Volume 4, Issue 4, December 2019, Page: 109-123
Corporate Governance in Manufacturing and Management with Analysis of Governance Failures at Enron and Volkswagen Corporations
Moses Jeremiah Barasa Kabeyi, Department of Mechanical and Manufacturing Engineering, University of Nairobi, Nairobi, Kenya
Received: Jun. 25, 2019;       Accepted: Aug. 27, 2019;       Published: Jan. 4, 2020
DOI: 10.11648/j.ajomis.20190404.11      View  18      Downloads  11
Abstract
Good corporate governance is important in management of all organizations. It gives direction to an organization in matters of accountability, integrity and quality of product and service offerings in the wake of stiff competition and conflicting stakeholder interests. Business challenges and realities create conditions that favor governance failure through unethical conduct hence the need for regulations in addition to self-governance. Business ethics in business and manufacturing helps organizations in making ethically critical decisions. Corruption is a significant indicator of governance failure and involves illegal activities, criminal activities that are both financial and non-financial abuses and benefits. Corporate governance should provide a framework upon which organizations are hence creates order and harmony between various stakeholders. Good corporate governance improves organization’s image as a self-policing institution that is responsible and honest. Whereas self-regulations looks more attractive for free market economies, legislation and control is necessary since not all managers believe and act within good corporate governance. The board of directors should set the strategic objectives and provide leadership for realization and supervise the management and report to shareholders on their leadership. The Enron Corporation and Volkswagen scandals demonstrated that severe consequences result from failed corporate governance in form monetary and non-monetary that affect both perpetrators and the innocent. Where corporate governance fails, major indicators include, manipulation of financial records, corruption, poor quality products and exaggerated quality specifications in manufacturing and engineering, high staff turnover, lack of transparency and accountability, poor stakeholder relationship, poor performance and low economic development leading widespread poverty and social disorder. External enforcement should be considerate to genuine stakeholder interests to avoid legislation that will encourage cheating for survival. Perpetrators of governance failure, should be punished both as individually and as organizations to set an example to others in the form of penalties that are reasonably high to discourage noncompliance.
Keywords
Corporate Governance, Code of Ethics, Business Ethics, Corruption, Volkswagen Scandal, Emission Levels Scandal, Corporate Reputation, Corporate Scandal, Enron Scandal, Ethical Failure
To cite this article
Moses Jeremiah Barasa Kabeyi, Corporate Governance in Manufacturing and Management with Analysis of Governance Failures at Enron and Volkswagen Corporations, American Journal of Operations Management and Information Systems. Vol. 4, No. 4, 2019, pp. 109-123. doi: 10.11648/j.ajomis.20190404.11
Copyright
Copyright © 2019 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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