Thursday, September 20, 2007

THEORIES OF CORPORATE GOVERNANCE

By Emmanuel Q. Fernando
In PLDT President Manuel V. Pangilinan’s keynote speech at the 43rd annual meeting of the Philippine Economic Society in November, when he had just been chosen as “Management Man of the Year” by the Management Association of the Philippines he likened corporate governance with public governance. “It is tempting—if not hazardous—to draw similarities between corporate governance and public governance, between our experience at PLDT and our view of the Philippine economy.”
He argued that public governance has much to learn and benefit from the financial cost-cutting and income-generating techniques and measures used in corporate governance, and provided the example of his stewardship of PLDT, to show how a once problematic and cash-strapped company can be transformed into a booming and profitable one. This series of articles, instead, will focus on the other aspect of the relationship between corporate and public governance: that is, whether corporations should take upon the functions of public governance.
The classical view, as presented in Friedman’s seminal article entitled “The Social Responsibility of Business Is to Increase Its Profits,” a 1973 article, answered the question in the negative. It presented the problem thus: “Should business be concerned merely with profit or also with promoting desirable social ends?”
He provided several arguments for his conclusion. First, he claimed that the managers of a corporation, being agents of its owners, the stockholders, bear a direct and primary responsibility towards them to conduct business in accordance with their desires, which is to make profit. Unlike owner-managed corporations, the money used is not management’s own to dispense with in any manner they wish. Hence, spending other people’s money for a social interest is just like taxing them.
Secondly, there is the argument based on competence. Businessmen are trained basically to make profit for the corporations they manage, and they do not enjoy a specific competence in matters affecting the public welfare. Hence, if they are required to perform this additional function of public governance, they are likely not to do a good job out of it.
Finally, implicit in his article is the “hidden hand” argument. If business were allowed freely and fully to function in its own specific competence, which is to make profit, then society will be better off in the long run. Thus, Friedman concludes that business has only one function, which is “to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”
These arguments, however, are not conclusive. To the first argument, it is countered that, strictly speaking, management is not the agent of the stockholders. For it is a curious kind of agency, where the agent does not ask the principal what the latter’s wishes are.
In truth, management bears a fiduciary relationship to the owners, to run the business on their behalf. However, the duty to make profits for them has only prima facie, and not absolute force, and may be overridden by his other obligations in running a company: to wit, to deal fairly and honestly with his suppliers, to attend to the working conditions of his employees, to provide safe products to his customers, not to pollute the environment, etc.
To put the same point another way, such a fiduciary duty stems from his role as the management of the corporation. Although the manager has the obligation to fulfill the duties attendant to his station, it does not mean that, in handling corporate affairs, he must approach problems only from a profit-oriented perspective, in the process forgetting his entire humanity. Sometimes, his duty to be human overrides his duty to make profits for the company.
As to the argument of competence, engaging in activities for the public welfare does not require such a high degree of competence which is beyond the capacities of an ordinary businessman, or indeed of any member of society.
Finally, as to the “hidden hand” argument, it is, on the contrary, observed that if businesses were left to themselves, they would enrich themselves while impoverishing society, will pollute the environment, will discriminate racially and sexually, will deceive customers, will eliminate competition and keep prices high through oligopolistic practices. In other words, the jury is still out as to the truth of the “hidden hand” argument.
Partly as a result of these counterarguments, the theory of business as having also a public function developed first in the form of corporate social responsibility and eventually in the form of stakeholder theory, which are the subjects of the next succeeding articles.
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The assertion that corporations ought to have a social or public purpose was perhaps first expressed at the dawn of the previous century, when both Dewey in the United States and Ravenaugh of Germany maintained that business had the ethical duty to consider social and public interests. Thereafter in the ‘30s, Berle and Means’ book, “The Modern Corporation and Private Property,” clearly set out the central problem of corporations, namely the fact that the ownership and the control of the corporation were bifurcated. How were the owners, then, to ensure that management, which exercised control over the corporation, was acting on their behalf? But it also stressed the other problem of whether the corporation should pursue purposes other than profit-making.
This other problem gained some prominence in the Untied States during the ‘60s due to three significant issues. First was the urban crisis, which involved problems of crime, racism, poverty, housing, ghettoes, riots and the like, and the contribution of big business to those problems and its corresponding failure to address them. Secondly, was the rise of environmentalism. Clearly big business was responsible for the increase in pollution, the damage to rivers and forests, for example. Finally was the phenomenon of consumerism. The public became increasingly aware of the false or exaggerated claims of manufacturers, their possibly defective and dangerous products and the fact that some of these manufacturers were willing or prone to endanger customers’ health in exchange for profit.
In the Philippines, there are two reasons, perhaps, for the growing importance of the issue. The first is the gross imbalance in wealth in society, where most of it is concentrated in the hands of an elite few. The second is the fact that we are a Third World nation where large multinational companies are raking in great profits often at the expense of the Filipinos. There is, as of yet, insufficient awareness of environmental and consumer issues. Indeed, these two problems gave rise to the revolutionary fervor expressed by the youth, the students, the working classes, the peasantry and other sectors of society during the late ‘60s and early ‘70s, to which martial law became the answer of government.
In answer to the claim that the corporate responsibility in only to make profit, three reasons are usually cited in support of the view that it ought to include social and public purposes as well. The first is due to the fact that the corporation wields great power. Indeed some of the assets of multinational corporations rival those of governments. They have the power to create great wealth, provide jobs for the multitude, advance the frontiers of science and technology by financing and conducting research, either maintain the ecological balance of or pollute the environment, create goods and services that increase the safety, health and welfare of its consumers, provide basic needs, affect the stock market and the economy for better or worse, and the like. Clearly, with such awesome power comes the corresponding responsibility.
The second reason is that of gratitude. Corporations exist and thrive because the government and society provides the conditions for their continued existence. The government enacts favorable laws for the corporations while the community supports them.
Finally, there is the reason of citizenship. The corporation has legal personality, and therefore should have duties and responsibilities toward the community just as the ordinary individual citizen does.
This focus on corporate social responsibility, was eventually provided systematic and theoretical underpinnings by means of the stakeholder theory of corporate governance. Indeed in the mid-80s, the problem of corporate social responsibility began to be expressed in terms of the debate between stockholder and stakeholder theory, the latter theory being the topic of the next article.
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As mentioned in the previous article, stakeholder theory provided the theoretical underpinnings for a mode of corporate governance, which takes into account ethical and public concerns, and not just profit making. The moral environment of stockholder theory was tightly constrained, focused as it was only on the duties of management toward the stockholders to maximize the profits of the corporation. Stakeholder theory, on the other hand, opened the door to bringing fundamental moral principles to bear on corporate activity. For under that theory, the obligation of business was not to seek profit for its stockholders but to coordinate stake­holder interests.
There are many definitions of what a stakeholder of a corporation is. Briefly put, a stakeholder is any group or individual who can affect or is affected by the achievement of the organization’s objectives. Hence, the stockholders or the owners are only one among the many stakeholders of the corporation. Others include management, the creditors and financiers, the suppliers, the employees, the customers, the local community and the government. The corporation manifests its concern for ethical and public issues, and thereby puts on a human face by not taking the profit of the stockholders as the sole or primary consideration, but only as one among many considerations in weighing and balancing the needs of these various stakeholders.
In coordinating stakeholder interests, the corporation may function in a variety of ways. It may provide safe and healthy working conditions as well as meaningful life experiences for its employees, pay dividends to stockholders, develop new products and technologies, expand business, protect and enhance the environment, donate to various charities, install safety mechanisms to its products and help society solve its pressing problems. The manager therefore is not uni-dimensional, who takes his role as an agent of the stockholders at the expense of his humanity. Rather he infuses his humanity into his role as the steward of the corporation, who places importance on and fulfills his various responsibilities toward all those who affect and are affected by the corporation.
With the increase of large multinational corporations, the need to develop stakeholder theory became even more imperative. For these corporations, whose assets may rival even those of governments, play a vital and active role in the socioeconomic development of Third-World countries. Greater responsibility, therefore, is expected from them. Hence arose the Clarkson Principles, otherwise known as the Stakeholder Management Principles, the Caux Roundtable Principles, which are the product of European corporate executives who met in Caux, Switzerland, the Sullivan Principles, which were applied in South Africa and the Principles of the United Nations Global Compact. All of these principles were intended to ensure that multinational corporations be aware of their social responsibility toward developing countries.
Despite the praiseworthiness of stakeholder theory, two main criticisms can be made against it. First, it fails to provide adequate guidance to decision making by management. In insisting that the corporation or management has many responsibilities toward its various stakeholders, it does not furnish a neat or suitably precise formula with which the weighing and balancing of competing considerations are to be made. All it basically says is that the manager should not forget his humanity or to be so myopic as to consider only profit making in the formulation of policy or in the making of business decisions. The second criticism is related to the first. It asserts that the responsibility of management toward its owners or stakeholders is of a distinct or special kind, not to be put on the same level as its responsibility toward other stakeholders. This brings us to Strategic Stockholder Theory, which is the topic of the next article.
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Because of the introduction of stakeholders other than stockholders in developing theories of corporate governance, a number of intermediate theories between the two extremes of Stockholder Theory on one side and Stakeholder Theory on the other arose.
Whereas stockholder theory in its original form only spoke about the duty of the corporation toward its stockholders, these intermediate theories also accounted for the duties of the corporation toward stakeholders other than stockholders.
And although the first stakeholder theories acknowledged the existence of other stakeholders and the moral duties the corporation had toward them, they did not sufficiently explain the nature of these duties, how they are to be weighed and measured against each other in case of conflict and whether there was an ethical difference between them. These two intermediate theories to be discussed will explain in more specific detail how the duties of the corporation toward the various stakeholders are to be weighed and measured against each other by insisting on an ethical difference between the kinds of duties that management had toward stockholders and toward other stakeholders. Whereas the duty of management toward stockholders is fiduciary in character, its duty toward other stakeholders is nonfiduciary.
The first intermediate theory, which I call the Moral Minimum Stakeholder Theory, insists that the corporation must not behave toward the other stakeholders of the corporation below a certain moral minimum.
This moral minimum involves duties not to cause avoidable harm, or to honor individual stakeholder rights or to adhere to ordinary canons of justice. It can go about its fiduciary duty of making profit for the stockholders of the corporation so long as it does not transgress the requirements of the moral minimum. Corporate actions, humanitarian in character with a social or public goal, are not required, although they may be encouraged.
The second intermediate theory, which I refer to as Strategic Management Theory, insists that the corporation, in honoring its fiduciary duty toward stockholders to increase profits, should treat other stakeholders strategically. This allows business both to act within the moral minimum and even to go beyond it by undertaking humanitarian endeavors which help solve social problems.
For example, the corporation may honor its contractual obligations with its creditors or suppliers, lest it acquire a ruinous reputation. Or it may justify the rise in cost in manufacturing a more adequately safe product to avoid the costly litigation in the form of damage suits arising from the harm or accidents caused by an unsafe or defective product. Or it may engage in charitable projects in order to buy the goodwill of the public and enhance customer loyalty. Hence much moral good may result in this kind of theory.
Like other theories, either of these theories has its drawbacks. I will make only two criticisms and against only the Strategic Management Theory. First, this theory allows for the possibility of unethical behavior. For acting strategically is treating stakeholders only as a means toward the end of profit. Hence, if it were not profitable to treat stakeholders ethically, then management would soon abandon such behavior. However, since the corporation must look toward its long-term interests, in which maintaining a good reputation is important, the possibility for unethical behavior is greatly minimized. The second criticism refers to the fact that even if the corporation is acting morally, it is practicing a deception. For the theory’s successful application, corporations should disguise their intentions and instead make it appear to the public that they are motivated purely by ethical considerations. Customer loyalty would be more steadfast and binding if the public were convinced that corporations truly had their interests at heart, and were not only using ethical behavior strategically in order to increase their profits. In this regard, I am reminded of a remark once made by Groucho Marx: “The secret to life is honesty and fair dealing; now if you can fake that, you’ve got it made.”
The theory of corporate governance underlying the Corporation Code of the Philippines is essentially the classical Stockholder Theory in the Friedmanesque mode. The function of the corporation to increase or maximize profits is implicit in the entire Code. Duties only toward the stockholders are specified, and no mention is made of the other stakeholders. This is understandable because the Corporation Code took effect only on May 1, 1980, whereas Stakeholder Theory was introduced in the mid-eighties.
The elegantly formulated doctrine regarding the existence and nature of the fiduciary duty of directors toward stockholders was expressed in Gokongwei v. Securities and Exchange Commission, a 1979 case. In that case, a regulation in the amended by-laws of San Miguel Corp. to the effect that board members are disqualified for being engaged in any business which competes with or is antagonistic to the corporation was upheld by the Supreme Court, thus preventing Gokongwei from being elected as a board director. The Supreme Court stated: “Although in the strict and technical sense, directors of a private corporation are not regarded as trustees, there cannot be any doubt that their character is that of a fiduciary insofar as the corporation and the stockholders as a body are concerned. As agents entrusted with the management of the corporation for the collective benefit of the stockholders, ‘they occupy a fiduciary relation, and in this sense the relation is one of trust.’”
The fiduciary duties are those of loyalty, obedience and diligence, which are found in different provisions of the Code. Hence with regard to the duty of loyalty, directors must not “acquire any personal or pecuniary interest in conflict with their duty as directors” (Section 31); and must not acquire “for himself a business opportunity which would belong to the corporation, thereby obtaining profits to the prejudice of the corporation” (Section 34). Moreover there are restrictions against directors dealing with the corporation (Section 32), as well as restrictions on corporations with interlocking directors (Section 33). Finally, there are limitations on the compensation of directors during stockholder meetings. To pay directors too much will eat into the profits of the stockholders.
The duty of obedience requires that the board of directors act to increase or maximize profits, which can be assumed as the primary purpose for stockholders’ investment. However, no specification of this duty is located in the Code. Obedience also requires that the board act within its corporate powers.
Finally, the duty of diligence is provided for in the requirement that the director “not be guilty of gross negligence” (Section 31). It is also found in the business judgment rule, which states that the directors cannot be held liable for mistakes or errors in the exercise of their judgment provided they acted in good faith and with due diligence and care.
The business judgment rule also allows for leeway for the corporation to act in an ethical way toward other stakeholders, or even pursue a social, public or charitable purpose. Whereas the aforesaid doctrine was applied in cases which justified the acts of the corporation with respect to the pursuit of profit, there are two cases where it justified ethical behavior toward other stakeholders.
In Montelibano v. Bacolod-Murcia, the duty of a sugar central mill to honor its contractual obligations to its suppliers or planters, which would increase the planters’ share in the resultant product, was justified in terms of the business judgment rule, regardless of whether it will cause losses or decrease profits of the sugar central.
In Board of Liquidators v. Kalaw, the Board’s act to ratify contracts to deliver copra to various companies at a loss, operations having been hampered by four typhoons, was held to be a matter of the business judgment to be fair. Hence, the Court concluded: “Obviously, the board thought that to jettison Kalaw’s contracts would contravene basic dictates of fairness. They did not think of raising their voice in protest against past contracts, which brought enormous profits to the corporation. By the same token, fair dealing disagrees with the idea that similar contracts, when unprofitable, should not merit the same treatment. Profit or loss resulting from business ventures is not justification for turning one’s back on contracts entered into.” It is, more importantly, a matter of fair dealing to the corporation’s customers.
Under the Code of Corporate Governance, the theory espoused is a form of intermediate theory, where the corporation has a fiduciary duty toward shareholders and is to deal with other stakeholders observing the moral minimum. It is assumed that observing the moral minimum will help enhance the value of the corporation, so it can be considered a kind of Strategic Management Theory as well.
Its fiduciary duty toward the shareholders is expressed in articulating the Board’s Duties and Responsibilities. Hence, the board has the duty and responsibility “to foster the long-term success of the corporation and secure its sustained competitiveness in a manner consistent with its fiduciary responsibility, which it should exercise in the best interest of the corporation.” Transparency is also required. For the “shareholders shall be provided, upon request, with periodic reports which disclose personal and professional information about the directors and officers and certain other matters such as their holdings of the company’s shares, dealings with the company, relationships among directors and key officers, and the aggregate compensation of directors and officers.”
The duties of loyalty, obedience and diligence to the shareholders as found in the Corporation Code have been expanded to include the requirements of conducting fair business transactions with the corporation and ensuring that personal interest does not bias board decisions; devoting time and attention to work; acting judiciously; exercising independent judgment; knowing the law affecting the corporation, observing confidentiality and ensuring the continuing soundness, effectiveness and adequacy of the company’s control environment.
That it is a form of Strategic Management Theory is found in the very definition of corporate governance, which “refers to a system whereby shareholders, creditors and other stakeholders of a corporation ensure that management enhances the value of the corporation as it competes in an increasingly global market.” Thus the code emphasizes the role of stakeholders in enhancing the value of the corporation. It is also reflected in the state policy “to actively promote corporate governance reforms aimed to restore investor confidence, develop capital market and help achieve sustained growth for the corporate sector of the economy.” The corporation’s duties toward investors and the public as stakeholders are here stressed in line with State policy of sustained growth for the corporate sector.
Observing the moral minimum toward other stakeholders is found, among others, in the provision that the corporation’s major and other stakeholders are to be identified and a clear policy on communicating or relating with them accurately, effectively and efficiently is to be formulated. It is also expressed in the board’s general responsibility, where a director is to assume certain responsibilities toward different constituencies or stakeholders, who have the right to expect that the institution is being run in a prudent and sound manner. For a director’s office is one of trust and confidence. He should act in the best interests of the corporation in a manner characterized by transparency, accountability and fairness.
More particularly, the board should conduct itself with utmost honesty and integrity in the discharge of its duties to ensure a high standard of best practice for the company and its stakeholders. There must be an accounting rendered to the stakeholders regularly to serve their legitimate interests.
This requirement of the moral minimum extends to the chief executive officer and the corporate secretary, who should work and deal fairly with all the constituencies of the corporation, namely the board, management, stockholders and other stakeholders.
Conspicuously absent in these moral requirements is that of the corporation serving a public or social purpose. However, the possibility for such is found in the corporation’s vision and mission statement, which is required by the code. Hence, “The board should establish the corporation’s vision and mission, strategic objectives, policies and procedures that may guide and direct the activities of the company.” The vision and mission statement is the topic of the next and last of this series of articles on the theories of corporate governance.
As mentioned in the previous article, it is through the mission and vision statements that a corporation is able to express its adherence to social responsibility, a concern which is not required by the Code of Corporate Governance. Normally, mission and vision statements include three aspects: (1) a statement of the obligation of the company toward its investors or stockholders as to the maxi­mization or increase of profit; (2) a commitment to observe basic moral standards with respect to its dealings with the various stakeholders of the corporation; and (3) an affirmation of corporate social responsibility. This article will deal only with the last aspect to show that corporations in the Philippines, at least by express intent, go beyond the fundamental requirements of the Code of Corporate Governance.
For example, Benguet Corp. acknowledges its social responsibility and its concern for the community in its mission statement. Hence, it is committed to “be a socially responsible and environmentally conscious corporate citizen adhering to the highest ethical business standards” as well as “achieve competitiveness and excellence as a natural resource development company through the enhanced productivity of its people and through the improvement in the quality of life of its employees and their families, and its host communities.”Lepanto Consolidated Mining Co., on the other hand, expresses its social responsibility in terms of community involvement and research on the effects of mining activities on the environment and the community. Thus, it achieves its vision by continually “involving communities in decisions, which affect them, treating them as committed partners, respecting their cultures, customs and values and taking into account their needs, concerns and aspirations and “conducting and supporting research programs to expand [its] knowledge of the impact of mining activities on the environment and the community.”
A more elaborate articulation of its various ethical duties which include social responsibility is found in the mission and vision statement of Meralco. Indeed, it enumerates the various stakeholders of the corporation toward which it owes distinct obligations expressed in terms of stakeholder principles. These stakeholders include its investors, customers, employees, suppliers, competitors and the community.
It is the enumeration of the corporate principles concerning the community which best expresses its social responsibility. Thus it has the responsibility, among others, to “fulfill with dedication and commitment its social responsibilities,” “undertake activities that support and contribute to the economic development of the country” and “employ proactive measures and lead the development in [its] areas of interest by working with government and other institutions to serve society toward [their and its] collective benefit.”
Moreover, its commitment toward social responsibility has gone beyond articulation in its mission and vision statement. It has established a Corporate Social Responsibility Office. This office is a concrete manifestation and reaffirmation of its civic consciousness, which has been part of its commitment to society for decades. The vision of this Office, established in January 2001, is to “further strengthen this dedication to help uplift the quality of life in the communities within the Meralco franchise area.”
I do not mean to sound cynical, but there is no way to tell, by means of a mission and vision statement, whether a corporation is truly socially responsible or is merely using the statement as a means by which to increase its profits. For in acknowledging its commitment to social responsibility, a corporation is able to increase or enhance customer patronage and loyalty, attract more investors as well as minimize losses. If that is the motive, then the corporation subscribes merely to the Strategic Management Theory. In other words, it is not adhering to a moral standard or pursuing virtue for its own sake, but for the beneficial consequences to the corporation an ethical course of action brings about. To it, being ethical makes nothing but good business sense. It is only in the case of conflict, when a corporation chooses to be ethical rather than make profit, that its commitment toward social responsibility is demonstrated.
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Corporate Social Responsibility and Media
[07 July 2007, The Manila Times]
At a roundtable on “Corporate Social Responsibility (CSR): A Two-way Street,” the media was urged by businessmen to give greater importance to CSR stories and not just to relegate it to the press releases section of a newspaper.
The rationale behind this proposal was the claim that CSR should be something for the media not only to write about but also to carry out. After all, a media corporation, just like any corporation, has a responsibility not only toward shareholders, but also to other stakeholders, which comprise management, creditors and financiers, suppliers, employees, the local community, the government and most significantly the public in general.
The crux of this argument seems to be that the media, because of its duties to the public and other stakeholders, must feature with greater prominence stories concerning social-welfare projects or charitable activities of corporations. With all due respect to the businessmen, I beg to disagree.
That business expects the media also to adhere to CSR principles is, of course, welcome news. For the mischief of a corporation being concerned solely with profit at the expense of social responsibility must be vigilantly guarded against. After all, the prevailing theory in the sixties and the seventies was to recognize only the interest of the shareholders. According to Friedman, business has only one function, which is “to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game . . .”
His conclusion was based on the argument that since management is merely the agent of its owners, comprised of the shareholders, it bears a direct and primary responsibility toward them to conduct business in accordance with their desires, which is to make profit. Unlike owner-managed organizations, the corporation’s money is not for management to dispense with in any manner it wishes, such as engaging in welfare projects.
Obviously if the media took into account the public interest in responsible reporting and not just the shareholders’ interest in profit-making, it would cover and emphasize stories of a less gossipy or sensationalistic kind and feature with prominence stories of a more substantial and significant nature. This, obviously, would be of greater benefit to the public. It does not necessarily follow from this, however, that accounts of welfare projects of corporations should be prominently featured.
This is because of the fundamental tension between the interests of the shareholders and that of the other stakeholders, which the corporation has to coordinate and to weigh and balance against each other. In whatever way this balancing is done, there is no doubt that the making of profit is primary. For profit is the very reason for the corporation’s existence. A corporation would be unable to survive, much less engage in welfare projects, without it.
Hence, most corporations adhere to what is known as Strategic Management Theory. It insists that a corporation, in honoring its duty to shareholders to increase profits, should treat other stakeholders strategically as a means to generate profit. This allows business to undertake ethical or charitable activities because it is profitable to do so.
For example, a corporation may justify the rise in cost in manufacturing a more adequately safe product, to avoid the costly litigation in the form of damage suits arising from the harm or accidents caused by an unsafe or defective one. Or it may pursue charitable activities in order to buy the good will of the public, to enhance customer loyalty or to use as a tax write-off.
The media’s social responsibility, therefore, requires it to be more discerning in deciding which CSR activities should be displayed prominently. Since stories concerning charitable projects of corporations may simply be a way of promoting a good public image, they may, as a result, properly belong to the press relations part of a newspaper. On the other hand, if a story concerns faulty, defective or harmful products like some cars, tobacco, or infant milk formula, it should belong to the front page. But this, I suspect, is not the type of story which the businessmen in the roundtable discussion complained about as not being given sufficient prominence.
CSR also demands the media to exercise greater vigilance. Business, nowadays, cannot afford but to be engaged in manifesting some CSR. But in acting strategically, a corporation treats stakeholders only as a means toward the end of profit. Were it not profitable to do so, the corporation would soon abandon such behavior. It thus behooves the press to expose unethical practices so that the corporation will not be able to get away with them. The corporation must be convinced that it doesn’t pay to be unethical or, conversely, that being ethical makes good business sense. That is possible only with an informed public opinion. Without it, the public would fall prey to the corporation’s deception. In this regard, I am reminded of a joke of Groucho Marx: “The secret to success is honesty and fair dealing; now if you can fake that, then you’ve got it made.”

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