Business Ethics and Corporate Governance
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Chapter 3 : The Ethical Organization and its Corporate Code
The Ethical Organization - An overview
Characteristics of an ethical organization
Corporate moral excellence
Stakeholders Corporate governance
Definition of corporate code
Development of corporate code
Implementation of corporate code
Chapter Summary
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In this chapter we discussed the characteristics of an
ethical organization and the development and implementation of a corporate
code. Three theories are commonly used to judge the ethical nature of
organizations: theory of corporate moral excellence, ethics and
stakeholder theory and ethics and corporate governance.
According to the first theory, the culture and values of an organization
play an important role in developing an ethical organization. The second
theory states that the behavior of the management towards its stakeholders
plays a pivotal role in building an ethical organization. And according to
third theory, good governance is necessary for building an ethical
organization. |
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Organizations frame corporate codes that lay down
ethical standards for employee behavior. The development of a corporate code
involves identifying the key behavior, reviewing the codes
containing the key behavior, communicating by distributing copies of
the code and, finally, updating the codes according to the laws and
regulations. Once the code is developed, it has to be implemented. An
approach proposed for implementing the corporate code involves
organizational structure, coordination, motivation and communication.
If an organization develops a corporate code to guide the behavior of its
employees, and if the company's'Espoused and Values in practice are aligned
then the organization can be termed as ethical organization.
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