Smith and Zimmerman argue that a healthy, ethical corporate structure can be achieved if a corporation has appropriate organizational design. The framework outlined in this article accepts peoples self-interest as a given and rests on the principle that incentives work when performance evaluation and reward systems are properly designed. Achieving the right balance among decision authority, performance evaluation and compensation will ultimately drive shareholder value as well as ethical behavior.
What are your thoughts? Have you had experiences in the corporate world that either confirm or refute the authors ideas? If you havent been part of a large corporate structure, how can a small business promote ethical behavior while still having the goal of financial success?