The Ethics of Corporate Governance

Abstract

That same year Columbia University's American Assembly at Arden House conducted conference on business written up by Clar? ence Walton. Significantly, the next American Assembly conference was on corporate governance, reported by William Dill. One newspaper editor at the time described corporate governance as a fancy term for the various influences that determine what corporation does or does not do, or should or should not do. Corporate governance obviously involves top management, but it also involves middle and lower man? agers, and indeed the board of directors, who are not managers. The question is: Can the discipline of assist both managers and directors in the running of corporation? Some people might say no. Peter Drucker, unhappy with the phrase business at least, states that 'business ethics' is plain old hostility to business and to economic activity altogether. . . 'Business Ethics' might well be called 'ethical chic' rather than ? and indeed might be considered more media event than philosophy or morals. [pp. 34-35] Drucker misconstrues what professionals have recently been saying and doing in applying to business. He savages, though with ele? gance, at least several straw men. But Drucker makes two good points: the very phrase business can be misunderstood. There is really only one basic ethics. But it is useful to apply that to the special problems of business, as we can and do apply it usefully to the specific problems of law, medicine, health care, labor unions or politics. Drucker is also right when he stresses the ethical obligations of employees or critics towards the corporation. The recent popular phrase, corporate social responsibility (CSR), could now well be reversed, society's responsibility for the corporation (SRC). Indeed, Drucker's so-called Confucian ethics of society of interdepen? dence, as he puts it, or mutual responsibility, is exactly what most in this field have been talking about all along.