Do Ethics and Innovation Correlate?

David Gebler of ethics firm Working Values acknowledges that none of the Top 20 Firms to Work for are members of the Ethics and Compliance Officers Association (ECOA) and only half of the Most Admired Companies have ECOA membership. Nevertheless, he asserts a linkage between ethics and innovation. To support the assertion, he cites Frank Daly at last year's ECOA conference--Daly argued that there may be a better linkage between employee happiness and ethics than between a formal ethics program and ethical behavior. Following Daly's line of argument, Gebler says that trust is based on respect and open communication and that satisfied employees will act ethically to protect their organization. Additionally, an environment of openness, respect and trust will encourage greater levels of creativity. By contrast, adding on ethical expectations to a "dog eat dog" management approach has an uncertain prospect of success as many employees might feel that they have to choose between competing goals.

Gebler's piece is well-thought out, especially for businesses and organizations in knowledge activities such as high-tech businesses, accounting firms and universities. Among other things, his arguments address both the incentive and rationalization points of the fraud triangle--trust and respect reduce the incentive to cheat and wanting to protect an organization is the opposite viewpoint of rationalizing fraudulent behavior.