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4.9. Relating social responsibility with governance: the evidence

There has been a variety of research over time investigating the relationship between the characteristics of a firm and its disclosure (eg Cowen et al 1987; Gray et al 2001) and equally there is research (eg Burke & Longsdon 1996) showing the benefits of CSR. It is clear that these benefits are also directly related to the sustainability of a firm and that firm's success. It would seem apparent therefore that there should be some attention paid to social responsibility within the corporate governance of a corporation. It is therefore apposite to conduct an investigation as to what exactly is mentioned about CSR within such corporate governance. It is to be expected that good corporate governance will foster social responsibility in general.

There has been much work undertaken which investigates the failures of corporate governance and the ensuing problems which arise and this could be adapted to a consideration of our concern with the relationship between corporate governance and social responsibility. We argue however that this approach is not an appropriate methodology for this kind of research. Rather our starting assumption is that effective corporate governance will be largely unnoticed and that this will be manifest in examples of good practice rather than in the exceptional instances of poor practice.

Although there is a clear link between good corporate governance and all aspects of a firm's performance, which will ultimately affect the sustainability of that firm's activity our research does not show that this is at all clearly understood by many firms. Furthermore, although the majority of firms consider that corporate social responsibility is important, they do not make any connection between this and corporate governance. They clearly do not understand the link between good governance, the management of all stakeholder relations, corporate social responsibility and the longer term economic performance of their company.

4.10. Conclusions

Stakeholder Theory is one approach to the managing of an organisation. It is particularly important for an understanding of CSR and its incorporation into organisational activity. There are various aspects to this which we have considered in this chapter. At the same time we have introduced a variety of other aspects which are related. Our purpose is to show that all of these concepts are inter-related in the management of an organisation and that CSR cannot be considered in isolation from the rest of organisational activity. We will see this more clearly throughout this book.

4.11. References

Aras G & Crowther D (2009); The Durable Corporation: strategies for sustainable development; Farnham; Gower Argenti, J. (1993) Your organization: What is it for?, McGraw-Hill, London.

Atkinson, A. A., Waterhouse, J. H., and Wells, R. B., (1997) 'A stakeholder approach to strategic performance management, Sloan Management Review, Spring.

Burke L & Longsdon J M (1996); How corporate social responsibility pays off; Long Range Planning, 29(4), 495-502

Clarkson, M. E., (1995) 'A Stakeholder Framework for analyzing and evaluating Corporate Social Performance, Academy of Management Review, Vol. 20, No. 1, pp 92-117.

Cooper S, Crowther D, Davies M & Davis E W (2001); Shareholder or Stakeholder Value? The development of indicators for the control and measurement of performance; London; CIMA

Cowen S S, Ferreri L B & Parker L D (1987); The impact of corporate characteristics on social responsibility disclosure: A typology and frequency-based analysis; Accounting, Organizations and Society, 12 (2), 111-122

Freeman, R. E. (1984) Strategic management: A stakeholder approach; Boston; Pitman

Gray R, Javad M, Power D M & Sinclair C D (2001); Social and environmental disclosures and corporate characteristics: A research note and extension; Journal of Business, Finance and Accounting, 28 (3/4), 327-356

Greenley, G. E. and Foxall, G. R. (1997): "Multiple stakeholders orientation in UK companies and the implications for company performance", Journal of Management Studies, Vol. 34, n°2, March, pp. 259-284.

Heskett, J.L., Jones, T.O., Loverman, G.W., Sasser, Jr W.E. and Schlesinger, L.A., (1994). "Putting the Service-Profit Chain to Work", Harvard Business Review, March-April, pp. 164-174.

Jones, T. M. and Wicks, A. C. (1999); Convergent stakeholder theory; The Academy of Management Review, April, 24 (2), pp206-221.

Kaplan R S & Norton D P (1992); The balanced scorecard - measures that drive performance; Harvard Business Review, Jan/Feb, 71-79

Kaplan R S & Norton D P (1993); Putting the balanced scorecard to work; Harvard Business Review, Sept/Oct, 134-147

Kaplan, R. S. and Norton, D. P., (1996a) 'Using The Balanced Scorecard As a Strategic Management System', Harvard Business Review, January / February 1996, pp. 75-85.

Kaplan, R. S. and Norton, D. P., (1996b) The Balanced Scorecard: Translating Strategy into Action, Harvard Business School Press, Harvard.

Mitchell, R. K., Agle, B. R. and Wood, D. J. (1997) 'Toward a theory of stakeholder identification and salience: Defining the principle of who really counts', The Academy of Management Review, October, pp853-886

Paine T (1792); The Rights of Man (many editions)

Sternberg, E. (1997) 'The Defects of Stakeholder Theory', Corporate Governance: An International Review, Vol. 5, No. 1, pp 3-10.

 
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