Ethics, CSR and Corporate Governance - Desklib

This article discusses the importance of ethics, CSR and corporate governance in organizations. It covers topics such as the definition of corporate governance, the relationship between ethics and CSR, ethical dilemmas, agency problems, and the advantages of CSR. The article also includes information on Lawrence Kohlberg's stages of moral development, the PDCA cycle, and the spheres of influence in an organization. Desklib provides study material with solved assignments, essays, dissertations and more.

Running head: ETHICS, CSR and CORPORATE GOVERNANCE
Ethics, CSR and Corporate Governance
Name of the Student
Name of the University
Author Note

1EHICS, CSR and CORPORATE GOVERNANCE
Contents
Question 1:.................................................................................................................................3
Question 2:.................................................................................................................................3
Question 3:.................................................................................................................................4
Question 4:.................................................................................................................................4
Question 5:.................................................................................................................................4
Question 6:.................................................................................................................................5
Question 7:.................................................................................................................................5
Question: 8:................................................................................................................................5
Question 9:.................................................................................................................................6
Question 10:...............................................................................................................................6
Question 11:...............................................................................................................................7
Question 12:...............................................................................................................................7
Question 13:...............................................................................................................................8
Question 14:...............................................................................................................................8
Question 15:...............................................................................................................................9
Question 16:.............................................................................................................................10
Question 17:.............................................................................................................................10
Question 18:.............................................................................................................................10
Question 19:.............................................................................................................................11
Question 20:.............................................................................................................................11
Question 21:.............................................................................................................................12

2EHICS, CSR and CORPORATE GOVERNANCE
Question 22:.............................................................................................................................12
Question 23:.............................................................................................................................12
Question 24:.............................................................................................................................13
Question 25:.............................................................................................................................13

3EHICS, CSR and CORPORATE GOVERNANCE
Question 1:
Corporate governance is a term that refers to the practices, rules and processes that are
related to the direction and control of the organization. Corporate Governance ensures the
involvement of the Organization’s committee and board of directors, involves regulatory and
legal frameworks of practice, incorporates the hierarchy of the organization, involves
monitoring and control of the internal operations, ensures transparency and accountability for
actions, and also supports the implementation of policies and procedures. The main aspects of
corporate governance is to set up a vision for the organization, create drive towards it
(mission), identify how to active them (strategy), decide the criterion for success (objectives)
and implement achievable targets (smart goals) in the organization. Corporate social
responsibility on the other hand is a part of corporate governance that ensures the business is
conducted responsibility and the organization fulfills the duties of corporate citizenship. This
includes fulfilling the responsibility of an organization towards its environment, community,
workplace and its market. All these practices are based on the principles of ethics that helps
the organization to understand the importance of governance and social responsibilities of an
organization. Ethics are essentially the moral principles that help to govern the behavior of an
organization or individual. Ethical codes help to identify and implement practices that are
moral and responsible, involve accountability and ensure professionalism. Thus, ethical
principles drive corporate governance, and CSR is one of the objectives of the corporate
governance.
Question 2:
It is not unusual to come across an ethical dilemma in both professional and personal
life. This can occur anytime when the actions that is expected does not align with the ethical
or moral codes. In such instances, it is important to analyze the situation thoroughly, and

4EHICS, CSR and CORPORATE GOVERNANCE
identify where and how exactly id the breach of ethics is occurring. Once that has been
identified, the correct and ethical practice should be implemented instead of the unethical
one. Thus I would refer to the ethical codes of practice to analyze and identify the ethical
issue, and try to rectify it through the implementation of ethical practice. Also, I would report
the unethical practice to ensure such breach does not recur and strategies are taken to mitigate
or prevent them.
Question 3:
Ethical Dilemma is a situation where an ethical paradox occurs. This implies a
conflict between moral imperatives creating an ambiguity in the decisions or action that
needs to be taken. An ethical dilemma occurs when more than one ethical principle or
imperatives are opposing each other, thereby creating n obstacle in the decision making
process. During such a situation, following one ethical principle can result in the breach of
another ethical principle. Some examples of ethical dilemma are the debates that surround
abortion, suicide and euthanasia.
Question 4:
Hiding information from the auditors is an unethical practice, since it prevents
transparence and accountability in the processed and operations and also adversely affects the
ability to monitor the organizations activities. Hence I shall refuse to comply with such a
request and not hide any information.
Question 5:
Being ethical is definitely good for the business on the long run as it ensures the
business follows a responsible and accountable practice and helps in developing a good
image for the organization. Ethical businesses also can get more support and trust from the

5EHICS, CSR and CORPORATE GOVERNANCE
regulatory authorities and create better employee satisfaction which can improve the
performance of the organization. Customers also show more interest for ethical businesses
increasing the sales of the business and attract more investors. However, on a short term,
ethical practices can also increase the expenses of the business and increase the paperwork,
bureaucracy and workload for the employees.
Question 6:
Agency problem can be understood as a state of conflict of interest between the
management of the organization and its stakeholders. This affects the relationship that exists
between the principal with the agents where the agents conducts a task on behalf of the
principal. Here principal refers to the benefactors or stakeholders of the organization and the
agents refer to the individuals conducting the actions, and the principal employs the agency to
perform the actions. Agency problems can be solved through the implementation of measures
such as a comprehensive process of screening, incentivizing good actions and punishing bad
ones and involving auditing or watchdog bodies. However agency problems are hard to be
mitigated completely, because such strategies can increase the expense of the organization in
an unsustainable way.
Question 7:
Ethics and ethical principles can be derived from several sources or institutions such
as religious beliefs, family institution, education, social values or norms, community and
neighborhood environment, legal and policy framework as well as the influence of the media.
Question: 8:
Ethics are important for the business because it helps to improve the performance of
the business, helps to comply with the legal requirements and obligations of the organization,

6EHICS, CSR and CORPORATE GOVERNANCE
prevent or mitigates harm due to wrong practices, helps to address the needs of the
stakeholders and also promotes personal morality and accountability and fosters trust and
transparency in the organization.
Question 9:
Lawrence Kohlberg’s stages of moral development or ethics reasoning include 6
stages which spans through three levels.
Level 1 is called Pre-Conventional morality (develops in children under 9 years of age), and
includes 2 stages:
Stage 1: Orientation to Obedience and Punishment
Stage 2: Individualism and Exchange
Level 2 is called Conventional Morality (develops during adolescence and adulthood) and
includes 2 stages:
Stage 3: Good interpersonal relationships
Stage 4: Maintenance of social order
Level 3 is called Post-Conventional morality (develops on individual principles and moral
sense or reasoning) and includes 2 stages:
Stage 5: Social Contract and Individual Rights
Stage 6: Universal Principles
Question 10:
Corporate and Ethical climates are important factors that can enhance the behavior of
the employees since both these factors support professional practice. This helps to develop

7EHICS, CSR and CORPORATE GOVERNANCE
practice that is accountable, responsible and is in compliance to the organizations objectives
and obligations. Thus a corporate and ethical climate fosters the development of the
organization as well as the employees through the changes in behavior that helps to maintain
such a climate in the organization.
Question 11:
Unethical conduct or unethical practice can be reduced or prevented through several
strategies such as the implementation of a compliance based approach and integrity based
approach. Compliance based approach ensures that the practice of conduct complies with the
legal or policy requirements of the organization. Integrity based approach ensures integrative
in the practices and behavior of the employees. This can also be ensured by setting a good
code of conduct for all employees, leading the employees through exemplary behavior,
reinforce the consequences of non compliance and unethical practice, appreciate employees
who show exemplary ethical behavior, involve good screening policies and also having
strong auditing activities to identify and reprimand unethical practice or conduct.
Question 12:
Corporate Social Responsibility or CSR is an aspect of Corporate Governance that
helps in the development of a sustainable business practice, ensures compliance to the
organizations obligations and objectives and involves funding and skill development. CSR
incorporates the philosophies of corporate citizenship, where the organization shows
responsibility towards its environment, community, workplace and market. CSR essentially
ensures that an organization or a business ‘gives back’ to the environment, communities or
societies from which it draws its resources from. It also helps to mitigate the negative impact
of the business on its surroundings. It is mandatory for several organizations ensuring that
they conduct their business in a responsible, accountable and ethical manner.

8EHICS, CSR and CORPORATE GOVERNANCE
Question 13:
The best CSR initiatives include:
i. Involvement of the communities
ii. Optimizing the use of resources
iii. Minimizing wastage
iv. Implementing green business strategies
v. Implementing sustainable business practices
vi. Involving renewable sources of energy
vii. Education and empowerment of the local communities
viii. Philanthropic activities
ix. Social Entrepreneurship Practices
x. Fair business practices
xi. Increasing customer centricity in the business process
xii. Contributing to social causes
xiii. Employee wellness program
Question 14:
The key advantages of Corporate Social Responsibility include:
Improves the brand image and reputation: A responsible organization attracts more reputation
and improves its brand image in the market through activities that helps in the improvement
of the environment, community, workplace and market. For example the philanthropic
activities of Microsoft successfully developed its reputation and image.
i. Improves the loyalty and trust of the customers: Business that shows more
responsibility towards its customers and environment are trusted more by the

9EHICS, CSR and CORPORATE GOVERNANCE
customers and attracts loyal customers. For example Apple has significant
customers loyal to the brand through its drive to make products based on
customers’ expectations and needs.
ii. Improves customer satisfaction: Better products also improve satisfaction of the
customers as seen in case of Apple.
iii. Cost savings on the long term: Implementing sustainable practices, renewable
energy, optimizing resources usage and minimizing wastage helps to save costs.
For example Apple and Tesla Motors that has started implementing renewable
sources of energy to run their operations.
iv. Improves financial performance: Financial performance can also increase through
better customer loyalty, improved sales and cost savings. This can be seen in case
of apple.
v. Improves employee satisfaction and retention: Better performing companies also
helps to improve work satisfaction and retain the employees better. For example
Google or Microsoft.
vi. Attracts talented and competent workers: Companies with good image or
reputation also attracts talented workers with higher competencies. Such as
Facebook and CISCO.
vii. Helps in the growth of the organization: Higher performance and lower losses
helps in organizational growth, for example: Apple
viii. Supports positive attention from the media: Socially and Environmentally
responsible and conscious organizations also get positive media coverage, as seen
in cases of Microsoft, BMW and Ben & Jerry’s.
Question 15:

10EHICS, CSR and CORPORATE GOVERNANCE
PDCA stands for Plan-Do-Check-Act cycle which is a four step framework that can
help a business to manage and implement continuous development of its products or services.
In the stage of Planning, the organization can assess the current or new business processes
and identify how they can be further developed through action plans. Doing is the stage
where the action plan is implemented in the organization. Checking is the stage where the
results and outcomes of the action plan is evaluated and compared with the initial objectives
to find if it was successful. Acting is the stage where any improvements on the action plan are
identified for further development of the process.
Question 16:
The Spheres of influence in an organization includes 6 nested spheres, with the
innermost sphere being Leadership, followed by Workplace sphere around it, which is
followed by Marketplace sphere, followed by Supply Chain Sphere, followed by Community
Sphere and finally enabling environment sphere that encapsulates all the inner spheres.
Understanding these spheres can help to comprehend the extent of the influence of each of
these aspects on the organization or business. This also helps to implement the CSR initiates
in a more effective way.
Question 17:
The important concepts of corporate governance includes: developing an effective
relation between the management, board of directors and stakeholders of the organization,
developing organization’s objectives, supporting employees to achieve the objectives and
monitor the performance and compliance to these objectives.
Question 18:

11EHICS, CSR and CORPORATE GOVERNANCE
Both Management and Governance are related concepts that involve the oversight and
decision making processes that are aimed towards strategic objectives or directions of the
organization. However the difference between Governance and Management is that
governance includes evaluation, direction and monitoring activities, while management is a
wider concept that includes planning, developing, implementing and monitoring of the
organization. The management can use the guidelines that are developed by the board of
governance.
Question 19:
Strong and sustainable ethical principles can help to develop effective corporate
governance strategies that ensure compliance to all the legal, policy related, procedural and
corporate responsibilities and obligations of the organization. Also effective corporate
governance helps to support ethical practices and maintain an ethical and corporate
environment in the organization.
Question 20:
BOD or Board of Directors is a group of individuals who represents the shareholders
and stakeholders of the organization and oversees the activities of the organization. They also
establish policies for corporate governance and management and takes decisions on major
issues of the company.
Separating the authorities of the Chairperson and the Chairman Ex Officio (CEO)
helps in better corporate governance as it allows focus not only towards the best interests of
the organization and business but also on its employees, environment, market and the
community. Any disputes in the focus can lead to conflicts of interests and therefore support

12EHICS, CSR and CORPORATE GOVERNANCE
the development of strategies that would prevent or minimize the adverse effects on any of
these focal points.
Question 21:
Board of Directors must actively participate in the organizations activities since that
can ensure a better monitoring of the work, developing realistic and practical policies as well
as understand the challenges faced by the organization in a better manner. Such information
and active involvement also help to make informed decisions taking into account the views of
the stakeholders, management and the employees.
Question 22:
Germany implements a two tier system of boards such as the Supervisory Board
(comprising of the shareholders as well as employee representatives) and the Executive
Board (comprising of individuals involved in the day to day decision making process). The
supervisory Board is informed by the shareholder meetings and the company’s employee
representatives, while they report to the Executive Board themselves. Such two tier system
can be utilized in UAE to ensure better corporate governance.
Question 23:
Conflicts within the members of the board can be resolved through effective conflict
management strategies. To resolve any conflicts the strategies that I would use includes i).
Identifying the points of views and biases of either side of the conflict. This can help to
prevent the egocentric causes of conflict and see the perspectives of either side. ii) Preventing
provocation or escalation of the conflict through proper handling of the conflict and ensuring
a professional and ethical environment is maintained throughout the conflict. iii) Support
better communication where the points of views or the perspectives of either side are

13EHICS, CSR and CORPORATE GOVERNANCE
presented properly and without biases. iv) Developing a comprehension of the deeper issues
that gave rise to the conflict and addressing those issues. v) Identifying the best methods to
address the problem. vi) Supporting an open and honest discourse of the problem and
challenges that caused the conflict.
Question 24:
While designing and delivering strategic directions of the organization such as
mergers it is important to involve the stakeholders, management, and board of directors and
the employees of the organization. It is vital that the perspectives, opinions and inputs from
all the levels of the organization is taken into account and how the strategic decision would
affect the performance at each level should be considered in the process.
Question 25:
Independent directors can support better governance of the organization because
independent directors can provide impartial and unbiased opinions and directives, they can
support the best interests of the company and its shareholders and prevent the influence of the
executive committee, helps in an in depth and comprehensive monitoring of the
organization’s activities, helps to identify potential scope for development, helps in better
conflict resolution through neutral decisions and preventing biased opinions, helps in sharing
the network of decision making process through mentorship. Independent Directors also acts
as better ‘watchdogs’ thereby identifying and preventing frauds or malpractice

14EHICS, CSR and CORPORATE GOVERNANCE