Corporate Governance and Ethical Responsibility at Hospital


Ethics has been considered one of the reference values where a pact should be established and developed between various actors involved in an organization. Ethical behavior during governance should be understood in a manner that involves the managing of stakeholders’ interests. This should be carried out in the interest of the majority of the stakeholders through the behavior of controlling the powers and the responsibilities of the managers of a company. Managers and business executives should practice ethical corporate governance by enforcing values of transparency, professionalism, and accountability.

In this regard, a strong link between governance and ethics should contribute towards enhancing the efforts of stakeholders of a company. In matters of corporate governance, it is imperative for company executives to be aware in order to make them avoid the practice of misusing their powers or hindering them from undertaking improper actions which might lead to questionable behaviors within an organization. The strong link between governance and ethics should facilitate the behavior of the stakeholders and enable them to make decisions in a manner that is acceptable to the stakeholders and in conformity with the values of the organization (Dessain, 2008).

Internal and external stakeholders that Dr. DoRight, the president of the “Universal Human Care Hospital,” might have to deal with on a daily basis at the hospital

Stakeholders are those individuals, organizations, or groups that have an interest in any organization or company and have the ability to influence the operations of that organization. Organizational stakeholders are increasingly becoming the force influencing organizations and their managers. Stakeholders are considered to be constituents of an organization, and they have vested interests in the activities of the organization, and at the same time, they are affected by the actions of the organization

The three groups of stakeholders are internal stakeholders who operate within the boundaries of organizations and are made up of professional and non-professional staff; the second group is the interface stakeholders who operate internally and externally to the organization and include the governing body, stockholders, and the medical staff; the third group are the external stakeholders who are made up of the suppliers, patients, and government entities.

Every health institution requires stakeholders to survive (Ledlow & Coppola, 2011). In this context, the three examples of stakeholders that Dr. DoRight has to deal with at the hospital are employees, the board of trustees, and various community organizations and corporations. The key factor in the management of the hospital should be the application of the stakeholder model of governance. In the stakeholder model of governance, the objectives, interests, and expectations of the stakeholders are paramount. In every organization, stakeholders are not shareholders and managers but also customers, suppliers, and employees.

In this perception of the stakeholder corporate governance, aligning decisions to the interests of the stakeholders may not be productive and does not guarantee the sustainable development of the company. The governance mechanism in the stakeholder model is motivated by the perception that the company is a coalition of common objectives, which is primarily the viability and the lasting existence of the company.

In the Universal Human Care Hospital, there exist both internal and external stakeholders. The internal stakeholders are clinical managers, heads of departments, the board of trustees, and employees, while the external stakeholders include the federal government, other hospitals, suppliers, customers and community organizations, and corporations. The president owes loyalty of duty to each of the stakeholders. He should be loyal to the board of trustees since they are responsible for the corporate goals of the organization. He should be loyal to the external organizations since they satisfy the needs of the organization.

Potential conflicts of interest between duties of loyalty owed to an internal stakeholder vs. an external stakeholder at the “Universal Human Care Hospital”

Corporate governance systems should be geared towards protecting the interests of the stakeholders. For Dr.DoRight to effectively manage the needs of the health care institution, he should be in a position to control the interests of the stakeholders. By utilizing the stakeholder’s approach, the president should integrate managerial concerns like strategic management, social responsibility, and human resource management.

In order to recognize the major stakeholders, the president should evaluate the potentiality of each player and contribution towards the operations of the company; this can be achieved by analyzing the potential power and the history of their relations in the organization. Dr.DoRight should be in a position to manage the interests of the stakeholders and balance his loyalty and duty as not to be in conflict with the interests of the stakeholders (Mullerat, 2010).

Every stakeholder in an organization has both interests and expectations, and it is the duty of the managers to either oppose or support it. Since the duty of the President, or in this case, Dr. DoRight, is to integrate internal activities like staffing, planning, directing, and budgeting, and to also integrate the patient care processes, he/she owes a duty to the stakeholders. Dr. DoRight is in the center of people or stakeholders who demand attention and his time and also who expect him to act as they want. These internal and external pressures and demands from various stakeholders create a dilemma for the president; this forces the president to maintain a fluid position and mixed loyalties while dealing with the stakeholders.

The president should recurrently ensure that there is a balance out between the differing interests of the stakeholders to ensure that business moves on. This balancing act is in the increase because the number of stakeholders is on the surge while the power of the president also is increasing. While the external stakeholders influence the running of the company, the president also has a duty to deal with internal stakeholders on who the day-to-day operations of the institutions depend. As part of his management responsibility, he/she should direct all the operations of the organization (Blair et al., 1989).

Dr. DoRight’s steps to prevent further harm to current and future patients and reduce liability for his employer, the Universal Human Care Hospital

  • Step I: He should recognize the existence of an ethical dilemma. This will enable him to define the ethical issues that are involved and the course of action that should be implemented. This will guide him in making an informed decision.
  • Step II: Identify how the decision will affect the stakeholders. The demands of the stakeholders are often in conflict, and this puts the president in a dilemma of which stakeholders to satisfy based on the degree of their importance. This will enable the president to make decisions without affecting the demands, interests, and operations of the company.
  • Step III: Generation of alternatives or options. This will guide the making of decisions using ideal and ethical measures, and this will guide the reporting procedure of the organization (Brooks & Dunn, 2010).

The deontology principle applied to the ethical dilemma that Dr. DoRight faces in this case

Deontology principle posits that “people should pay attention to their duties and obligations when analyzing any case of an ethical dilemma” (Rainbow 1). In this situation, Dr.DoRight should adhere to his duties and obligations to the stakeholders of the institution because by doing so, he will be acting correctly and ethically. A person who applies the principle of deontology is bound to produce consistent decisions which will be based on the set duties. Since deontology offers a basis for duties and obligations towards certain people, in this case, the president will be only obliged to the stakeholders because by reporting the cases of negligence in the health care facility, Dr. DoRight is doing what is expected of him as part of his duties and obligations (Rainbow, 2002).

Deontology should be applied by the president by factoring in the interests of the stakeholders and his duties and obligations towards meeting the demands and pressures of the health institution. By doing this, the president will have balanced the aspirations of the stakeholders by reporting the case and meeting his duties and obligations of protecting the interests of the patients who, as customers, are stakeholders too.

The utilitarianism principle applied to the ethical dilemma Dr. Do Right faces in this case

Utilitarian principle posits that any action is considered to be right from all ethical points of view if and only if the sum total of the utilities that is produced by the action is greater when compared to the sum of all the utilities that is produced by any other action that the party could have engaged in the first instance. The principle of utilitarianism assumes that we can measure and sum the total quantities of the benefits that result from a particular action and subtract from it the measured quantities of the harm that could be caused by the action. It is both the immediate and the foreseeable costs that might arise in the future and the benefits resulting from each alternative which will provide for each individual that should be taken into account as well as any significant costs arising indirectly (VelasQuez, 2001).

Utilitarianism places a lot of attention on the outcomes of any activity. In the context of Dr.DoRight, utilitarianism should enable him to approach the dilemma with the principle of what is good for the majority; this will enable him to consider the actions that are good for all the affected parties. Dr. DoRight can compare the various consequences that might emanate from his actions before he chooses to act on the case of negligence (Harman, 2006).


In order to survive in the murky health industry, there is a need for the president of the health facility to manage the divergent needs, demands, and pressures of both internal, external, and interface stakeholders and their resultant conflicts. The president should fully meet the demands of the major stakeholders and minimally meet the demands of the minor stakeholders. The president should also manage the ethical dilemmas that arise while delivering his/her duties and responsibilities.


Blair et al. (1989). Stakeholder issues for the physician executive. Web.

Brooks, L., & Dunn, P. (2010). Business & professional ethics for directors, executives & accountants. Mason, OH: Cengage Learning.

Dessain, V. (2008). Corporate Governance and Ethics: Shareholder Reality, Social Responsibility or Institutional Necessity? Web.

Harman, L. (2006). Ethical challenges in the management of health information. Sudbury, MA: Jones and Bartlett Publishers.

Ledlow, G., & Coppola, M. (2011). Leadership for health professionals: Theory, skills, and applications. Sudbury, MA: Jones and Bartlett.

Mullerat, R. (2010). International corporate social responsibility: The role of corporations in the economic order of the 21st century. Austin, TX: Wolters Kluwer Law & Business.

Rainbow, C. (2002). Descriptions of Ethical Theories and Principles. Web.

VelasQuez, M. (2001). Business Ethics Concepts & Cases. Web.

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