Abstract
There has been a recent hype in the business world which centres on corporate governance and codes of conduct as well as the voluntary adoption of best principles to pursue sound business practice. Research to date has largely focused on providing insights into the contents of various codes of conduct while only a few studies have adopted a theory-based argument. To address this gap, we use the theoretical lens of signaling theory and presume that adopting codes of conduct can be understood as a clear market signal with positive implications for a company’s reputation. In addition, this research places a major focus on ‘innovation’ in codes of conducts - an issue which has largely been neglected in previous studies. We contentanalyzed 150 codes of conducts, taken from the web-sites of internationally operating companies and showed that 60 of them contain references to innovation. The mere number of mentions might already signify that innovation is likely to become part of industry-wide shared codes of conduct which potentially influence competitive action. However, future research should be built on a theoretical framework with testable propositions. Based on market signaling theory,we adress research issues as well as managerial implications.