With increased globalization and centralization of information management, ethics, accountability, and transparency have increasingly become important aspects of governance in the contemporary world. Many studies have examined these concepts independently by defining and redefining them and their frameworks but only a handful of studies have examined the relationship between them. The relationship between these concepts is underscored by the explosion of technologies in different sectors that have enabled the rapid dispersion of ideas and practices hence enabling the stakeholders to demand high standards of transparency, ethics, and governance in the public sector as well as in the private sector. The prerequisite features of good governance and sustainable stability not only necessitates responsive policies and high levels of governance performance but also act as vital measures in preventing the spread of systemic corruption (Mabillard and Zumofen, 2017). The recent incidences of corruption such as the Enron scandal demonstrate that corruption inhibits economic development, undermines organizational stability, and erodes trust in institutions. According to the United Nations Public Administration Network (2010), corruption is an indicator of poor administration and mismanagement in an organization. These situations allow unscrupulous officials to create an environment that undermines organization's integrity, inhibits transparency and accountability. Thus, the relationship between accountability, ethical governance, transparency, and organizational stability is demonstrated where failure in one of the values leads to the inadequacies of the other values hence undermining organizational stability.
In the recent past, there has been increasing studies into how organizations are perceived in relation to how their organizational principles and cultures are aligned with the implicit and explicit values system. These studies strive to understand whether the business leaders are the sole determinants of what is acceptable or whether it involves collective action of employees. Johnson (2013) pointed out that leaders are considered as ethics ambassadors whereby they cast light or darkness by setting an example through their actions. In this regard, ethical leaders prioritize on ethical considerations in their organizations by creating environments that promote moral and transparent conduct by leaders and followers. However, it is important to note that there are situations that could compromise a leader to act below the standards of integrity. For this reason, there is the need to establish an accountability system that marginalizes efforts of discrediting the reputation of the organization in the market.
Features of Ethical Governance in an Organization
The organizational culture defines the limits within which a company operates. While creating an environment that facilitates better outcomes for the stakeholders, the values holding a company together must depict how the future of the company is aligned with the market needs. Although the leadership of a company is important in promoting ethical practices, a study by Johnson (2013) shows that the leadership of a company does not influence the ethical climate. Ideally, high performing organizations are thought to have leadership of high moral integrity which is reciprocated by the subordinates. It is important to note that the organizational culture should depict how the company hopes to deliver services and produce goods. However, this changes during times of crisis whereby the level of moral and ethical integrity depends on how the business leaders justify their actions. In determining the patterns of these behaviours and decisions, it is vital to note that they are subjective to how the limits are defined and maintained across different levels of the company. This paradigm is also subject to the company's position in relation to the society's norms and customs.
Ethical governance is a prerequisite to the development of an organizational culture because a constant understanding and respect for the policies lowers the likelihood of an organization or the leaders abusing their authority. Some scholars have attributed the level of ethics in an organization to the structure of the board of governors and the stakeholders (Cumming et al., 2016). The impact of the level of business ethics is demonstrated in situations whereby implementation of better corporate governance methods improves the performance of a firm by reducing its cost of capital. Cumming et al. (2016) point out that this demonstrates the qualities for the existence of ethical governing boards which aim at reducing expenses and increasing profits. Therefore, a check and balance system for monitoring the process of decision-making is not only an efficient but also a conservative way of reducing wastage of resources.
According to Mabillard and Zumofen (2017), ethical governance refers to the way in which a company manages the collective action from the perspective of the interests of the majority hence preventing unethical behaviour and ensuring better control of the powers of the company's managers. In other words, ethics aim at raising awareness of other people's rights and the common needs by instituting principles on minimal requirement on conduct. In this view, ethical governance is perceived as a system of shared and transparent governance that aims to create a framework and procedures for leaders of business organizations through enforcement of values of responsibility, professionalism, and transparency.
Many organizations implement different techniques of ensuring they maintain competitive advantage over the competition. In other words, they strive at maintaining organizational stability while pursuing ways of growing the company. Organizational stability relies on the relationships that involve its ability to promote its ethical values sustainably. To promote its ethical values to other players in the market, the organization should adopt an approach based on normal practices rather than new practices. In other words, the company should not compromise its mission and vision. Cremers (2015) defines an organization as a community comprising of different people working together in collaborative efforts toward the shared objective of contributing to human improvement. Hence, focusing on the growth of individual's ability within the system leads to creating a mutual understanding in the way the organization increases its competitive advantage and organizational stability.
According to Stanciu (2017), the country and the society in which an organization operates in determine the organizational structures. This is an important consideration because a company's microcosmic views generally reflect the public sphere. For example, the strength of a corporate structure is considered by the following Maslowian needs for the individual: safety, belonging, esteem, and self-awareness (Csikszentmihalyi, 2000). These needs can be extrapolated to include their contribution to the organization. Therefore, organizational stability can be perceived as an issue of convenience based on which needs outweigh the other. The causal relationship between how the corporate structure affects these needs depicts the organizational stability to produce and deliver services sustainably.
Transparency and Accountability
With the advent of an era of information, the public and private sectors are not immune to demands for details about moral obligations and ethical practices. As noted by Brandtzaeg and Folstad (2017), the degree of a company's transparency is dependent on the accuracy of its sources. In many organizations, the significance of transparency is critical to its culture so as to enable its stakeholders to determine their preferred investment and embrace the idea of organization's values. However, for certain institutions such as security and military institutions, controlling privileges to only pertinent roles is critical to the well-functioning of the organization's structure.
Typically, the degree of transparency of a company depicts how relatable it is because accountability is attributed to a sense of humility and respect for public opinion (Mabillard and Zumofen, 2017). This was demonstrated in Donald Trump's campaign which gave the perception that the candidate was transparent which resultantly attracted many Americans. Trump's campaign seemed attractive to people who were looking for an alternative to the view that the corrupt American politics required a candidate who would transact differently. As noted by Hall, Goldstein, and Ingram (2016), Trump's wing was perceived as an establishment that debilitated the rhetoric of political correctness. Regardless of whether Americans accepted him or not, his ability to demonstrate transparency and accountability for his actions earned him competitive advantage over the opponents.
In the same way, a business organization must demonstrate such levels of accountability and transparency in order to improve its competitiveness in the respective market. Withholding information leads to abuse of power and privileges. In addition, it makes it difficult for the business leaders to act accordingly as required by the members of the society (Johnson, 2016). The perception that a business acts in accordance with the society's interest creates public trust. The society's reception of an organization's transparency relies on the purpose of either being amused, persuaded, or informed to the needs of the business. For this reason, the business must create a reliable source by providing evidence that its activities do not go against the interests of the society. In other words, the business must increase the levels of transparency and accountability in order to promote public trust.
In conclusion, business leaders are ethics officers who illuminate light or darkness in their organizations by setting an example through their actions. The components of transparency, organizational stability, and governance are intertwined as the connection between each is unique to the needs of an organization. The ethics governance and the value system of a company must work collaboratively with the ideals of people in the organizational structure. While creating an environment that promotes the best outcomes for the investors, the core values of a company must demonstrate how the organization responds to the needs of the market. The significance of ethics governance is demonstrated through the creation of limits and procedures that control the activities and powers of business leaders hence preventing corruption and abuse of power. In other words, ethics governance helps in the development of a good organizational culture that underscores the value of transparency and organizational stability. The organizational culture developed ensures that the vision and mission of a company as well as its activities are aligned with the interests of the society and the market. In this regard, the level of transparency exhibited by the organization's leadership determines the level of public trust in the company as well as the degree of organizational stability.
Brandtzaeg, P. B., & Folstad, A. (2017). Trust and distrust in online fact-checking services. Communications of the ACM, 60(9), 65-71.
Cremers, M. (2017). What corporate governance can learn from catholic social teaching. Journal of Business Ethics, 145(4), 711-724.
Csikszentmihalyi, M. (2000). The costs and benefits of consuming. Journal of consumer Research, 27(2), 267-272.
Cumming, D., Hou, W., & Lee, E. (2016). Sustainable and ethical entrepreneurship, corporate finance and governance, and institutional refo...
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