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Executive Summary
All businesses are grey. A loaded statement but one which befits today’s business milieu. The debate is on the shades of the color and not the color itself. Wealth creation precedes wealth distribution, an unalterable sequence. There is a growing realization that former belongs to the exclusive domain of business and the latter to a shared domain. Businesses demand autonomy from others to create wealth and others demand accountability from businesses for the wealth created. Both, autonomy and accountability are worthless in isolation. Accountable autonomy is the panacea.

Introduction
The world operates like a simple pendulum. Its microcosm, the business world is no exception. One extreme is autonomy and the other is accountability. It is hard to strike a balance between the two. Both are benign in their own space but too much of a good thing is also detrimental.

Business Ethics- Individual’s or Organization’s
Dis-connect between an employee and the ground realities widen as she moves up the ladder. Today, businesses are very target driven. At each level, targets are set and are interlinked. The performance of one’s superior is determined by one’s own performance and this process goes on till the very top echelons. Till such time one meets or surpasses the targets no questions are asked on the way of achieving those and disconnect mentioned earlier plays a huge role. It is only when the shortfall occurs, explanations are demanded and then also words like ethics are given a short shrift. In nutshell, only the end and not the means is what matters. In such an environment, where targets are means to not only success but more importantly survival, ethics boil down to a personal call. These calls have to be taken everyday by millions of people in real time with targets and survival at top of the mind.

Approaches to Corporate Governance
Over the years, two very distinct approaches to corporate governance have emerged. One is the mix of organization-control perspective and stakeholder-control perspective and other is based on capital market control.

The former approach sacrifices short-term focus at the altar of long-term sustainability. It is based on 1 person 1 vote dictum. The agreed upon goal for the management is to achieve stability and perpetuity of business. Board has representation of employees and society. Major chunk of equity comes from financial and non financial companies, which are ready to wait for longer periods for their investments to fructify. Firms are not too keen on going public thereby not lending themselves to the whims and fancies of markets. Employee welfare, obligation to local community, size and market share make up the essence of this approach. Myopic Market model by Marris is the fundamental pillar of this approach. According to this model, heeding the markets too much has a detrimental effect on the organization.

Excesses in this approach are created by managerial capitalism as executives are given a free hand in managing the show. At times, a host of objectives other than wealth creation are followed.

As the firm expands, it requires additional capital. If this capital is not forthcoming from stable sources like banks then the company has no other choice but to go public. This gives rise to capital market-control system. It is based on 1 share 1 vote dictum. The more the equity held by an investor, the more the firm is at her mercy. Investors are interested in the ends- dividends and capital gains. Hence, companies have to jostle for the mind space of these players. This brings in the short-termism of this approach. This perspective is based on Principal Agent model. Line is crossed in this approach when investor capitalism sets in. All other obligations of the firm are relegated to keeping the share price up and there is intense pressure on executives to perform consistently in the short-run leading at times to violation of norms.

Both the approaches are similar to the extent that they both give minority shareholders a short shrift. They have been taken for granted and most of their rights have remained on paper.

Lost Ground
Recently the stakeholder inclusive approach has lost considerable ground to shareholder savvy approach. The reason is capital becoming mobile. The global investors like private equity funds and pension funds are deluged with choices. But they lack one crucial element which the local investors have which is the closeness to the business which in turn lends stability to the equity provided. This means the firms have to attract these global investors by way of the globally acceptable parameters, toplines…
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Ihab Salloum