2.2 How Organizations Influence Ethical Conduct
- How can organizations encourage ethical business behavior?
People choose between right and wrong based on their personal code of ethics. They are also influenced by the ethical environment created by their employers. Consider the following headlines:
- Investment advisor Bernard Madoff sentenced to 150 years in prison for swindling thousands of clients out of more than $65 billion. He passed away in prison in 2021.
- Volkswagen CEO, Martin Winterkorn, resigned after the company was ordered to pay over $30 billion for deceptive software designed to mislead consumers about the environmental impact of their vehicles.
- Renaud Laplanche, the founder of Lending Club, is fired because of misrepresentation of data to investors and deceptive loan practices to consumers.
- Wells Fargo CEO John Stumpf resigned after company employees opened more than 2 million fake accounts to meet aggressive sales targets.3
As these actual stories illustrate, poor business ethics can create a very negative image for a company, can be expensive for the firm and/or the executives involved, and can result in bankruptcy and jail time for the offenders. Organizations can reduce the potential for these types of liability claims by educating their employees about ethical standards, by leading through example, and through various informal and formal programs.
Leading by Example
Employees often follow the examples set by their managers. That is, leaders and managers establish patterns of behavior that determine what’s acceptable and what’s not within the organization. Ben Cohen, co-founder of Ben & Jerry's ice cream, instituted a policy that no one could earn a salary more than seven times that of the lowest paid employee. He wanted upper management to work toward increasing pay for all employees in order to retain a higher salary themselves. This meant that the CEO of Ben & Jerry's was making around $150,000 at the time—while executives at other companies might be earning millions. Cohen's actions helped shape the ethical values of Ben & Jerry's. Although acquired by Unilever in 2021, Ben & Jerry's still retains the reputation of having ethical practices and leadership.
Offering Ethics Training Programs
In addition to providing a system to resolve ethical dilemmas, organizations also provide formal training to develop an awareness of questionable business activities and practice appropriate responses. Many companies have some type of ethics training program. The ones that are most effective, like those created by PepsiCo, Hershey, and Procter & Gamble, begin with techniques for solving ethical dilemmas such as those discussed earlier. Next, employees are presented with a series of situations and asked to come up with the “best” ethical solution. One of these ethical dilemmas is shown in Table 2.1. According to a survey by the Ethics Resource Center, most U.S. companies provide some sort of ethics training for employees, with nearly 80 percent providing this training targeting new managers.4
| An Ethical Dilemma Used for Employee Training |
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| Robin was a middle manager of a large manufacturer of lighting fixtures in Newark, New Jersey. Robin had moved up the company ladder rather quickly and seemed destined for upper management in a few years. Robin's boss, Taylor, had been applying pressure about the semiannual reviews concerning Misha, one of Robin's employees. Taylor, it seemed, would not accept any negative comments on Misha's evaluation forms. Robin had found out that a previous manager who had given Misha a bad evaluation was no longer with the company. As Robin reviewed Misha's performance for the forthcoming evaluation period, there were many areas of subpar performance. Moreover, a major client had called recently complaining that Misha had filled a large order improperly and then had been rude to the client when they called to complain. |
Discussion Questions
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Establishing a Formal Code of Ethics
Most large companies and thousands of smaller ones have created and distributed codes of ethics. In general, a code of ethics provides employees with the knowledge of what their firm expects in terms of their responsibilities and behavior toward fellow employees, customers, and suppliers. Some ethical codes offer a lengthy and detailed set of guidelines for employees. Others are not really codes at all but rather summary statements of goals, policies, and priorities. Some companies have their codes framed and hung on office walls, included as a key component of employee handbooks, and/or posted on their corporate websites.
Do codes of ethics make employees behave in a more ethical manner? Some people believe that they do. Others think that they are little more than public relations gimmicks. If senior management abides by the code of ethics and regularly emphasizes the code to employees, then it will likely have a positive influence on behavior.
The “100 Best Corporate Citizens” as ranked by 3BL's annual report are selected based on 219 factors across seven categories, including climate change, employees, environment, governance, human rights, stakeholders and society, and overall performance.5 The top corporate citizens in 2025 were:
- HP Inc.
- Ingersoll Rand
- Owens Corning
- Dell Technologies
- Graphic Packaging Holding Company
- The Hershey Company
- Intel Corporation
- Jones Lang LaSalle (JLL)
- Hewlett Packard Enterprise (HPE)
- CBRE Group
Customer Satisfaction and Quality
Campbell’s Adds CSR to Its Recipe
The Campbell Soup Company is no longer just about traditional cans of processed soup. Under the guidance of its management team, particularly its former CEO Denise Morrison (Morrison retired from Campbell’s in May of 2018), Campbell’s has undergone a transformation that includes a strong emphasis on organics and fresh food—and a large serving of corporate citizenship.
Once recognized in the Best Corporate Citizens rankings, Campbell’s is working to make sustainability and transparency part of its business DNA, and this culture shift has had an important influence on the company’s business strategies.
Morrison, who took over as CEO in 2011, is a firm believer in the company’s central vision: real food that matters for life’s moments. “We can make a profit and make a difference, and we are doing both through our business . . . in a way that’s authentic, that’s transparent, and that truly matters,” she explains.
Under Morrison’s watch, the company acquired several fresh food and organic companies, including Bolthouse Farms, one of the largest suppliers of fresh carrots in the United States, and Pacific Foods of Oregon, which produces organic soups. Tracking the strong change in consumer preference for healthier food, Campbell’s continues to be on the lookout for strategic acquisitions that align with this goal to help solidify the company’s reputation for fresh ingredients with millennials and their families.
Inherent in the company’s reinvention is the strong emphasis on corporate citizenship—doing good and giving back seem to be top priorities for Campbell’s. In addition to acquiring sustainable and fresh food companies, Campbell’s has also made a conscious decision to support the communities where their employees live and work. For example, the company launched a healthy communities initiative in Camden, New Jersey, where Campbell’s is headquartered—an urban city that has seen its share of economic and social challenges in the past. In partnership with several local organizations, this initiative has helped fund community gardens, food pantries, nutrition education, and cooking classes that help build healthy communities. The Camden experience has been so successful that the company has expanded the program to other cities where it operates, including Detroit, Michigan, and Norwalk, Connecticut.
The company’s ongoing commitment to fresh food, community involvement, and corporate social responsibility has helped change the narrative when it comes to being a sustainable and ethical organization.
- How does Campbell Soup Company’s recent business acquisitions help support its CSR strategies?
- Provide examples of how the company’s transformation from a processed food giant to a purveyor of fresh ingredients can help attract a new group of customers.
Sources: “Corporate Responsibility and Sustainability Are Good for Business,” https://www.campbellsoupcompany.com, accessed June 27, 2017; “Campbell Soup Wants to Make You a Personal Eating Plan (video),” Fortune, https://fortune.com, May 2, 2017; Don Seiffert, “Campbell Soup CEO Makes 3 Predictions about the Future of Food,” Boston Business Journal, https://www.bizjournals.com, April 13, 2017; Aaron Hurst, “How Denise Morrison Took Processed Food Icon Campbell’s on a Fresh Food Buying Spree,” Fast Company, https://www.fastcompany.com, March 2, 2017; Abigail Stevenson, “Campbell Soup CEO: Stunning Disruption in the Ecosystem of Food,” CNBC, https://www.cnbc.com, July 21, 2016; Richa Naidu and Svea Herbst-Bayliss, “Campbell Soup Names Industry Veteran Mark Clouse as New CEO,” Reuters, https://www.reuters.com, accessed January 23, 2026.
Making the Right Decision
In many situations, there may be no simple right or wrong answers. Yet there are several questions you can ask yourself, and a couple of self-tests you can do, to help you make the right ethical decision. First, ask yourself, “Are there any legal restrictions or violations that will result from the action?” If so, take a different course of action. If not, ask yourself, “Does it violate my company’s code of ethics?” If so, again find a different path to follow. Third, ask, “Does this meet the guidelines of my own ethical philosophy?” If the answer is “yes,” then your decision must still pass two important tests.
The Feelings Test
You must now ask, “How does it make me feel?” This enables you to examine your comfort level with a particular decision. Many people find that, after reaching a decision on an issue, they still experience discomfort that may disrupt sleep or create unsettling feelings. Those feelings of conscience can serve as a future guide in resolving ethical dilemmas.
The Headline or Social Media Test
The final test involves the top-of-page news headline or social media posts. The question to be asked is how an objective reporter would describe your decision in a front-page newspaper story, an online media site, or a social media platform such as X or Facebook. Some managers rephrase the test for their employees: How will the headline read if I make this decision, or what will be the reaction of my social media followers? This test is helpful in spotting and resolving potential conflicts of interest.
Concept Check
- What is the role of top management in organizational ethics?
- What is a code of ethics?