Company Culture and Ethics
INTRODUCTION
On September 12, 2002, Tyco International’s former chief executive officer L. Dennis Kozlowski and former chief financial officer Mark H. Swartz have been arrested and charged with stealing more than $170 million from the company as well as more than $430 million through false sales of Tyco stock and covering the information from shareholders. Kozlowski and Swartz were charged with more than thirty counts of wrong doing. Hence, Tyco scandal was one of the most notorious of the early 2000s.
Consequently, companies need to be alert of any changes in their culture, predominantly with regard to ethical behavior. For example, according to George P. Jones (2003), if sales personnel who aggressively book revenue are consistently rewarded while those who take a more conservative approach are left behind, one may expect to find problems in the company’s revenue classifications and related financial figures.
Furthermore, corporate culture is how a corporation thinks the business should be ran. Senior management always has a belief that a firm owed it to its shareholders to get as much profit as possible forgetting that the company’s corporate culture is as important as the profit making.
In Tyco’s case, the CEO, Kozlowki was the second-highest-paid CEO, but his lack of conservativeness, his aggressive business style and his extravagant way of living, did raise some red flags and indicated that Kozlowski was acting unethically by manipulating the company’s financials and using the company’s money unethically.
According to Whelan G. (2012), as MULTINATIONAL CORPORATIONS (MNCs) have become more numerous, more powerful, and more variously engaged (Dunning & Lundan, 2008; Roach, 2005; UNCTAD, 2010), and as their global operating context has changed (Kobrin, 2005; Ruggie, 1982, 2008a), so too have the normative demands commonly made of them. Within the business ethics and business and society literatures for example, the belief that
On September 12, 2002, Tyco International’s former chief executive officer L. Dennis Kozlowski and former chief financial officer Mark H. Swartz have been arrested and charged with stealing more than $170 million from the company as well as more than $430 million through false sales of Tyco stock and covering the information from shareholders. Kozlowski and Swartz were charged with more than thirty counts of wrong doing. Hence, Tyco scandal was one of the most notorious of the early 2000s.
Consequently, companies need to be alert of any changes in their culture, predominantly with regard to ethical behavior. For example, according to George P. Jones (2003), if sales personnel who aggressively book revenue are consistently rewarded while those who take a more conservative approach are left behind, one may expect to find problems in the company’s revenue classifications and related financial figures.
Furthermore, corporate culture is how a corporation thinks the business should be ran. Senior management always has a belief that a firm owed it to its shareholders to get as much profit as possible forgetting that the company’s corporate culture is as important as the profit making.
In Tyco’s case, the CEO, Kozlowki was the second-highest-paid CEO, but his lack of conservativeness, his aggressive business style and his extravagant way of living, did raise some red flags and indicated that Kozlowski was acting unethically by manipulating the company’s financials and using the company’s money unethically.
According to Whelan G. (2012), as MULTINATIONAL CORPORATIONS (MNCs) have become more numerous, more powerful, and more variously engaged (Dunning & Lundan, 2008; Roach, 2005; UNCTAD, 2010), and as their global operating context has changed (Kobrin, 2005; Ruggie, 1982, 2008a), so too have the normative demands commonly made of them. Within the business ethics and business and society literatures for example, the belief that