Corporate Responsibilities, Ethics and Governance - PDF

CORPORATE
RESPONSIBILITIES, ETHICS
AND GOVERNANCE

Aspects of Ethical Business
• Ensures honesty and clarity from the business organization
• Respect for privacy and individuality
• Direct communication
What does Ethical Business Practises do?
• Improves the reputation of the business in the society
• Enhances the confidence of the stakeholders

Unethical Issues in Business Organizations
 Trade Secrets
 Conflict of Interests
 Breach of Privacy
Theories related to Corporate Business Ethics
 Deontological or Kantian Ethical Theory
 Theory of Utilitarianism or Consequential or Teleological Theory

• Trade Secret
Any confidential information of a business firm that makes an organization
advantageous over others in the same field (Lioukina, 2013)
• Case related to Trade Secret
Spotless Group Holdings v/s Former Employee Mr Reynolds
• The Case In Brief
Mr Reynolds disclosed sensitive information related to customer base, finance
model and biddings to Adelaide Zoo project to the rival company, Blanco
Catering.
• The result of the case
The company won the case against the former employee but got only 1/10th of
the loss faced by the organization

Conflict of Interest
• Not using the information of the company for personal gains or third-party benefit
by the directors (Tseng & Angelos, 2017)
• Should not use damage to the company by misusing the position of the directors
The case of Conflict of Interest
Perpetual Investment Management Limited and the joint venture of the The
Washington H Soul Pattinson and Company Limited (Soul Pattinson) and
Brickworks Limited (Brickworks)
The Case in Brief
Perpetual Investment Management Limited rejected the interests and claimed that
both the companies and the directors were engaged in a case of Conflict of Interest
Result of the Case
The court favoured the directors and marked them as diligent working for the interest
of the organization

 Breach of Privacy
Safeguarding the interest and private information of the customer, client and
employees of an organization
 The Case of Breach of Privacy
Federal Privacy Commissioner v/s Telstra Corporation Ltd
 The Case in Brief
Leakage of the online data of 15,775 clients of Telstra due to lack of safety
procedures adhered by the company. The information included telephone numbers
and addresses.
 Results of the Case
The company was held responsible of the matter by the report of Office of the
Australian Information Commissioner (OAIC)

 Deontological Theory
The ethical theory that concentrates on the right and wrong actions of the organization or person.
 Teleological Theory
The ethical theory that concentrates on the right and wrong results of the action done by the
organization or person
 Deontological v/s Teleological Theory
Deontological Theory Ethics focusses on the motives behind the work done and addresses
whether the same is right or wrong
Teleological Theory of Ethics focusses on the end consequence of the action and deals with the
affects rather than the motives

 Kantian Ethical Theory
• Proposed by German Immanuel Kant
• The theory developed as a result of Enlightenment Rationalism
• The theory states that the right and wrong of the actions does not depend on the
consequences but on the fulfilment of duty (Aune, 2014)
 Utilitarianism Theory of Ethics
• Proposed by Jeremy Bentham and modified by John Stuart Mill
• The theory solely concentrates on the outcomes of the actions and not on the ways the
action has been conducted (Mill, 2016)
• Refers to the Greatest Happiness Principle
• Greatest Happiness Principle refers to the capability of the people to achieve
maximum amount of happiness by most of the people
• The theory can be applied to either Particular Actions (Act utilitarianism) or General
Rule (Rule utilitarianism)

Trade Secrets
 Trade Secrets of an organization is one of the most important aspect through which the
successful running of the business is conducted
 The reveal of trade secrets of Reynolds, the former employee to Spotless group to Blanco
Catering Group is unethical and violates both the Kantian and Utilitarianism Theory
 According to the Kantian theory, the act of revealing secrets of an organization to another
for personal benefit is a wrongful according to concept of Categorical Imperative
 According to Utilitarianism Theory, the consequences of an action define its rightfulness
but the loss of the profit of Spotless group resulted in the loss of interest for majority
workers which makes it unethical.

Conflict of Interest
 The preference of personal gains over professional profitability by a professional worker
of a particular organization
 The wrong accusation of Perpetual Investment Management against the directors violates
the ethical theories of Kant and Utilitarianism
 According to Kantian Theory, the conduct that results in loss of interest for the majority
and leads to conflict of interest is unethical that violates the theory at the first place.
 The preference for personal gains over professional profit by any person results in lack of
profit for a mass including the society as a whole which is against the Utilitarianism
Theory.

Breach of Privacy
 The failure of a particular organization to safeguard the interest and private information
of their client base, employees that can lead to a huge loss for the customers and
workers associated
 Failure of Telstra Corporation to safeguard the private information of their customer
base
 According to Kantian Theory, the act of breach of privacy is unethical and wrongful
conduct as it gives importance to personal gains rather than overall benefit
 According to Utilitarianism Theory, Telstra Corporation is accused of unethical
business conduct as they have failed to provide confidentiality to their customer
information.

References
Aune, B. (2014). Kant's theory of morals. Princeton University Press.
Lioukina, E. A. (2013). INSTITUTIONAL ARRANGEMENTS OF THE TRADE
SECRETS. American Journal of Economics and Control Systems Management, 2, 25.
Mill, J. S. (2016). Utilitarianism. In Seven Masterpieces of Philosophy (pp. 337-383).
Routledge.
Tseng, J., & Angelos, P. (2017). Conflict of Interest. In Clinical Trials Design in Operative
and Non Operative Invasive Procedures (pp. 215-217). Springer, Cham.