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Codes of Ethics in BusinessResearch Paper

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Code of Ethics

The organization, XYZ company, is a start-up company that develops supply chain software. The software is intended to provide real time updates about any aspect of a company's supply chain, on any device, through a simple platform. The tracking functions and interface are the key elements of the product/service offering. The company is marketing its software to small and medium-sized enterprises (SMEs). Most similar applications are either proprietary, or are built for very large companies. The objective of XYZ is to win market share by offering high-end supply chain management software to companies that otherwise cannot afford it. There are several competitors in this industry, mostly falling into two categories. The first category are the large companies (SAP, etc.) that develop solutions for large and multinational companies. They tend not to pursue smaller companies because the incremental revenue is not high. The second category of competitor targets SMEs, but with cheaper software applications.

This industry is moderately competitive, and characterized by a rapid pace of technological change. If the costs come down, the big competitors can pursue smaller clients. Or the smaller competitors can take advantage of lower costs to offer similar products to XYZ. XYZ sells via a sales force that operates as a remote virtual team, spread across North America but working together to service clients, and integrate their suppliers into the platform as well.

It is important for any company to have a code of ethics, and this is true for XYZ as well. Ingram (2015) notes that breaches in ethics can be costly for any company, reflecting poorly on the brand, degrading asset value, and inviting regulatory/legal scrutiny. In more extreme cases, ethical breaches involve the commission of illegal acts and can bankrupt a company, but even minor breaches such as an inappropriate social media comment, can reflect negatively on a company's brand. An ethical code contributes to avoiding such problems in a couple of important ways. First, it helps to set the ethical tone and culture of the organization, and a more ethical organization is less likely to experience major lapses in judgment. Second, a code of ethics can serve as a specific reference point for people faced with ethical dilemmas, to provide them with decision-making criteria to help them make the best choices for the organization (Ethics.org, 2009).

Guiding Principles

A precursor to any corporate code of ethics is to have a set of underlying principles. In general, these will be common among Western companies, since the baseline understanding of ethics in the West does not vary much. But there is opportunity for the company to emphasize some guiding principles over others. The most fundamental element of the code, however, has to be whether the corporate is considered to be a moral agent. Legally, corporations are unique entities from the people who work within the corporation, and on its behalf. But should this legal status reflect on corporate ethics, or should the corporation be viewed, in terms of its ethics, as a collection of individuals. This has important ramifications for whether the corporation as a whole wishes to present a singular ethical identity to the world, or whether it wishes to have the ability to disassociate itself from the actions of individuals who are working on the corporation's behalf (Marcoux, 2008). XYZ will assume that all people under its employ will present the same ethical face to the world -- the corporation will dictate the ethical standards, and employees will be compelled to adhere to these standards.

A second issue with the guiding principles is the role of the manager within the corporation. In other words, in whose interests does the corporation act. Friedman argued that the managers are working on behalf of the shareholders, and thus should have the sole objective of enhancing the corporation's wealth, a logic which is the extension of agency theory of the firm. This is essentially a stockholder theory, one that is rejected by many firms. Stakeholder theory is an alternative view, one that holds that the corporation acts on behalf of all of its stakeholders, and therefore must take a variety of needs into account. XYZ will adopt the stakeholder theory, even though it is more complex, and can present decision-making challenges (Mitchell et al., 2015). The reality is that ethical dilemmas are not simple, so attempting to distill them down to simplistic slogans and things that dummies can understand is not going to work. People have to accept ambiguity and uncertainty in order to function at a high level, so the code of ethics needs to reflect reality in that way. Dilemmas arise specifically because of conflict of interest between stakeholders, and in situations of uncertainty -- nobody incapable of handling these things should be making decisions. Simplistic sloganeering such as "treat everybody with respect, honesty and value hard work" or other such drivel are meaningless, providing no guidance in times of ethical dilemma. All evidence shows that high quality codes of ethics are strongly correlated with high ethical performance (Erwin, 2011). Codes of ethics that only work when there are no dilemmas do not serve the core purposes of codes of ethics, namely to avoid damaging ethical breaches and the development of an unethical culture.

In goes without saying that employees of the company will be bound by the law, but as some major ethical breaches in other companies have specifically involved breaking the law, maybe it does need to be said. If there is a breach of the law, then there is a breach in company's ethical code, as the law represents a baseline of ethical behavior that cannot be violated.

The formulation of the ethical code is something that is taken into account when strategy is being set. One of the most important characteristics of an ethical code is that it should be consistent over time. Corporations can change their strategies, in some cases even their industries, but the ethical code should remain the same. The code will be embedded in all of the organization's policies, processes and practices, so it is the one constant element of the organization (Schwartz, 2013). Thus, once the code of ethics is developed, it will underpin all of the subsequent decisions that are made by the organization, including those with respect to strategy, right down to day-to-day operations.

Purpose of the Code

This code of ethics exists in order to provide guidance to all employees and agents of XYZ Corporation with respect to expected ethical behaviors.

What Employees Does the Code Cover?

The code covers all employees and agents of XYZ Corporation. For employees who are employed on an at-will basis, the code covers all activities, regardless of whether they come in the performance of XYZ duties. In today's world, with social media, all employee actions will ultimately be reflected back on the company, so there is an imperative that all employees uphold basic good ethical conduct at all times, not just in the specific performance of duties with or for XYZ. For employees employed under contract, the above has been written into the employment contract, such that failure to adhere to the ethical standards of XYZ Corporation may be found to be in breach of the standard employment contract.

The code will also apply to non-employees, such as partners, agents, supply chain and distribution chain partners, and other affiliated entities. The enforcement capacity of XYZ will be different for external stakeholders, but XYZ will ensure that all external partners are aware of the code, and their obligations under it. Failure to adhere to the code may jeopardize the ongoing relationship between XYZ and the partner in question.

Mission Statement

The code of ethics for XYZ will contribute to the organization's mission of becoming the world's leading provider of supply chain and logistics management software.


The first aspect of implementation is to set objectives -- employees will need to demonstrate knowledge and understanding of the code in general, as well as any specific elements that apply to their roles within the company. There will be a test at the end of training to measure this. The training sessions will be held as part of the orientation and onboarding process for all new hires. The current team will also receive this training. One individual will be assigned the task of creating the training program and test. The course will be guided, and will be 30 minutes in duration. There will be an option to expand the training if this time frame proves inadequate. Supplementary education can play an important role in reinforcing the code of ethics. For example, supplementary education can highlight examples of the code of ethics in action. It is one thing to understand a code in abstract, but people need to see how it can be used, and what types of decisions it is required for. Success stories are always good. The initial training should be seen simply as building a foundation, but supplementary education can show people how the code… [END OF PREVIEW]

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