Business Sustainability, Corporate Governance, and Organizational Ethics

CHAPTER 27Ethics as Corporate Culture

1. Introduction

Corporate culture is defined in Chapter 3 as the environment that is affected by the implicit and unwritten rules that create expectations and norms for how people may behave and how organizations create value and protect value through people. Although the last three chapters have considered the unique situation of businesses, the focus has been on individual decision makers, even if they happen to find themselves in a business. But with most of the important decisions being made by the business entity, we now turn our attention toward what a business can do to encourage more ethical acts by employees. This chapter initiates this direction with a sustained inquiry into the nature of corporate culture. Many believe that a proper environment for ethics must be set by the prevailing spirit of the organization.

This chapter first attempts to define and illustrate what constitutes culture, in large part by providing some illustrative examples. The second objective of the chapter is to articulate what culture has to do with corporate governance and its ethical posture. Here we need to be mindful of the negative possibilities of a strong corporate culture. We then attempt to place corporate culture into two contexts, both of which have claims to the use of the culture idea. The first of these is the embeddedness of corporate culture within a larger national culture. The second is more of an “inside” culture for corporations. We ...