Internal corporate governance and personal trust
Abstract
There are various indications that corporations and their leaders are currently not perceived as trustworthy. This decline in trust is one of the factors that has contributed to the rise of interest in corporate governance. There is an explicit expectation that an adherence to the principles and practice of good corporate governance will bolster the trust of stakeholders in business. It is exactly this expectation that provides the focus for this article. The expectation that good corporate governance will result in higher levels of trust will be critically examined. This will be done by first making some crucial distinctions regarding corporate governance in order to clarify what kind of corporate governance is at stake in the examination that is to follow. Also, with regard to the concept of ‘trust’, a number of important distinctions will be made to clarify what is meant by trust within the context of this paper. Against the backdrop of these distinctions regarding corporate governance and trust, the question will then be refined as to whether, specifically, internal corporate governance can bolster the perceptions of trustworthiness that stakeholders have of business. Principles and practices of internal corporate governance will then be critically examined to determine their potential for enhancing stakeholders’ perceptions of the trustworthiness of corporations and their leaders.ÂDownloads
References
Becerra, M. & Huemer, L. 2002. Moral character and relationship effectiveness: An empirical investigation of trust within organizations. In Von Weltzien Hoivik (ed.) Moral leadership in action. Cheltenham, UK: Edward Elgar.
Bews, N.F. 2000. An investigation into the facilitators of the trustworthiness of managers. Doctoral dissertation. Johannesburg: Rand Afrikaans University.
Bews, N.F. & Rossouw, G.J. 2002. A role for business ethics in facilitating trustworthiness. Journal of Business Ethics, 39: 377–390.
Bigley, G.A. & Pearce, J.L. 1998. Straining for shared meaning in organization science: Problems of trust and distrust. The Academy of Management Review, 23(3): 405–421.
Breeden. R.C. 2003. Restoring trust. New York: Report to the United States District Court for the Southern District of New York.
Brenkert, G.G. 1998. Trust, morality and international business. Business Ethics Quarterly, 8(2): 293–317.
Coffee, J.C. 1998. Inventing a corporate monitor for transitional economies: The uncertain lessons from the Czech and Polish experiences. In K.J. Hopt et al. Comparative corporate governance: The state of the art and emerging research. New York: Oxford University Press. pp. 67–138.
Collier, J. & Robberts, J. 2001. An ethic for corporate governance? Business Ethics Quarterly, 11(1): 67–71.
Crotty, A. 2004. Called to account. Directorship, March: 19. Dibben, M.R. 2000. Exploring interpersonal trust in the
entrepreneurial venture. London: MacMillan Press. Engelbrecht, A.S. & Cloete, B.E. 2000. An analysis of a supervisor-subordinate trust relationship. Journal of
Industrial Psychology, 26(1): 29–38.
Evan, W. & Freeman, R. 1993. A stakeholder theory of the modern corporation: Kantian capitalism. In T. Beauchamp & N. Bowie (eds.) Ethical theory and business (4th edition). New Jersey: Prentice Hall.
Flores, F. & Solomon, R.C. 1998. Creating trust. Business Ethics Quarterly, 8(2): 205–232.
French, P. 1993. The corporation as moral person. In T.I. White (ed.) Business ethics: A philosophical reader. New York: MacMillan.
Garratt, B. 2003. Thin on top. London: Nicholas Brealey. Goodpaster, K.E. 2004. Ethics or Excellence? Conscience as a check on the unbalanced pursuit of organizational goals. Ivey Business Journal, March/April: 1–8.
Granovetter, M. 1985. Economic action and social structure: The problem of embeddedness. American Journal of Sociology, 91: 481–510.
Hosmer, L.T. Trust: The connecting link between organisational theory and philosophical ethics. Academy of Management Review, 20(2): 379–403.
Husted, B.W. 1998. The ethical limits of trust in business relations. Business Ethics Quarterly, 8(2): 233–248
IFAC. 2004. Enterprise governance: Getting the balance right. International Federation of Accountants. [Online]. Available: www.ifac.org. Accessed in February 2007.
Ilett, D. 2004. How socially responsible is your company? Directorship, March: 10–11.
IoD. 2002. King Report on Corporate Governance for South Africa 2002. Johannesburg: Institute of Directors.
Kaptein M. & Wempe, J. 2002. The Balanced company: A theory of corporate integrity. Oxford: Oxford University Press.
Kist, E. 2002. Restoring and building trust in a turbulent world. Paper delivered at Yale University on 15 November 2002.
Mayer, R.C., Davis, J.H., & Schoorman, F.D. 1995. An integrative model of organizational trust. Academy of
Management Review, 20(3): 709–734.
McKinsey and Company. 2001. Investor opinion survey on corporate governance. London: McKinsey and Company.
McKinsey & Company. 2002. Investor opinion survey on corporate governance. London: McKinsey and Company.
Mishra, A.K. 1996. Organizational responses to crisis: The centrality of trust. In R.M. Kramer & T.R. Tyler (eds.) Trust in organizations: Frontiers of theory and research. Thousand Oaks, California: Sage.
Monks, R.A.G. & Minow, N. 1995. Corporate governance. Oxford: Blackwell.
OECD. 2004. OECD principles of corporate governance. Paris: OECD Publications.
Payne, N. 2004. Board Effectiveness. Directorship, March: 6–7.
Reinecke, M.P.A. 1996. Effective corporate governance: A South African perspective. Masters dissertation. Johannesburg:
Rand Afrikaans University.
Robbins, S.P. 1997. Essentials of organizational behaviour (5th edition). Upper Saddle River, NJ: Prentice-Hall.
Romano, R. 1998. Empowering investors: a market approach to securities regulation. In K.J. Hopt et al. Comparative corporate governance: the state of the art and emerging research. New York: Oxford University Press. pp. 143–217.
Rossouw, D., Van der Watt, A. & Malan, D. 2002. Corporate Governance in South Africa. Journal of Business Ethics, 37: 289–302.
Rossouw, G.J. & Van Vuuren, L.J. 2003. Modes of managing morality: A descriptive model of strategies for managing ethics. Journal of Business Ethics, 46: 389–402.
Seiling, J.G. 1997. The membership organization. Palo Alto (CA): Davies-Black.
Shapiro, 1987. The social control of impersonal trust. American Journal of Sociology, 93(3): 623–658.
Shleifer, A. & Vishny, R.W. 1997. A survey of corporate governance. The Journal of Finance, LII(2): 737–783.
Smerden, R. 1998. A practical guide to corporate governance. London: Sweet & Maxwell.
Soule, E. 1998. Trust and managerial responsibility. Business Ethics Quarterly, 8(2): 249–272.
Verstegen Ryan, L. & Buchholtz, A.K. 2001. Trust, risk and shareholder decision making: an investor perspective on corporate governance. Business Ethics Quarterly, 11(1): 177–193.
WEF. 2003. Declining public trust foremost a leadership problem. World Economic Forum. [Online]. Available: www.weforum.org.
Wieland, J. 2005. Corporate governance, values management, and standards: a European perspective. Business and Society, 44(1): 74–93.
This journal is an open access journal, and the authors and journal should be properly acknowledged, when works are cited.
Authors may use the publisher's version for teaching purposes, in books, theses, dissertations, conferences and conference papers.
A copy of the authors’ publisher's version may also be hosted on the following websites:
- Non-commercial personal homepage or blog.
- Institutional webpage.
- Authors Institutional Repository.
The following notice should accompany such a posting on the website: “This is an electronic version of an article published in the African Journal of Business Ethics, Volume XXX, number XXX, pages XXX–XXX”, DOI. Authors should also supply a hyperlink to the original paper or indicate where the original paper (http://ajobe.journals.ac.za/pub) may be found.
The following Creative Commons license applies:
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
