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Ethics and corporate governance: an Australian handbook
Abstract
Ethics and Corporate Governance is an eminently practical handbook. It distils the principles of ethics for busy people and students, and show how they can be applied without oversimplifying nor becoming overly theoretical. The book focuses on the need for a strong adherence to codes of corporate governance in a rapidly deregulating and globalising world. It seeks to persuade the sceptical businessperson or professional that clear and practical ethical codes do actually contribute to a healthier bottom line. Illustrated with vignette cases throughout and a whole chapter of key cases, Ethics and Corporate Governance provides the perfect blend of demystification of the knotty issues and clear practical advice.
... Milton-Smith (1997) argued that corporate governance has developed into an expectation of setting higher standards of accountability for decision-makers in response to the public demand for greater transparency. This proposition is supported by Francis (2000) who noted that the term ''corporate governance'' has come to imply good, in both the non-moral as well as the moral sense. Corporate governance in the non-moral sense has come to mean efficient decision-making, appropriate resource allocation, and strategic planning, whereas in the moral sense, corporate governance has come to be seen as promoting an ethical climate, due diligence, and an attention to directors' duties. ...
... The increased expectations of society on the roles and accountabilities of organizations have resulted in an increased focus on governance by these organizations, as a method of ensuring and protecting their reputation. Authors such as Francis (2000) and Hopen (2002) suggested that the day-to-day management of an organization's ethics can be seen as a critical determinant of success, as it is linked to the reputation that the organization will have with all key stakeholders. Any unnecessary tensions, adverse publicity, and damage to one's reputation that flow from any breach of the organization's ethics work to the detriment of good governance. ...
... 70). Francis (2000) reinforced this argument stating that; ''the notion of conflict of interest is where a reward or belief (real or perceived) is likely to compromise the objectivity of commercial judgment. It is the institution of this inequitability in the conflict of interest that offends our sense of moral propriety'' (p. ...
b>Purpose – The purpose of this paper is to discuss how the relationship between sport and business has increased the complexity of ethical issues affecting contemporary sport management. Specifically, this paper seeks to define conflict of interest and how it is manifested in both business and sport.
Design/methodology/approach – The paper provides a conceptual discussion of the issue of conflict of interest as it relates to the management and governance of sports organizations. Relationships between business ethics, governance and sport management are examined in the quest to understand conflict of interest and its prevalence in and relevance to sport management.
Findings – Conflicts of interest within the sport industry may have the same structural elements as those occurring in mainstream business, such as benefits, obligations and issues of trust, but it is the higher societal expectations and values placed on sport and sporting organizations that provide the key points of difference.
Practical implications – Through collaboration with sport management practitioners, via inductive in-depth research, a clearer definition of conflict of interest and the range of situations in which it may occur can be developed. It is through a continued research effort in this area that sport managers will be better able to both identify and manage conflicts of interest as they occur.
Originality/value – It is the lack of definitive examples or guidelines for recognition of an actual or a potential conflict of interest that appears to cause the greatest confusion within sport management. By drawing together the key concepts found within the extant literature, a clearer understanding of what constitutes a conflict of interest is provided by this paper. <br /
... In the field of corporate governance, the discussion has been centered around the agent problems caused by the separation of ownership and control, such that managers may not always act in the interest of shareholders (Bhimani, 2008). La Porta et al. (1997;2000;2002) developed a "law and finance perspective" and extended their research beyond the firm level to the national level by including country-specific variables, namely the degree to which shareholders' rights are defined and protected by law, thus specifically addressing another agency conflict between controlling and minority shareholders. Davis et al. (1997) introduced the stewardship perspective which contracts the agent view of corporate governance and stated that managers act as stewards of the resources entrusted to them by stakeholders and thus are responsible for acting in the stakeholders' best interest. ...
... Alone, the human Dao approach may not bring effective corporate governance. Francis (2000) described the connection between governance and ethics: "Corporate governance, as a term, has come to imply good, in the non-moral as well as the moral sense. Its nonmoral applications include efficient decision-making, appropriate resource allocation, strategic planning, and so on. ...
Although the concept of corporate governance began with the emergence of corporations, the concept of governance can be traced back to ancient China. Currently, discussions of this topic focus mainly on the differences between approaches to and theories about corporate governance and examine their effectiveness, an integrated view that draws on Chinese theories and cultures is missing. This paper attempts to address the gaps by conceptually synthesizing insights from ancient Chinese philosophies to construct an integrated framework; it further defines the legal and ethical constraints while incorporating both an ancient Chinese (i.e., Eastern) philosophical perspective and Western governance elements and both national-level and firm-level variables. Drawing on institutional theory (Scott, 1995, 2004, 2008a, 2008b) and considering the interaction of legal and ethical constraints, a model — the ethical-legal model — constructs and categorizes corporate governance approaches into four types driven by different types of institutions and compares how these approaches are related to different governance perspectives (agent, stewardship and stakeholder). An autonomous (Wu Wei) governance approach is trigged when the cognitive institution is formed as a result of high levels of both legal and ethical constraints and drives autonomous corporate governance with a shift in focus from compliance to commitments
... Some empirical and theoretical literatures have examined the relationship between CG and financial performance. Some scholars have argued that CG affects firm financial performance (Gompers et al., 2003, Lei & Song, 2004, Black et al., 2005, Zeitun, 2009, Bubbico et al., 2012, Lee et al., 2015, Cruz, et al., 2015. ...
... This result encourages investors to make their investments with greater awareness and reduced risk. Gompers et al. (2003) investigated shareholder rights as the CG mechanism for U.S.A 1500 large firms from 1990 to 1999. The researchers use 24 governance rules by constructing a GI as a proxy for the level of shareholder rights. ...
... Francis (Francis, 2000) has identified the differences between morals, ethics, and values: The terms ethics and morals are many a times used indistinguishably, although one can determine the differences. Generally, 'morals' refers to the standards which are generally considered acceptable by the community, mostly in a form that is clearly unarticulated, whereas, 'Ethics' refers to explicitly defined codes of conduct and the value systems. ...
... Ethics is a well-defined form of behavior and attitude intended to produce desired results and acts in resonance with particular values. There are two forms of values: admirable values (like success or wealth) and there are some other values like fairness or honesty (Francis, 2000). ...
... Francis (Francis, 2000) has identified the differences between morals, ethics, and values: The terms ethics and morals are many a times used indistinguishably, although one can determine the differences. Generally, 'morals' refers to the standards which are generally considered acceptable by the community, mostly in a form that is clearly unarticulated, whereas, 'Ethics' refers to explicitly defined codes of conduct and the value systems. ...
... Ethics is a well-defined form of behavior and attitude intended to produce desired results and acts in resonance with particular values. There are two forms of values: admirable values (like success or wealth) and there are some other values like fairness or honesty (Francis, 2000). ...
Leadership sets the ethical code of conduct which acts as a guide for the employees in an organisation. The sale force is the key driver of revenue for most of the organisations. Yet, less empirical research till date has focused on establishing the relationship between the ethical behaviour of the leaders and its relationship on the sales force performance. The present research focuses on studying the relationship between the varying degrees of ethical leadership and the sales force outcome mediated by the level of trust they have on their leaders. A primary survey was conducted of 147 sales employees from different sectors mostly from Maharashtra, India. The findings indicate that ethical leadership has a considerable impact on sales performance of employees and there is a substantial increase in sales outcomes when trust acts as a mediator between them.
... Francis (Francis, 2000) has identified the differences between morals, ethics, and values: The terms ethics and morals are many a times used indistinguishably, although one can determine the differences. Generally, 'morals' refers to the standards which are generally considered acceptable by the community, mostly in a form that is clearly unarticulated, whereas, 'Ethics' refers to explicitly defined codes of conduct and the value systems. ...
... Ethics is a well-defined form of behavior and attitude intended to produce desired results and acts in resonance with particular values. There are two forms of values: admirable values (like success or wealth) and there are some other values like fairness or honesty (Francis, 2000). ...
... Francis (Francis, 2000) has identified the differences between morals, ethics, and values: The terms ethics and morals are many a times used indistinguishably, although one can determine the differences. Generally, 'morals' refers to the standards which are generally considered acceptable by the community, mostly in a form that is clearly unarticulated, whereas, 'Ethics' refers to explicitly defined codes of conduct and the value systems. ...
... Ethics is a well-defined form of behavior and attitude intended to produce desired results and acts in resonance with particular values. There are two forms of values: admirable values (like success or wealth) and there are some other values like fairness or honesty (Francis, 2000). ...
... To pick and choose a theory simply to justify a decision is consistent with what Benjamin identifies as the moral opportunists, constantly shifting their moral position so as to gain the most significant short-term advantage (French and Granrose, 1995: 166-169). Velasquez (1998) and Francis (1999) suggest that decision making needs to reflect a holistic approach, which seeks to identify ethical implications from all three major approaches. Both agree that the first step is to collect the facts surrounding an issue and ensure that we have clarified the decision context. ...
... As with any skill, the more attention given to developing ethical decision-making skills the more effective they will be. Francis (1999) suggests that two further tests can be applied if there is still uncertainty, both dealing with your decision, and perceptions that are relevant to making project procurement decisions. ...
... He describes the term "morals" on the other hand as standards held by the community, often in a form not explicitly articulated. Ethical principles can stem from consideration of principles at two levels: high level principles such as equitability, dignity and honesty and second level principles such as the avoidance of conflicts of interest when making commercial decisions (Francis 2000). ...
... Criticism of Kohlberg's work includes arguments that cognitive development is not the only contributor to ethical development, that the work is based on western ideologies and ethnocentrics (Langford 1995), that it fails to properly address gender differences (Francis 2000) and social experience (Gilligan 1982). Researchers have therefore moved from a sole focus on individual cognitive development as a predicator of individual behaviour (Kelloway et al. 1999). ...
The purpose of this paper is to describe the analytical framework and methodology of a proposed study of the ethical reasoning of financial planners and the cognitive frameworks used to make ethical decisions in the provision of financial planning advice. The framework will draw on previous studies of individual characteristics such as ethical reasoning and the values and ethical development of a financial planner and consider the influence of situational and contextual factors such as organisational ethical climate and culture and the formal and informal control systems within an organisation. This is a significant study because the relationships financial planners have with their clients and the ethical framework that underpins them are pivotal to the ability of the financial planner to provide professional and effective independent advice.
... Following Francis (2000), morals are standards of reference that are defined by the community within which the person resides. Ethics on the other hand, are value systems and explicit codes of conduct. ...
In examining the affective-cognitive process of ethical decision-making, this study gives a better understanding of how people can take the same information and end up with different decisions, in particular, how different individuals within the same environment can act in both ethical and unethical ways, despite the pressures and expectations of others.
This study integrates emotion into the ethical decision-making process, which traditionally has been conceptualised and studied as purely cognitive. Only recently has research started to move away from the view that emotion interferes with the development of a professional ethic. This study provides support to this new conceptualisation of ethical deliberation, one where emotion and anxiety, in particular, is central to the decision to perform unethical actions.
Furthermore, very few studies have looked at the specific decision considerations that decision-makers focus on when choosing a course of action. Similarly, little research has addressed the role of anxiety in ethical decision-making. Past literature has largely focused on attitudes and moral development. This research shows that a better understanding of the motivations behind one’s behaviour and the anxiety one feels when faced with an ethical dilemma can add further value to ethical decision-making frameworks. Attitudes can facilitate a positive view of an action or potential outcome but they do not guarantee a desire to act.
... The concept of corporate governance gained prominence in the 1980s, when stock market crashed in different parts of the world, and corporations failed due to poor corporate governance (Francis 2000). This forced for change to corporate governance codes, as there was a change of attitude and much higher performance expectations were being placed on management boards as they are expected to hold the responsibility to ensure that firms are run effectively and in the right direction. ...
... The concept of corporate governance gained prominence in the 1980s, when stock market crashed in different parts of the world, and corporations failed due to poor corporate governance (Francis 2000). This forced for change to corporate governance codes, as there was a change of attitude and much higher performance expectations were being placed on management boards as they are expected to hold the responsibility to ensure that firms are run effectively and in the right direction. ...
... They are able to bring about changes in behaviour through their influence, which would not have occurred without their presence and actions (Dobel,1998). According to Francis (2000) leadership is crucial to ethical behaviour. Being in a position of power, a leader is able to have influence out of proportion with their individual worth. ...
The ethics of business practice and leadership in organizations has once again fallen under the spotlight in organisational practices. Over the past decade the spectacular collapses of Enron, WorldCom in the United States and HIH Insurance in Australia have raised questions of not only governance practices in corporations but also the notion of ethical leadership. The business leadership practices of corporate high fliers such as Kenneth Lay and Jeffrey Skilling of Enron, and Bernard Ebbers of WorldCom as well as Ray Williams and Rodney Adler who were involved in Australia's largest corporate collapse of the HIH group, once again put into question the concept of ethics in leadership, particularly in regard to unethical business practices and narcissistic leadership approaches (De Vries, 2004, 1985; Maccoby, 2004, 2000). The contention of this paper is that ethical leadership practices are a foundation stone for developing sound leadership practices aimed at building enduring organizations and businesses. The paper will identify a concept of contemporary leadership practice, the nature of ethical leadership, the nature and stages of development of ethical decision making; the prime arena of ethical leadership within the organisational context, and finally the paper will outline the principles that support ethical leadership as well as final conclusions to be drawn.
... Governance is essentially concerned with the structures and processes for decision-making, accountability, control and behaviour at the top of organisations (Armstrong and Francis 2004b;Armstrong and Francis 2004a (Francis 2000). As the ASX (2003) states p.3 'There is a basic need for integrity among those who can influence a company's strategy and financial performance, together with responsible and ethical decision-making'. ...
Despite the introduction of legislation and corporate governance standards designed to promote business integrity, prosecution of the directors of many companies for fraud and other offences has continued. This paper describes the changing environment in which the members of the boards of companies operate, and their legal duties and responsibilities. The authors illustrate the traps for, and liabilities of, directors with reference to vignettes of three corporate investigations, Enron, HIH and more recently Opes Prime. This paper argues that, in many instances, the failures of the corporate sector were due to loss of integrity by the major actors. Whether this was related to a belief in their invulnerability, or whether a climate of fraud was seen as acceptable hard-nosed business practice is a moot point. An alternative point, that the collapses could be mediated by ignorance, or by malice, is a critical point, and one deserving of further investigation.
... Victoria Police have similar values but also value professionalism and flexibility. Francis (2000) suggests that one of the principle mechanisms for embedding agency values throughout an organization can be through its values embedded in a code of conduct. Unique to the governance principles in Australian Standards International's 8000 Series on governance is publication of their underlying ethical values attached as an Appendix to the Standard. ...
Governance describes the processes by which organisations are directed, controlled and held to account. It encompasses authority, accountability, stewardship, leadership, the direction and control exercised in the organisation. This paper argues that the shape of policing has changed in recent years; the service is more innovative and less risk averse than ever before. In this environment, governance structures are needed that support the complexities of the change in police roles and functions and assessment of corporate performance must include criteria such as ethical values and codes of conduct.
... Ritchie (1996) stresses the importance of examples and the opportunity to work through these as a means of developing ethical skills. Ferrell et al. (2010), Trevino and Nelson (2009) and Francis (2002aFrancis ( , 2002bFrancis ( , 1994 also advocate implementing ethics training to support moral reasoning and decisionmaking for the organizational context. ...
Ethics is an integral part of an organization's overall culture. Designing an ethical organization requires systematically analysing all aspects of the organization's culture and aligning them so that they support ethical behaviour and discourage unethical behaviour. This chapter considers issues related to establishing an ethical culture in an organization, through a case analysis of a major Australian private hospital and its approach to establishing and continuing to define an ethical culture. Key aims of the research were to identify the role of executive and senior management leadership in developing a values-based approach to ethical culture particularly regarding senior management's own awareness, support and communication of the stated values. The chapter considers the theoretical approaches available to organizations in developing and sustaining ethical approaches in relation to organizational structures, systems and processes that inform cultural type. The paper also critically comments on the situation presented within the case analysis, providing conclusions and insights for further research initiatives related to such case-based field investigation.
... Ethical principles for guiding boardroom ethical behaviour are dignity, equitability, prudence (exercising judgment), honesty, openness, goodwill, suffering (prevention and alleviation). (Francis 2000). Weiss (1998. ...
This paper discusses some of the critical issues and corporate governance choices for members of boards concerned with decisions about their organisation's corporate social responsibilities (CSR). The paper defines corporate governance, corporate social responsibility, and discusses some ethical and pragmatic reasons why Triple -Bottom-Line (TBL) reporting of CSR is of benefit to corporations. It argues that various antecedent conditions (values, legal requirements, perceived benefits of CSR, and the ability to measure and report CSR practices) drive socially responsible behaviour, and that the practice of CSR is demonstrated by Triple -Bottom-Line reporting. Responsible reporting is transparent and communicates with relevant stakeholders. It will only happen if board members, their accountants and relevant stakeholders are convinced that reporting is possible, credible and worthwhile. The paper reports the opinions of a survey of investment directors on this issue. INTRODUCTION Definitions of corporate governance vary according to the context and cultural situation. In general, corporate governance is concerned with structures and processes for decision-making, accountability, control and behaviour at the top of organisations.
... A confluence of several disclosures spawned a new era in stakeholder thinking regarding the governance of business. As widespread corporate excesses became public knowledge, calls were made in both the popular and academic media to tighten up the overall governance of business (Cole, 1998; Conyon et al., 1995; Francis, 2000; Merino et al., 2010; Ryan, 2000). These excesses, as defined by both the popular media and academics, included: ...
Purpose
– This paper aims to develop a framework of connotative meanings afforded to the term “corporate governance”.
Design/methodology/approach
– An examination of academic publications from 1985-2012 containing the term “corporate governance” was conducted. The articles are sorted into the theoretical constructs that influence the contemporary connotative meaning of corporate governance.
Findings
– That a combination of a weak definitional base coupled with strong motivational forces have aided the development of competing theoretical perspectives of the meaning of corporate governance. The dominant meaning is written from an agency theory perspective.
Research limitations/implications
– Theoretical analysis was restricted to articles found in academic journals published since 1985.
Practical implications
– This study provides a very useful analysis into the connotative meanings and theoretical bases used by academic writers in the study of corporate governance.
Originality/value
– This paper provides an updated and developed analysis to the theoretical dimensions that underpin the contemporary use of the term “corporate governance”.
... As noted earlier in this discussion, the ECI framework assesses superior performing managers predominantly using utility measures that emphasise rational goal attainment. This approach is particularly limiting given the complexity and Virtue: The Missing Ethics Element 795 competing stakeholder demands prevalent in the twentyfirst century organisation (Longstaff 1997;Francis 2000;Quinn et al. 2011). Cameron (1980) notes major problems with rational goal approaches to assessing performance. ...
The Emotional Competency Inventory (ECI) framework of Daniel Goleman and Richard Boyatzis has gained significant impact in business leadership and management development. This paper considers the composition of the various versions of the ECI and its successor the Emotional and Social Competency Inventory to determine the nature of any appeal to ethics or moral competence within these frameworks. A series of concerns regarding the ethical limitations of the frameworks are presented with arguments supported by the relevant literature across the Emotional Intelligence (EI), competency theory and ethics fields. Based on a review of the ECI competencies in terms of their definitional constructs, it appears possible for an unethical manager or leader to demonstrate EI competence. Several cases involving high-profile business leaders, who were once lauded but later found to have acted unethically, are analysed. The authors consider the capacity of unethical leaders and managers to fulfil EI competence an issue of concern. The inclusion of an ethical management cluster and a number of competencies based on virtue ethics is proposed to meet this concern. Such an inclusion would address the critical issue of the purpose to which an EI competence is applied. Argument supporting the value of a virtue ethics approach as opposed to utilitarian or duty-based ethics approaches is also presented. Finally, a proposed exemplar of an ethically informed ECI framework is included for consideration.
... Information of this type seemed especially relevant to Australia's rural and regional public hospitals because they delivered the majority of care to these communities and were essentially nurse-led (Bish, Kenny, & Nay, 2012 (Morrell, 2009;Saravanamuthu, 2005) and was also reflected in Peters and Pierre's (1998) characterisation of the Whitehall tradition of public-sector governance entailing strong direction-setting power at the top with monitoring at lower levels to ensure decisions are implemented. This assumed that government ministers or agency boards carried the primary strategic roles and that employees acted on their guidance (Francis, 2000). Feldman and Khademian (2002) however, criticised this "one way street" (p. ...
... The application of the term ''conflict of interest'' to the Australian sport management arena has appeared only since the late 1990s, as the increased professionalisation and bureaucratisation of sport brings with it increased complexities in business relationships and practices (Sherry, Shilbury, & Wood, 2007). Authors (Margolis, 1979; Davis, 1982 Davis, , 1993 Luebke, 1987; Boatright, 1992 Boatright, , 1993 Carson, 1994; Francis, 1994 Francis, , 2000 Solomon, 1996; GoldenBiddle & Rao, 1997; Felo, 2001; Demski, 2003; Sherry et al., 2007) have struggled to define the variety of roles, responsibilities, interests and organisational settings that contribute to a conflict of interest. Common themes and concepts appear in the conflict of interest literature, including: interest, benefit, damage, professional judgement, obligation, duty, trust, moral values and voluntary actions. ...
Conflict of interest is one aspect of governance that has the potential to damage both an organisation and those who govern that organisation. Board directors of sport organisations are faced with a number of influences particular to sport business, which can impact on the process of managing conflict of interest. This research identified processes and attributes that influence directors: selection processes, outside roles, experience, regulation, education, motivation and qualifications. Directors and CEOs drawn from a sample of five Australian Football League (AFL) clubs and members of the AFL commission were interviewed. Data analysis was undertaken using a constructivist grounded theory method, and key processes (selection processes and director education) and attributes (outside roles, experience, regulation, motivation and qualifications) of non-executive directors were identified. By better understanding the influences on board directors in sport organisations, and the impact of these on managing conflict of interest, the potential for damage to the directors and the organisation may be decreased.
... Issues of social and moral obligations of banks have been debated ad infinitum by the academic and broader community(e.g. Cousins 1995;Francis 2000;Weerasooria & Bagaric 2001), no definitive set role guideline has ever been established.Regardless of the vagaries of the social and moral obligations of banks, what has been neglected to a large extent are the possible commercial benefits of positive social positioning in the community by banks.An example of this positive social positioning has come from a small regional bank, from the state of Victoria. Whilst most banks in Australia have been reducing their conventional branch networks, Bendigo Bank, a small regional bank, has been increasing its branch network throughout Australia. ...
Consumer trust research has principally developed from established psychological-based research. This conception of consumer trust largely draws from research pertaining to interpersonal trust. This study combined existing theories from both sociological and psychological research in developing a consumer trust model specifically for banks. Partly because of their historical position in society and also because of their government-protected position, banks, bank branches and bank managers have traditionally held a respected, and trusted position in Australian communities. Because of this reputation and position in communities, banks were seen to display institutional attributes. These attributes were defined in this study as local community focus, local availability and visibility, relationship power symmetry and social obligation fulfilment. This study explored the notion of institution-based trust in an Australian retail banking context. Institution-based trust was a measure of the levels of consumer trust in various defined institutional attributes. It was contended that through the diminishment and divestment of its institutional attributes banks were impairing their institutional cachet. The process was termed 'deinstitutionalisation' and was postulated to have a negative impact on consumer trust. The hypothetico-deductive methodological framework was employed throughout the study, with a mail-based consumer survey used as the main means of primary data collection. 468 useable questionnaires from adult bank customers were yielded and the data analysed. These data were analysed and used to test twenty-three research hypotheses of which nineteen were supported. From the results, it was concluded that perceived local community focus, perceived social obligation fulfilment and perceived relationship power symmetry were antecedents to consumer trust in banks. Also, reasonable availability of conventional bank branch services was found to be an important component of perceived community focus of their banks, thus having an indirect relationship to institution-based consumer trust in banks. Community Banks were found to be exhibiting and promoting many of these institutional attributes. Consumers were found to be less likely to need bank branches for transactional or functional purposes, but branches were seen to be symbolically important. Also, consumers were found to be more likely to identify with intangible elements of their bank, principally bank brand, than with tangible attributes such as the bank branch. Importantly, consumers were found to be trusting of their banks, however they were more likely to believe that banks were less trustworthy now than they were in the past.
... ased focus on ethics as part of corporate governance was demonstrated by the Cadbury (1992) and Hampel (1997) Committees (in the UK), the OECD (1998) in Europe, the requirements of the Australian Stock Exchange (ASX, 2003, Bosch, 1995 Hilmer, 1993) and recently by the recently released Governance Standards by Standards Australia International (2003). Francis (2000) described the connection between governance and ethics: " Corporate governance, as a term, has come to imply good, in the non-moral as well as the moral sense. Its non-moral applications include efficient decision making, appropriate resource allocation, strategic planning, and so on. In its moral sense good corporate governance has co ...
Ethics has become an important component of corporate governance. Corporate governance decisions about engagement in corporate social responsibility are addressed by many researchers as a corporate issue determined for the most part by strategic motives and somewhat less by altruism. However, it is the leaders of organisations who make the choices about strategic positioning, and how they direct people and resources can influence corporate objectives such as those concerning corporate social responsibility. The purpose of this paper is to consider why corporate social responsibility is a legitimate responsibility for the leaders of companies and to explore how some ethical theories can explain the involvement of leaders in CSR issues. The paper discusses what is meant by corporate social responsibility, why corporate leaders are increasingly supporting CSR and the extent to which the major ethical theories assist corporate leaders to make ethical decisions about CSR. It addresses the questions: What does corporate social responsibility mean? Do corporate leaders have social responsibilities for stakeholders, including responsibilities to consumers, employees and government, and to society? If a corporation is more than a profit-making institution, what is the ethical and moral basis of its responsibilities, and to what extent do ethical theories assist corporate leaders in making ethical decisions about corporate social responsibility? The paper shows that the traditional ethical theories of ethical egoism, teleology and deontology appear to offer inadequate guidance for leaders who operate in complex environments and face complex problems. It concludes that a challenge for researchers is to provide ethical models that can assist leaders manage the moral dilemmas emerging from decisions involving the multiple stakeholders in corporate social responsibility issues.
... Business ethics is concerned with the moral philosophy, values and norms of behaviour that guide a corporation's behaviour within society. Ethics concerns formalised principles and codes of conduct as well as value systems that guide how we behave and apply to ethical situations that may arise in doing business. Francis (2000) describes seven ethical principles that might act as a guide to ethical behaviour. Dignity refers to treating each individual as an end rather than a means. This means respecting the interests of other. This principle, for example, guides actions taken in the interests of others, customers in product recalls, employees in safety practic ...
This article addresses the connection of ethics to risk management, and argues that there are compelling reasons to consider good ethical practice to be an essential part of such risk management. That connection has significant commercial outcomes, which include identifying potential problems, preventing fraud, the preservation of corporate reputation, and the mitigation of court penalties should any transgression arise. Information about the legal position, examples of cases, and arguments about the potential benefits of ethics are canvassed. The orientation of this article is essentially Australian. It is hoped that it may provide some insights of value to other countries.
... One such source is that of using professional ethicists: another source is to use books that have plain language guides (eg. Francis, 2000). ...
This paper addresses the problems of implementing ethics into business organisations wherein there is indifference or resistance. A moral stance requiring ethics is unlikely to succeed as are preaching, linking business ethics to religion, hard sell, and even the constant reiteration of the word `ethics'. To this end a non-moral approach to persuading of the merits of ethics is recommended. In approaching this problem six basic issues are addressed: the identification and removal of barriers; what does not seem to work; what does seem to work; whom do we need to convince; what principles should we use; and accommodating diversity of personal styles. The paper concludes with some practical recommendations. It is noted that this analysis is essentially based in a particular culture. There are other places wherein some of these principles may not apply - and thus the paper may be seen as an opening consideration of an issue of substantial importance for the globalisation of trade.
The ethics of care is a quite new branch in ethics and feminist theory. Previous research has
used this perspective as an underlying theory for the study of business ethics, corporate
governance, auditing, and ethics education. This paper tried to identify the potential gap that
can be fulfilled or even refined by Islamic business ethics, which are: sharpen the stakeholder
definitions and prioritization, as well as risk management and finance aspect.
Ethics plays a substantial role in modern theory and practice of young financial markets. Financial ethics, as a subset of general ethics, focuses on applying the ethical principles in setting and preserving norms of financial morality, honesty, and fairness in financial markets. With the definition in mind, it is crucial to inspect the cause and factors that lead to ethical deviations. The decay of ethical values stems from wrong evaluation of money, criminalization of market act behavior, ignorance, as well as misconceptions. Negative consequences that arise from ethical violations lead to a wide range of serious banking and financial crises. The existing legal regulations and instruments of investor protection have proved insufficient in the control process, creating a need to establish clear operating ethical principles. This thesis focuses on ethics and morality in modern society, as well as the mechanisms for ethical value preservation. In the set context, the research analyses the interrelations of ethics of society and of the individual as an obstacle in the process of financial investment. The thesis presents proposals for improving ethical values in the finance sector in a form of possible provisions of the ethical codex of stockbrokers, possible ethical solutions in the field of financial instruments (trade), and gives example of desirable ethical principles in financial trade with interest groups. The proposed solutions should serve as guide conduct to reduce the level of immorality, robbery, fraud, and bribery in the field of finance trading.
Do you know where your investments go? How effective and accountable are the resources used in the international development? How can intercultural frictions, governance scandals, or corruption be prevented?
Based on a case study the author unveils a gap in the governance of development projects, a gap between implementation and governance, ultimately hindering effective, transparent and accountable usage of resources.
Illustrated with entertaining examples the author, himself a senior manager in development and business, develops a Project Governance model. Overcoming shortcomings of the theories of corporate governance and business ethics, of best practices in development and project management, the Project Governance Model is a concrete model for practitioners and academics. Its six modules build an integrated, strategically oriented and ethically reflected platform for a more truthful and efficient cooperation in difficult projects or programs such as in development.
This chapter discusses corporate governance practices from the ethics of care perspective. The literature reviewed was selected based on several aspects, outlined as follows:1.
A review of previous studies that investigated, theoretically or empirically, corporate governance using the ethics of care. These include the discussion of the shareholder or stakeholder model, which best describes corporate governance from the ethics of care perspective.
2.
A review of previous research that studied the risk management, enabling the possibility to undertake an analysis from an ethics of care perspective.
3.
The interpretation of corporate governance practices from the feminist ethics of care perspective was applied in developing a financial planning model. Therefore, previous studies that have discussed accounting and financial reporting using the ethics of care were also reviewed. This is because the financial projection required accounting data from the financial reports as inputs for the model.
This book aims to highlight the need for a proactive attitude towards social engagement that can be initiated by corporations due to CSR practices, either by the organizations with social mission. For this purpose they will be addressed three main topics that play a major role in sustaining the development of social economy in Romania like "Corporate Social Responsibility", "Corporate Governance" and "Social Entrepreneurship".
This book is based on the hypothesis of a governance gap. It presents a multi-dimensional view, from the perspectives of corporategovernance, project management, and the development sector, includingnonprofit governance, which substantiates this hypothesis. The hypothesisis further corroborated by ethical normative considerations whose particularintricacy and weight carry perhaps the most fruitful explorations inthese chapters.The book's case study, which follows the course of a major developmentproject carried out over a period of 20 months, has confirmed thehypothesis of the governance gap. The analysis of around 400 exampleshas led to a multi-perspectival understanding of the kinds of problems andopportunities that come into focus once one begins to address governanceissues. Based on this understanding, drawing on the governance rolesframed in organizational theories and on several models developed byscholars at the University of St. Gallen, a solution for bridging this governancegap has been developed, the so-called Project Governance Model.Its application to the experience and understanding gained from this particularproject has proven to be fundamental.The governance gap, which this book has examined, is specific to thefunctioning of development projects in nonprofit organizations or NGOs.That gap has special interest if only because NGOs are in the business,finally, of promoting self-governance among the people with whom theycarry out their projects.Project governance is defined herein as a process-oriented system bywhich projects are strategically directed, integratively managed, and holisticallycontrolled, in an entrepreneurial and ethically reflected way, appropriateto the singular, time-wise limited, interdisciplinary, and complexcontext of projects.Six key responsibilities have been identified. Together, they constituteintegrated modules of the Project Governance Model (and are italicized inthe following paragraphs):System management provides a systemic understanding of the environmentand of influences. This book adapts the St. Gallen ManagementModel to the context of development projects, an application that allowsone to set up a project in the first place. The same system understanding,and the lessons that come from it, allow all of the involved actors, from themanager to the donors and stakeholders, to steer the project in its environmentand to guide it toward specific objectives.The specific tasks of the governance board in directing and controllingthe project and its mission are the subject of mission management.Pursuing the development mission requires sensitivity to what developmentcooperation signifies. True development cooperation is made possibleonly through a discursive and recognition-based approach. The challengesinherent in development cooperation may pose threats to the integrityof the project - and indeed, the case study has identified 130 caseswhich have ethical relevance to that integrity. The study has yielded theneed to resort to a universally valid normative foundation. Such a foundationis proposed in integrity management through an approach which combinesdiscourse ethics and recognition ethics. Such a combined approachallows development actors to understand and explicate integrity challengesto the integrity of the project and its organizational elements, creatingso-called tension-zones between the challenges and the elements themselves.A practical process model illustrates how such integrity challengescan be resolved.Development cooperation ultimately relies on stakeholders. In order togo beyond lip-service to these parties, management tools and managementcommitment are needed. The proposed extended stakeholder managementmodule provides a model with specific focus on the broad identification ofstakeholders and a continuous monitoring of the expectations and claimswhich come to exist between the project and its stakeholders.Risk management allows one to detect risks in an all-inclusive way onceagain through reliance on system understanding. This book has emphasizedin particular the need for strategies capable of responding when risk down-sides occur with all of their troubling and messy consequences, aswell as the need for monitoring risks on the level of project governance.Finally, audit management expands on the audit roles of governance. Insightsderiving from the case study propose that internal audit capabilitiesbe strengthened in development projects and that audit needs are alignedon the governance level.In summary, the proposed model for project governance allows one toclose the governance gap in development projects, which was outlined indetail, and thereby contributes to bridging another gap as well, the famousone between theory and practice. The importance of such project governance,however, does not lie exclusively in its support for a proper implementationof development objectives; project governance as it is presentedhere also becomes an implicit part of the objective of true and systemicallyunderstood development cooperation.
The current emergence, once again, of corporate collapses due in no small way to unethical behaviour raises questions about the duties and responsibilities of boards of major organisations for building an ethical organisation. This paper argues that the legal duty of care to employees extends to creating an ethical work environment. It describes different types of ethical climates, how they are recognised and the consequences of their impact on the behaviours of their members. It illustrates this with some of the findings from our research into measuring ethics and ethical decision making. In conclusion, it identifies the key factors that boards should address to promote a desirable ethical climate.
Few empirical studies have been done that directly address the underlying values that drive leadership or distinguish its ethical dimensions. As a result the development of a theory about how values and ethics affect transformational leadership lacks empirical support. This has important implications for the study of transformational leadership. The purpose of this study was to establish a range of values and implied approaches to ethics that are associated with transformational styles of leadership, to use an inductive approach to determine the values and ethical approaches associated with transformational leadership, and to determine whether such a style is always right in itself. The study used interview data from senior executives to address the questions: What kinds of values do people associate with the dimensions of transformational leadership? Are these values related to ethical conduct and positive outcomes for followers and organisations? What are the values that drive transformational leadership behaviour? Is there an ethical or moral dimension to it? Do these represent ethical or immoral dimensions in the “Full range leadership model? The results of this study suggest that leaders’ values are more important in driving ethical behaviour among leaders, than the operationalisation of the management practices suggested by transformational leadership theory.
After almost 20 years of researching, teaching and consulting in business and organisational ethics, this emerging field seems to be facing an organisational dilemma. Who should manage the ethics and integrity systems that are slowly being adopted by Australian firms?During consulting engagements with numerous Australian businesses it has become clear that the task of managing ethics and integrity systems, i.e. creation of codes of ethics, ethics committees, information programs, conducting of audits, etc, more often than not seems to be delegated to Human Resources Managers and their Departments. This trend appears to be unique to the Australian setting and contrary to the US where Ethics Officers and Compliance Officers assume this role.The purpose of this paper is to consider the question of who is appropriate to manage the ethics function in the Australian context. A literature review will examine the concept of professionalism and what characteristics and duties qualifies an occupation as a profession. In particular it will identify the role of knowledge and the existence of an organisation or association that regulates and licences the individual to operate as a professional. It will then identify the roles, responsibilities and characteristics of ethics officers so as to determine the knowledge required to undertake this task in an organisation setting.Given the predisposition to delegate this function to Human Resources practitioners in Australian Organisations, a review of formal Postgraduate Human Resources programs at the major Australian Universities will be undertaken. The objective of this task is to determine whether such programs contain any specific ethics content, in particular the creation of codes of ethics, codes of conduct, ethics training and the conducting of ethics audits. This will establish whether Australian Human Resource professions are sufficiently equipped with the knowledge and capabilities required to undertake this function through their formal education.
This study examines ethical challenges and financial performance in the Nigerian banking sector. The study was prompted by the dearth of research work in this area of interest. Percentage analysis, Descriptive statistics and Spearman ranked order of correlation (rho) using Statistical package for social sciences (SPSS 21.0) were used to analyze the responses from the various respondents. Findings from the empirical result indicates that insider related credits exhibit a significant positive relationship with financial performance in the Nigerian banking sector while unauthorized tampering with customers’ accounts revealed unexpected insignificant negative relationship with financial performance. It is therefore recommended that the Central Bank of Nigeria should instill tougher disciplinary measures against erring CEOs as this could go a long way to further mitigate the rising tide of unethical practices in the Nigerian banking sector.
Oceania is a diverse region consisting of 29 countries, all of which are islands; its total population is approximately 379 million people. Business Ethics is firmly established as an academic field in the region’s two OECD countries, Australia and New Zealand, and in Singapore, is still developing in a dozen other countries, but no development at all has been found in half of the region’s countries, including each of those that has no higher education institutions. A major task for Business Ethics in this region is to seed the development of the field in countries in which development has not yet begun, and to assist development where it is nascent. The key change to the focus of academic business ethics in this region over the past 15 years has been a shift in focus from the organisation and its employees, to business’ impact on the natural environment and external stakeholders.
From the 1980s onward the concept of corporate governance has developed and expanded until today it is the subject of serious discussion and research into how boards and committees of management in not -for-profit organisations should operate. This development has seen a significant re-evaluation of the work of not -for-profit boards and the skills of board members in undertaking their governance roles. This paper reports the results of a study of the corporate governance practices within the sporting organisations funded by the Department of State and Regional Development in Victoria. The research proposes a theoretical framework for assessing performance against an enabling model of governance that supports social capital formation, and as a consequence of the study recommends new governance practices for the sector.
Ronald H. Coase, der „Vater“ der Transakti onskostentheorie, begründet in seinem Aufsatz „The Nature of the Firm“ die Entstehung von Unternehmen mit dem Argument, dass die aus den Koordinationsanforderungen resultierenden Transaktionskosten über eine hierarchische Steuerung geringer ausfallen als bei einer marktlichen Koordination (vgl. Coase 1937). Ökonomische Transaktionen werden innerhalb hierarchisch gegliederter Unternehmen—im Gegensatz zur Marktlösung—nicht mehr alle in den Individuen zugeschrieben, sondern auch den Unternehmen als Institutionen. Vertraglich und rechtlich ergibt sich durch die Einführung der Rechtsform der juristischen Person hier zunächst kein Problem. Aus moralischer Perspektive sieht die Lage jedoch anders aus: Hier gilt es, eine Antwort auf die Frage zu finden, ob Unternehmen prinzipiell Träger einer moralischen Verantwortung sein können.
This article examines the duties of directors of public companies and specifically studies the ethical components of those duties. Most directors are well aware of their legal duties and that the source of these duties is found in the Corporations Act, in particular sections 180-184. In addition, further quasi-duties are expressed in the Australian Stock Exchange (ASX) Corporate Governance Principles. This article argues that the black letter law contains within it an ethical foundation and the ASX Principles, especially Principle 3, actively promote ethical decision-making. The purpose of this article is twofold: firstly, to encourage directors to be aware of and focus upon the ethics components of their duties and secondly, to provide an interpretation of these components. An understanding and application of ethical principles within directors' duties will assist directors to avoid the moral hazards of the corporate world. While legal compliance is part of directors' corporate governance, so is integrity. This article applies the principles of virtue ethics with its emphasis on character as a suitable model to promote integrity. The principles of virtue ethics are supported by Kant's rules-based principles with its focus upon the duty of honesty. I INTRODUCTION An understanding and application of ethical principles within directors' duties will assist directors to avoid the moral hazards of the corporate world. Company directors need to be aware that there are ethical components within their responsibilities. The civil and criminal penalties in relation to contraventions by * Minh Nguyet Dang, Analyst in Management Consulting & Integrated Markets, Accenture Australia, former Business Law Honours student (2008), University of Sydney. ** BJuris, LLB, LLM (UNSW), Lecturer, Business Law, Faculty of Economics & Business, University of Sydney. barbara.mescher@sydney.edu.au 2 MqJBL (2010) Vol 7 directors of their duties under sections 180-184 of the Corporations Act 1 ensure that directors are fully aware of their legal duties. However, it is a narrow interpretation of directors' responsibilities to isolate the law as their main concern. An appreciation by directors of the ethics component of their legal responsibilities is essential for both legal compliance and good corporate governance. Indeed it is one of the roles of company legal advisers to point out relevant ethical aspects to directors and to advise them that the law does not exist in an ethical vacuum. The law of directors' duties has a context that is both commercial and ethical. The spirit of this area of the law is often drawn from ethical considerations. This article examines these ethical considerations 2 within the law of directors' duties as a means of providing guidance to company directors. It is argued that this will make a significant contribution to improved corporate governance. The ASX Corporate Governance Principles 3 were introduced in part as a result of perceived failures by company boards, especially in relation to compliance with the law and engagement in ethical decision-making. Principle 3 concerns the promotion of ethical and responsible decision-making and recommends a code of conduct to assist in the process. This article analyses Principle 3 and offers an interpretation of ethics that satisfies the Principle's objective. It is argued here that the fulfilment of Principle 3 will greatly improve corporate governance.
This paper examines the concept of corporate governance from a historical perspective. The paper explores how the agency theory and stewardship theory affect corporate governance practices. The focus of the paper is on public universities in Kenya. An extensive review of literature indicates that the ideals of good corporate governance have been adopted by developing countries since the 1980s. Developing countries differ from developed countries in a wide variety of ways. Therefore, there is need for developing countries to develop their own corporate governance models that consider the cultural, political and technological conditions found in each country. This paper explores the challenges encountered by developing countries in the process of adopting the corporate governance ideals. The authors have identified knowledge gaps in corporate governance that can form the basis for future research projects.
This thesis sets out to investigate the meaning, understanding and application of corporate governance in a public sector health service provider in Victoria, Australia. The methodological and analytical approach is based on an adaptation of the Glaser and Strauss’ grounded theory, using ethnographic and survey techniques to collect and describe data so as to capture a broad interpretation of how governance as a process is interpreted, understood and practiced in this organisation. Most studies of governance focus on economic compliance and performance, and questions concerning less obvious human elements of governance involving decision-making are left largely unaddressed and unresolved. In this thesis, these less tangible elements of governance are explored. The perspective presented here is that corporate governance is a socio-cultural phenomenon that requires not only an examination of the governance structures and processes in place, but also the direct observations of social and cultural elements including individual and organisational decision-making. There is a dearth of corporate governance research in the public sector, which has in the past decade adopted a system of governance more aligned to a private sector model. This thesis starts to address this lack. It combines a study of the Board and its accountabilities in the face of rapid change (analogous to the private sector model) with evidence from stakeholders to assess the impact of the governance in the public sector. From the analysis of the data collected and from the researcher’s observations, the health provider studied here can be described as having an effective Board. It appears to have integrated decision-making, with the Board strategically setting the direction of the service and supporting the actions of management to meet the key performance targets and measures as prescribed by the Department of Human Services (DHS). This research explores how governance as a process is interpreted, understood and practiced in the context of a public sector organisation. It offers a unique insight into the complex concept of corporate governance and offers a constructionist conceptual paradigm for further governance inquiry.
The study investigated the effects of three cultural variables – country of employment, race/ethnicity and religion – on managerial
views of profit and 15 other business priorities. In total, 203 responses were obtained (120 randomly and 83 by quota) from
executives and managers belonging to either of two race/ethnic groups (Caucasian and Chinese) and three religious denominations
(Christian, Buddhist and Malay Muslim) located in three different countries (Australia, Singapore and Malaysia). Findings
indicated that these three different cultural variables affected (to varying degrees) the attitudes of managers towards profit
and other related business concerns. Managers working in Malaysia, the Malay Muslims and Caucasians in particular, had the
highest regard for profit whilst those employed in Australia were found, on the whole, to be the most (socially) considerate
toward their employees, customers and environment. This study pointed to the need for cultural ethics as a complementary function
in business.
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