Striking a Balance Between Rules and Principles-based Approaches for Effective Governance: A Risks-based Approach

Several recent studies and initiatives have emphasized the importance of a strong ethical organizational DNA (ODNA) to create and promote an effective corporate governance culture of trust, integrity and intellectual honesty. This paper highlights the drawbacks of an excessively heavy reliance on rules-based approaches that increase the cost of doing business, overshadow essential elements of good corporate governance, create a culture of dependency, and can result in legal absolutism. The paper makes the case that the way forward for effective corporate governance is to strike an optimal balance between rules-based and principles-based approaches. The recent corporate scandals have demonstrated that the ethical ODNA is critical to the driving force and basis of legal and regulatory requirements. Effective governance means adhering to ethical principles, not merely complying with rules, and is a crucial guardian of a firm’s reputation and integrity. It is through an effective corporate governance program (that is, one that optimally captures and integrates the appropriate aspects of rules-based and principles-based approaches, and identifies and assesses the related risks) that an organization can reconfigure its ODNA for improved performance. Focusing on the ethical ODNA as the basis of new governance measures provides an opportunity to develop a competitive advantage as it represents a potential source of differentiation, strengthens the relationship with all stakeholders of the organization by building a culture of trust and integrity, and re-instills investor confidence. This paper employs dialectical reasoning that links the ODNA through principles-driven rules in developing a risks-based approach. A comparison from a risk assessment perspective between rules-based and principles-based approaches is presented. Although there have been few applications employing dialectical reasoning in business research, this methodology can be extremely useful in isolating ethical issues and integrating them into the business process. The risks-based approach captures the benefits of both rules-based and principles-based approaches, and incorporates trust-based principles such␣as solidarity, subsidiarity and covenantal relationships.Sundera Arjoon is a Senior Lecturer in Ethics at the Department of Management Studies, The University of the West Indies, Trinidad, He has served as Head of Department (2002–2005) and as Deputy Dean of the Faculty of Social Sciences (1996–2002). His publications have appeared in the Journal of Business Ethics, Journal of Markets and Morality, Global Development Studies, Social and Economic Studies, Applied Financial Economics, and the Journal of Eastern Carribean Studies. His current teaching and research interests include ethical decision-making, corporate governance, virtue ethics and familial ethics.     

Islamic Work Ethic,innovative work behaviour,and adaptive performance: the mediating mechanism and an interacting effect

This study’s focus is on the relationship between Islamic Work Ethic (IWE) and adaptive performance with the mediating role of innovative work behaviour (IWB) and moderating role of ethical leadership among hospitality sector employees in Pakistan. Data were collected using questionnaires from 257 employees working in various hotels across Pakistan. Results indicate that IWE significantly predicts adaptive performance both directly and indirectly through IWB. In addition, results also confirm the moderating role of ethical leadership between IWE and IWB. Theoretical and practical implications are discussed.     

Virtue Theory as a Dynamic Theory of Business

This paper develops a meta-theory of business based on virtue theory which links the concept of virtues, the common good, and the dynamic economy into a unifying and comprehensive theory of business. Traditional theories and models of business have outlived their usefulness as they are unable to adequately explain social reality. Virtue theory shows firms that pursue ethically-driven strategies can realise a greater profit potential than those firms who currently use profit-driven strategies. The theory expounds that the business of business is ethical business and that the crises that business and society face today are crises of leadership and ethics. The issues of leadership and corporate social responsibility are discussed in the context of the proposed theory.     

Book Commentary

Ocko, Judy Young and M.L. Rosenblum. How to be a Retail Advertising Pro. National Retail Merchants Association, New York, 1977. Reviewed by Lee Skidmore Wenthe

Retail Advertising Copy: The How, The What, The Why by Judy Young Ocko. Rev. Ed. National Retail Merchants Association, New York, 1977. Reviewed by Lee Skidmore Wenthe

Profitable Retail Television Advertising, chapters written by 16 professionals. National Retail Merchants Association, New York, 1977. Reviewed by Lee Skidmore Wenthe     

An Analysis of the Canadian Cattle Supply Using Polynomial Distributed Lags1

In this paper a distributed lag analysis of regional cattle supply is presented. A polynomial lag formulation has been applied. A distributed lag effect of two economic variables—cattle price and feed grain price (or stocks)—was specified, each with a different lag period. The model was estimated using the method of Lagrangian interpolation. An average lag of 11 quarters with respect to slaughter cattle prices was observed. The lag with respect to feed price (or stocks) was found to be relatively shorter. An inelastic response to cattle price, in the short—as well as the long-run, was observed for Eastern Canada. A similar situation for Western Canada with respect to feed grain stocks was observed.
Dans cet essai, nous nous proposons de présenter une analyse de délai distribué dans I'approvisionnement en bétail au niveau régional. Nous nous sommes servis dune formulation de délai polynomial. Nous avons spécifié un effet de délai distribué de deux variables économiques—le prix du bétail et le prix des farines alimentaires (ou des stocks)—toutes deux ayant des délais différents. Le modèle est basé sur la méthode d'interpolation Lagrangienne. Nous avons observé un délai de 11 trimestres pour ce qui concerne le prix du bétail à l'abattoir. Le délai pour le prix des farines alimentaires (ou des stocks) se montre relativement plus court. Pour I'Est du Canada, nous avons observé pour le prix du bétail une réponse inélastique que ce soil à court on long term. Nous avons observé une situation semblable dans I'Ouest du Canada pour les farines alimentaires.     

A SHORT-RUN MODEL FOR FORECASTING MONTHLY EGG PRODUCTION IN CANADA1

A model for predicting the monthly egg production in Canada at least six months in advance is developed in this paper. The model is based on simulating the egg production involving its various stages and making use of technical as well as economic relationships. The model can forecast egg production up to five months in advance using available prices: for a period beyond this lime projection of prices becomes essential. During the period 1965–1969, the forecasted level of production came within ±5 percent range of the actual. Un modèle pour prédire la production mensuel ?oeufs au Canada au moins six mois ?avance est révélé dans cette étude. Le modèle est basé sur la simulation de la production ?oeufs comprennanl ses différents étapes, et ulilisant des relations techniques ou economiques. Le modèle prevoie la production ?oeufs jusquà cinq mois ?avance ulilisant les prix disponibles; pour un temps hors de ce temps, la projection de prix devient essentiel. Pendant ?éspace de temps 1965–1969, le plan de production prèvenue est venue entre plus ou moins la classe de cinq pourcent de ?actuel.     

Technology and the demand for skills in Canada: an industry-level analysis

In this paper we examine the effect of technological change on the relative demand for skilled workers across Canadian industries. We find that skill upgrading at the aggregate level is less evident in Canada than in the United States and other industrialized economies over the 1981–94 period. Behind this overall trend on skill upgrading, there is substantial variation across industrial sectors. Consistent with the skill-biased technological change hypothesis, the technology indicators – the stock of patents used by the industry and the age of capital stock – are found to be significantly correlated with skill intensity. JEL Classification: E24, J23, J31, O33
Technologie et demande de travailleurs qualifiés: une analyse au niveau de l'industrie. Ce mémoire examine les effets du changement technologique sur la demande de travailleurs qualifiés dans les industries canadiennes. On montre que l'amélioration du niveau des compétences au niveau agrégé est moins claire au Canada qu'aux Etats-Unis et dans les autres économies industrialisées au cours de la période 1981–94. Derrière cette tendance générale, il y a cependant des variations importantes entre les secteurs industriels. On trouve que les indicateurs de niveau technologique (le stock de brevets, l'âge du stock de capital) sont co-reliés positivement au degré d'intensité d'utilisation des compétences – ce qui s'arrime bien avec l'hypothèse du changement technologique liéà une amélioration du niveau des compétences     

A monthly price forecasting Model for cattle and calves

Fluctuations in cattle and calf prices are examined in this study, using monthly data for Canada, for thaperiod 1958 to 1976. Prices for live animals along with wholesale and retail level prices were analyzed. Live cattle prices were. furthermore, studied by type of animals – finished steers, COWS, heifers, feeder steers and calves. The model is formulated on the hypothesis that wholesale prices of beef and veal are first discovered at the wholesale level and live animal and retail prices are then derived from the wholesale prices. Among the live animal prices, price of finished steers was hypothesized to be the price leader, whereas the other live animal prices were determined by it. The wholesale beef price was found to be highly supply flexible (the coefficient being - 1.836), but this was not the case with veal. The flexibility coefficient for live steer (finished) prices with respect to wholesale prices was 0.925. Similarly, the flexibility coefficients for heifer and cow prices with respect to finished steer prices were 0.923 and 0.846. respectively. This suggests that the opportunity cost of females in the breeding herd helps determine the spread between their prices and those of finished steers. Despite the inclusion of economic variables, the study concluded that cyclical fluctuations remained. L'auteur examine dans cette etude les fluctuations des prix bovins et des veaux en utilisant des donnks mensuelles pour la ptriode 1958–1976. Les prix des animaux vivants ainsi que les prix de gros et de detail ont tte analyses dans cette h d e. En outre, l'auteur a entrepris une analyse des prix pour chaque categorie d'animaw – bouvillons A I'engrais. vaches, gtnisses, bouvillons A engraisser et veaux. Le modble explicatif sous-jacent a ttk construit selon I'hypothhe que les prix de gros des veaux et des boeufs s'ktablissaient d'abord sur le march6 de gros. puis les prix des autres animaux vivants et de detail Ctaient ensuite dtduits de ce dernier prix. On a constatt que le prix de gros du boeuf Ctait sensible A toute variation de I'offre (le coefficient ttant & gal A 1,836). Le cas du veau est tout A fait different. Le coefficient de flexibititk pour les prix des bouvillons vivants (A engraisser) par rapport au prix de gros etait tgal A0.925. De la msme facon, les coefficients de flexibilitk du prix des vaches et du prix des gknisses par rapport au prix des bouvillons A l'engrah ttaient respectivement tgaux A 0,923 et 0.846. Ce fait suggbre que le c6ut d'opportunitk des vaches dans le troupeau reproducteur aide A determiner la difference de prix entre les prix des vaches et genisses d'une'part et celui des bouvitlons B l'engrais d'autre part. MalgrC l'inclusion de variables konomiques pertinentes, I'ttude a rtvkle une persistance des fluctuations cycliques.