One aspect of good citizenship is the adoption of high standards of ethical behaviour. Some people assume that organisations, in becoming good citizens, will also adopt ethical standards. So what do we mean by Corporate Ethics? A simple definition might suggest that an organisation’s ethics involve establishing and living by a set of standards regulating its conduct and interaction with a variety of interested stakeholders. These ethical standards would ideally reflect the concerns of these stakeholders, and be captured and communicated in the organisational mission statement.

Such a definition suggests that a responsible, ethical strategy is the product of negotiation with the various concerns of stakeholders including the organisation’s legal obligations, mediated by managers to create a set of organisational guidelines.

However, while such a definition reflects stakeholder views, it may also reflect the power imbalance between stakeholders, and may not necessarily require an organisation to behave responsibly. Underpinning the idea of corporate ethics is a concern that an organisation should reflect the values of its stakeholders, accept the rules and regulations of the society within which it operates both in practice and in spirit, and develop a broader consciousness beyond simple delivery of returns to its shareholders.

The organisation must also survive and deliver those returns, in the case of both for-profit and not-for-profit organisations, and it is in this respect that conflict may emerge. Who, therefore, does the manager answer to: the shareholder, the government, the consumer, members of wider society, or themselves? We should bear in mind the view, that Corporate Social Responsibility itself is potentially unethical, in that it leads to the misallocation of resources and that it does not properly reward shareholders for the risk they are exposed to by investing their capital. This is not an easy question to answer.

Why are ethics important?
There is no simple answer to the question of why ethics are important: there will be a continuing dialogue within any organisation over the degree to which corporate objectives conflict with corporate obligations to behave responsibly.

It is worth emphasising that most organisations do behave 'responsibly' most of the time. The cases where they do not and the continuum between best and worst behaviour is what interests us here. In addition, all managers and employees within organisations can expect to occasionally face difficult moral dilemmas – whether to act against your employer, to whom you may owe a debt of trust and loyalty, possibly by becoming a whistleblower – or to act upon the basis of your own moral code, and by implication upon your interpretation of events, which may (of course) be biased.

A whistleblower is typically an employee of an organisation who has become concerned about the legal or ethical behaviour of the organisation, and who has chosen to ignore the normal reporting structure of the organisation (i.e. to a line manager) and reported their concerns to a more senior manager; a government or law enforcement body; or the media. Whistleblowers run a risk of retaliation by the organisation involved.

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