"Good corporate governance practices cannot guarantee corporate success, but the absence of such governance definitely lead to questionable practices and corporate failures, which surface suddenly and massively". Discuss

Good corporate governance practices cannot guarantee corporate success, but the absence of such governance definitely lead to questionable practices and corporate failures, which surface suddenly and exert a massive impact. Good corporate governance goes beyond rules and regulations that the Government can put in place. It is about the ethics and the values which drive companies in the conduct of their business. Ethics is also the first line of defense against corruption, while law enforcement is remedial and reactive. It is, therefore, all about the trust that is established over time between the companies and their different stakeholders through their ethical business conduct. The need for business ethics may be highlighted in following points: Ethical conduct is in the long-term interests of businessmen. A business enterprise that is honest and fair to its customers, employees, and other stakeholders earns their trust and goodwill. It ultimately results in customer satisfaction, healthy competition, industrial growth and high earnings. Businesses must balance their desire to maximize profits against the requirements of stakeholders. To address this unique aspect of business, rules are articulated to guide it to earn profits without harming individuals or society as a whole. While referring to business activity profile, Mahatma Gandhi once mentioned that all business entrepreneurs should ask themselves the question whether the activities they are contemplating would be of some use to the common man. Ethical business behaviour is not only about good business but about good citizenship as well. Morally conscious businessmen have created names and built great business empires. They serve customers with good quality products at fair prices, treat their employees with great respect, reward their shareholders with good returns and pay their taxes honestly. A business organisation that adheres to a code of conduct gains a competitive advantage and builds long term value. On the other hand, unethical practices lead to the ultimate downfall of big organisations too. Business can prosper only when a society is stable and peaceful. Unethical practices at times create distrust, disorder and turmoil in society.