Symbolic or substantive document? The influence of ethics codes on financial executives' decisions
Article first published online: 17 DEC 2004
Copyright © 2004 John Wiley & Sons, Ltd.
Strategic Management Journal
Volume 26, Issue 2, pages 181–195, February 2005
How to Cite
Stevens, J. M., Kevin Steensma, H., Harrison, D. A. and Cochran, P. L. (2005), Symbolic or substantive document? The influence of ethics codes on financial executives' decisions. Strat. Mgmt. J., 26: 181–195. doi: 10.1002/smj.440
- Issue published online: 17 DEC 2004
- Article first published online: 17 DEC 2004
- Manuscript Revised: 16 JUL 2004
- Manuscript Received: 7 MAY 2003
- executive decision-making;
- ethics codes
With the recent spate of scandals resulting from the questionable behavior of corporate leaders, there have been calls for various governance mechanisms including ethics codes to guide executive decision-making. However, the extent to which ethics codes are actually used by executives when making strategic choices as opposed to being merely symbolic is unknown. We develop our hypotheses by combining stakeholder management theory and the theory of planned behavior, and test them with a survey of 302 senior financial executives (e.g., CFOs, VPs of Finance). We find that financial executives are more likely to integrate their company's ethics code into their strategic decision processes if (a) they perceive pressure from market stakeholders to do so (suppliers, customers, shareholders, etc.); (b) they believe the use of ethics codes creates an internal ethical culture and promotes a positive external image for their firms; and (c) the code is integrated into daily activities through ethics code training programs. The effect of market stakeholder pressure is further enhanced when executives also believe that the code will promote a positive external image. Of particular note, we do not find that pressure from non-market stakeholders (e.g., regulatory agencies, government bodies, court systems) has a unique impact on ethics code use. Copyright © 2004 John Wiley & Sons, Ltd.