ABSTRACT. Codes of ethics exist in many, if not the majority, of all large U.S. companies today. But how the impact of these written codes affect managerial attitudes and behavior is still not clearly documented or explained. This study takes a step in that direction by proposing that attention should shift from the codes themselves as the sources of ethical behavior to the persons whose behavior is the focus of these codes. In particular, this study investigates the role of code familiarity as a factor impacting the influence of an ethics code on manager behavior. Data collected from 286 executives from companies in the direct selling industry are used to test hypotheses (1) that the perceived usefulness of ethics codes is positively related to the degree of familiarity with the code, and (2) that ethical climate as assessed by managers is positively related to the code’s perceived usefulness. Both hypotheses are supported, and their implications and further research directions are discussed. KEY WORDS: code of ethics, ethical behavior of managers, ethical climate, ethics code familiarity, ethics in direct selling Codes of ethics have become commonplace in today’s business world. Studies show that the vast majority of large U.S. companies as well as industry and professional associations have written documents labeled as codes of ethics or codes of conduct (Benson 1989; Kohls, Chapman, and Mathieu 1989; Trevino et al. 1999; Weaver 1993). But the evidence on whether these codes have contributed to improved ethical behavior in business is sketchy and mixed, as noted in more detail below. What is required so that codes of ethics will have an impact on managers’ attitudes and behavior? What is it beyond the codes themselves that contribute to a stronger ethical climate in an organization? This study offers some answers to those questions. Purposes of codes of ethics Codes of ethics can serve three major purposes in organizations. These include demonstrating a concern for ethics by the organization, trans- mitting ethical values of the organization to its members, and impacting the ethical behavior of those members. Figure 1 describes this process, growing out of the organization’s concern about ethics and concluding with some intended impact on the organization’s ethical climate. Demonstrating a concern for ethics Perhaps the most obvious and tangible way for an organization to signify that it is concerned about ethics is to create a document called a code of ethics or a code of conduct. As discussed by Weber (1981), an ethics code can serve to insti- tutionalize ethics in the corporation. The code thus created and made known is a major method to reflect the corporation’s desire to project a sense of responsibility, to signify a positive ethical climate to employees, to respond to and to antic- ipate external demands and pressures from stakeholders and various groups in the organiza- tion’s environment (Raiborn and Payne, 1990). Thus, as noted in Figure 1, the demonstration of a concern for ethics is the fundamental purpose for creating a code of ethics in many organizations. Much of the early research on ethics codes concentrated on what topics or contents appeared in these codes and how those The Impact of Ethics Code Familiarity on Manager Behavior Journal of Business Ethics 33: 59–69, 2001. © 2001 Kluwer Academic Publishers. Printed in the Netherlands. Thomas R. Wotruba Lawrence B. Chonko Terry W. Loe