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Keywords: ethics; governance; stakeholders
Corporate governance has gained unprecedented prominence in recent years. The failures and successes of modern corporations are equally responsible for this rise in prominence. Modern corporations thus are not simply victims of external conditions that have imposed corporate governance on them but also created the very circumstances that made corporate governance imperative. It cannot be denied that spectacular corporate failures and the abuse of managerial power contributed significantly to the rise in prominence of governance. However, neither can it be denied that the phenomenal growth in social power and influence of corporations equally contributed to them taking responsibility for balancing their own interests with those of the societies and the natural environment in which they operate.
Corporate governance is geared toward ensuring that companies take responsibility for directing and controlling their affairs in a manner that is fair to their stakeholders. Two qualifications however need to be added immediately. First, this responsibility can either be taken voluntarily by the boards of directors of companies or it can be imposed on them by regulating authorities or by a combination of both. second, the scope of stakeholders toward whom the company should be responsible is a contested issue in corporate governance, as some corporate governance regimes restrict these stakeholders almost exclusively to shareholders, while other corporate governance regimes are much more inclusive with regard to stakeholders who fall within the ambit of corporate responsibility.
Irrespective of how corporate governance is conceived in terms of these two qualifications, it still has a distinct ethical character. This ethical character is reflected in the fact that corporate governance requires companies to take responsibility for their impact on societies and on their stakeholders. It therefore is not surprising that the rise in prominence of corporate governance coincided with a rise in prominence of business ethics.
The articles in this special forum are the outcome of a research project intended to gauge what the impact of recent corporate governance reforms are on the role and prominence of business ethics in companies. The research project was initiated by the International Society for Business, Economics and Ethics (ISBEE), and the findings of the project were first presented at the Third ISBEE Quadrennial World Congress in Melbourne, Australia, in 2004.