Institutionalizing ethics within corporations

Ethics

The first action, to acknowledge the importance of conducting business morally and that ethical behavior should flow from the top down, unequivocally, speaks to the social disorganization theory. This theory espouses that criminal activity occurs when social order breaks down. Therefore, it is important that management establish a strong social order. They themselves must be the leaders of the social order, in order to establish precedents of good behavior. If top management equivocates on issues of criminality, then the rest of the corporation can expect to do the same. Moreover, the theory applies to the larger group of corporations as a singular entity. Each corporation can be considered a member of the corporate community. Therefore, each must set the standards of behavior and social order. Should one corporation begin to deviate, others will follow. The deviation will occur because a corporation or individual within a corporation will fail to acknowledge the necessity of conducting business morally. When that happens, the social order begins to break down. The incidence of fraud, in particular, will become more prevalent if corporations see that other corporations are committing fraud. Conversely, unequivocal intolerance of fraud among managers will result in a reduction of fraud.

The second action, to encourage their members to take moral responsibilities seriously, relates to the control theory of criminology. This theory states that crime emerges in the absence of control and shrinks in the presence of control. Corporations therefore can take many steps to encourage moral responsibility, by exercising control at certain points. If employees receive steady encouragement, this is the presence of control on behavior. At other times, the absence of control can be used to promote positive actions. The absence of punishment for whistle-blowing or consideration of moral elements of corporate decisions can promote such activities. When these activities flourish, the corporation will be fulfilling the second action. Corporations must thus be cognizant of the ways in which they can use the presence of absence of control mechanisms to attain ethical goals and encourage moral responsibility. Fraud can occur when an employee acts in self-interest or what he or she perceives to be the interest of the corporation. However, the presence of anti-fraud controls and the absence of anti-whistleblower policies will allow for corporations to weed out employees engaging in fraud.