Can Ethical Behaviour
Really Exist in Business?
ABSTRACT. Our soft survey reveals that the assump-
tion underlying much of the business ethics litera-
ture — that the conduct of business can and ought to
support the social good - is not accepted within the
workplace. This paper considers an apparent
dichotomy, with companies investing in ethical
programs whose worth their employees and managers
question. We examine the relationship between work,
bureaucracy and "the market" and conclude that
employees often question the existence of business
ethics because there is no good and bad between
which to choose. The choice is between success and
failure. A common view of success and the "good
life" is one determined by hard work in a well-organ-
ised company operating in a free market. Analysing
the three aspects of this view (the free market, hard
work, bureaucracy) we suggest these are mere fictions.
A major problem we identify in business is that organ-
isations are designed as profit making mechanisms and
have no interest in the good of society. The chal-
lenge is to convince such organisations that a direct
benefit accrues to them through their own ethical
behaviour. In order to do this organisations must
first be shown the importance of long termism.
Executives, managers and other employees can be
expected to attain high ethical standards only when
they feel they are a integral part of an organisation
and the organisation itself respects those standards.
One of the keys to unravelling the undesirable situa-
tion of a perceived absence of ethics in business is in
encouraging a greater identity community, company
and workforce. We provide some examples of ways
companies can meet the challenge of encouraging
more ethical, long-sighted behaviour. In addition, we
highlight ways in which the expectations of the
organisations of the organisation can be communi-
Andrew Bartlett is Director of Knowledge Workers, London
e a postgraduate Student at University of East London.
David Preston is Reader in Information Management at
University of East London.
Journal of Business Ethics 2 3 : 199-209, 2{)()0.
© 2000 Kluwer Academic Publishers. Printed in the Netherlands.
Andrew Bartlett
David Preston
cated more strongly through corporate structures that
foster ethical action that benefits the long term
interests of the individual and the organisation.
Overall implementing a successful ethical program is
shown to parallel that of the implementation of a
quality program.
A soft survey on business ethics
In discussion recently with friends and colleagues
about our research in business ethics their almost
uniform reaction was, "But there aren't any." We
generally smile mysteriously as if knowing some-
thing they do not but in truth their responses
unsettled us. We had already read books and
articles listing the benefits of codes of conduct,
describing systems for ensuring distributive
justice in organisations, weighing up the com-
peting claims of deontological and utilitarian
approaches to the subject and analysing any
number of fine-tuning issues in business ethics.
With internal programs of team-working and
empowerment or public announcements of
ethical initiatives, businesses themselves add to
the burgeoning body of literature regarding
organisational and commercial ethics. Our own
experiences in business lead us to feel some dis-
comfort with much of what we read because it
somehow did not seem to address the real
concerns of a person having to make their way
in working life. However, it had not occurred
to us that the whole subject may not refer to
anything that actually exists in the real work.
Worse still, our acquaintances - let's call them
the BE Sceptics - do not even find it necessary
to ask, "So what is business ethics", before
despatching it to the land of the non-existent.
200 Andrew Bartlett and David Preston
The common opinion among them seems to be
that the term "business ethics" is an oxymoron.
From this perspective, ethics is about being nice,
controlled and altruistic whilst business is nasty,
chaotic and self-interested. The assumption
underlying much of the business ethics literature
- that the conduct of business can and ought to
support the common social good - is not
accepted. So, can business ethics, as conceived
in the literature, really exist in a social setting
populated by BE Sceptics? And where do the BE
Sceptics come from?
The BE Sceptics of our acquaintance are not
rampant "profit at any cost" capitalists; nor cynics
hardened from spending too much time as small,
unappreciated servants of large and uncaring
organisations; nor college graduate with too little
experience of work. In general, we hear these
comments from relatively successful women and
men with between five and twenty years of work
in commercial firms or the professions behind
them as directors, managers, technicians, doctors,
lawyers or engineers. They are generally people
to be expected to be sensitive to social and moral
issues. We estimate that of the hundred or so
people with whom we have had this conversion,
90% to 95% of them are BE Sceptic. We had
anticipated disagreements about the extent to
which ethics impinges on business or about the
ethics that are relevant to business but we were
not prepared for a complete denial of the applic-
ability of ethics to business at all.
Some of our friends work in large companies
that we felt sure would have ethical programs or
codes of conduct and this turned out to be the
case. However, no-one could tell us anything
about their contents and no-one believed that
anyone else paid any attention to these codes
either. Others work in professions such as
medicine or law and hence are aware that they
are bound by strict codes of conduct. The preva-
lent attitude here seemed to be that whatever is
allowed by the code is acceptable (although we
have to say that this is more noticeable among
lawyers than medics). There is no requirement
for any additional responsibility.
Of course, this is not to say that every person
we know is unethical or amoral. It is just that
they cannot see that any ethics are active in
business other than the view of Friedman that
the only "social responsibility of business is to
increase its profits" [lj. The fact is however, that
we all have moral standards, whether we recog-
nise them or not. We do not personally know
anyone who would really be prepared to do
anything at all to attain success in business. Even
the lawyers insisting that their code of conduct
is all they recognise are at least applying some
level or moral reasoning (and one suspects that,
although they will not admit it, their personal
ethics would place additional restrictions on them
in reality). The opinion being expressed by our
acquaintances is not that they themselves wish
to be absolved of responsibility for their actions
at work but that they do not believe they or
anyone else in business is required to be morally
responsible. Bird and Waters have written about
the phenomenon of managers refusing to
acknowledge the moral content of their thought
and behaviour, preferring to explain apparently
altruistic acts in terms of utility to the company.
The Moral Muteness of Managers is the term
they use to describe the phenomenon [2].
These observations become especially puzzling
when one looks at other types of evidence
regarding the behaviour of business organisations.
In the U.K., the Business In The Community
(BITC) organisation is made up of 400 of the
largest British companies, 300 of which con-
tribute 0.5% of pre-tax profits to charitable
projects. The purpose of BITC is to get compa-
nies involved in social and economic problems in
the communities in which they operate. Further,
whilst it may be true that there is little aware-
ness of ethical issues among managerial and
clerical staff, there does seem to be an increasing
readiness of companies to attempt to change this
situation. Between 1987 and 1991 a quarter of
companies surveyed internationally had spon-
sored new ethics programs and there was a 40%
increase in the number of European company
CEOs making ethical pronouncements [15].
Why do companies seem to becoming more
ethical (or least seem to be trying to do so) whilst
their employees appear to believe that the organ-
isations for which they work and the people with
whom they work are interested only in profits?
 Can Ethical Behaviour Really Exist in Business
Ethical values communicated by the
organisation
The answer may lie with the values implicitly
communicated by the organisation itself. The
majority of large corporations may have estab-
lished codes of ethics but it seems to be the case
that they have failed to reinforce the message
they contain. The presence of a sidelined code
of ethics could actually have a more deleterious
efFect on the ethical mindset of workers and
managers than the absence of a code altogether.
Organisations spend a great deal of time and
effort in implementing new initiatives for profit
making and cost cutting. The same commitment
of resources is often lacking from the imple-
mentation of ethical programs. By publishing and
failing to reinforce a code of ethics organisations
may be sending the message that talk of ethics is
- to use Friedman's phrase - "hypocritical
window dressing" and incidental to the real
business activity that takes place. Alternative, the
impression may be given that adherence to the
letter of the code is sufficient rather than under-
standing and embracing its spirit. Either way, by
emphasising the need for rneasurable financial
success above the methods used to achieve it,
many companies have created environments in
which ethical considerations are regarded as no
more significant than the choice of plants in the
office.
The fact is that the methods used by organi-
sations to communicate and reinforce the values
of efficiency and profitability to their employees
are far more advanced and sophisticated than
those used to promote ethical awareness.
Messages encouraging ethical neutrality in
decision making are generally far stronger than
those imposing ethical constraints. In the
words of Saul Gellerman, "Ethics must be
managed. . . . Setting a high moral tone at the
top levels of management is necessary, but not
sufficient" [16]. Techniques must be employed to
balance the potentially conflicting goals of
financial success and high moral standards. The
volume of the "anything goes" message must be
attenuated at the expense of a stronger exhorta-
tion towards good ethics. When this does not
happen, and as we shall see, the difference in
201
attitudes between corporate oflficers and those of
their managers suggests that it is rare that it does,
then the individuals in the organisation are likely
to believe that the only goal of the corporation
is profit maximisation.
In turn, if it is true that the only goal o the
organisation is to maximise profits then the only
responsibihty of the individual in that organisa-
tion is to contribute towards higher profits. It is
normal for the contribution an individual makes
to an organisation to be measured in this way
with no consideration given to the morality of
the methods used to achieve results. The
Protestant Ethic tells us that to be a good person
we must work hard to achieve success and the
business organisation tells us that success means
profits and nothing else. Against this background,
even the morally sensitive come to believe that
ethics does not apply to business because the
organisation provides no motive for any moral
consideration. Inside, we may feel that this is not
quite right, that something has gone missing, but
we have no reason to think that others feel the
same. We may be torn between economic
requirements and, for example, our desire for
fairness to other people but the business envi-
ronment fails to validate our disquiet since it
recognises only one side of the dilemma. Since
those around us are the organisation we end up
thinking that they share the ideals of the organ-
isation and hence are ethically clueless. Due to
the difference between the stated values of the
business organisation and the personal values of
the employee, manager or executive, it is also
possible that individuals come to think them-
selves less worthy than their colleagues of their
place in the organisation. This in turn creates
pressure to conform to the perceived require-
ments of behaviour and to treat personal values
as a kind of weakness. It is this that leads to the
ethical blindness encapsulated in the statement,
"There is no such thing as business ethics."
Ethical standards in the organisation
There is a growing body of literature and research
indicating that the ethical standards applied by
individuals at work may be different [3] and
202 Andrew Bartlett and David Preston
probably significantly lower [4-6] than those they
follow in situations outside the business envi-
ronment. There is general agreement that social
factors such as the ethical climate of the organ-
isation and conformance to behaviour of peers
and superiors play an important part in mediating
ethical reasoning. An organisation encouraging
the view that profits are the only consideration
will tend to be populated by individuals thinking
and functioning on a lower ethical level. This
standard of ethics will apply just as much to their
dealings with and within the organisation as
much as to their dealings with external parties.
Other literature has suggested that specialised
ethical theories should be applied to business to
better understand behaviour in the context of the
business organisation [7]. Ulrich and Thielemann
investigate the "kind of thinking pattern
(managers) have personally evolved for them-
selves in order to be able to legitimise their activ-
ities within the field of tension between ethics
and economic success". Following research
among managers in Switzerland they identify
a dominant thinking pattern they name
"economism", under which managers "regard
any more or less strictly success-oriented courses
of action as ethically legitimate." The model used
to derive this result divides managers into
Harmonists who believe "good business is good
ethics" and Conflict-Perceivers who see ethics
as a factor independent of success and therefore
imposes additional responsibilities beyond merely
satisfying business objectives. Harmonists, repre-
senting 88% of the group of managers inter-
viewed by Ulrich and Thielemann, place their
faith in mechanisms such as Adam Smith's
"Invisible Hand" to spontaneously reconcile self-
interested behaviour with a greater social good.
An individual subscribing to the Harmonist
view now finds herself equipped with a consis-
tent set of beliefs that relieves the tension
between personal (The Protestant Ethic), organ-
isational (profit maximisation) and societal ethics.
By working hard to achieve success she is able
to satisfy all constituencies and lead a "good life"
in the Aristotelian sense. She is able to identify
with the Aristotelian principle that the interests
of the community are largely common with her
own interests. This appears to be the only way
of justifying or understanding our working lives
in the context of our lives in society.
Of course there is nothing Aristotelian about
this kind of existence at all. When we share inter-
ests with the community in the Aristotelian sense
we are expected to put the interests of the com-
munity before our own and have faith that our
own interests will be well served. Economism
and Friedman put it the other way - we serve
society by pursuing our own ends. We occa-
sionally hear versions of this point of view from
business people as a justification for the inap-
plicability of ethics to business and it reminds us
of Alisdair Maclntyre's theory regarding emo-
tivism [8]. In his book After Virtue Maclntyre
suggests that Western liberal democracy is in a
state of moral fragmentation with no consistent
set of beliefs to which one can appeal to justify
ethical standards. He further posits that in such
an environment the moral statements made by an
individual - the emotivist — are merely those she
finds convenient to support her own position.
Evidence that individuals manufacture justifi-
cations for ignoring the ethical content of situ-
ations has been provided by Darley and Latane
[19]. Their work specifically applied to the
reactions of people to "emergency" situations
such as a theft or a potential fire. They found that
when exposed to these situations, the subjects
were much more likely to respond to the emer-
gency if they were alone than if they were in
the company of one or more strangers. When the
subjects were interviewed after the event, the
most frequently reason given for a lack of
response was that the subject did not perceive
an emergency situation or believe it was real.
However, those that responded reported that they
had no probleni noticing the emergency at all
and other incidental evidence indicated that the
non-responders had done also. The researchers
commented that the non-responders seemed
genuine in their belief that they had not noticed
anything unusual requiring their attention, the
implication being that they had at least convinced
themselves with their post-justification if no-one
else. Generalising from emergency situations to
any situation with an ethical content, it may be
possible to conclude two things.
Firstly, it seems that social factors play a part
 Can Ethical Behaviour Really Exist in Business
in determining whether any individual "does the
right thing" in any given circumstance. Darley
and Latane suggested that the presence of others
can inhibit action in situations in which reacting
would require one to behave differently to the
others. In other words, if everyone else is doing
nothing then it is easier to continue to do
nothing oneself. The second conclusion that may
be drawn is that the route frequently taken by
individuals to explain a lack of ethical consider-
ation in their behaviour in a given situation is
to deny that any ethical content is present in that
situation. These conclusions may be summarised
in the phrase "pluralistic ignorance". Pluralistic
ignorance is the condition in which members of
a group will ignore the need to take notice of
certain conditions provided all members of the
group do the same. Applying these conclusions
to the work setting begins to get to the bottom
of why it is that so few of the people we have
spoken to believe in business ethics, if we start
from the position in which the majority of
individuals support the view that business is
purely about profits, then the socialisation effect
of the organisation will tend to propagate this
view. Any given corporate individual may find
himself subscribing to an opinion purely because
it is the opinion of the majority of people around
him. His critical faculties are paralysed by the
socialisation effect.
This is surely the case for the manager who
justifies an unadulterated profit motive with a
belief in the Invisible Hand. Such a belief takes
on an almost mystical quality when one compares
it with the methods of control used within
organisations. On the one hand we have the
common good for society arising spontaneously
from a largely unregulated market of companies
pursuing their self-interest and on the other hand
we have the common good for the corporation
arising from the application of a rigid bureau-
cracy expressly designed to suppress the effects of
self-interest that may be harmful to the organi-
sation. In both cases the benefits are supposedly
efficiency and fair distribution. Taken from the
level of the corporation this appears to be an
entirely desirable and rational situation offering
a minimum of restriction on market behaviour
and maximum control over internal affairs.
203
(Obviously it is only rational provided one
ignores the paradoxical suggestion that both
maximum control and minimum control are the
best way to run eflScient systems of transaction
humans.) The claim that this arrangement is also
good for the community and the individual
worker emerges as entrepreneurial emotivism. It
is a sleight of hand that deceives us as a society
into recognising demands from the business
sector for deregulation as legitimate whilst as
individuals we are exhorted from the same
quarter to submit ourselves to an ever more
constraining bureaucracy.
Work, bureaucracy and the market
The situation reflects the distribution of power
in late 20th century western democracy in which
the economy or "the market" is the primary
organising and driving force. Society is required
only to legitimate the status quo through the
democratic process. Individualism is tolerated
only to the extent that it fuels consumerism.
Employees, managers and executives are expected
to subordinate the interests of society to the
interests of the economy and for reasons of
personal welfare they do so. They are provided
with economism as a salve for their conscience.
The hegemony of the economy over society is
exposed by Gary Teeple when he says, "The idea
that politics determines national policies has
gradually dissipated and in its place has come the
open assertion that economics is the deciding
factor in more and more aspects of society" [13].
However, we believe that for most people
economism is not sufficient to relieve moral
disquiet. It is a crutch for disjointed values rather
than a true justification for the way we all have
to live. There is not perceived to be any ethics
in business because there is no good and bad
between which to choose. The choice is between
success and failure.
So success and "the good life" is determined
by hard work in a well-organised company
operating in a free market. (The importance of
each of these terms varies depending on position
- hard work is important for the worker, organ-
isation for the manager and free trade for the
204 Andrew Bartlett and David Preston
entrepreneur - but everyone is encouraged to
believe in all three.) In reality all three of these
terms are somewhat imperfect.
It has been pointed out many times before that
the market always has been and always will be
regulated in some form or another. Some regu-
lation (and an implied system of ethics) is
required to protect buyers and sellers from
unscrupulous trading partners. Without this kind
of protection there could be no market at all.
Other regulations e.xist to protect the interests
of groups such as workers, local communities and
nations.
The importance of hard work may also be
called into question. The market is not designed
as a system to reward hard work or merit and it
does not operate as one. Success in the market
is arbitrary. As already mentioned, it suits the
business organisation for its employees to believe
that hard work will lead to success but this is also
open to doubt and the idea has been called into
question by Robert Jackall [9]. Jackall recounts
the result of interviews with managers in U.S.
corporations. Far from supporting the work ethic
the U.S. managers indicated that the qualities
needed for success were conformism to expected
norms of thinking and behaviour, political skill
in building relationships with the right people
and the ability to outrun one's mistakes. Even
then, success is capricious and disaster looms for
anyone unfortunate enough to be in the wrong
place at the wrong time. The picture Jackall
paints of the bureaucratic hierarchy is of a system
populated by kow-towing bureaucrats serving the
interests of the organisation only when it happens
to suit them to do so.
What of the third term, the bureaucratic-
organisation? Certainly in the light of Jackall's
findings and to the extent that the managers'
behaviour is influenced by the system they
inhabit, it is hard to claim that bureaucracy is
really the means by which the corporation can
get the most from the human resources at its
disposal. At best it is a tool used by executives
and managers to give the impression, to them-
selves and to their directors or shareholders, of
being in control. For Maclntyre, managerial
expertise is a fiction used for social control. He
refers to Bittner who noted the gap between the
concept of managerial effectiveness and the
absence of any actual criteria by which it may
be measured.
The dangers of scepticism
It may be said that if the unregulated market,
the well-organised bureaucracy and the indi-
vidual coerced by the work ethic are all fictions
then there is no problem. Why does it matter if
we speak one way and act another? We can think
of three main reasons. Firstly, by pretending that
our values are different to how they are we leave
ourselves vulnerable to the ethical opportunist.
It provides a justification for the "We Don't
Make The Laws' attitude identified by Albert
Carr in his often cited article "Is Business
Bluffing Ethical?" [10]. As an example, he
describes a key manufacturer who supplied keys
for cars to mail-order customers. Although it was
obvious that many of the customers would be car
thieves, the manufacturer justified his actions by
pointing out that he had not broken any law. In
the absence of any values other than success
measured by profit there is no argument against
the key manufacturer however much it may
offend our intuition. Although he avoids disap-
proval of the key manufacturer, Carr cannot
bring himself to explicitly defend his behaviour
and one suspects that this is because he is also
subject to the intuition that there is something
wrong with it.
Secondly, there could be a psychological
impact of "living a lie" likely to operate at the
level of the individual and the community. The
main effect may simply be to make us less happy
although the result of placing oneself in a false
position can be despair, schizophrenia and
paranoia. On the societal level, this self-decep-
tion is a false consciousness closely related to the
alienation of man from himself and his activity
described by Marx [11].
The third reason that it is important to recog-
nise the difference between our statements about
business ethics and our actual behaviour contains
within it a clue to the way we might escape from
the situation. Bad ethical practice, encouraged by
a denial of the existence of ethical values in
 Can Ethical Behaviour Really Exist in Business
business, can be detrimental to the efficiency of
the economy and the corporation.
The problem we face is that the commercial
business organisation is designed as a profit
making mechanism and has no interest in the
good for society. It is playing a zero-sum game
against the rest of the economy and can be
expected to have no particular orientation
towards ethical behaviour beyond the laws that
constrain it. Attributes, such as trustworthiness
and co-operation, that tend to favour long term
stability and success are not likely to be displayed
by organisations with profit maximisation as the
dominant value. When populated by organisa-
tions of this type, the economy functions as a
system of non-co-operating agents and offers
neither the optimum return on resources spent
by society nor the ideal operating environment
for individual companies. The challenge is to
convince the organisation (and hence the people
in the organisation) that a direct benefit accrues
to it through its own ethical behaviour. This is
not the same as saying it is better for everyone
if organisations have higher moral standards. It
must be shown that the ethical organisation is
likely to be more successful than the unethical
one whilst operating in a system that delivers no
guarantee of the ethical standards of other organ-
isations. (Note that a further challenge exists to
arrange the relationships between the economy
and society as whole such that an efficient
economy made up of co-operating agents will
deliver the greatest benefit to society, however
we may choose to measure it.)
The economic benefits of business ethics
Whether "good ethics is good business" is a
matter of some debate. Among the academic
community it seems to be an article of faith but
it is a belief that also appears to hold a degree of
credibility in business seems to be an article of
faith but it is a belief that also appears to hold a
degree of credibility in business circles. A survey
conducted among U.S. executives, directors and
business school deans in 1988 by Touche Ross
found that 65% of the respondents believed that
high ethical standards improved a firm's compet-
205
itiveness [12]. (The same survey also found that
94% said that "the business community as a
whole is troubled by ethical problems \ This is
perhaps further evidence of the conflict between
the way we would like to be and the way we
are forced to be.) Also, Galaskiewicz [14]
has reported on the "Emerald City" of
Minnesota — St. Pauls which has a reputation
for corporate benevolence and public spirit.
Focusing on the area of corporate donations,
he reported that in he found that 67% of com-
panies gave donations out of a sense of moral
obligation or social responsibihty. (In fact, only
30% of organisations explicitly articulated their
reasons in terms of "enhghtened self-interest" but
there is probably a good deal of overlap in the
two categories.)
There are a variety of benefits an organisation
can expect to accrue from taking a positive
ethical stance: higher sales through improved
public image; enhanced employee commitment
to corporate goals through higher regard for the
organisation; greater job satisfaction; efficiencies
through improved internal and external relations
and so on. On the other hand, there are obvi-
ously there are those who dispute the connec-
tion between good ethics and good business.
Carr and Friedman are the most often quoted
examples. Their argument focus on the fact that
companies or businessmen will only act ethically
if it benefits them to do so. They say that since
this is self-interested behaviour it cannot be
deemed ethical. However, Carr and Friedman are
here referring to specific acts that have an
obvious positive outcome for the organisation.
There is no reason to assume that the corpora-
tion cannot be convinced that a positive ethical
outlook in general can be a factor in success
irrespective of whether there is any immediately
identifiable business advantage from it. In order
to be able to adopt this position it is necessary
for the organisation to be able to take a long term
view and trust that over a period of time they
will benefit. Short-termism is the enemy of good
ethics in business since it obscures the connec-
tion between responsibility and success. In the
Touche Ross survey pressure for short-term
results was one of the main threats to business
ethics perceived by managers.
206 .Andrew Bartlett and David Preston
In his book Theory Z [21], William Ouchi
contrasts the success over recent decades of
Japanese firms with the poorer performance of
companies in the West over the same period.
Generalising the Japanese and Western forms and
referring to them as Type Z and Type A organ-
isations respectively, he find the difference to be
in the long-term approach adopted by Type Z
compared to the short-termism of Type A. Long-
terniism allows the development of trust, co-
operation and shared values between the
corporation and its customers, employees and
suppliers. Type A organisations, in the absence of
shared values and stable relationships, require a
strong bureaucracy to prevent individuals from
sacrificing the long-term interests of the
company for short-term gain. The costs of
bureaucracy can be high. Not only are there costs
attached to running the bureaucracy itself — the
accounting system used for "untangling the inter-
dependencies between people" - but also the
system prevents the organisation responding to
the need for change since it precludes cross-
functional co-operation. Ouchi makes plain the
connection between success and concern for long
term relationships.
Many large corporations have already
embraced the idea that their long term interests
are served through a positive involvement in the
community. Business In The Community and the
5% club are just two examples of large organisa-
tions with the motivation to invest resources in
their surrounding environment. It is perhaps not
surprising that it is large companies that are more
willing to take part in such initiatives. Not only
do they have greater visibility and hence their
behaviour is likely come under closer scrutiny
than their smaller counterparts, they are also
likely to be around for longer and are therefore
able to reap the long term rewards for co-oper-
ation and trust with customers, suppliers, com-
munity, regulatory bodies and even competitors.
Smaller companies are more likely to succumb to
the temptation to overlook ethical considerations
in the bid for short-term profits. Large com-
panies are not immune to this however and the
pressure to show year on year profits is increasing
with increasing shareholder promiscuity. Also, the
long-term success of an organisation only
becomes relevant when the decision making
executives identify their reputations with that of
the company.
Unravelling the contradictions
Short-termism is prevalent at all levels of business
as shown by Jackall's analysis of the attitudes of
managers to the criteria for success. To the extent
that merit plays any part in success it is merely
in "keeping ones nose clean" or having "a safe
pair of hands". In the absence of any system for
tracking the consequences of decisions once a
manager has moved to another position, even in
the same company, individuals are invited to
sacrifice long-term goals and stability for short-
term results. As Ouchi points out, "in a short-
run oriented firm, a manager who fails in the
short run will be around to see the long run".
Like executives, managers and other employees
can be expected to attain high ethical standards
only when they feel they are an integral part of
the organisation and the organisation itself
respects those standards.
Perhaps this is a root of the contradiction that
so many apparently believe in the beneficial
effects of good ethics on corporate well-being
whilst so few are willing to acknowledge the
relevance of ethics in the business arena. Those
questioned in the Touche Ross survey were
classified as "executives, directors and business
school deans". The statements analysed by
Galaskiewicz regarding corporate donations came
from high ranking executives. Conversely, the
evidence cited against business ethics, including
our own anecdotal evidence, is generally gathered
by investigating the views of middle-managers. It
appears that business leaders believe and espouse
a positive view of business ethics has nothing to
do with them. We can return to pluralistic
ignorance to explain this difference. Middle-
managers' views on appropriate modes of
conduct in the business setting are formed by
contact with people and experiences within the
organisation. The company itself forms the
socialising environment and as we have seen, if
the company is sending mixed messages regarding
the relative importance of success and ethical
 Can Ethical Behaviour Really Exist in Business
behaviour then it is hardly surprising if corpo-
rate individuals become cynical.
Senior executives have a different socialising
environment to set the tone for their ethical
behaviour. Their contacts and dealings are to a
much greater extent external to the corporation.
Furthermore, since senior executives are more
closely identified with the organisation they work
for, they are more likely to extend their corpo-
rate persona beyond business and into the com-
munity. Galaskiewicz found that Minnesotan
companies with CEOs closely linked socially to
community leaders gave more in corporate
donations than others. He also noted that on
average the community leaders had considerably
higher standing in husiness than the CEOs. In
other words, the Minnesotan community leaders
could apply pressure to CEOs to conform to
expectations of charitable behaviour because the
failure to do so results not only in exclusion from
elevated social circles but from elevated business
circles as well. He says that "company executives
give to keep their places in the network" [17].
One of the keys to unravelling the undesir-
able situation of a perceived absence of ethics in
business therefore is in encouraging a greater
identity between community, company and
workforce rather than allowing companies to
manage their relationship with the community
and their relationship with their employees as if
they were entirely separate entitles. In the U.K.
there is growing support for the concept known
as stakeholding. If iniplemented, this would give
a say in the running of a company not just to
shareholders via their appointed board but to
other interest groups such as employees, the local
community, customers and so on. Such a move
would significantly raise the likelihood that the
company would adopt a longer-term, more
ethical posture that should reap its own rewards.
Galaskiewicz quotes Talcott Parsons [18]: "if the
goals of the organisation are in line with the
dominant values, not only will the organisation
operate unencumbered in its environment, but
participants in the organisation will be all the
more loyal to the organisation." This is the
double effect caused by the fact that as members
of society we legitimate the role of business and
yet we benefit from its success by our participa-
207
tion in it. (Note that there is a danger here
however Organisational goals and dominant
community values may be aligned by changing
either one of them. Organisations may find it
more convenient to alter the values of the com-
munity they serve than their own values. This is
one of the traditional criticisms of advertising
expressed for example by J. K. Galbraith in The
Affluent society.)
Managing ethics in the organisation
These days, most corporations are aware of the
need to be at least seen to be in step with the
values of the surrounding community and many
are adept at achieving this by actively projecting
their ethical values into the marketplace. Few
organisations manage to effectively communicate
the corresponding values to their employees and
instead give the impression that the company
expects them to behave as if financial consider-
ations outweigh all others. To reverse this situa-
tion the organisation must learn to manage and
communicate through the social system rather
than through the bureaucracy.
In addition to the hierarchy and the market,
Ouchi's Theory Z recognises a social system he
calls a "clan'\ Clans are "intimate associations of
people engaged in economic activity but tied to
each other through a variety of bonds". Through
long term associations with clans, individuals are
socialised are socialised to pursue the common
good since it is only through the success of the
clan that the individual can succeed. The business
organisation that can develop and communicate
rationally with the collective consciousness of the
clan will have no need to exert control over the
individual through the bureaucracy. This can only
occur in an environment in which the expecta-
tion of persisting relationships enables the devel-
opment of trust and co-operation and it is only
those at the top of an organisation who can
decide to create this environment.
This will not be achieved without consider-
able difficulty. Ouchi points out that it is rare that
a Type A organisation becomes Type Z. Rather,
Type Z companies are those that have managed
to maintain the values of trust and long term
208 Andrew Bartlett and David Preston
commitment instilled by the founders. Once
these values are lost it is difficult to re-establish
them. Clan arise from intimacy in human rela-
tions and cannot be bullied into existence by a
hierarchy. It may be that the many failed attempts
at forcing Typo Z management styles into unre-
sponsive bureaucracies have created the ethical
vacuum that now exists.
The challenge for companies is to employ
their often considerable expertise in shaping
ort^anisational activity to encourage more ethical,
long sighted behaviour and discourage self-inter-
ested, short sighted behaviour. Gellerman has
suggested some practical methods for the latter.
He identified the need to reduce inducements
to unethical behaviour such as unusually high
rewards for good performance or severe punish-
ments for poor performance. For e.xample, a
number of recent incidents in the City of
London involving misconduct of highly incen-
tivised individuals or teams have caused The
Bank of England to issue warnings to city firms
regarding the size of bonus payments for high
fliers. Reducing disproportionate incentives or
increasing the surveillance ot individuals in a
position to personally benefit from excessive
corporate profits will reduce the risk of uneth-
ical behaviour.
At the same time, the expectations of the
organisation must be strongly communicated
through corporate structures that foster ethical
action that benefits the long term interests of the
individual and the organisation. Patrick Murphy
points out that in large organisations corporate
ethical credos are only sufFicient in companies
with a pre-existing "cohesive corporate culture,
where a spirit of frequent and unguarded com-
munication exists" 120]. In other (more preva-
lent) cases. Murphy suggests that extensive ethics
education programs are required to reinforce and
standardise interpretation of the ethical code.
Trevino [4] supports this with the proposition
that, "Codes of ethics will affect ethical/
unethical behaviour significantly only if they are
consistent with the organisational culture and are
enforced."
Within the organisation there is much that can
be done to improve the ethical climate provided
the top levels of the company hierarchy are
prepared to use their power to foster the correct
atmosphere. In some ways, implementing an
ethical program is similar to implementing the
quality programs that many organisations have
been persuaded to take one. It must be woven
into the culture of the organisational and cannot
be tacked on as an afterthought. It requires a
loosening of bureaucratic control and a willing-
ness to allow each individual to think creatively
within the context of their own role. Through
tramuig the organisation must provide the moral
reasoning skills to the workforce to allow ethical
considerations to become a feature of operational
decision making. Through reward and if neces-
sary punishment the organisation must reinforce
ethical behaviour in individuals. In this way the
people in an organisation may gradually become
less afraid to admit to the existence of an ethical
conscience in their business personae and perhaps
more able to identify their long term interests
with those of the company.
Conclusion
There will always be openings for opportunists.
There will always be companies and individuals
that take advantage of the goodwill of others to
make a quick profit. Laws and regulations are
there to discourage and detect such behaviour
but we should not pretend that they define the
limits of our expectations of ourselves or others.
To do so is to deny what we know to be true
about ourselves. Business ethics does exist but it
should not be limited to a search for normative
systems. Business ethics should search for ways to
allow people in the business environment to do
what they think is right for themselves, their
company and their community rather than what
they think is expected of them.
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