1997) use social-cog-
increase in the frequency of mention of environmental nitive theory to identify factors influencing business
affairs, legal responsibility as the basis of codes and ethics standards and conduct. They propose that a
enforcement/compliance procedures. person’s perception of ethical standards and sub-
sequent conduct is influenced by institutional factors
KEY WORDS: Business ethics, Corporate ethics, Cor- (e.g., ethics legislation), personal factors (e.g., moral
porate codes, Ethical conduct, Code contents, Ethical development), and organizational factors (e.g., code
standards, Determinants of ethical conduct, Codes of ethics of ethics). The key antecedent factors triadically
interact to influence ethical standards (Stajkovic and
Luthans, 1997, p. 32). The current study examines a
Lefebvre and Singh (1992), in a study of Canada’s major organizational factor, code of ethics, in Can-
500 largest corporations, content analyzed their ada’s largest organizations. In particular, this study
codes of ethics. They found that, inter alia, a third of examines the contents of codes of ethics of Canada’s
the responding firms had fairly well developed largest corporations, comparing their contents in
codes; issues pertaining to conduct against the firm 1992 and 2003. While several aspects of corporate
were addressed to a greater extent than issues con- codes may affect behaviour in organizations, their
cerning conduct on behalf of the firm and that the contents are critical to effectiveness.
most frequently addressed issues were those policies Changes in content over time reflect changing
that pertain to conflicts of interest and the integrity values in organizations. As Weaver (1993) suggests,
of books and records. They concluded that the focus ‘‘generally absent from existing research are longi-
of Canadian corporate codes of ethics was protection tudinal studies of content change, which can indicate
of the firm and that while some of the codes refer to the sources of code content: e.g., top management
issues of social responsibility, they were mainly changes, legal pressures, general social trends, scan-
concerned with conduct against the firm (p. 808). dals, actions by reputationally prominent firms,
changes in organizational structure, etc. (p. 54).
Dr. Jang B. Singh is Professor of Business Administration at the Kaptein (2004) suggests that periodic analysis of the
Odette School of Business, University of Windsor, Canada. content of business codes tracks the extent to which
He teaches in the management area and his research focus is there is evidence of further homogenization or
on ethics in the management process. diversification in codes (p. 27).
18 Jang B. Singh

Institutional
Factors

Organizational
Social Factors Ethical
Values Standards
Personal
Factors

Figure 1. Theoretical Framework (Adapted from Stajkovic and Luthans, 1997).

A corporate code of ethics is ‘‘a statement setting codes along three broad areas: policy (specific issues
down corporate principles, ethics, rules of conduct, addressed in the code), authority (what makes the
codes of practice or company philosophy concerning codes policies ethical, morally necessary or legiti-
responsibility to employees, shareholders, consum- mate) and compliance procedures. Cressey and
ers, the environment, or any other aspects of society Moore found that there is minimal agreement
external to the company (Langlois and Schle- among officials on the subject matter of codes with
gelmilch, 1990, p. 522). In the same vein, Kaptein only 3 of 15 policy issues mentioned in at least two-
(2004) states that a code clarifies the objectives the thirds of the codes, and only half of the issues
company pursues, the norms and values it upholds covered by less than one-third of them. Their
and what it can be held accountable for (p. 13). analysis showed that conflict of interest was the most
These documents vary in length, and breadth and emphasized item in the policy area, that the codes
depth of topics covered. Berenbeim (2000) cites were predominantly founded on principles related to
three trends as evidence of the growing importance the business world and that three-quarters of the
of corporate codes of ethics: the globalization of codes referred to compliance procedures.
markets and the need for core principles that are Matthews (1987) evaluated the codes of 202
universally applicable, the acceptance of these codes American corporations using a method similar to
as part of the corporate governance as illustrated by that used by Cressey and Moore (1983). She
increased participation of boards in their develop- examined the content of the codes along three broad
ment and the improved ethical literacy of senior areas: the behaviour and actions discussed in the
managers as illustrated by the increasing sophistica- code; the enforcement procedures mentioned, and
tion of the codes. In some circumstances, as a the penalties associated with illegal behaviour. These
condition of doing business, corporations are 3 broad areas encompassed 64 items evaluated
required to have a code of ethics. For example, listed according to the following scheme: not discussed,
companies on the New York Stock Exchange must discussed, discussed in detail, emphasized. Matthews
not only have a code but one which covers stipu- (1987) group the 64 items into 10 major areas
lated issues and is accompanied by appropriate (collapsed into 7 in the current study). Overall, she
compliance standards and procedures (Verschoor, found that the codes addressed conduct relating to
2002). At the Toronto Stock Exchange, Canada’s consumers and the general public less frequently
largest, it is recommended, but not required, that than conduct against or on behalf of the firm. She
listed companies have a corporate code of ethics. also found that the codes overwhelmingly cited legal
Several studies, using varying methodologies, over ethical considerations as their foundation.
have examined the contents of corporate codes of Hite et al. (1988) found 42 different problems
ethics. The methodology used in the current study addressed in 67 codes of Fortune 500 corporations
has its genesis in a study of American corporations they content analyzed. They found that among the
conducted by Cressey and Moore (1983). They issues most frequently covered were misuse of funds/
comprehensively examined the contents of 119 improper accounting or reporting procedures and
 A Comparison of the Contents of the Codes of Ethics 19

conflict of interest. They also found that only 28% of West Germany. However, they found that despite
the codes mentioned penalties for non-compliance. the differences in contents of codes, most ethical
In one of the earliest studies of Canadian codes of issues transcend national barriers (p. 532).
ethics, Brooks (1989) found that the 10 most Similarly, Wood (2000) in a comparison of
important topics covered by them were corporate American, Australian and Canadian corporate codes
citizenship, conduct of personnel, product or service of ethics found that Australian codes were not dra-
commentary, planning, shareholders, trust of the matically different in construction and content.
company name and representatives, competence of However, he found that they focused on a more
personnel, external communications, customer needs social view of corporate relations. Moreover, Wood
and internal communications (p. 122). Lefebvre and found that the Australian codes were less reliant on
Singh (1992), using an approach similar to that of internal and external watchdogs and legal represen-
Cressey and Moore (1983) and Mathews (1987) tatives for guidance. Overall, the Australian codes,
content analyzed the codes of 75 of Canada’s top 500 like the Canadian and American codes, were mainly
companies. In that study, a comparison to which a concerned with self-preservation and protection of
similar 2003 study is the subject of this paper, it was the organization.
found that, inter alia, issues pertaining to conduct In a recent comparison of Australian, Canadian
against the firm were addressed to a greater extent and Swedish corporate codes of ethics, Singh et al.
and more frequently than were issues relating to (2005) found the contents of the Australian and
conduct on behalf of the firm, with those most fre- Canadian codes to be similar, with the Swedish codes
quently addressed being conflict of interest and the being different in some areas: a reflection of the
integrity of books and records. They also found that cultural differences between Sweden and the other
over two-thirds of the documents cited ethical two countries. Codes of 78 Australian, 80 Canadian
responsibilities as being the basis of the code and and 39 Swedish corporations were content analyzed
almost three-quarters specified enforcement/com- according to the categories developed by Mathews
pliance procedures (p. 808). (1987) and amended by Lefebvre and Singh (1992)
Lefebvre and Singh (1996) subsequently com- and Wood (2000). It was found that the Australian
pared their 1992 Canadian findings to those of and Canadian codes were more prescriptive than
Mathews’ (1987) American study and found that those from Sweden as the intensity of codification for
except for the finding that American corporations Canada and Australia was distinctly stronger than for
cite legal responsibilities more frequently as the basis Sweden (p. 106). A further finding of Singh et al.
of their codes, Canadian and American corporate (2005) was that the Swedish codes were less regula-
codes of ethics are remarkably similar. They con- tory as they mentioned enforcement procedures less
cluded that the codes from both countries were than the American and Canadian codes.
mainly concerned with protection of the firm, While several studies have examined codes from
focusing on conduct against the firm rather than on single countries and have compared the contents
issues of social responsibility (p. 165). of codes from two or more countries, some studies
The striking similarity of the contents of Canadian have analyzed the contents of the codes of multi-
and American codes does not extend to European national firms. Carasco and Singh (2003) analyzed
codes. Langlois and Schlegelmilch (1990), in an the codes of 32 of the world’s largest corporations
analysis of 189 codes of corporations in Britain, and found that, consistent with several previous
France and West Germany relative to similar studies cited above, they were concerned with
American firms found that fewer European than conduct both on behalf and against the firm, but
American firms had adopted codes of ethics and that concerns relating to the latter were more prominent.
there were striking differences between the contents The Organization for Economic Cooperation
of European and American codes. These differences and Development (OECD) Directorate for Finan-
were mainly in the areas of employee conduct, cial, Fiscal and Enterprise Affairs (2001) studied
supplier and contractor relations, and political 246 codes of OECD based corporations. Each code
interests. They also found that there were differences was evaluated on nine areas: environmental stew-
in the contents of codes among Britain, France and ardship, labour standards, science and technology,
20 Jang B. Singh

competition, information disclosure, taxation, brib- McClearn (2004) argues convincingly that ‘‘it’s dif-
ery and corruption, and consumer protection. It was ficult to find a single provision within this fledgling
found that the codes addressed a variety of issues, code that has not been allegedly trampled or disre-
with environmental management and labour stan- garded (p. 14).’’ Similarly, Sims and Brinkmann
dards being dominant. Consumer protection and (2003) illustrate that the fault at Enron was not with
bribery and corruption also received considerable its business ethics tools but with its corporate culture,
attention. Many of the codes were found to address which had significant effects on the ethics of its
narrow questions of internal control and protection employees and consequently led to disaster.
of shareholder value (p. 2).
Kaptein (2004) comprehensively analyzed 105
codes of the 200 largest firms in the world. He found The study
that only 52.5% of the 200 largest firms in the world
had codes. The contents of the codes were analyzed The purpose of this study was to analyze, according
according to the following categories: stakeholder to a specific method, the contents of corporate codes
responsibilities, stakeholder principles, corporate of ethics in Canada and to compare the findings to a
values, internal employee conduct, and implemen- similar study done in 1992 by Lefebvre and Singh.
tation and compliance. Each of these categories were The study sought to identify and compare the issues
composed of several items: stakeholder responsibili- addressed in the codes of ethics of the top 500
ties (47 items, most frequently mentioned being Canadian corporations in 1992 and 2003.
‘‘supplying sufficient/good etc. original products and The sample for the 2003 survey was drawn from
services and offering good value by 67%); stake- the Summer 2001 edition of the Financial Post,
holder principles (13 items, most frequently men- which annually ranks the top 500 companies in
tioned being transparency by 55%); corporate values Canada. A cover letter and questionnaire were
(25 items, most frequently mentioned being team- mailed to the CEO or Chair of 490 corporations
work, mutual support, interdependence/coopera- (contact information was not available for 10). The
tion, team-spirit by 43%); internal conduct (40 letter and cover page of the questionnaire briefly
items, most frequently mentioned being no con- described the nature of the research, guaranteed the
flicting sideline activities/conflict of interests by confidentiality of the information provided and re-
52%); implementation and compliance(25% of the quested a copy of the corporation’s code of ethics.
codes make reference to implementation and 52% The questionnaire consisted of 31 questions related
indicate monitoring of code compliance). Three to ethics programs, the findings of which are reported
clusters of codes were identified: (1) the stakeholder elsewhere. Thirty packages were returned to sender
statute/business principles (72%), (2) the values as undeliverable. The 460 packages delivered elicited
statement (49%) and (3) the code of conduct (46%). 140 responses (a response rate of 30.4%), 24 indi-
While several studies have examined the contents cating various reasons for not participating in the
of corporate codes of ethics some have examined the study, 16 indicating that they did not have a code and
effectiveness of the codes, e.g., Schwartz (2001), 100 indicating that they have a code (80 sent codes;
Marnburg (2000). Despite mixed findings of research 75 sent codes in 1992). A total of 80 codes, repre-
studies on the effectiveness of corporate codes of senting a broad cross section of Canada’s largest firms,
ethics in influencing behaviour, these codes can be were analyzed. A breakdown according to industry
valuable in corporate decision making and in con- of the corporations whose codes were analyzed in this
veying organizational values to stakeholders. More- study is shown in Table I. The industry composition
over, the research findings indicate that the of the sample was highly correlated (Pearson Cor-
establishment of a code is not enough: it must be relation=0.853 ; p<0.01) to that of the population,
supplemented by strict compliance measures and indicating no non-response bias on this variable.
other ethics initiatives. For example, Hollinger The contents of the corporate codes of ethics
International Inc., currently embroiled in a massive were analyzed according to a scheme derived from
ethical scandal, in early 2003 had introduced an Cressey and Moore (1983), Mathews (1998), Le-
eloquent code of ethics to deter wrongdoing. febvre and Singh (1992) and Wood (2000). Cressey
 A Comparison of the Contents of the Codes of Ethics 21

TABLE I tions, which in turn was modified by Wood (2000)

Corporations that sent their codes and population by for his study of Australian corporations. Wood’s
industry methodology did not assess the degree to which
items were discussed in the codes but measured only
Industry Sample Population the frequency of mention. He argues that the
amount of space devoted to an item within the code
Accommodation, Cafe or 1 7 may not necessarily correlate with the importance
Restaurant that the company attaches to it and that the space
Agriculture, Forest or Fishing 4 32 devoted to it may be a result of the difficulty of
Communication Services 6 29
expressing the concept (p. 288).
Construction 2 11
The content analysis technique used in the cur-
Cultural or Recreational Services 2 8
Electricity, Gas or Water 4 50 rent study is closest to Wood’s approach and includes
Finance and/or Insurance 13 79 61 items, the modification reflecting the nature of
Health & Community Services 3 17 the Canadian data. The contents of the codes were
Manufacturing 18 110 examined to determine if they included each of these
Mining 6 20 61 items and the results are reported as frequency of
Personal & Other Services 0 5 mention in Tables II–IX below. For example, in
Property & Business Services 0 47 Table II, Item 1, 29% of the codes mentioned
Retail Trade 6 33 ‘‘Relations with Home Government’’ in 2003,
Transport & Storage 4 18 down from 58.7% in 1992.
Wholesale Trade 5 16
Other 3 8
Diverse Business Interests 3 10
Total 80 500 TABLE II
Conduct on behalf of the firm
(Pearson Correlation=0.853; p £ 0.01)
2003 1992
and Moore (1983) examined codes of ethics of 119 n = 80 n = 75
U.S. corporations along a number of criteria: (1) % %
policy area (conduct on behalf of the firm, conduct
against the firm, and integrity of books and records); 1. Relations with Home Gov’t 29 58.7**
(2) authority – precepts, trends, or principles that 2. Relations with customers/suppliers 80 77.4
make a code seem ethical, morally necessary, or 3. Relations with employees-health, 54 48
legitimate (p. 59); and (3) compliance procedures – safety
4. Relations with competitors 45 29.3*
the methods specified for monitoring, enforcing,
5. Relations with foreign gov’ts 18 22.7
sanctioning or otherwise ensuring compliance with
6. Relations with investors 36 32
the provisions of a code (p. 64). Mathews (1998) 7. Civic and Community affairs 40 33.3
analyzed the codes of 202 of the most profitable 8. Relations with consumers 9 33.3**
American corporations using an extension of the 9. Environmental affairs 48 21.3**
Cressey and Moore technique. Content was classi- 10. Product safety 16 12
fied as follows: (1) categories of behaviour and 11. Product quality 33 24
actions covered by the code, (2) enforcement pro- 12. Payments or political 46 72.7**
cedures, and (3) penalties for non-compliance. contributions to gov’ts or
These three broad categories contained a total of 64 gov’t officials or employees
items and each item was assessed as (1) not discussed, 13. Acceptance of bribes, 79 82.7
(2) discussed, (3) discussed in detail, and (4) kickbacks, gift/ entertainment
14. Giving of bribes, kickbacks, 61 66.7
emphasized. For the purposes of analysis, the 64
gifts/entertainment
categories were grouped under and areas.
Average score: 42.4 43.9
Lefebrvre and Singh (1992) modified the Math-
ews technique for their study of Canadian corpora- (**p £ 0.01 ; *p £ 0.05)
22 Jang B. Singh

TABLE III TABLE VI

Conduct against the firm Laws and agencies cited

2003 1992 2003 1992

n=80 n=75 n=80 n=75
% % % %

15. Conflict of interest 85 95.3* 23. Competition Act 40 44

16. Divulging trade secrets/ 81 81.3 24. Securities 21 24
proprietary information 25. Environment 25 9.3**
17. Insider trading information 70 72 26. Food and Drug 5 0*
18. Personal character matters 25 50.7** 27. Product safety & quality 1 0
19. Other conduct against the firm 61 52 28. Worker health/safety 23 9.3*
Average Score 64.4 70.3 29. Bribes or payments to 20 14.7
gov’ts or officials
(**p £ 0.01; *p £ 0.05) 30. False advertising 4 2.7
31. Other laws 56 12**
TABLE IV Average score 22 12.9
Integrity of books/records Governmental agencies/
commissions referred to
2003 1992
32. Competition Tribunal 1 1.3
n=80 n=75
33. Other agencies 4 0
% %
Average score 3 0.65
20. Integrity of books and records 64 82.7** (**p £ 0.01; *p £ 0.05)
(**p £ 0.01; *p £ 0.05)
and Singh, 2003): the results were compared to the
findings of Carasco and Singh (2003) and found to
Content analysis results and discussion
be consistent. Little or no difference was found in
the classifications.
The contents of the 80 Canadian corporate codes of
The frequencies of mention of the 61 items were
ethics were comprehensively analyzed within 7
computed for the Lefebvre and Singh (1992) study
categories, reduced from the earlier outlined 10
and together with the findings of the content analysis
broad categories used by Mathews (1998). The
of the corporate codes of ethics in the current study
analysis was manually done by one person and
are presented in Tables II–IX and discussed
randomly checked for accuracy by another. More-
according to the seven categories. Z-tests for dif-
over, the person analyzing the codes for the current
ference of proportions (two-tailed) were done for
study also independently analyzed 32 codes from an
the 61 items (see Appendix A), comparing 1992 and
earlier study of transnational corporations (Carasco
2003 findings (Zikmund, 1991, p. 508). In
TABLE V Tables II–IX, differences in proportions significant
Basis of code at the p £ 0.01 level (critical Z-value of 2.57) are
indicated by ** and those significant at the p £ .05
2003 1992 level (critical Z-value of 1.96) by *.
n=80 n=75
% % Conduct on behalf of a firm
21. Legal responsibility 80 32**
This category focuses on behaviour of employees
22. Ethical responsibility 84 70.7*
when representing their organizations. It consists of
Average score 82 51.4**
14 items ranging from interaction with governments
(**p £ 0.01; *p £ 0.05) to the giving and receiving of bribes. As shown in
 A Comparison of the Contents of the Codes of Ethics 23

TABLE VII TABLE VIII

Types of compliance/enforcement procedures Penalties for breaching code

2003 1992 2003 1992

n=80 n=75 n=80 n=75
% % % %

Internal – Oversight Internal

34. Supervisor surveillance 16 45.3** 52. Reprimand 6 8
35. Internal watchdog committee 9 9.3 53. Fine 1 2.7
36. Internal audits 5 34.7** 54. Demotion 1 5.3
37. Read and understand affidavit 33 45.3 55. Dismissal/Firing 58 46.7
38. Routine financial budgetary review 0 1.3 56. Other internal penalty 9 26.7**
39. Legal department review 0 9.3** External
40. Other oversight procedures 14 18.7 57. Legal prosecution 33 14.7**
Internal – Personal Integrity (For questionsre policy 58. Other external penalty 6 4
or reporting misconduct of self or others to) Average score 16 15.4
41. Supervisor 69 69.3
42. Internal watchdog committee 4 0 (**p £ 0.01; *p £ 0.05)
43. Corporation’s legal counsel 49 44
44. Other (in firm) 64 46.7* It should also be noted that, on the issue of
45. Compliance affidavits 0 34.7** bribery, the 2003 codes mention the acceptance of
46. Employee integrity 58 44 bribes more often than the giving of bribes – a
47. Senior management role models 8 6.7 finding consistent with Lefebvre and Singh (1992),
External
Wood (2000) and Carasco and Singh (2003).
48. Independent auditors 0 13.3**
49. Law enforcement 0 1.3
50. Other external 0 1.3 Conduct against the firm
Average score 19 25
51. Codes mentioning Enforcement 86 70.7* The category, ‘‘Conduct Against the Firm’’ is con-
or Compliance Proceedings cerned with employee conduct that could directly
harm the firm. This is measured by five items as
(**p £ 0.01 ; *p £ 0.05)
shown in Table III.

Table II the average frequency of mention of this TABLE IX

category in the codes was almost identical for 1992
General information
and 2003: 42.4% and 43.9% respectively.
Similarly, the most frequently mentioned item in
2003 1992
both years was ‘‘relations with customers/suppliers’’: n=80 n=75
80% in 2003 and 77.4% in 1992. However, there % %
was a significant increase in the frequency of men-
tion of ‘‘environmental affairs’’ in 2003 (48%) rela- 59. Need to maintain corporation’s 61 50.7
tive to 1992 (21.3%). This may be due to the good reputation
increased emphasis in society on the role of business 60. Letter/Introductory remarks 46 57.3
in protecting the environment. ‘‘Relations with from the President/CEO/
competitors’’ also increased significantly, from Chairperson of the Board
29.3% in 1992 to 45% in 2003. There were signif- 61. Code specific to which country, 23 50.7**
icant decreases in two items: ‘‘relations with con- i.e., Home Country, World/
General, Others
sumers’’ from 33.3% to only 9% and ‘‘payments of
Average score 43 52.9
political contributions to governments or govern-
ment officials or employees’’ from 72.7% to 46%. (**p £ 0.01; *p £ 0.05)
24 Jang B. Singh

Issues related to conduct against the firm were, on Basis of the code
average, covered slightly less frequently in 2003 than
in 1992 (64.4% and 70.3% respectively). Mention of This category consisted of two items – legal
‘‘conflict of interest’’ dropped from 95.3% in 1992 to responsibility and ethical responsibility (see Table V).
85% in 2003 (significant at the 0.05 level) while There was a dramatic increase (significant at the 0.01
personal character matters fell from 50.7% to 25% level) in 2003 of the frequency of mention of legal
(significant at the 0.01 level). Overall, in 2003, as in responsibility as the basis of codes (80% vs. 32% in
1992, frequency of mention of the category ‘‘con- 1992) and a smaller increase (significant at the 0.05
duct against the firm’’ was higher than ‘‘conduct on level) in the frequency of mention of ethical
behalf of the firm’’ (70.3–43.9% in 1992 and responsibility from 70.7% in 1992 to 84% in 2003.
64.4–42.4% in 2003). The focus of the codes on The codes were read to determine whether legal
conduct against the firm may be interpreted as a or ethical responsibility was cited as their basis. The
reflection of the desire of organizations to guard findings indicate that these are not mutually exclu-
against events that may have a dramatic, adverse sive items, i.e., codes could cite both legal and
impact on them. However, another interpretation ethical bases. However, as Mathews (1998, p. 54)
may be that such intent is perhaps not ethically argues, ‘‘if the basis of the code is legal, it imitates the
motivated based on the welfare of stakeholders but criminal law (law, criminal justice procedures,
by mercenary values of self-preservation of the sanctions), but if it is ethical only, no legal apparatus,
organization. including sanctions, is called for (one doesn’t
‘‘enforce’’ the Golden Rule). This implies a different
approach by codes citing legal responsibility and
Integrity of books and records those citing ethical responsibility: those citing legal
responsibility could be expected to be more precise
This category was measured by one item (see in identifying unacceptable corporate behaviour and
Table IV) that indicates a significant decrease in the consequences of such behaviour. Those men-
frequency of mention from 82.7% in 1992 to 64% in tioning both legal and ethical responsibility convey
2003. the message that while the codes may be based on
The higher frequencies of mention in 1992 may ethical values, non-compliance with them could lead
be linked to the influence of the focus of American to sanctions against employees.
corporate codes at that time. Many American codes
were first developed or revised in response to
extensive overseas bribery in the 1970’s, which was Laws and agencies cited
facilitated by corporations keeping two sets of
books: one for auditors and one secret set that This category examined reference to specific laws
showed the amount of money given as bribes and government agencies in the corporate codes (see
(Mathews, 1998, p. 54). Mathews in her study of Table VI).
American codes found a frequency of mention of The average frequency of mention of specific
75.3% for this item. laws was 22% in 2003 compared to 12.9% in 1992.
This item was mentioned by 47% of the codes of The Competition Act remains the law most often
transnational corporations studied by Carasco and cited in the codes (40% compared to 44% in 1992).
Singh (2003). The value of conveying to employees There were significant increases in references to
the importance of accounting transparency and the environmental and worker health/safety laws:
use of true, accurate and complete information 9.3–25% (0.01 level) and 9.3–23% (0.05 level)
cannot be overemphasized. It would be interesting respectively, likely reflecting greater concern in
to see how recent revelations of lack of integrity of society with these issues. Carasco and Singh (2003)
books and records at major corporations (e.g., in their study of the codes of transnational corpo-
Enron, WorldCom) will affect the way this item is rations, consistent with the current study, found
considered by corporate codes of ethics in the relatively high mention of competition, securities
future. and environmental laws. Of all the categories
 A Comparison of the Contents of the Codes of Ethics 25

assessed in this study, ‘‘Government agencies/ supervisor continues to be seen as pivotal to the
Commissions received the least mention. The internal oversight compliance procedures such reli-
average frequency of mention of items in ‘‘Gov- ance is not as widespread as in 1992. ‘‘Internal
ernmental agencies/Commissions’’ was 3% for the watchdog committee’’ received roughly the same
Canadian Codes (see Table VI). This finding is level of mention in 2003 as in 1992 (9% and 9.3%
consistent with Lefebvre and Singh (1992) when it respectively) while the percentage of codes men-
was mentioned by less than 1% of the codes and also tioning ‘‘internal audits’’ dramatically fell to 5% from
with Wood’s (2000) research on Australian codes 34.7% (significant at the 0.01 level) in the same
(3.6%). Competition tribunal or equivalent agencies period. The decrease in the frequency of mention of
received mention in 1% of the Canadian codes internal audits is inexplicable as such audits of ethical
while 4% mentioned other agencies. The overall practices could be an effective device in ensuring
low level of mention of this category is likely due to compliance, thereby becoming an important part or
envisaged limited contact between rank and file the control function in organizations. Affidavits
employees and those agencies and commissions. stating that employees have read, and understood,
the firm’s code of ethics was mentioned by 33% of
the codes in 2003 compared to 45.3% in 1992. The
Compliance second of the three segments in the category
‘‘Enforcement/Compliance Procedures’’ is ‘‘Inter-
Berenbeim (1999) argues that, ‘‘companies need to nal-Personal Integrity’’ (Items 41–47). Employee
strengthen code Compliance/Verification proce- integrity, as an internal measure to ensure compli-
dures. Precatory words are insufficient weapons for ance with the code of ethics was mentioned by 58%
effective action’’ (p. 139). Including in a code that of the Canadian codes in 2003, up from 44% in
which is acceptable and unacceptable employee 1992. According to Wood (2000), ‘‘employee
behaviour without identifying methods for compli- integrity is basically a nom de plume for the
ance/enforcement may not be enough: clearly spec- expectation that individuals will engage in whistle
ifying compliance/enforcement procedures and blowing’’ (p. 294). An issue being addressed in this
penalties for breaching provisions of the code are segment is that of to whom should one take ques-
critical to code effectiveness. This section of the paper tions regarding a policy or to report misconduct of
looks at two categories of items in the content analysis: self or others. The employee’s supervisor is identified
Enforcement/Compliance Procedures (Table VII) most often as the person to whom one should direct
and Penalties for Breaching Code (Table VIII). questions about a policy or to report misconduct:
The proportion of codes mentioning enforcement 69% in 2003 and 69.3% in 1992. The second most
or compliance procedures increased from 70.7% in often cited ‘‘official’’ in both 2003 and 1992 was
1992 to 86% in 2003 (see Item 51, Table VII). This ‘‘other’’: 64% and 46.7%, respectively. This reflects
significant increase (at the 0.05 level) is a reflection the rise in positions such as ‘‘ethics officer’’ and
of a strong effort to make the codes more effective ‘‘ombudsman’’, officials directly charged with
and is consistent with findings of studies in other overseeing the codes. Another official of the firm
jurisdictions, e.g., Carasco and Singh (2003) found receiving mention across the codes is the corpora-
that 75% of the codes of transnational corporations tion’s legal counsel: 49% in 2003 vs. 44% in 1992.
mentioned enforcement or compliance procedures. The clear message of the findings in this segment is
These numbers are an encouraging sign of the codes that reliance on personal integrity as a means of
not merely being window dressing but instruments ensuring compliance with codes has increased over
of corporate governance, with which employees are the past decade and that the supervisor continues to
expected to comply. be the primary official to whom an employee takes
The internal-oversight section (Table VII), Items his/her concerns. External compliance/enforcement
34–40, includes individuals, groups and measures procedures (independent auditors, law enforcement,
aimed at monitoring the behaviour of employees. other external) were not mentioned in any of the
Supervisor surveillance fell to 16% from 45.3% codes in 2003: in 1992, 13.3% mentioned ‘‘inde-
(significant at the 0.01 level) in 1992. While the pendent auditors’’ (decrease significant at the 0.01
26 Jang B. Singh

level), 1.3% ‘‘law enforcement’’ and 1.3% ‘‘other Board. Such a statement indicates that the code has
external.’’ The lack of mention of ‘‘external com- received the attention of top management and it is to
pliance/enforcement procedures’’ in all of the codes be taken seriously by all in the corporation. In light
in 2003 and scant mention in 1992 is significant: it is of evidence of the growing importance of corporate
a strong indication of firms’ desire for direct control codes of ethics, the increase in the proportion of
of compliance procedures. However, this is an area codes excluding such a letter or remarks is inexpli-
that may receive attention in the future as stake- cable. The final item in this category indicates that
holders may be more inclined to have faith in ethics codes specifying jurisdiction fell significantly (0.01
programs which are independently audited. The level) from 50.7% in 1992 to 23% in 2003. This is
second aspect of compliance is ‘‘Penalties for possibly driven by the multinational corporations in
Breaching Code’’ (see Table VIII). The internal the sample and is a reflection of the internationali-
measure most often cited in both 2003 and 1992 was zation of the codes, made possible by communica-
dismissal/firing: 58% and 46.7%, respectively. tion technologies and a desire to unify the global
‘‘Reprimand’’ was mentioned by 6% of the codes in operations of corporations. Carasco and Singh
2003 and 8% in 1992. The increase in the frequency (2003), in their study of the codes of the world’s
of mention of ‘‘dismissal/firing’’ clearly signals the largest transnational corporations found that 94% of
growing importance companies attach to the codes the codes were geared at the worldwide operations
of ethics. This is further illustrated by the significant of those transnationals and were not country specific.
increase in frequency to 33% in 2003 of mention of
legal prosecution as an external penalty for breaching
codes from 14.7% in 1992. Conclusion

Globalization of markets, according to Berenbeim

General information (2000), is one of the forces influencing changes in
corporate codes of ethics. As mentioned above there
The General Information category consisted of was a significant drop from 1992 to 2003 in the
Items 59–61 (Table IX): Item 59 examined state- proportion of corporations specifying jurisdiction.
ments in the codes expressing the need to maintain Another of the forces driving changes in codes of
the corporation’s good reputation; Item 60 identi- ethics is the growing acceptance of them as a part of
fied whether or not the code included introductory corporate governance. This is best illustrated by the
remarks from a senior executive (President, CEO, findings on the basis of the code as shown in Table V.
Chair of the Board) and Item 61 the jurisdiction at There were significant increases from 1992 to 2003 in
which the code is aimed. the proportion of codes citing legal responsibility and
The need to maintain the corporation’s good ethical responsibility: 32–80% and 70.7–84% respec-
reputation was mentioned by 61% of the codes in tively. While legal and ethical responsibility portray
2003 and 50.7% in 1992. Carasco and Singh (2003) different attitudes to the use of the codes, they both
in their study of the codes of ethics of transnational address the issue of how an organization is governed
corporations found a 76% mention of this item. The and the increase in the frequencies of mention of these
relatively high rate of mention of this item both in items in the codes, coupled with the involvement of
the 2003 and 1992 studies is indicative of the sig- senior managers in their development, signal a
nificance corporations attach to a good public image. growing acceptance of the codes as instruments of
However, it also raises the issue of why almost half of corporate governance. Singh (unpublished manu-
the codes in 1992 and 39% in 2003 did not mention script), in a study of ethics programs in Canada’s
the importance of maintaining the corporation’s largest corporations found that senior managers were
good reputation, one of the most important func- involved in the development of 88% of them. A third
tions of corporate codes of ethics. Only 46% of the driver of changes in corporate codes of ethics is the
codes in 2003, down from 57.3% in 1992, were improved ethical literacy of senior managers as illus-
accompanied by an introductory letter or introduc- trated by the increased sophistication of these docu-
tory remarks by the President, CEO, or Chair of the ments. Again, the findings on the increased mention
 A Comparison of the Contents of the Codes of Ethics 27

of the bases of the codes (see Table V) may serve to ethics. As social values change, so do institutional
illustrate this point. In addition to identifying factors, personal factors and organizational factors,
acceptable and unacceptable behaviour, these docu- resulting in changing ethical standards (see Figure 1).
ments increasingly identify the overarching principles Examining changes in the contents of codes could
governing their development. therefore be used to ascertain whether corporate
These overarching principles are part of a theo- codes of ethics reflect a changing environment. If
retical framework, which views ethical standards in they do not, then legitimate questions may be asked
organizations as determined by a triadic interaction about their true function: symbolic or to guarantee
of organizational, institutional and personal factors, ethical behaviour. ‘‘If the espoused reason for a code
under the influence of social values (see Figure 1). is to guarantee ethical behaviour, but no actions are
This study investigated the contents of corporate taken within the organization of a sort necessary to
codes of ethics as organizational factors in this foster code compliance (e.g., no monitoring, no
framework. In order to determine and compare the enforcement), we may have evidence that the code
contents of the codes of ethics of Canadian corpo- is implemented for purely symbolic reasons(Weaver,
rations in 2003 and 1992 a modified version of a 1993, p. 50). There is evidence from the current
technique used in several studies (Carasco and Singh study suggesting that the function of Canadian cor-
(2003; Cressey and Moore, 1983; Lefebvre and porate codes of ethics has moved closer to guaran-
Singh, 1992; Wood, 2000) was applied to a total of teeing ethical behaviour. The proportion of codes
80 codes in 2003 and the findings compared to those mentioning enforcement or compliance proceedings
of a similar study conducted by Lefebvre and Singh (see Item 51, Table VII) increased from 70.7% in
in 1992. The results of the analysis shown in 1992 to 86% in 2003.
Tables II–IX, compare frequencies of mention on Of course, the mere mention of enforcement/
61 items for codes from the two studies. It was found compliance proceedings does not guarantee ethical
that in 2003, as in 1992, more of the codes were behaviour. There is a multitude of other variables
concerned with conduct against the firm than with that determine the effectiveness of codes and this is
conduct on behalf of the firm. However, under an area that is in dire need of further research.
‘‘conduct on behalf of the firm’’ there was more than Do corporate codes have an impact on employ-
a doubling of frequency of mention of environ- ees’ behaviour? To date, research has returned mixed
mental affairs. Similarly, there was a significant in- findings. If codes can be effective, what role do the
crease, to 25% in 2003 from 9.3% in 1992, of contents of the codes play in making them so? As
references to environmental laws. Further, there was White and Montgomery (1980) argue, ‘‘if codes are
a significant increase in 2003, from 32% to 80%, in to serve as more than documentary window dressing
the frequency of mention of legal responsibility as and play a constructive role in encouraging ethical
the basis of codes. Moreover, the proportion of practices by corporate employees, much remains to
codes mentioning enforcement or compliance pro- be learned about designing and administering them
cedures increased significantly from 1992 to 2003, (p. 86).
reflecting a determined effort to make the codes How can we learn more about the formulation
more effective. In the same vein, the frequency of and implementation of corporate codes of ethics? In
mention of the most often cited internal penalty for depth, semi-structured interviews with ethics offi-
non-compliance with the code for both years, cers and other officials involved in the development
‘‘dismissal/firing’’, rose from 46.7% in 1992 to 58% of codes is one way to do so. Such interviews will
in 2003. enable researchers to determine the genesis of codes
All in all, this paper advances the search for an and thus better understand their intended function.
explanation of business ethics standards and conduct Valuable information, not discernible from the
by analyzing the evolution of the contents of the contents of codes, will be obtained in such inter-
important antecedent organizational factor, corpo- views. This information will supplement our
rate codes of ethics, from 1992 to 2003 in Canada. knowledge of the contents of codes and help in the
Analysis of the evolution of code contents is critical quest to better understand the role of codes of ethics
to understanding the dynamic nature of business as instruments of corporate governance.
28 Jang B. Singh

APPENDIX Appendix A. (Continued).

Appendix A. Z scores for content analysis items
Item 2003 1992 Z-Score Significance
Item 2003 1992 Z-Score Significance P P level
P P level
46 0.58 0.44 1.742602613
1 0.29 0.587 )3.728611194 ** 47 0.08 0.067 0.309540379
2 0.8 0.774 0.395383208 48 0 0.133 )3.372214768 **
3 0.54 0.48 0.746784905 49 0 0.013 )1.023026562
4 0.45 0.293 2.018733185 * 50 0 0.013 )1.023026562
5 0.18 0.227 )0.72733817 51 0.86 0.707 2.320914968 *
6 0.36 0.32 0.525120601 52 0.06 0.08 )0.488738962
7 0.4 0.333 0.864580995 53 0.01 0.027 )0.79069595
8 0.09 0.333 )3.727735449 ** 54 0.01 0.053 )1.548289382
9 0.48 0.213 3.480968986 ** 55 0.58 0.467 1.407913258
10 0.16 0.12 0.715848479 56 0.09 0.267 )2.894062138 **
11 0.33 0.24 1.238553968 57 0.33 0.147 2.660444269 **
12 0.46 0.727 )3.376551813 ** 58 0.06 0.04 0.569207041
13 0.79 0.827 )0.584348311 59 0.61 0.507 1.291051985
14 0.61 0.667 )0.737753669 60 0.46 0.573 )1.406712715
15 0.85 0.953 )2.134591175 * 61 0.23 0.507 )3.581806057 **
16 0.81 0.813 )0.047718667
17 0.7 0.72 )0.274137767 *p £ 0.05; **p £ 0.01
18 0.25 0.507 )3.303977864 **
19 0.61 0.52 1.12993143
20 0.64 0.827 )2.622126785 ** References
21 0.8 0.32 6.028426555 **
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27 0.01 0 0.868268997 Business Ethics 8, 117–129.
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29 0.2 0.147 0.86910435 Focus of the Codes of Ethics of the World’s Largest
30 0.04 0.027 0.44814857 Transnational CorporationsÕ, Business and Society
31 0.56 0.12 5.750594659 ** Review 108(1), 71–94.
32 0.01 0.013 )0.175427929 Cressey, D. R. and C. A. Moore: 1983, ÔManagerial
33 0.04 0 1.750211732 Values and Corporate Codes of EthicsÕ, California
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35 0.09 0.093 )0.064753212 Hite, R., A. Bellizzi and C. Fraser: 1988, ÔA Content
36 0.05 0.347 )4.675680669 ** Analysis of Ethical Policy Statements Regarding
37 0.33 0.453 )1.569332857 Marketing ActivitiesÕ, Journal of Business Ethics 7(9),
38 0 0.013 )1.023026562 771–776.
39 0 0.093 )2.791160317 ** Kaptein, M.: 2004, ÔBusiness Codes of Multinational
40 0.14 0.187 )0.792187939 Firms: What do They Say?Õ, Journal of Business Ethics
41 0.69 0.693 )0.040409967 50(1), 13–31.
42 0.04 0 1.750211732 Langlois C. C. and B. B. Schlegelmilch: 1990, ‘Do
43 0.49 0.44 0.623631023 Corporate Codes of Ethics Reflect National Charac-
44 0.64 0.467 2.16648495 * ter? Evidence from Europe and the United States’,
45 0 0.347 )5.775941842 ** Journal of International Business Studies, (Fourth Quar-
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