Corporate Governance and Ethical Responsibility


In the society, there exist rules that determine the best course of action in any given situation. These norms which can be referred to as ethics enable people to coexist in harmony and most of them have been developed and practiced over long periods of time. By definition, Ethics are “a system of moral principles by which social conduct is judged as either ‘right’ or ‘wrong” and ethical principles are tenets that direct action (Chryssides & Kaler, 1993, p.3).

Ethical issues are hard to resolve since the “rightness” or “wrongness” may vary depending on the point of view that one is looking at the issue from. For this reason, using ethical theories assists in arriving at ethical decisions. This paper will review the case of Dr. DoRight who is faced with some ethical issues in his role as president of the “Universal Human Care Hospital”.

The paper highlights the various internal and external stakeholders that Dr. DoRight is answerable to and applies the deontology principle and the utilitarian principle to help resolve the ethical issue that Dr. DoRight faces.


There are a number of internal and external stakeholders to whom Dr. DoRight has to deal with as the president of the Universal Human Care Hospital. Dr. DoRight owes varying loyalties to each of these stakeholders.

Internal Stakeholders

The First internal stakeholder is the departmental managers who Dr. DoRight works through and also supervises. As the leader of these stakeholders, DoRight is supposed to act as a role model and also ensure that the company standards are upheld by the managers. He is supposed to protect these managers from litigation and ensure that they have favorable work conditions.

The second internal stakeholder is the board of trustees which is in charge of setting the hospital’s policies and ensuring that the shareholders receive a good return on their investments. The board normally focuses its energies on financial issues including fundraising for the hospital (Shore, 2007). Dr. DoRight is obliged to assist the board in its endeavor to protect and advance the interests of the owners of the organization. He is also supposed to advance the goals that the board has set for the organization.

The third internal stakeholders are the medical staffs who are responsible for providing health care to the hospital’s clients. DoRight has an obligation to foster trust between himself as the president and the hospital staff. For the hospital to run effectively and efficiently there must be trust among the medical staff, managers and the president. Shore (2007) declares that organizational trust is a key ingredient in the functioning of the hospital since when it is there, people can trust each other to carry out their tasks with morally good judgment.

External Stakeholders

There are also a number of external stakeholders who Dr. DoRight has to deal with as the Hospital president. The first external stakeholder is the patients who are the primary clients to the hospital. Dr DoRight has an obligation to ensure that the patients are afforded the best care in the hospital.

The Second external stakeholders are the various corporations which do business with the hospital regularly. To these stakeholders, Dr DoRight is required to ensure that the hospital maintains a high moral standing since the credentials of the various corporations may be hurt by any allegations of illegal conduct by the hospital.

The Third external stakeholder is the community which the hospital serves. Dr. DoRight has the responsibility to ensure that the facilities at the hospital are of a good standard for the community members who may use them. The community also expects the hospital to provide the best medical care for its members.

Potential conflicts of Interest

There are some potential conflicts of interests that may arise between the duties of loyalties that Dr. DoRight owes to the hospital board who are internal stakeholders and the patients who are external stakeholders. As the president, Dr DoRight has the obligation to ensure that the hospital develops by attracting more clients.

He also has to engage in patient advocacy and ensure that his staff offers adequate health care to the patients. He therefore has to look into any medical malpractice that might cost the patients their life. The findings of such an investigation may damage the reputation of the hospital and this is a situation that the hospital board would like to avoid.

The investigation will require independent investigators to look into the allegations to avoid unbiased results. The cost for this will be incurred by the hospital and as such, the board of trustees may wish to avoid this expense.

The patients on the other hand would be interested in the same investigation taking place since it would reveal any malpractice that has been going on in the hospital. It is Dr. DoRight’s responsibility as the President of the “Universal Human Care Hospital” to ensure that safety and quality care is provided in the institute. Balancing the conflicting interests and goals of the hospital board and the patients is crucial.

Dr. DoRight’s Ethical Duty

Dr DoRight was informed of the issue of patient deaths and illegal procedures and negligence. He did not follow up on the issue nor demonstrate any urgency in dealing with the matter. Goeschel, Wachter and Pronovost (2010) state that the hospital governance is “legally bound to the fiduciary duties of care, loyalty, and obedience” (p.172).

Dr DoRight continues to hold a position of leadership and practices fraudulence by continuing to accept awards for good leadership despite the issues in his hospital. He is also aware of the fact that the quality of services offered in the hospital is not excellent.

Dr DoRight should have advocated for the creation of a quality and patient safety improvement system that will help in the provision of high-quality and safe patient care. As a result of corporate scandals, the Sarbanes-Oxley legislation was passed in the US to ensure higher standards of accountability and “foster greater public confidence in corporate governance (Goeschel, et al., 2010). The Sarbanes Oxley legislation led to an increased scrutiny of corporate leadership and a pressure for the improvement of quality of services.

There are a number of things that Dr DoRight should have engaged in to prevent harm. He should engage all his staff in frequent training and workshops on best practices and protocols to follow in the medical field. A body should be formed in the hospital to evaluate staff performance and ensure that set standards are upheld. In addition to this, there should be an avenue for patients to air their views on the current practice.

The Deontology Principle

Deontological ethics emphasize the assumed duty which means that duty is the basis of all moral actions regardless of the consequences. When applying this theory, the consequences of a person’s are inconsequential and have greater weight on the rules rather than consequences to justify an action. DeMarco (1994) asserts that the principle of deontology requires that rules should never be broken even if less good or even greater evils come about from this.

By applying this principle on DoRight’s dilemma, we find that Dr DoRight is bound by the Hippocratic rule to ensure that no harm is done to the patients. He is also legally obligated to report any misconduct that occurs in the hospital. He is also bound to ensure that the services offered to the patients are high and that safety is always observed.

Deontology also requires that the motives of the actors be used to determine the ethical nature of the action. The deaths of the patients have been caused by negligent supervision and oversight by doctors and nurses in addition to the illegal procedures. It cannot be argued that the medical staff had the patient’s best interest at heart when engaging in these actions. The deontology principle would therefore require him to bring the issue to the relevant authorities and ensure that corrective action is taken.

Utilitarianism Principle

Utilitarianism requires that the welfare of the many should have primacy over an individual’s good or rights. Thiroux and Krasemann (2008) articulate that this theory “advocates for the maximization of happiness for the largest number of people” (p.23).

As such, the net benefits of the actions under consideration are weighted against the net consequences and the decision which has the most “productive” results is chosen. Johnston (2009) states that the ethical action according to Utilitarianism is the one which results in the highest number of benefits for the largest number of people. There are a number of consequences that would arise from Dr DoRight reporting the matter.

Positive Consequences

If the errors are exposed, the hospital will be able to deal with the mistake and embark on the provision of quality services to its clients. Investigations will demonstrate that the hospital is willing to take accountability for its mistakes. It will be easy for the hospital to establish trust and confidence in future if it initiates the investigations instead of waiting for the matter to get to the publics attention through other channels. The investigations will reveal what is causing the death of patients and once this has been done, corrective action can be taken hence saving many lives.

Negative Consequences

If Dr DoRight reports the matter, resources will have to be provided by the hospital to aid in the investigations. This will in the short term, this will reduce the ability of Universal Human Care Hospital to achieve its organizational goals since its funds will be. Bringing the issue under investigation is bound to affect the future practice of the doctors who are responsible for the illegal operations. This doctors may lose their licenses or even be arraigned in court for their wrongdoings


Unethical conduct will result in great loses not only for the hospital but also for the society which depends on it. Both the deontology principle and Utilitarianism support the decision to report the matter to authorities. Utilitarianism notes that while some negative consequences will come from this, more significant benefits will be reaped from this action.


Chryssides, G. & Kaler, J. (1993). An introduction to business ethics. Boston: Cengage Learning EMEA.

DeMarco, P.J. (1994). A Coherence Theory in Ethics. NY: Rodopi.

Goeschel, C.A., Wachter,R.M. & Pronovost, P.J. (2010). Responsibility for Quality Improvement and Patient Safety Hospital Board and Medical Staff Leadership Challenges. Chest. 138(1), 171-178.

Johnston, G. (2009). An Introduction to Ethics, for Training Colleges. NY: BiblioBazaar, LLC.

Shore, D.A. (2007). The (sorry) state of trust in the American healthcare enterprise. In D.A. Shore (Ed).), The trust crisis in healthcare: Causes, consequences, and cures (pp. 3-20). Oxford, UK: Oxford University Press.

Thiroux, J. & Krasemann, K. (2008). Ethics: Theory and Practice. New Jersey: Prentice Hall.