Ethical challenges to the governance practices of corporate leaders in the 21st century

Ethics has become an important component of corporate governance. Corporate governance decisions about engagement in corporate social responsibility are addressed by many researchers as a corporate issue determined for the most part by strategic motives and somewhat less by altruism. However, it is the leaders of organisations who make the choices about strategic positioning, and how they direct people and resources can influence corporate objectives such as those concerning corporate social responsibility. The purpose of this paper is to consider why corporate social responsibility is a legitimate responsibility for the leaders of companies and to explore how some ethical theories can explain the involvement of leaders in CSR issues. The paper discusses what is meant by corporate social responsibility, why corporate leaders are increasingly supporting CSR and the extent to which the major ethical theories assist corporate leaders to make ethical decisions about CSR. It addresses the questions: What does corporate social responsibility mean? Do corporate leaders have social responsibilities for stakeholders, including responsibilities to consumers, employees and government, and to society? If a corporation is more than a profit-making institution, what is the ethical and moral basis of its responsibilities, and to what extent do ethical theories assist corporate leaders in making ethical decisions about corporate social responsibility? The paper shows that the traditional ethical theories of ethical egoism, teleology and deontology appear to offer inadequate guidance for leaders who operate in complex environments and face complex problems. It concludes that a challenge for researchers is to provide ethical models that can assist leaders manage the moral dilemmas emerging from decisions involving the multiple stakeholders in corporate social responsibility issues