Whistleblowers - The New Corporate Conscience Keepers?
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Code : GOV0002
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Region : USA |
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Introduction: In the early 1990s, Harvard professors John Kotter and James Heskett undertook a study of the performance of 217 large businesses.They found that a corporate culture that called for paying attention to all stakeholders and taking their views into account during decision-making had a significant positive impact on the company’s long-term economic performance.2 In complete antithesis to this finding, by 2001, the corporate world had been hit by a slew of scandals involving high-profile corporate fraud _ Enron, Tyco,WorldCom, Adelphia and in early 2004, Parmalat. Stakeholder confidence plummeted to an all-time low and the US Congress quickly passed the Sarbanes-OxleyAct in July 2002 (Annexure I). Business leaders like John Bogle, the founder of Vanguard Group, and Bill George, the former chief executive ofMedtronic no longer believed in the ‘few bad apples’ theory and started questioning the efficiency of the capitalist system in checking such acts of malfeasance.3 Many causes were espoused for it _ the prevailing investment system, emergence of a “culture of greed” , increased complexity of organizations, ill-functioning boards, the failure of regulatory bodies and the rise of the ‘imperial chief executive’. Amidst the rubble, there was a clear call from all stakeholders for a greater corporate compliance to ethical standards.... |
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