Corporate Governance and Ethics: Analysis of a German Start-up Company

This essay delves into the critical aspects of corporate governance and business ethics, focusing on a case study of a start-up software company, Cosmos Pvt Ltd, based in Germany. It begins by highlighting the increasing importance of ethical practices in today's competitive business environment. The essay outlines the company's Code of Ethics, emphasizing key elements such as integrity, community involvement, transparency, data protection, effective communication, and respect for diversity. The role of the CEO in implementing and monitoring the Code of Ethics is thoroughly examined, including the CEO's responsibilities in raising awareness, providing training, and holding parties accountable for unethical behavior. The essay concludes by emphasizing the significance of a well-defined Code of Ethics for fostering ethical conduct and ensuring long-term organizational success. The essay also briefly mentions the optimal internal corporate structure for a Public Limited company in Ireland, addressing key issues including the Board structure, duties and obligations on directors, necessary sub-committees and basic internal control requirements. It also considers the differences in directors’ obligations if the company was based in the USA.

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Corporate Governance and Ethics

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In today’s competitive business world, the intensity of competition has increased
substantially between organisations. Many times, the management of companies rely on
unethical and immoral way to generate a competitive advantage in the industry. These
incidents highlight the importance of corporate governance and business ethics in
companies. Corporate governance policies are a set of rules, policies and procedures which
guide and control the operations of a company (Harlalka, 2012). These policies assist
companies in making a balance between the interests of their stakeholders. The senior
executive officers in a company play a crucial role in ensuring that they comply with ethical
and corporate governance policies while taking business decisions (Solomon, 2016). They
have to implement a Code of Ethics in the business to continuously monitor its operations in
order to avoid unethical practices. The purpose of this essay is to outline the Code of Ethics
(Value statement) of a start-up software company based in Germany called Cosmos Pvt Ltd.
This essay will evaluate various factors which are included in the Code of Ethics of the
company to ensure that the management conducts their operations in ethical manner.
Lastly, as the CEO of the company, various actions will be evaluation to ensure the
implementation and monitoring of the code of ethics.
A Code of Ethics is referred to a guide in the organisation which contains principles that are
designed to assist professionals in conducting the business honestly and with integrity. This
document outlines the mission and values of the company to understand how professionals
are supposed to approach business issues and challenges (Davidson and Stevens, 2012). This
document is an overview of the ethical principles and core values of the organisation based
on which its management makes business decisions. It is an ‘ethical code’ which
encompasses principles from different areas such as business ethics, employee code of
conduct and a code of professional practice. The senior-level executives of a company are
responsible for preparing the code of ethics of the company. With the popularity of
corporate governance policies, the importance of outlining a code of ethics has become a
significant part of businesses (Solomon, 2016). It is also the case with start-ups which have
just started their operations. Start-ups face competition from large enterprises along with
small businesses, it requires the managerial personnel to ensure that they choose ethical
ways to manage the operations of the company. In Germany, the government encourage

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companies to adopt a code of ethics and comply with the same in order to ethically manage
their operations.
The code of ethics or value statement of Cosmos Pvt Ltd focuses on embracing diversity in
the workplace and encouraging its members to maintain highest standards while
discharging their duties. Integrity is a key element which is central to protecting the
reputation of corporations (Soltani and Maupetit, 2015). The value statement of Cosmos
focuses on giving back to the community in which the company serves. All the members of
the start-up dedicate one day in a month to give back to the community by working with
local charities and volunteering. The start-up is honest and transparent towards its
stakeholders. The company focuses on protecting the data of its clients who use its software
and maintain transparency to ensure that relevant factual information is received by them
within appropriate timeframe. Another key element is that the company focuses on
protecting the sensitive information of its customers and employees. All the sensitive data
of clients and employees are stored with high security, and utmost care is taken by the
executives to ensure that this data is not accessible to third parties. The value statement
highlights the effective communication between the start-up and its members to ensure
that they are able to disclose their issues to the management. In Germany, authorities
impose fines around €100 million and in many cases more on companies if they engage in
corruption-related activities (Lexology, 2018). Corruption investigations have become
frequent in Germany due to which the company has implemented these policies to avoid
corruption in its operations and promote integrity.
Continuous and timely disclosures are a key part of the value statement of corporations in
which the start-up reveals information regarding the actions taken by the management
towards maintaining balance between its stakeholders (Chapple and Truong, 2015). The
start-up discloses information regarding conflicts of interest which affects its stakeholders.
The company has also committed to treating others with respect. It is important that the
company must have mutual respect towards its stakeholders in order to understand their
issues and implement appropriate policies to address them. Treading others with respect
include encouraging diversity in the workplace. German legal system recognises gender
equality as a fundamental right based on which discrimination in the workplace for reasons
such as religion, age, disability, sexual orientation, gender or race is considered a crime.

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Cosmos also avoid discrimination in the workplace when it comes to the hiring of new
employees or giving growth opportunities to existing workers. Awareness regarding these
policies is spread among all workers, and they can easily approach the top level
management if they face any issue relating to discrimination in the workplace as per the
value statement of the start-up (Kim, Kang and Ahn, 2013). The start-up also focuses on fair
pay for equal work based on which all employees receive fair compensation for their work
which also includes employee benefits.
A duty is imposed on the CEO of the start-up to ensure effective compliance with the Code
of Ethics of the company. If the senior level executives did not support the value statement
of the company, then it becomes difficult for others to comply with these policies as well.
The role of the CEO of the enterprise is to ensure that its operations are managed in an
ethical manner; the CEO plays a crucial role in order to ensure that these policies are
implemented and monitored in the start-up (Garcia-Sanchez, Rodriguez-Dominguez and
Gallego-Alvarez, 2013). CEO has a duty to communicate with employees to increase
awareness regarding the code of ethics of the company. The CEO engages with employees
and raise awareness between them to become their ‘ethical idol’. Without ethical
leadership, it is difficult for a company to comply with corporate governance and business
ethics principles. The CEO continuously monitors the actions of middle and low-level
managers and their attitude with employees to ensure that they did not promote unethical
behaviour in the workplace. Supporting context and culture is another important job of the
CEO to ensure that employees from other cultures did not face discrimination (Shin, 2012).
The CEO must hold parties accountable for discriminatory behaviour in order to teach a
lesson to everyone that discrimination will not be tolerated in the company. A good
example is an action taken by the CEO of Google by firing a senior developer of the company
who sends a discriminatory memo in the workplace.
Along with being an ethical idol for everyone, the CEO must also ensure that appropriate
training and education facilities are available for employees that assist them in complying
with the code of ethics. Employees have different values and beliefs and it important that
they must match with the value statement of the company in order to promote the
collaborative working environment. Training and education assists employees in learning
about key business policies in the company which they have to understand in order to

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discharge their duties in ethical manner (Harkrider et al., 2012). It also assists them in
learning about the cultural aspects of other employees which avoids stereotyping and
discriminatory behaviour in the workplace. Moreover, the CEO must implement policies for
monitoring and accountability of parties for their unethical actions. Monitoring and
accountability are key elements of good corporate governance which enable employees in
reporting queries to the management and resolve them within appropriate framework
(Solomon, 2016). Along with employees, the managerial personnel also held accountable for
their unethical behaviour in the organisation.
In conclusion, the importance of a code of ethics or value statement has increased
substantially between corporations as the number of cases involving unethical behaviours
increases. The case of Cosmos which is a Germany based start-up software company is
taken to understand the key elements of the code of ethics of the organisation. The
company focuses on integrity and promoting diversity in the workplace. The member
engages in community development activities, and transparency is maintained regarding
protection of data of clients and employees of the company. The company communicates
with its members, and it respects others to avoid discrimination between employees. The
CEO of the company plays a crucial role in the implementation and monitoring of the code
of ethics. The CEO communication and raise awareness regarding these policies in the
company and become an ethical idol for others. The CEO provides support to employees
from different cultures, and training facilities are given to employees as well so that they
familiarise themselves with the value statement principles. The CEO also monitors the
compliance with ethical policies and hold the parties accountable for their actions based on
which the start-up is able to effectively comply with its code of ethics.

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References
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