Corporate Governance and Ethics

Corporate Governance and Ethics

An Aristotelian Perspective

New Horizons in Leadership Studies series

Alejo José G. Sison

Corporate Governance and Ethics is an illuminating and practical reading of Aristotle’s Politics for today’s corporate directors. With a deft synthesis of ethics, economics and politics, Alejo Sison elevates the discussion of corporate governance out of the realm of abstract rules and structures into a more effective form of Aristotelian politics. He argues that corporate governance is a human practice where subjective, ethical conditions outweigh the mastery of techniques, since the firm is not a mere production function but, above all, a community of workers. Corporate governance issues are discussed in a holistic fashion, using international case studies to embed the discussion in environments defined by their economic, legal and cultural systems. One of the author’s key messages is that reform starts with the ethical and political education of directors.

Chapter 8: Governance as Praxis

Alejo José G. Sison

Subjects: business and management, business leadership, corporate governance, economics and finance, corporate governance, financial economics and regulation, politics and public policy, leadership

Extract

So far, we have gone through the different political regimes described by Aristotle and we have seen how they apply to various corporate governance contexts. The time has come for us now to identify and expound on what could be the Stagirite’s main contribution to this ongoing discussion: the understanding of governance as a kind of an activity that comes under the name of praxis. In their work on the corporate governance practices in Flemish family businesses, Van den Berghe and Carchon (2002) designed a framework that could prove to be very helpful in our study. They distinguished among five different perspectives from which the exercise of corporate governance could be analysed. Corporate governance could be understood at (1) the level of the board of directors, from (2) the so-called ‘corporate governance tripod’ that brings together shareholders, directors and management, from (3) the angle of a firm’s direct stakeholders, such as its employees, suppliers and customers, from (4) the viewpoint of a firm’s indirect stakeholders – that is, government, the environment and society at large – and finally, from (5) an all-encompassing global angle that accounts for the economic and legal systems apart from the culture, values and norms in which a business organization is embedded. The majority of studies concerning corporate governance focus exclusively on a single one of these levels, inadvertently ignoring the others which, nevertheless, could also be very significant. Van den Berghe and Carchon’s framework possesses the additional merit of being quite intuitive or readily...

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