Discuss how corporate governance can support ethical strategic decisions?

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farouk23 eNotes educator| Certified Educator

Corporate governance is the overarching framework for the control and management of business organizations. Corporate governance includes internal corporate structures, government and industry regulation as well as internal rules and policies. Corporate governance can play a huge role in the ethical strategic decision making process of organizations, some of the reasons for this are:

  1. Threat of prosecution- This pertains particularly to government regulations and laws, corporations would make ethical decisions so as not to fall afoul of the law.
  1. Industry pressure – In industries that have large associations and regulatory bodies, there are certain standards and practices that need to be adhered to in order to remain in good standing. In certain situations, being labelled as unethical could result in loss of status and revenue.
  1. Internal controls – In order to remain ethical and present a good public image, company’s sometimes adopt internal policies that promote ethical behaviour and encourage good corporate stewardship.