Ethics in business have been closely associated with corporate governance. Corporate governance is more of a social relationships rather than process orientated structure. Business process should also focus on other critical factors such as legislation, culture and institutional contexts. Corporate governance is constantly changing and evolving and changes are driven by both internal and external environmental dynamics. An effective and good corporate governance cannot be explained by one theory but it is best to combine a variation of theories, addressing not only the social relationships but also emphasize on the rules and legislation and stricter enforcement surrounding good governance practice and going beyond the norms of a mechanical approach towards corporate governance. Corporate governance theories emphasizes on empathy, healthy social relationship, loving care for each other and the avoidance of harm. In an organization, to care for one another is a social concern and not merely a profit centred motive. Ethics has also to be seen in the light of the environment in which it is exercised. This is important as an organization is a network of actions, hence influencing trans communal levels and interactions (Casey, 2006). Resource Dependency Theory is one the corporate governance theories that would be discussed below.
Resource Dependency theory was originated in the 1970s with the publication of The External Control of Organisations: A Resource Dependence Perspective by Pfeffer and Gerald R. Salancik. Resource Dependency Theory (RDT) can be defined as an explanation of how the external resources of an organization affect the behaviour of said organization. RDT argues that in order to survive, an organization must acquire resources (Pfeffer and Salancik, 1978). In a traditional manufacturing company, resources would be things like money, a skilled labour