Ethical Culture: What, Why and How?

Elizabeth Sheedy

What makes people behave unethically and even unlawfully in the workplace? And to what extent is this driven by characteristics of the individual (bad apples) or the nature of the workplace itself (bad barrels)? Increasingly, research is highlighting the importance of the latter, although it is likely that both are at play.

These questions are particularly asked with reference to the financial services industry. Scandals relating to the mis-selling of financial products to consumers and market manipulation have been thoroughly documented (see, for example, Salz 2013). But a study by Labaton Sucharow (2015) of financial services professionals in the US and UK suggests that, if anything, unethical behaviour continues and may even be increasing. Twenty-three percent of respondents believed it likely that fellow employees have engaged in illegal or unethical activity in order to gain an edge (versus only 12% in 2012). In the UK, 32% of individuals said they would be likely to engage in insider trading to earn US$10 million if there was no chance of getting arrested, compared with 24% of respondents from the US.

Traditionally, economists have tried to understand criminal or immoral