Conscious capitalism refers to businesses that serve the interests of all major stakeholders, investors, suppliers, customers, and the environment (Fyke & Buzzanell, 2013). Mackey & Sisodia (2014) also defines Conscious capitalism as “Conscious business enterprises and people (also sometimes referred to under the label conscious capitalism) are those that choose to follow a business strategy, in which they seek to benefit both human beings and the environment.” Conscious capitalism is guided by its four principles which are conscious leadership, the organization that mirrors the actions and personality of an individual at the higher ranks. Secondly, during the stakeholder’s orientation, the conscious leaders takes into account all of their stakeholders. Conscious culture is the next principle that is intentional about how people act and perform. Lastly, the higher purpose looks into more of improving the organization than just making money (Fyke & Buzzanell, 2013). Ethics plays a significant role in conscious capitalism and impacts the management tactics within an organization.
Corporate governance is the system where rules, practices, and processes are directed and controlled. It balances the interests of the company stakeholders, customers, and suppliers. More so, it goes around every sphere of management, just from the plans and controls to performance, measurement and corporate disclosure. The fiduciary responsibilities of an organization are the legal obligation of one party to act in the best interest of another. The person responsible for the fiduciary duty needs to be loyal and law-abiding to serve the interest of all the major stakeholders in an organization.
The organization should take consideration of the insider trading which includes both legal and illegal conduct. It is illegal because it gives an insider unfair advantage in the market and puts the interests of the insider above those whom he owes a fiduciary duty (Lens & Selley, 2008) The insider trading plays a role in the conscious capitalism which will protect the major stakeholders from extortion. Ethics of conscious capitalism impacts the management tactics of an organization and therefore improving the financial performance of the organization. Improving the financial performances means that the organization stakeholders will have been served on their best of interests. In addition, the stakeholder and employment engagement will be enhanced generating tremendous organization’s energy. Conscious of capitalism also help to increase innovation and trust in the organization. The morale and engagement of the employee are boosted and the relationship with the stakeholders is reinforced.
- Fyke, P., & Buzzanell, M. (2013). The ethics of conscious capitalism: Wicked problems in leading change and changing leaders. Human Relations, 66(12), 1619-1643.
- Lens, B. & Selley, D. (2008). Ethics and Governance: Developing and Maintaining an Ethical Corporate Culture. Toronto: Canadian Centre for Ethics & Corporate Policy, 3rd ed.
- Mackey, J. & Sisodia, R. (2014). Conscious capitalism, with a new preface by the authors: Liberating the heroic spirit of business. Harvard Business Review Press.