Toyota: an Example of “Good” Corporate Governance
1.0 INTRODUCTION
Corporations the world over have been publicly criticized for improving their firm’s bottom line at any moral or social cost. Ethics essentially “refers to the issues of right, wrong, fairness and justice.” Clearly, examples such as Enron, WorldCom, and even Conrad Black tested society’s views on sound ethical business and the link to what society sees as “good” governance practices. Although the controversies involve issues matched in variety only by the types of companies, they all virtually involve some form of abuse of stakeholders trust. These cases are not representative of the entire spectrum of today’s business environment; in fact, there are a number of companies whose competitive advantages are based on “good” corporate governance practices – namely stakeholder involvement. As a result, I have chosen to present and explore in this essay the practices of one such company: the Toyota Motor Corporation while highlighting its “good” corporate governance principles.
2.0 TOYOTA
Toyota is a global leader in automotive sales, technology and production while also retaining one of the world’s most recognizable and highly valued brands. At the heart of their success is the innovative and groundbreaking production methods made possible by the company’s recognition of the value of employee empowerment. Employee involvement is defined as “consist[ing] of a variety of systematic methods that empower employees to participate in the decisions that affect them and their relationship with the organization.” At Toyota, the company has employed these proven techniques of co-determination to encourage employee, and supplier involvement in their decision making process, since these practices “help improve both the ability and attitude” of stakeholders. In fact, one of the guiding principles of Toyota requires the company to “foster a corporate culture that enhances individual creativity and teamwork value, while honouring (sic) mutual trust and
Corporations the world over have been publicly criticized for improving their firm’s bottom line at any moral or social cost. Ethics essentially “refers to the issues of right, wrong, fairness and justice.” Clearly, examples such as Enron, WorldCom, and even Conrad Black tested society’s views on sound ethical business and the link to what society sees as “good” governance practices. Although the controversies involve issues matched in variety only by the types of companies, they all virtually involve some form of abuse of stakeholders trust. These cases are not representative of the entire spectrum of today’s business environment; in fact, there are a number of companies whose competitive advantages are based on “good” corporate governance practices – namely stakeholder involvement. As a result, I have chosen to present and explore in this essay the practices of one such company: the Toyota Motor Corporation while highlighting its “good” corporate governance principles.
2.0 TOYOTA
Toyota is a global leader in automotive sales, technology and production while also retaining one of the world’s most recognizable and highly valued brands. At the heart of their success is the innovative and groundbreaking production methods made possible by the company’s recognition of the value of employee empowerment. Employee involvement is defined as “consist[ing] of a variety of systematic methods that empower employees to participate in the decisions that affect them and their relationship with the organization.” At Toyota, the company has employed these proven techniques of co-determination to encourage employee, and supplier involvement in their decision making process, since these practices “help improve both the ability and attitude” of stakeholders. In fact, one of the guiding principles of Toyota requires the company to “foster a corporate culture that enhances individual creativity and teamwork value, while honouring (sic) mutual trust and
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