RESPONSIBILITY AND ACCOUNTABILITY |
powers or conferring rights to carry out those duties. Next comes the causal responsibility to use mechanisms
for accountability and due recognition. Accountability and due recognition generally operate in tandem.
15.3 CORPORATE RESPONSIBILITY
Corporate responsibility has been seen arises from business ethics and has three dimensions:
1. Good governance,
2. Corporate social responsibility and
3. Environmental accountability.
This is how business ethics becomes an all-pervading inf uence in the governance of business. The top
management is not only responsible to envision such a change but also responsible to translate this vision
into practices and to make sure that they adopt a balanced approach towards three dimensions. It should be
evidenced from the conduct of business for it is not easy for them to get away from this by indulging only in
15.3.1 GOOD GOVERNANCE
The corporations are formed based on the division of ownership and control, in which the investor or
owner relies on the manager, that is, CEO to manage the business on his/her behalf which implies that
principal–agent relationship exists between investor and manager, which causes the room for asymmetric
information. In other words, there is always a gap between the information possessed by the manager vis-àis
the investors. This situation calls for a good and transparent governance, that is, corporate governance. The
shareholders must have full and authentic information. There should be transparency in processes, so that
the agent (manager) cannot mismanage or take the advantage of the asymmetric information. The objective
of good governance is to have such system of controlling and managing so that the interest of owner may be
protected. For this to be successful, f rst of all, whatever hurdles are there in the processes are to be removed.
The processes are necessary to prohibit the manager to push their own agenda or self-interest, that is, the
managers, as working in the capacity of agent, might have their own individual goals to pursue which are not
in line with organisational goals. Such processes are to be institutionalised which protect the interest of the
owner, that is, prof t maximisation and wealth maximisation. Therefore, ethical structure has the implication
for good governance, which means better prof ts. It is important to make prof ts within ethical framework.
There is a shift in the psychology of investors that they are curious not only to know how much prof t the
company has booked, but also to know how this prof t has been earned, that is, ethically or unethically.
Therefore, business has to be done ethically, the prof ts are to be taken seriously, if not, it would be interpreted
as if the business is not indulging into good governance.
15.3.2 CORPORATE SOCIAL RESPONSIBILITY (CSR)
Second ethical dimension of CSR includes the social practices where the company is discharging its
responsibility towards community at large, that is, stakeholders. Stakeholders are the ones who can inf uence
or can be inf uenced by the actions, decisions, policies, practices and goals of the company. Apart from
shareholders, it includes employees, consumers, suppliers, government competitors and community at large.
Traditionally, so far business was treated purely from the viewpoint of private–personal pecuniary motive.
Now, a company has acknowledged its responsibilities to society that goes beyond the production of goods
and services at a prof t. It involves the idea that the corporate governance has a broader constituency to serve
than that of shareholder alone. In more recent years, the term stakeholder has been widely used to express
this broader set of responsibilities. By now, it has been accepted that corporations are more than economic