The government and stakeholders play different key roles in facilitating corporate governance. The government's key function and ethical responsibility is to provide an enabling environment in which the private sector can thrive ( Shaukat et al., 2015). The government realizes its role by making regulatory and statutory frameworks that must be met by each firm and monitoring fair play in business, thus restoring corporate integrity. On the other hand, the stakeholders play the vital role of electing the board of directors ( Gitman et al., 2018 ). It is these elected board of directors who will elect the president and leaders of the firm that will make decisions that affect the firm’s processes. As such, both the stakeholders and the government play a significant role in influencing corporate governance in the firm.
The board of directors and management have an ethical responsibility towards the society. The key function and ethical responsibility of the board of directors to society is to set ethical values and standards that the firm will operate on ( Gitman et al., 2018 ). They achieve this through supervising and overseeing the firm's business processes. On the other hand, management has an ethical responsibility towards society to make ethical decisions that will benefit the community ( Sharma, 2018). They realize this by ensuring the goods and services that they provide meet the safety standards and do not affect the environment in which the community lives. The management and board of directors both play a key function in facilitating ethical responsibility in the business.
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The roles and ethical responsibilities of the government and the board of directors are tied to each other. The government and board of directors play the primary functions of regulating and monitoring business operations ( Gitman et al., 2018; Shaukat et a l., 2015 ). The government ensures fair play and sets the rules that must be met by firms. The board of directors set standards and ethical values of operation. They also supervise the business operations in the firm to ensure the values are met ( Gitman et al., 2018 ). In contrast, although both roles ensure ethical responsibility in the firm, the government's role affects the whole business environment, while the role of the board of directors is tailored to the specific organization that they belong to.
References
Gitman, L., Shah, A., Reece, M., Koffel, L., Talsma, B., Hyatt, J. C., & McDaniel, C. (2018). [eTextbook] Introduction to Business. OpenStax . https://opentextbc.ca/businessopenstax/
Sharma, M. (2018). Understanding Managerial Perception of Corporate Social Responsibility Practices in a Public Sector Undertaking: An Empirical Study (Doctoral dissertation, BITS Pilani).
Shaukat, S., Manzoor, U., Azmat, Z., Tanveer, F., & Sheikh, A. (2015). The role of government in corporate governance. https://www.academia.edu/12042059/Final_Project_The_role_of_government_in_corporate_governance
