Business Ethics Project III

Code of Ethics: A Stratified Vehicle for Compliance

Jennifer Adelstein • Stewart Clegg

Received: 31 July 2013 / Accepted: 13 February 2015 / Published online: 21 February 2015

� Springer Science+Business Media Dordrecht 2015

Abstract Ethical codes have been hailed as an explicit

vehicle for achieving more sustainable and defensible or-

ganizational practice. Nonetheless, when legal compliance

and corporate governance codes are conflated, codes can be

used to define organizational interests ostentatiously by

stipulating norms for employee ethics. Such codes have a

largely cosmetic and insurance function, acting subtly and

strategically to control organizational risk management and

protection. In this paper, we conduct a genealogical dis-

course analysis of a representative code of ethics from an

international corporation to understand how management

frames expectations of compliance. Our contribution is to

articulate the problems inherent in codes of ethics, and we

make some recommendations to address these to benefit

both an organization and its employees. In this way, we

show how a code of ethics can provide a foundation for

ethical sustainability, while addressing management in-

tentions and employees’ ethical satisfaction.

Keywords Code of ethics � Organizational risk management � Business ethics � Power relationships � Governance � Domination � Genealogical discourse analysis

… for the distance is so great between how we live and how we ought to live that he who abandons what is done for what ought to be done learns

his ruin rather than his preservation…(Machiavelli 1520 [1980], p. 66).

Introduction

Machiavelli’s exhortation still resonates with implications

for organizations in the twenty-first century. Against a

backdrop of economic austerity and embarrassing corpo-

rate misdemeanours, the need for corporate executives to

adopt stringent economic measures that may also necessi-

tate a review of corporate governance procedures may

seem closer to ruin rather than preservation. From the

perspective of managerial elites, ‘ordinary’ people who just

do not know what is good for them need to be brought to

heel to ensure the survival of the institutional apparatus in

which they function: hence, organizational processes must

be implemented that discipline them normatively. Corpo-

rate governance and codes of ethics are usually regarded as

answering the call for discipline that corporations, as a

legal fiction, require of all their members. Intertwining of

corporate governance with member compliance signified

by doing what is right is becoming a normal feature of

many organizations’ assumptions about how managing the

organization should be done.

In this paper, we address assumptions embedded in or-

ganizational codes of ethics, also known as codes of pro-

fessional conduct, through close inspection of a particular

and significant case. Specifically, we address assumptions

that the ethics of individual employees need to align with

what management elites define as the organization’s in-

terests. Tacitly, by extension, management’s interests are

taken to be definitive of the ‘real interests’ (Lukes 1974) of

J. Adelstein (&) � S. Clegg Centre for Management & Organization Studies (CMOS),

University of Technology, Sydney, Australia

e-mail: jenniferadelstein@gmail.com

S. Clegg

Universidade Nova de Lisboa, Lisbon, Portugal

S. Clegg

Copenhagen Business School, Frederiksberg, Denmark

S. Clegg

EM-Lyon, Écully, France

123

J Bus Ethics (2016) 138:53–66

DOI 10.1007/s10551-015-2581-9

those subject to these codes. A corollary of the premise that

management is entitled to define real interests is that if the

ethics of individuals and the organization do not align,

whatever the distance between an organizational member’s

moral integrity and that of the organization, then it is the

individuals who need to abandon (or at least modify) per-

sonal ethical choices for what management deems ought to

be done.

While creating a nexus between business and ethics may

be admirable in and of itself, there is potential conflict of

interest when a code of ethics is conceived as primarily a

mode of organizational risk management. If it is conceived

in terms that stipulate its authoritativeness in a unidirec-

tional imposition, it potentially overrides the moral in-

tegrity and choice of organizational members. Such a

strategy creates a potential for conflicts of interest between

ordinary members and organizational elite management, as

we will show. We illustrate the debate through a ge-

nealogical discourse analysis of a code from one global

organization that is typically representative of the codes of

many other such institutions. We question the ethical va-

lidity of such a code’s rhetorical technologies with its real

purpose being mitigating risk by controlling individual

members’ ethical choices.

We choose as our subject for empirical enquiry one of

the world’s most significant and globally visible organi-

zations Microsoft Corporation. We do so not to position it

as exemplary but as typical. Microsoft has a well-

documented approach to ethics, and its code is a typical

example of many other corporate codes of ethics, so we

particularize it here in order to understand how these codes

typically frame expectations relating to organizational

members’ behaviours. Our aim is not to present a case

study or empirical investigation of the code in practice but

to understand what the code actually articulates. We ana-

lyse the code discursively as a document that states poli-

cies. Hence, the genre to which this paper belongs is policy

analysis at the organizational level, in which we search for

contradictions and tensions in the discourse.

Methodologically, we use Foucault’s genealogical dis-

course analysis (1972, 1980, 1981, 1988). This paper be-

gins with an explanation of the methodology of

genealogical discourse analysis. We follow with an ana-

lysis of the conventional codes’ literature before positing

the view that codes of ethics are premised on strategies of

control and risk management. We conduct analysis of our

site of enquiry—Microsoft’s code of ethics—to show how

management couples legal compliance with non-legal in-

ternal corporate governance in equal measures as pre-

scriptions for employee behaviour and disciplinary actions.

We argue that by prescribing ethical behaviours, not only

for legal compliance but also for corporate interests,

management aims to effect compliance by removing

individual ethical options. In Microsoft’s code, we find a

discourse of risk management that is inextricably tied to

ethics, such that deviance from one implies deviance from

both, with potential power effects being reprimand or

dismissal.

Framing the Subject

The primary concern of corporate codes of ethics is to

assure compliance by staff with interests defined

specifically as corporate as a form of insurance against any

breach of corporate interests. The implicit assumption is

that accepting a contract of employment entails accepting

all of its implied conditions. It is assumed that a member

joins an organization of her own free will and in so doing,

must accept the rule of the organization. She must do so

regardless of whether she considers the ways in which she

is being ruled are ethical. It is also assumed that whatever

sovereign powers of autonomous reasoning she may have

will require subordination to the judgments embedded in

the ethical codes.

In the private sector, there is an explicit set of power

relations framing contracts of employments and the sub-

mission of the contracting agent to all that they imply

corporately. In the private sector, Capital hires Labour and,

for the time the capabilities of the person are rented, those

employed must respect Capital’s preferences as expressed

in a code of ethics. If there is a conflict between the ethics

of the individual and those of the code, then the common

assumption is that the individual’s preferences must be

secondary and subordinate. That this is the case requires

that individual employees cannot have ethical autonomy;

where their preferences, values and interests conflict with

those of the employing organization, and that whatever

ethical autonomy they can exercise will be constrained by

the implicit framework of their contract of employment.

Such contracts are an unarticulated strategy for organiza-

tional risk management.

Limitations to an individual’s ethical choice can have

profound effects on both the individual and subsequently

the organization. Organizational members may see such

limits as belittling and patronizing, leaving them with one

or other of Hirschman’s (1970) three options of exit

(leaving the organization), voice (speaking out) or loyalty

(abiding by the management’s declarations), or Goffman’s

(1961) secondary adjustment, where management’s decla-

rations are enacted in the letter but in spirit are quietly

subverted. Management faces compliance issues around

codes of ethics and ensuring that negative consequences do

not ensue. The potential detrimental effects inherent within

codes that prescribe employee behaviour and disciplinary

actions while at the same time denying organizational

54 J. Adelstein, S. Clegg

123

member’s moral choices and autonomy need to be recog-

nized if potential problems are to be addressed before they

arise. We see four possible resolutions that we will explore:

first, that organizational members be encouraged to par-

ticipate to some extent in the formulation and development

of the code; second, that the topic of ethics and ethical

decision-making becomes a prominent and ongoing con-

versation within organizations; third, that organizational

members be empowered to make ethical decisions rather

than follow rules premised on being merely organization-

ally risk averse; and fourth, that the code not be stratified

according to organizational roles. While codes of ethics

may be a contested terrain, management can ease potential

conflicts through communication and collaboration.

Codes of Ethics

Increasingly, in the wake of contemporary scandals from

Barings Bank (BBC News 1999) onwards, including Enron

(2000), Lehman Bros. (2004), Barclays (BBC News 2013)

and HSBC Switzerland (2015) (Treanor 2015) and con-

tinuing in the ongoing global financial crisis, many orga-

nizations have sought to link business interests, employee

ethics, and legal compliance in formal codes. The moti-

vation is to ensure that an organization’s code of ethics has

high visibility (Basu and Palazzo 2008, p. 126) enabling

enhancement of corporate reputation (Fombrun 2005) or,

as Friedman (1970) described it, ‘‘hypocritical window

dressing’’ (Bartlett and Preston 2000). Much has already

been written about how the concern with codes of ethics

emerged (Phillips and Margolis 1999; Raar 2002; Schwartz

2004; Trevino 1986; Waddock 2000), so we will not deal

with it here.

Analytically, a corporation’s code of ethics is the

documented, formal, and legal manifestation of that orga-

nization’s expectations of ethical behaviours by its em-

ployees. It is the visibility that a code offers that enables an

organization to be judged as ethical. Indeed, according to

one institution that benchmarks codes of ethics, scoring

organizations’ performances against this benchmark and

encouraging them to broadcast the results are the criteria

for consideration as an ethical company. Such criteria in-

clude having an ‘‘ethics and compliance program, gover-

nance and corporate responsibility’’ (Ethisphere 2014). 1

Implicit within such corporate prescription of employees’

ethical behaviours is the organization’s ability to manage

any allegedly ‘deviant’ behaviour by organizational

members (Trevino 1986) effectively for the benefit of the

organization. There is a strong normalizing function in the

deployment of these codes that suggest strategic risk is

being managed (Fombrun et al. 2000; Husted 2005).

Since the 1990s, the formulation of codes of business

ethics has been seen as a delimiter of misconduct and

prescriber of unethical behaviour perpetrated by organiza-

tional members; in effect, such codes are represented as

tools for risk management, limiting opportunities for ethi-

cal malfeasance. Most major corporations have instituted a

corporate code of ethics stating their publicly mandated

commitment to corporate governance, business ethics, and

legal compliance. Codes of ethics frame the risk that

members’ behaviours might potentially hold for an orga-

nization; hence, codes of ethics are Janus-like in their

purpose, both protecting an organization from the actions

of its members and providing a public declaration of its

ethical practices in documented form. In neither case, the

operationalizing of the code and its implementation is in

question.

Discourse and Codes of Ethics

We will now tease apart the rhetoric of a code of ethics to

enable us to understand fully its effects, assumptions and

purposes using Foucault’s genealogical discourse analysis

(1972, 1980, 1981, 1988). In doing so, we describe the

‘surfaces of emergence’ or historical contexts, in which

‘authorities of delimitation’ function to define what is in-

cluded and excluded from discourse. Such authorities are

those individuals or groups who have the imprimatur of

authority within their field of knowledge. In addition, we

address ‘grids of specification’ that explain how a discourse

is disseminated and links with other discourses by other

authorities and is constituted in terms of the power rela-

tions that position various interests framed in the discourse.

The text is the object of enquiry.

Organizationally, codes typically fall within the ambit of

the Office of Compliance (usually within an organization’s

legal structure), the institutional gatekeeper that promotes

the official management discursive positions, sometimes

against alternative interpretations. Given that the corpora-

tion is a legal entity, this assignment of responsibility is

appropriate. However, one effect of this is that ethical

questions tend to be interpreted through the prism of a legal

framework in service to the corporation and how its

counsel defines its legally framed responsibilities. Hence,

alternative conceptions of ethics by employees or others

who may have different interpretations of ethical be-

haviours in organizations tend to be excluded from official

interpretation. The compliance gatekeepers have legitima-

cy through their standing and high regard as authorities

whose expertise organizational management acknowl-

edges. Codes are updated when deemed necessary by the

1 Ethisphere Institute is an US-based influential ethics think tank that

surveys and publicly recognizes ethical companies.

Code of Ethics 55

123

Office of Compliance to limit the range of interpretive

possibilities. Closure can only ever be temporary, given the

inherent indexicality of meaning and openness of inter-

pretive horizons (Garfinkel 1967), and so gatekeepers must

maintain vigilance against the emergence and development

of unauthorized understandings that can cause interpretive

drift. Compliance is managed by limiting the variety of

alternative conceptions, thus minimizing drift from official

discursive positions.

Authorities of delimitation are not just internal to or-

ganizations: they are supported by others in different fields

of knowledge, who not only take up the discourse but also

try to delimit alternative conceptions of the discourse. For

example, in the discourse of ethical codes there exists think

tanks such as the Ethisphere Institute, 2 which has the im-

primatur of authority to decide on and award prizes to

ethical corporations based on consideration of the codes of

ethics of more than 1000 companies, thereby supporting its

position through quantitative data comparison. Through its

system of awards, Ethisphere’s role is not only as official

external arbiter of organizational codes of ethics but also as

a disseminator of the normalized view of what a ‘good’

code of ethics should include. In this way, Ethisphere plays

an institutionally isomorphic role as organizations

mimetically normalize their codes on the models that win

approval. As organizations adjust to the specific rhetoric of

Ethisphere’s ethics framework within their own codes of

ethics, these awards gain credence, thus further institu-

tionalizing the legitimacy of Ethisphere and the discourse

of ethics that it prescribes. Indeed, legitimacy by both

Ethisphere and the organizations that participate in the

award systems is gained through mutual ‘‘cultural align-

ment and imitation of that which is already deemed to be

legitimate’’ (Long and Driscoll 2008, p. 174). Such awards

affirm the literalness of dominant interpretations of the

codes. Ambiguities in interpretation can be resolved by the

Office of Compliance which, as the official gatekeeper,

arbitrates and enacts any disciplinary procedures they deem

to be necessary.

Ethics as Control: The Dominant Discourse

of Integrity-Based Approaches

An organizational code of ethics may be interpreted as a

means of managing and controlling employee behaviours

desired by management. In their efforts to control em-

ployee behaviours some organizations increase the

numbers of business practice officers, include ethical

values and compliance in performance assessments in a

tick-box fashion and investigate infractions and take re-

medial action (Paine 2010). For other organizations that

are less active, the code of ethics is assumed to provide

legitimacy (Long and Driscoll 2008; Meyer and Rowan

1977).

Paine (1994, p. 106) argues that in an integrity-based

approach, ‘‘ethics has everything to do with management’’

because it reflects an organization’s ‘operating culture’.

Culturally oriented ethics rely on managerial responsibility

for ethical behaviours in combination with legal compli-

ance, a position also argued by Christensen (2008). Paine’s

concern is what ought to be done rather than what is done

or may be done by organizational members. She describes

various corporate initiatives such as those related to ‘‘di-

versity, quality, customer service, health and safety, the

environment, legal compliance, professionalism, corporate

culture, stakeholder engagement, reputation management,

corporate identity…’’ and more (Paine 2003, p. 3). Some elements of codes have the force of national

regulation and law behind them. Such is the case with

occupational health and safety legislation, equal employ-

ment opportunity and other areas where the state mandates

acceptable behaviours. However, Paine (2003) dissolves

the discursive boundaries between legal compliance (such

as diversity, health and safety, and the environment) and

self-governance strictures (quality, customer service, pro-

fessionalism, corporate culture, reputation, corporate

2 Ethisphere Institute describes itself as a ‘‘leading international

think-tank dedicated to the research and promotion of best practices in

corporate ethics and compliance… honorees not only promote ethical business standards and practices internally, they exceed legal

compliance minimums and shape future industry standards by

introducing best practices today’’ (http://ethisphere.com/worlds-

most-ethical/wme-honorees). One of Ethisphere’s areas of research

is to examine codes of business conduct and score them for best

practices. Its website states that the Institute has scored the codes of

the Fortune 1000 companies and other global companies. (http://

www.ethisphere.com/history). Microsoft has been ranked in the

category of one of the ‘‘World’s Most Ethical (WME) Companies’’

between 2011 and 2014. Since 2007, Ethisphere has run an annual

survey of the World’s Most Ethical Companies. Its rating system is

based on a comprehensive questionnaire that includes self-rating

questions, awards/recognition by other institutions, board governance

activities, board oversight of compliance and ethics, job title of person

responsible for the compliance and ethics program, the code of ethics,

and ethics training. The questionnaire has five core categories: Ethics

and Compliance program (worth 25 per cent of the total score);

Reputation, Leadership and Innovation (20 per cent); Governance (10

per cent); Corporate Citizenship and Responsibility (25 per cent); and

Culture of Ethics (20 per cent). It is this last category that interests us

in this paper. It ‘‘looks at the culture of ethics at the organization

concerning widely accepted or unaccepted norms as it pertains to

ethical conduct. Starting with adoption of a values-based culture and

building on those core guidelines by having the workforce buy into

the culture and not only know it, but live it’’ (http://ethisphere.com/

worlds-most-ethical/scoring-methodology. However, the survey does

not address the issue of potential moral conflict or moral integrity

between a corporation and its employees. It is this prickly area that is

the subject of this paper.

56 J. Adelstein, S. Clegg

123

identity, etc.). Being locally preferential rules, the latter are

not legally constitutive as would be the case of those

mandated by juridical decree, with legislative authority.

These rules or structured ‘‘guiding principles’’ (Paine 2003,

p. 111) in codes of ethics are a key part of a top-down

strategy: they express strategic preferences with respect to

areas of behaviour deemed significant.

In essence, reciprocity between the organization and

its members is neither presumed nor left to chance. What

are promoted are routines that seek to align the moral

integrity of the individual with that of the organization.

Organizational members rarely arrive at these routines as

a result of any form of democratic participation. That the

organization sets out the frame for ethical behaviour

presumes a great deal about the ethicality of the orga-

nization. Moreover, it is a frame that has to deal with

the extreme contingency of events; its ethicality is tested

for each new event that the organization encounters

(Deroy and Clegg 2011). To the extent that organiza-

tional members predicate organizational ethicality on

rule-following behaviour, there is no necessity for deci-

sion and judgment, and hence no ethicality is at stake

(Clegg et al. 2007). It is only when events occur, defined

as matter for which no rule is present, that these issues

come into play.

Codes of ethics are closely tied to organizational ob-

jectives since managerial and organizational objectives are

enshrined in them. As Rasche and Esser (2007) argue,

these objectives have a relation to matters of compliance

both externally (compliance with the law) and internally

(compliance with organizational regulations) (Rasche and

Esser 2007, p. 109). Christensen (2008) argues that while

models of ethical decision-making typically do not include

the law, legal norms are implicit even if they are exogenous

to moral thinking. While law and ethics may be related,

they are not the same (Christensen 2008, p. 451). Yet by

folding both corporate rules and legal compliance into a

strategic discourse of integrity-based ethics, managerial

preferences become a natural and normal part of what is

constituted as legal compliance. While such compliance is

stipulative, managerial preferences are not: they lack legal

sanction and remit and are preferential rather than consti-

tutive rules for conduct (Shwayder 1965). Such strategic

ethics not only require organizational members to make

interpretations that management deems correct and then to

take appropriate action but also that as a matter of ethical

principle each employee should accept the legitimacy of

doing so by virtue of accepting her contract of employ-

ment. The capacity of the individual to act according to

personal ethical choices is removed, and discursive

boundaries are closed to alternative interpretations. Cor-

porate governance and legal compliance are entwined

within the code of ethics.

Unpacking Assumptions About Integrity-Based

Practice

The overarching culture of the organization in question

may be inherently coherent, robust and freely shared by its

employees, such that they will feel free to give voice

(Hirschman 1970) or it may be characterized by differen-

tiation or fragmentation (Martin 1992). Where employees

do not tacitly or explicitly resist the imposition of ethical

codes, they hold their counsel. Acquiescence may be taken

to be loyalty but could just as easily be the result of being

dominated and subordinated. An absence of dissent may

signal either authentic consensus, or one that is more ap-

parent than real. The conditions for democratic consensus

are rarely to be encountered in the normal conditions of

organizational life; more likely, preferences will be com-

promised in the interests of established authority and its

power relations. The simple management response is: if

you don’t like the way we operate, you can work some-

where else. However, this may not always be possible.

Essentially, within the organizational ambit we are

dealing with a localized problem of order and management

intentionality. Codes of ethics per se are not legally binding

enactments but local social contracts in a Hobbesian sense.

They are preferential rather than constitutive rules. While

Hobbes argued such social contracts, between sovereign

authorities and ordinary people, were a necessary fiction

with which to preserve peace and order, we prefer the re-

alism of Machiavelli’s arguments in the Prince. Organi-

zations align the authority of legality with organizational

self-interest embedded in a ‘code of ethics’ to define the

limits and extension of their sovereignty. Such codes are

not the result of a founding social contract but rather

constitutive of the place of employment. The aim is to

restrict organizational members from articulating ‘unau-

thorized’ behaviours either by conduct not contained in the

code’s preferences or by their interpretations of the code.

To counter any such tendencies, the code prescribes the

authorized and ‘appropriate’ behaviours that it licenses as

sovereign accounts. It is proposed that such licensing will

create a stable organizational order within a disciplinary

structure. In political theory, it is the ideological and re-

pressive state apparatuses that enforce sovereign will; in

commercial organizations, it is an alliance between an or-

ganization’s legal department and its management to en-

force, monitor and discipline that serves to legitimize

organizational self-interest within a legal framework.

When considered as a sphere for strategic risk man-

agement, a code of ethics presents an ethical problem. How

ethical is it for an organization to serve up a utilitarian

mélange of legal compliance inseparable from manage-

ment-designed governance through which organizational

members’ moral autonomy is filtered? In other words, is it

Code of Ethics 57

123

ethical for organizations to try to influence the ethical

subjectivity (Clegg et al. 2007, p. 107) of their members

and persuade them to act in particular ways to protect the

interests of the organization, if doing so denies employees’

own ethical views?

While rhetoric about the organization may well seduce

top management teams, it is rare that rank-and-file em-

ployees will be so easily pleased. Many ethnographic

studies detail the considerable cynicism and distance in

‘the ranks’ (Collinson 2003; Collinson and Ackroyd 2005;

Collier and Esteban 2007; Fleming and Spicer 2002, 2003,

2007; Mumby 2005; Trevino and Nelson 2011). The gap

between prescribed business codes of ethics and their

subjective interpretation by organizational members hinges

on mundane practices (Clegg et al. 2007; see also Gordon

et al. 2009a, b). The relationship between rule following

and rule violation is an indication of ethics-as-practice

(Clegg et al. 2007, pp. 107–108). In context, ethics do not

exist on paper or in a virtual space but in concrete prac-

tices: it is not what the rules stipulate but what the actors do

that is important (Gordon et al. 2009a, b). Daily practices

by organizational members rather than executive manage-

ment’s dictates frame mundane organizational behaviour,

and it is in this mundanity that the practice of ethics

resides.

Although research into how organizational members can

and do interpret codes of ethics day-to-day is relevant and

worthwhile, this is not our intention here. In this paper, our

attention is drawn to the codes of ethics themselves and the

rhetoric that is inscribed within them. Such rhetoric

typically incorporates both prescriptive behaviours and

disciplinary actions for deviance with clear warnings about

levels of tolerance and reveals the tacit domain assump-

tions made by management in the organization in question.

Such codes may have little to do with the ethical world of

the individuals employed: they do not serve to enhance the

moral autonomy and integrity of organizational members

so much as bind them in subservience. Ethics become

another face of domination through their capacity to restrict

organizational practices.

Many management and organization studies scholars, as

well as students of ethics, are concerned with the way or-

ganizations deal with ethical issues through formalizing

and enforcing ethical rules (see, Bauman 1993; Bowie

1999; Jackson 2000; Jones 2003; Kjonstad and Willmott

1995; Ten Bos 1997). Organizations typically prescribe

forms of ethical behaviour through rules that focus on

framing members’ intentions and limiting the conse-

quences of their actions (Rasche and Esser 2007; Trevino

et al. 1999; Trevino and Nelson 2011). Such formal rules

tend to focus exclusively on motivating employee be-

haviours that benefit the organization and serve to protect

management from blame and legal consequences (Trevino

et al. 1999, p. 133). Indeed, the primary objective of codes

of ethics is often to minimize business risk rather than

produce ethicality. The reduction of risk is sought through

corporate affairs guardians’ monitoring and auditing of

compliance to enforce ethical rules (Donaldson 2003; Mi-

crosoft 2014b).

What is defined as acceptable seeks to protect the

business from unethical consequences as well as signalling

business priorities. Kjonstad and Willmott (1995, p. 446)

argue, ‘‘the provision of codes of conduct is an insufficient,

and possibly a perverse, means of recognizing the sig-

nificance, and promoting the development, of ethical cor-

porate behaviour’’. Having set the scene for ethics as a

managerial preference, we now move on to analyse the

Microsoft Code of Ethics discursively to elaborate our ar-

gument. Again, it should be stressed that the argument is

wholly one of discursive analysis in which the text is the

thing under consideration.

Microsoft: A Case of Integrity-Based Ethics

Microsoft is named by Ethisphere Institute as ‘‘one of the

world’s most ethical companies’’ (Ethisphere 2014, Nerney

2011). It is for this reason, as well as its evident sig-

nificance in the contemporary global economy, that we

chose this firm as our empirical example. Microsoft’s code

of ethics embodies certain artefacts and cultural objects

that become visible when interrogated. To understand

Microsoft’s code of ethics more deeply, we conducted a

genealogical discourse analysis of three documents that

collectively comprise Microsoft’s ersatz code of ethics: the

Microsoft Finance Code of Professional Conduct (2014a),

Microsoft Values (2014b), and Microsoft’s Standards of

Business Conduct (2014c). Microsoft describes its Stan-

dards of Business Conduct as an extension of its Values

(Microsoft 2014b) and its ‘‘commitment to ethical business

practices and regulatory compliance’’ (Microsoft 2014c)

and its Finance Code of Professional Conduct as ‘‘princi-

ples of ethical business conduct’’ (Microsoft 2014a). The

code has not been updated since 2010 (as stated on the

website) except for the removal of any reference to former-

CEO Steve Ballmer who was signatory on a personalized

letter to Microsoft employees. The substance of his letter is

now incorporated in a generalized section on Microsoft

values.

Our argument is that Microsoft’s code of ethics aims to

ensure compliance not only with the law but also its own

corporate rules. Given that this is the case, how does the

code frame intentions in such a way that subjects (em-

ployees) will be governable, ethical, and biddable? First,

according to Microsoft’s Code of Professional Conduct

(Microsoft 2014a), the intertwining of legal compliance

58 J. Adelstein, S. Clegg

123

and Microsoft’s corporate issues are such that any viola-

tions of Microsoft’s ethical codes ‘‘may result in disci-

plinary action, up to and including termination of

employment’’ (Microsoft 2014a, b, c). The edict includes

such activities as to ‘‘share knowledge and maintain pro-

fessional skills important and relevant to stakeholders’

needs’’ (Microsoft 2014a). Interpreting this edict clearly

requires an identification of stakeholders, their needs, what

is important and relevant to them. For instance, would it be

considered to accord with the code to share knowledge

with labour organizers in supply chain plants or with the

media in an attempt to improve conditions therein? In all

probability, no: the interpretation of even a simple matter

such as what is a (legitimate) stakeholder is itself ethically

contested.

What appears to be neutral and without political will is

capable of being enacted in such a way as to be an impost on

the integrity and autonomy of organizational members

through enforcement and management of organizational risk

that enhance the interests of the organization but not neces-

sarily its employees, direct and indirect. For example, em-

ployees are not given a choice whether to share their

knowledge or to be supported by Microsoft to develop skills

that they (rather than Microsoft) may consider worthwhile;

Microsoft states in its policy that it will make these decisions

for employees and employees must abide bythem or possibly

suffer the consequences, that is, discipline or termination.

Thus, Microsoft formulates what intentions are discursively

available and manages them punitively.

Second and perhaps a little confusing, Microsoft em-

ployees are also exhorted to be ‘‘self-critical, questioning,

and committed to personal excellence and self-improve-

ment’’ (Microsoft 2014c), to self-analyse and effect change

in their behaviours. Yet, any such changes will subse-

quently be open to judgment by management. Microsoft’s

policies have the practical effect of making it the sole ar-

biter of any possible infringement of its rules. One might

be forgiven for thinking that it is ethically questionable for

Microsoft to not only try to frame the ethical subjectivity of

its employees (Clegg et al. 2007) in order to protect its

interests but also to regard those interests and its recipes for

ethicality as equal to the law. The corporation holds its

rules to be of similar status to that of a country’s laws. It is

as if Microsoft sees a potential conflict between performing

an act that is virtuous and one that is a moral obligation and

takes the choice away from its employees in favour of its

own prescribed rules.

Third, employees are to be held accountable for ‘‘com-

mitments, results, and quality to customers, shareholders,

partners, and employees’’ (Microsoft 2014b) even when

such things are outside of the control of specific indi-

viduals. So, we have an ethical dilemma in that if organi-

zational members think differently to Microsoft, they are

discouraged from exercising moral autonomy or intuition

to do what they consider to be the right thing, other than to

be puppets of the available Microsoft discourse of inten-

tions. Yet they are to be held accountable for the outcomes.

This is a far cry from creating an empowering ethics (Clegg

et al. 2007; Kjonstad and Willmott 1995) or being able ‘‘to

complement the construction and appreciation of moral

rules with the development of moral learning and the ex-

ercise of moral judgment’’ (Kjonstad and Willmott 1995,

p. 447). In the Microsoft codes, moral rules are imposed by

a commercial entity for its own interests and the exercise of

moral judgment by employees in any other terms is denied.

Because the employee’s free will to choose an ethical path

is disallowed by the organization, one would be hard

pressed to designate such codes as ethical.

Fourth, Microsoft’s code advises that before any action

is taken an employee should consult with those in positions

of authority, including the compliance and legal depart-

ments (Microsoft 2014c). By closing off discursive

boundaries for alternative interpretations of the code, the

argument for inhibiting risk through organizational practice

is established. While this closure aims to protect both

employees and the company from legal ramifications, the

law does not necessarily relate to ethics.

Fifth, Microsoft not only limits its employees’ moral

intuition but it also restricts their capacity to perform ac-

tions with which they, the employees, feel most ethically

satisfied—their satisfaction preferences (Etzioni 1986).

Etzioni (1986) claims that where individuals are not per-

mitted any choice, there is continual conflict in their choice

of satisfaction preferences. One’s sense of duty and com-

mitment may act against one’s own utility since self-wel-

fare is not instrumental in such action (Minkler 1999).

From this perspective, Microsoft, like other corporations,

effectively assumes the right to set organizational citizen-

ship rights in relation to what is probably the most central

life-interest: employment and the security generated by it.

Whatever framing of citizenship rights there may be in the

wider state and civil society that are not enshrined in law,

these are not necessarily relevant to practice. Should moral

obligation be the reason for our intentional action, we

could regard it as important to maintain a relationship of

relative equity between or among parties to the actions.

The notion of reciprocity is implied as something done for

us or that we anticipate will be done for us (see Jones 2003;

Lévinas and Smith 1999).

Management of Risk

Businesses need to move beyond a legalistic framework of

risk management and Paine’s (1994, 2003) organizational

values-regulated-by-management approach and create

Code of Ethics 59

123

empowering ethics, as suggested by Kjonstad and Willmott

(1995) as well as Clegg et al. (2007). From these per-

spectives, it is ‘‘possible to complement the construction

and appreciation of moral rules with the development of

moral learning and the exercise of moral judgment’’

(Kjonstad and Willmott 1995, p. 447). In the ethics-as-

practice (Clegg et al. 2007) approach, there needs to be

flexibility in the way a code of ethics may be interpreted

and acted upon by organizational members (Clegg et al.

2007; Gordon et al. 2009a, b). The conflict inherent in

business codes of ethics provides little leeway to do

otherwise. The ethical positions that codes incorporate and

how they conflict with each other need to be addressed,

creating possibility for individual organizational members

to exercise their moral judgment.

While the insincerity of their own rhetoric about the

organization’s ethical stance may be seductive for top

management teams, it is unlikely that rank-and-file mem-

bers will be swayed, as we have noted earlier. Such rhetoric

typically incorporates both prescriptive behaviours and

disciplinary actions for deviance with clear warnings about

levels of tolerance. Such rhetoric reveals the tacit domain

assumptions that management makes in the organization in

question. The twin compliances of legal and internal cor-

porate requirements are integrated within a single dominant

discourse of the organizational code of ethics; the gap

between the managerial prescriptions of such a code of

ethics and its interpretation in practice by organizational

members has been sealed off and denied. Such codes have

little to do with the ethical world of the individuals em-

ployed: they do not serve to enhance the moral autonomy

and integrity of organizational members so much as bind

them in subservience. Ethics become another, albeit soft,

face of corporate domination over employees, including

managers.

Bowie (1999, pp. 121–133) establishes a case for Kan-

tian ethics (of doing one’s duty) in business saying that

business managers—and we would argue other organiza-

tional members—should do ‘the right thing’ out of duty

rather than personal interest. The essence of Bowie’s ar-

gument is that if a manager claims to act out of duty and it

is later found to have acted out of self interest, then others

will be cynical about any claims made by that manager,

thereby compromising both the manager’s and the firm’s

reputations (Bowie 1999, p. 135). As Jones (2003, p. 235)

suggests, once a business manager begins the teleology of

calculating risk and benefit in making such a claim or

performing an action, such actions fall outside of the

realms of ethics.

Jones (2003) reasons that ethics have a value to business

because they can minimize risk, such as limiting legal re-

sponsibility, influencing employees through organizational

culture, managing the firm’s image and brand. However,

strategizing such value relates to governance rather than

ethical practices. Here, too, Microsoft’s codes reserve ‘‘the

right in its sole discretion to modify or eliminate any of its

Standards’ contents without prior notice’’ (Microsoft

2014c). Strategy, planning and calculating consequences

aim to benefit Microsoft, so that decisions about a par-

ticular course of action are motivated by a desire for risk

minimization. Jones (2003) argues that the notion of

strategy is problematic for ethics, since such motivations

by an organization to act ethically derive neither from

virtue nor moral obligation.

A strategic sense of business ethics is not based on

ethical intentions but on calculated instrumental benefit to

business. If being ethical is good for business, it is because

business achieves success by using ethics as a tool rather

than ‘doing the right thing’. If a particular activity has been

modified or eliminated by the code, an ethical problem

arises for any employee who has pursued an activity based

on her understanding of the code at a particular time, only

to find subsequently, by virtue of the reaction that her ac-

tions elicit, that she has violated the code, leaving her in an

untenable position with the company. Similar to the film

Alphaville (Godard 1967), what can be said or done is

infinitely reprogrammable through deletion—but only by

the authorities. It is risk management as a disciplinary

strategy embedded in the rhetoric of a code of ethics.

The flexibility of ethics depends on the circumstances.

When the calculability of ethical action for a business is

seen in a decision-making framework conceived in purely

economic terms, it is ethically questionable (Minkler

1999). Minkler discusses two motivations for action: one,

in terms of an expectation of utility (benefit) from the ex-

ternal recipient of the action; and two, from an internalized

feeling of satisfaction that will come from performing the

action (Minkler 1999, p. 4). One should not confuse such a

situation with Kant’s conception of morality or virtue’s

intentions. Instead, there is an expectation that certain

consequences will derive from an act once it is performed.

Minkler (1999) argues that regardless of whether the utility

of such an act provides benefits to others, the motivations

serve primarily to satisfy the preferences of the doer; thus,

they are hardly ethical because they lack regard for the

Other.

Microsoft’s position concerning the consultation an

employee is required to have with those in authority, spe-

cifies that the ‘‘manager, Legal and Corporate Affairs, or

the Director of Compliance’’ (Microsoft 2014c) must be

consulted ‘‘before taking any action’’ and that employees

‘‘also have a responsibility to raise compliance and ethics

concerns through our established channels’’ (Microsoft,

2014c). Only those authorities designated by Microsoft as

the arbiters of ethics—the manager Legal and Corporate

Affairs or the Director of Compliance—can decide on a

60 J. Adelstein, S. Clegg

123

course of action. Thus, not only is an employee’s moral

intuition seen to be a risky basis for making a decision but

she is also perceived as insufficiently knowledgeable to

ascertain the level of risk. Microsoft stipulates that only

those with sufficient legal (rather than moral) knowledge

can decide ethical action. Ethical domination occurs

through the specific strategy of making the discourse a

technical instrument dependent on legal training.

At Microsoft, ethics are constrained by the overarching

authoritatively determined and thus dominant code.

Equally constrained is the possibility of invoking alterna-

tive standards (Kjonstad and Willmott 1995, p. 447) that

might be implied by the moral intuition of employees. Not

all employees are equal though; some are more equal than

others. Microsoft favours some employees over others in

their capacity to adjudge whether those others are abiding

by its corporate ethical policies as part and parcel of the

stratification of ethics.

We find that Microsoft’s finance employees, plus CEO,

CFO and its Corporate Controller, hold what Microsoft

describes as ‘‘an important and elevated role in corporate

governance (that is Microsoft’s policies rather than legal

compliance) in that they are uniquely capable and em-

powered to ensure that all stakeholders’ interests are ap-

propriately balanced, protected, and preserved’’ (Microsoft

2014a). Serving and balancing stakeholder interests does

not necessarily serve ethics for pragmatic reasons: the

balancing of sometimes opposing interests by a commer-

cial organization’s top management team would be un-

likely to ignore commercial economic outcomes.

Discussion: The Ethics of Business and the Business

of Ethics

It could be suggested that business ethics is merely an

extension of the business of business, with most large

corporations presenting their codes of ethics or ethical

standards of business conduct as another part of their

websites, like a product range or a list of business partners.

It may be viewed as a cynical exercise in terms of Fried-

man’s (1970) ‘hypocritical window dressing’ in as much as

corporations want to be seen as behaving ethically, as

shown by the Ethisphere Institute awards. Most companies

advise website visitors about their code of ethics, often

using a high degree of rhetoric and with many linking

documents. Microsoft explains its values in the following

way:

As a company, and as individuals, we value integrity,

honesty, openness, personal excellence, constructive

self-criticism, continual self-improvement, and mu-

tual respect. We are committed to our customers and

partners and have a passion for technology. We take

on big challenges, and pride ourselves on seeing them

through. We hold ourselves accountable to our cus-

tomers, shareholders, partners, and employees by

honoring our commitments, providing results, and

striving for the highest quality (Microsoft 2014b).

When we analyse the above statement, we can see subtlety

in the way Microsoft strategizes risk management as

integral to its past, present and future values, through the

use of the present tense. Inclusiveness is fundamental.

These things ‘we’ value and ‘we’ continually modify ‘our’

behaviours through self-criticism and self-improvement to

ensure that ‘we’ maintain such values. Continually re-

freshed values feed into commitments, passions, pride and,

above all, accountability for all things Microsoft, such as

technology, customers, shareholders, partners and other

organizational members. Risk management the Microsoft

way underlies such unarguable beneficent traits as integri-

ty, honesty, openness, personal excellence and respect.

Microsoft positions its values as being the same for both

the company and those individuals employed by it. Given

the long history of anti-trust violations pursued against it,

both globally and in the United States, as well as the fre-

quent claims of patent infringement, it would seem that the

corporate personality does not take seriously its own in-

junctions to act ethically, or at best, disclose its ethics as

contested and contestable. For example, in July 2013, the

European Commission launched another anti-trust action

against Microsoft, this time for the practice of linking its

Internet web browser with its operating system because it

‘‘harms competition between web browsers, undermines

product innovation and ultimately reduces consumer

choice’’ (USA Today 2013).

Despite the fact that the characteristics of integrity,

honesty, openness, personal excellence, and so on, are

personal virtues, Microsoft intends that all its employees

will manifest these virtues and in so doing, these charac-

teristics will be adopted and embodied as company culture.

Arguably they are not, as indicated by the almost twenty

million plus hits that ‘legal action against Microsoft’ yields

on Google, albeit that many hits may repeat what has been

written by others. However, the company publicly states its

intentions as ethical and therefore, cannot be denoted as

intentionally unethical because it has codes in place.

However, through their interpretation and practices, Mi-

crosoft employees may be at times unethical. This limits

the legal liability of Microsoft and may be considered to fit

its risk management profile. It provides Microsoft with

potential refutation for those myriad Google hits.

Analysis of the first two sentences of its values state-

ment (Microsoft 2014b) quoted above show that Microsoft

primarily incorporates management intentions for doing

Code of Ethics 61

123

the ‘right thing’ by customers and business partners, ex-

plaining that by valuing certain characteristics as a com-

pany and as individuals, good intentions will come to

fruition and the company will be doing its duty with respect

to its customers and business partners. The other two

sentences address consequences. The third sentence de-

scribes taking on challenges and seeing them through,

which is implicit to planning and strategizing courses of

action. However, the final sentence regarding account-

ability, honouring commitments, providing results, and

striving for quality, embodies acknowledging outcomes,

whether favourable or otherwise. Not only does it entail

committing to the rationales of planning for specific out-

comes but also learning from experiences. These are clear

indications of Microsoft’s risk management strategy.

An overarching theme is that Microsoft as an organi-

zation, and the individuals it employs, professes values and

is reflective about them. It is for this reason that they can be

used as references for ‘‘constructive self-criticism’’ and

‘‘continual self-improvement’’ (Microsoft 2014b)—‘dou-

blethink’ 3 terms reflective of authoritarian regimes—such

that the claim can be made that the guiding light for actions

is moral intuition. Further, because the organization and its

individual members ‘‘take on big challenges’’ (Microsoft

2014b), they perform actions for which they may have no

prior experiences and therefore, no specific contextual

reference points. By using employees’ basic beliefs, which

are presumed to be concomitant with Microsoft values and

applying them to unfamiliar situations, such as ‘‘big chal-

lenges’’, the code suggests that until there is proof that such

big challenges cannot be achieved, the company and its

employees will see challenges through to completion. In

Roeser’s (2005, p. 238) terminology, individuals justify

their basic beliefs through infinite regression or unavoid-

able circularity.

Microsoft’s values are stated on the company website: it

and its employees embody values not only of ‘‘integrity

and honesty’’ but also take on a missionary zeal to make

others better. In other words, there ought to be a singularity

of purpose for the Microsoft family and such prescription

should be adopted by others, as Microsoft family members

help these others to improve and to do things in ‘‘the right

way’’ (Microsoft 2014c). The reasons why Microsoft has

standards of business conduct are, it states:

As responsible business leaders, it is not enough to

intend to do things right, we must also do them in the

right way. That means making business decisions and

taking appropriate actions that are ethical and in

compliance with applicable legal requirements. As

we make these decisions, the Microsoft values must

shine through in all our interactions. The Standards of

Business Conduct are an extension of the Microsoft

values and reflect our continued commitment to

ethical business practices and regulatory compliance

(Microsoft 2014c).

The statement adds an additional layer of regulatory

compliance to the company values as a rationale of its ethical

code. The webpage containing the Microsoft Standards of

Business Conduct (Microsoft 2014c) is navigated from the

Microsoft home page/about/legal and corporate affairs.

While it is obvious that one rationale for Microsoft’s stan-

dards is the legality of Microsoft actions, it may also be seen

as a way of addressing legal requirements by addressing

ethics not only as intentions and consequences but also to

pre-empt possible legal consequences if the company or its

employees are suspected or charged with illegal actions; in

other words, to manage potential risk.

Jones (2003, pp. 236–237) suggests that one limit to

business ethics is that it may be considered to be analogous

to law. In courts of law, it is judgment about the intentions

of a defendant that play an important part in judicial de-

cisions, including the degree of remorse shown by the

defendant when the outcomes of what are taken to be de-

terminations of intentions negatively affect others. The

situation is as applicable to institutional cases as it is for

individuals at a personal level. Where remorse is shown,

sentencing is lighter. In any potential legal case relating to

unethical actions by its employees, Microsoft can show

through publicly available documentary evidence that the

company’s intentions are ethical and that it exhorts its

members not only to be ethical but also to help others to

improve and to encourage their compliance with Microsoft

values. The company can show that its intentions are not

only good but also legal and thereby minimize its potential

risk exposure to actions on its behalf by its employees.

We have problematized Microsoft’s code of ethics as

our example. Now we turn to possible resolutions to the

problems we have identified in codes of ethics conceived

as vehicles for compliance with the law as well as

corporate governance preferences. While our example is

Microsoft, our analysis is applicable to other organiza-

tions as well.

Discussion: Four Resolutions to Potential Problems

of Compliance

Having discussed the problems in codes of ethics, we now

propose some resolutions. We suggest that for a code of

ethics to be an appropriate vehicle for employee compli-

ance with a country’s laws and management preferences

3 Doublethink is a term in Orwell’s dystopian novel Nineteen Eighty-

Four (1949) that rejects morality while claiming to embody it.

62 J. Adelstein, S. Clegg

123

for corporate behaviours, management needs to be trans-

parent about its intentions with its code. By virtue of their

contract for employment, organizational members experi-

ence the necessity of social and ethical alignment with the

organization with which they are affiliated.

Any code ideally elicits an emotional response to the

personal concern for ethics in employees so that they can

feel ‘that’s right!’ For this to happen, organizational

members need the opportunity to participate directly in

formulating the code, such that it is not only organizational

management’s preferences that are embedded but also

those of the ordinary member. Organizationally, a code

will be less effective in all respects (legal and governance)

if organizational members are not encouraged to participate

in its development and if discussions about ethics are not at

the forefront of decisions made by all organizational

members. By making management intentions about the

code transparent and opening up communication among all

levels of the organization about different decisions that

could be made, there is likely to be far greater ‘buy-in’ and

commitment by members to the organization, going well

beyond the formal contract for employment. We suggest

here that it is the opportunity to become involved in de-

veloping the code of ethics that is important, since we

recognize that not all members may wish to participate.

Commitment by organizational members is an emo-

tional response that is greater than any ‘rationality’ em-

bedded in the code, as Ten Bos and Willmott (2001)

suggest: the privileging of rationality of organizational

management above emotional responses by ordinary or-

ganizational members to the questions of ethical theory and

practice should be refuted. Emotion is morality’s ‘‘condi-

tion of possibility’’ (2001, p. 770) they suggest, a per-

spective also suggested by Bauman (1993), Fineman (1993,

1994, 1996), Willmott (1998) and Gabriel (2000). In line

with Fineman (1993, p. 17), Ten Bos and Willmott (2001,

p. 770) observe that without emotional involvement,

‘‘moral functioning is crushed’’. They argue against the

scientific calculability of utilitarian ethics, which claims

that actions do not have a moral value in themselves and

that it is only the consequences one needs to account for.

Instead, they suggest that the morality of actions is based

on combining both the morality and virtues of an individual

or organization in acting ethically (citing, Petrick and

Quinn 1997, p. 51). They continue that it is not only the

ethics of character that come into play but also the morally

supportive frameworks that an organization provides (Ten

Bos and Willmott 2001, p. 770). Roeser (2005, p. 234)

argues that although moral intuition may be stronger or

more convincing than reasoning and evidence, the capacity

to reason does not necessarily guarantee virtue (2005,

p. 235). Reasoning may be manipulated to serve others’

interests, whereas moral insight is still possible based on a

moral aesthetic or basic moral belief that is self-evident

(Roeser 2005, pp. 235, 237).

If rationality as prescribed is paramount to an intuitive

moral aesthetic, then can Microsoft’s codes be ethical?

Bauman (1993), Fineman (1993, 1994, 1996), Gabriel

(2000), Ten Bos and Willmott (2001) and Willmott (1998),

as well as integrity-based approaches to ethics management

under the auspices of responsible management (Paine,

1994, 2003) or ethics-as-practice (Clegg et al. 2007, 2011;

Gordon et al. 2009a, b) would suggest not. Commercial

expedience and risk management close out ethical con-

siderations and frame business as usual.

So, what can management do apart from recognizing the

necessity of compliance by members to corporate values

both legal and non-legal to ensure that members are com-

mitted to them in practice? Here, we offer four resolutions

that could be implemented by organizations concurrently.

First, rules of practice within a code of ethics can result

from democratic participation by organizational members

in their formulation and evolution rather than being ad-

ministered from on high by the legal or risk management

departments. In this way, a code of ethics can align with the

pragmatically and discursively framed moral integrity of

employees’ agreement and be seen as reciprocal between

the organization and its members. Ethics, corporate gov-

ernance and legal compliance should be clearly separate.

Not everyone will be content with the rules thus formulated

but management would at least have undertaken a demo-

cratic and participatory process. At the same time, rhetoric

needs to be couched in appropriate terms that are clear and

unambiguous, obfuscated neither by legal jargon nor ef-

fusive and vague language. Of course, the process of

consultation cannot be one of permanent negotiation: un-

derstandings that are binding need to be enacted on the

basis of premises that are acceptable to all, even if ideal for

none. In order to guard against ossification and changing

contextual circumstances (think of the problems that a code

of ethics from 25 years ago would have with anti-corporate

web-pages), there would be needed a provision for periodic

review and assent.

Second, broader conversations about ethics and ethical

decision-making need to be part of organizational training

and continuing professional development, not just to serve

corporate interests but also to address issues of corporate

sustainability relating to the environment and social equity.

As Clegg et al. (2007, p. 107) argue, organizations can try

to influence the ethical subjectivity of their members and

persuade them to act in particular ways to protect the in-

terests of the organization. Such influence can only be

successful if employees’ own ethical views are acknowl-

edged. Management can be actively involved in the process

of assisting employees to develop an understanding of

moral learning and the exercise of moral judgment through

Code of Ethics 63

123

education by ethicists rather than corporate lawyers. Legal

and Corporate Affairs should be involved in educating

employees about the legal ramifications of their ethical

decisions since that is its area of expertise. No doubt, in

most socially responsible corporations, this is a necessary

adjunct to the preparation of legally binding discursive

material. 4

Third,individualsshouldbeempowered to act accordingto

personal ethical choices and make moral judgements within

thegovernancestricturesoftheorganization.Concurrently,an

organization needs to provide morally supportive frameworks

under the auspices of ethics rather than risk management to

support organizational members. Provided that the conver-

sations about ethical decision-making are to the forefront of

professional development activities, then employees are more

likely to discuss questionable ethical decisions with others

before they are implemented. In many respects, Habermas’

(1971) ideas of the conditions of an ideal speech situation

would fit the bill. Discursive conditions would need to dis-

courage ‘monologism’ based on the precepts of office and

hierarchy and ‘a priorism’ based on managerial prerogative.

Instead, assertions would be evaluated solely on the basis of

reason and evidence in pursuit of a rational consensus framed

by agreed upon common undertakings and assumptions. As

we noted earlier, consensus may not be possible, but such

normalization should be the goal.

Fourth, a code of ethics should not be subject to

stratification according to organizational role. Admission

that members of the legal and finance departments may

have as great a need for self-reflection and self-improve-

ment, that is to manage change in their own practices, as

any other organizational member is crucial. Use of ethicists

to mediate between corporate governance interests and

ethical behaviours would support rather than detract from

the necessity for compliance by all members to legal issues

raised by the Office of Compliance. Here, ethicists could

act as consultants whose ombudsman role is activated by

organizations when rational consensus over vexed issues

breaks down among different institutional parties such as

management and unions and whose fees are jointly paid by

these parties. The nature of joint cost and responsibility is

likely to assure the minimization of vexatious claims.

Conclusion

In this paper, we sought to establish some clarity con-

cerning the pragmatic intent of codes of ethics as an im-

portant first step in their analysis and offer some possible

resolutions to problems raised. Doing this constitutes our

contribution to the fields of organization studies and busi-

ness ethics. We recognize that one of the limitations of this

paper is that we do not address the impact that a general-

ized code of ethics, such as Microsoft’s, has on its em-

ployees for the simple reason that our paper is resolutely

not an empirical case study nor is it our intention to offer it

as such. Moreover, the materials that we have assessed are

limited to the various codes that Microsoft publishes. Ex-

cluding other internal forms of communication in which

these codes are discussed, such as workshops, seminars,

training and induction, as well as specific forums in which

they are discussed, is an obvious limitation. A text as a text

means nothing without enactment, and the sites of enact-

ment constitute a rich furrow worth ploughing in research

terms (see Helin et al. 2011).

We have chosen to discuss Microsoft not because we

think its codes of ethics are particularly bad but because of

the way that Microsoft prudentially embeds a strategy of

risk management in the code. Stratification of a code of

ethics means that organizational members are treated dif-

ferently according to their risk profile. As we have seen in

the Microsoft example, demands for ethical behaviours

among organizational members to align with documented

organizational values are different for finance and legal

employees. Rather than being seen as the subjects for or-

ganizational compliance, they, along with executive man-

agement, are the managers (arbitrators) of ethics and the

gatekeepers of the code where transference of values is

sustained.

One might ask whether ethical principles can be ra-

tionalized and whether codes of ethics are merely window

dressing for strategies of risk management? If this is the

case, and it seems likely that it is, then an organizational

code of ethics that ties legality with corporate compliance

and denies legitimacy to organizational members’ moral

intuition will continue to be stratified in its focus on or-

ganizational members, selective in its disciplinary actions,

as well as remaining a vehicle for the shady workings of

organizational risk management. Compliance with the law

is expected for all employees, regardless of their seniority

or their moral intuition or their ethical satisfaction prefer-

ences, since the intent of the laws of the land is for the

greater good. In addition, organizations need standards of

practice and governance but they need to be recognized as

distinct and separate from legal compliance.

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