The Essential Component of Corporate Governance
Center for International Private Enterprise
ECONOMICREFORM
Feature Service®
January 12, 2006
Business Ethics: The Essential Component of Corporate Governance
John D. Sullivan, Ph.D.
Executive Director, CIPE
Aleksandr Shkolnikov,
Program Officer, Global, CIPE
Given financial scandals and the resulting new mandates on business, firms find themselves pressed to develop strong codes of ethics to guide the behavior of board members, managers, and employees. Although the concern with ethics has always been a part of doing business, business leaders today are beginning to think about ethics as a set of principles and guides of behavior rather than a set of rigid rules. In this sense, business ethics is not only an attempt to set a standard by which all of the employees of a firm can know what is expected, but it is also an attempt to encourage employees, managers, and board members to think about and make decisions through the prism of a shared set of values. Future debates will center on the relative roles of the triangle of business, government, and NGOs in establishing these standards, as they find a way to meet high ethical standards and, at the same time, ensure that the reputational and collateral risks assumed by corporations do not inhibit the further development of the emerging markets.
Center for International Private Enterprise an affiliate of the U.S. Chamber of Commerce 1155 Fifteenth Street NW • Suite 700 • Washington, DC 20005 • USA ph: (202) 721-9200 • web: www.cipe.org • e-mail: cipe@cipe.org
published by the
Center for International Private Enterprise
Business Ethics: The Essential Component of Corporate Governance
Introduction
Business ethics and corporate governance have become key factors influencing investment decisions and determining the flows of capital worldwide. In part, this is the result of recent scandals in both developed and developing countries. However, in a more positive sense, the growing demand for good governance also flows from the
ECONOMICREFORM
Feature Service®
January 12, 2006
Business Ethics: The Essential Component of Corporate Governance
John D. Sullivan, Ph.D.
Executive Director, CIPE
Aleksandr Shkolnikov,
Program Officer, Global, CIPE
Given financial scandals and the resulting new mandates on business, firms find themselves pressed to develop strong codes of ethics to guide the behavior of board members, managers, and employees. Although the concern with ethics has always been a part of doing business, business leaders today are beginning to think about ethics as a set of principles and guides of behavior rather than a set of rigid rules. In this sense, business ethics is not only an attempt to set a standard by which all of the employees of a firm can know what is expected, but it is also an attempt to encourage employees, managers, and board members to think about and make decisions through the prism of a shared set of values. Future debates will center on the relative roles of the triangle of business, government, and NGOs in establishing these standards, as they find a way to meet high ethical standards and, at the same time, ensure that the reputational and collateral risks assumed by corporations do not inhibit the further development of the emerging markets.
Center for International Private Enterprise an affiliate of the U.S. Chamber of Commerce 1155 Fifteenth Street NW • Suite 700 • Washington, DC 20005 • USA ph: (202) 721-9200 • web: www.cipe.org • e-mail: cipe@cipe.org
published by the
Center for International Private Enterprise
Business Ethics: The Essential Component of Corporate Governance
Introduction
Business ethics and corporate governance have become key factors influencing investment decisions and determining the flows of capital worldwide. In part, this is the result of recent scandals in both developed and developing countries. However, in a more positive sense, the growing demand for good governance also flows from the