Chapter 10: Leading an Ethical Organization: Corporate Governance, Corporate Ethics, and Social Responsibility

Conclusion

This chapter explains the role of boards of directors in the corporate governance of organizations such as large, publicly traded corporations. Wise boards work to manage the agency problem that creates a conflict of interest between top managers such as CEO and other groups with a stake in the firm. When boards fail to do their duties, numerous scandals may ensue. Corporate scandals became so widespread that new legislation such as the Sarbanes-Oxley Act of 2002 and C-SOX have been developed with the hope of impeding future actions by executives associated with unethical or illegal behaviour. Finally, firms should be aware of generational influences as well as other biases that may lead to poor decisions.

Exercises

  1. Divide your class into four or eight groups, depending on the size of the class. Each group should select a different industry. Find positive and negative examples of corporate social performance based on the dimensions used by KLD.
  2. This chapter discussed Oliberté shoes. What other opportunities exist to create new organizations that serve both social and financial goals?

Attributions

Figure 10.3:
Hopital Shriners pour enfants – Canada de Montreal – Site Glen 01 by Jeangagnon (http://commons.wikimedia.org/wiki/File:Hopital_Shriners_pour_enfants_-_Canada_de_Montreal_-_Site_Glen_01.JPG) used under CC BY-SA 3.0 Licence (first);

CreativeTools.se – PackshotCreator – Ben&Jerry’s Cookie Dough by Creative Tools (http://www.flickr.com/photos/creative_tools/4295718895/) used under CC BY 2.0 Licence (second);

Canada Post RHD by Radagast (http://commons.wikimedia.org/wiki/File:Canada_post_RHD.jpg) is in the Public Domain (third);

Nuvola Chadian flag by Antigoni (http://commons.wikimedia.org/wiki/File:Nuvola_Chadian_flag.svg) is in the Public Domain (fourth);

Facebook Headquarters Menlo Park detail by Soerfm (http://commons.wikimedia.org/wiki/File:Facebook_Headquarters_Menlo_Park_detail.jpg) used under CC BY-SA 3.0 Licence (fifth)

Figure 10.4:
Pirate 02 by Raphodon (http://commons.wikimedia.org/wiki/File:Pirate_02.JPG) used under CC BY-SA 3.0 Licence (first);

Pirate-ship by mystica (http://commons.wikimedia.org/wiki/File:Pirate-ship.svg) is in the Public Domain (second);

Chess piece – White knight by MichaelMaggs (http://commons.wikimedia.org/wiki/File:Chess_piece_-_White_knight.JPG) used under CC BY-SA 3.0 Licence (third);

US Navy 030717-N-9693M-002 A U.S. Army Golden Knight parachute team member turns his parachute in preparation for landing at the U.S. Air and Trade Show by Photographer’s Mate 2nd Class Damon J. Moritz (http://commons.wikimedia.org/wiki/File:US_Navy_030717-N-9693M-002_A_U.S._Army_Golden_Knight_parachute_team_member_turns_his_parachute_in_preparation_for_landing_at_the_U.S._Air_and_Trade_Show.jpg) is in the Public Domain (fourth);

Skull and crossbones by Unknown (http://commons.wikimedia.org/wiki/File:Skull_and_crossbones.svg) is in the Public Domain (fifth);

Human-emblem-mail-green-128 by Hucz (http://commons.wikimedia.org/wiki/File:Human-emblem-mail-green-128.png) used under CC BY-SA 3.0 Licence (sixth)

Figure 10.5:
New York Police Officer by See-ming Lee (http://commons.wikimedia.org/wiki/File:New_York_Police_Officer.jpg) used under CC BY-SA 3.0 Licence (first);

Duckie Monster by Unknown (https://www.flickr.com/photos/duckiemonster/2219220078/) used under CC BY 2.0 Licence  (second);

20111013-OC-UNK-0003 – Flickr – USDAgov by U.S. Department of Agriculture (http://commons.wikimedia.org/wiki/File:20111013-OC-UNK-0003_-_Flickr_-_USDAgov.jpg) used under CC BY 2.0 Licence  (third);

3D Judges Gavel by Chris Potter (https://www.flickr.com/photos/86530412@N02/8213432552/) used under CC BY 2.0 Licence  (fourth);

Can-vote-stub by Roux (http://commons.wikimedia.org/wiki/File:Can-vote-stub.svg) used under CC BY-SA 3.0 Licence (fifth);

Helping the homeless by Ed Yourdon (http://commons.wikimedia.org/wiki/File:Helping_the_homeless.jpg) used under CC BY-SA 3.0 Licence (sixth)

Figure 10.6:
Charles Ponzi (August 1920) by Richard Arthur Norton (http://en.wikipedia.org/wiki/File:21rampell.xlarge1.jpg) is in the Public Domain (first);

Pyrite Fools Gold Macro 1 by “Jon Zander (Digon3)” (http://commons.wikimedia.org/wiki/File:Pyrite_Fools_Gold_Macro_1.JPG) used under CC BY-SA 3.0 Licence (second);

SNC-Lavalin, Montreal 2005-09-02 by Gene.arboit (http://commons.wikimedia.org/wiki/File:SNC-Lavalin,_Montreal_2005-09-02.JPG) used under CC BY-SA 3.0 Licence (third);

Nortel04 by Bjoertvedt (http://commons.wikimedia.org/wiki/File:Nortel04.jpg) used under CC BY 2.0 Licence (fourth);

Logging (8692551051) by Coconico National Forest (http://commons.wikimedia.org/wiki/File:Logging_(8692551051).jpg) used under CC BY-SA 3.0 Licence(fifth);

BernardMadoff by U.S. Department of Justice (http://commons.wikimedia.org/wiki/File:BernardMadoff.jpg) is in the Public Domain (sixth)

Figure 10.7:
SarbanesOxley by Adam sk (http://commons.wikimedia.org/wiki/File:SarbanesOxley.jpg) is in the Public Domain (first);

CBP Officers seize $409,000 in Unreported Currency by U.S. Customs and Border Protection (https://www.flickr.com/photos/cbpphotos/11853767103/) used under CC BY-SA 3.0 Licence(second);

Flags-of-usa-and-canada by Makaristos (http://commons.wikimedia.org/wiki/File:Flags-of-usa-and-canada.jpg) is in the Public Domain (third);

Budget Debate 2011 (5601686862) by Colorado Senate GOP (http://commons.wikimedia.org/wiki/File:Budget_Debate_2011_(5601686862).jpg) used under CC BY 2.0 Licence  (fourth);

Piggybanksvg by Googleaseerch (http://commons.wikimedia.org/wiki/File:Piggybanksvg.svg) used under CC BY-SA 3.0 Licence (fifth);

E-ticker by klip game (http://commons.wikimedia.org/wiki/File:E-ticker.jpg) is in the Public Domain (sixth)

Figure 10.8:
50-60 jaar Chiro 20.09.2008 087 by Nousefreak (http://commons.wikimedia.org/wiki/File:50-60_jaar_Chiro_20.09.2008_087.jpg) used under CC BY-SA 3.0 Licence (first);

Warning sign font awesome by Dave Gandy (http://commons.wikimedia.org/wiki/File:Warning_sign_font_awesome.svg) used under CC BY-SA 3.0 Licence(second);

Diversity (10314223086) by Oregon Department of Transportation (http://commons.wikimedia.org/wiki/File:Diversity_(10314223086).jpg) used under CC BY 2.0 Licence  (third);

Firefighters continue their strike to protect their pensions at Earlham Fire Station, Norwich by Roger Blackwell (https://www.flickr.com/photos/rogerblackwell/14689219208/) used under CC BY 2.0 Licence (fourth);

(Nuclear Grunge Sign – Sepia by Nicolas Raymond (http://freestock.ca/signs_symbols_g43-nuclear_grunge_sign__sepia_p1712.html) used under CC BY 2.0 Licence  (fifth);

pocketchange by Cheryl DeWolfe (https://www.flickr.com/photos/triviaqueen/4925033319/) used under CC BY 2.0 Licence (sixth)

Figure 10.12:
First man on the moon by –Nightflier (http://commons.wikimedia.org/wiki/File:First_man_on_the_moon.jpg) is in the Public Domain (first);

Baby on Back by Elnaz6 (http://commons.wikimedia.org/wiki/File:Baby_on_Back.jpg) used under CC BY-SA 3.0 Licence  (second);

Guitar player by Nat Ch Villa (http://commons.wikimedia.org/wiki/File:Guitar_player.jpg) used under CC BY 2.0 Licence (third);

Przykład selfie by Krazyjordan7 (http://commons.wikimedia.org/wiki/File:Przyk%C5%82ad_selfie.png) used under CC BY-SA 3.0 Licence (fourth)