Corporate Governance & Corporate Social Responsibility

Introduction

Every organizations, whether government, business, academic, or health organization, are expected to perform with corporate social responsibility and governance. The actions of the employees and leaders regarding the standards pay attention on the good practices as well as the promotion of the key initiatives. Through the presence of the practices in the organization, the effectiveness and competitiveness in an organization can be recognized.

Background and Problem Statement

Corporate social responsibility is an essential element of present and future social policies. The strategy is to develop the multinational economic and financial groups that is needed in global market economy or firms that going through serious of internal crisis. The strategy is a replacement for many socially and ethically irresponsible practices to avoid or lessen the possibilities of bankruptcies, fraudulent actions, and even disrespecting for the basic working values. The concept of corporate social responsibility accommodates a wide variety of achievements and initiatives that covers the moral and ethical concerns such as the code of conduct and good governance. On the other hand, the corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation (or company) is directed, administered or controlled. In corporate governance, the relationships among the many stakeholders involved and the goals for which the corporation is governed is also included. However, how does the corporate governance and corporate social responsibility create a great impact in the organization?

Research Aim and Objectives

The aim of the study is to investigate the influence of corporate governance and corporate social responsibility in organizations. In order to obtain the information in the study, there are three objectives that should be considered. First is to identify the purpose of corporate social responsibility and corporate governance in every organization. Second is to present the effectiveness of the CSR and governance in the internal and external function of organizations. And third is to measure the long-term impact of governance and CSR in every organization.

Literature Review

The aim for corporate social responsibility is to have an overall positive impact on society through a socially responsible conduct. It also includes the voluntary integration by the companies of social and environmental concerns towards the commercial activities and the relationship with stakeholders. The corporate social responsibility is an important way for organizations to increase their contribution to society and to sustainable development. The strategy covers the things and organizations have an impact beyond its immediate operations and legal obligations and goes beyond legal obligations that involves the issues of health and safety in the workplace, employment policies and environmental protection. If a business recognized the role of the corporate social responsibility, it definitely contributes in the development of the communities in which the business operates. Meanwhile, the principles of the corporate governance reflect on stimulating the debates about the problems or issues in relation to the corporate governance. The organizations are encouraged to adopt the recognized standards of governance to ensure the relationship of investors and organization by informing the investors in the present capital market and law. The corporate governance codes and principles is also evidently visible in different entities, such as stock exchanges, corporations, institutional investors, or associations or institutes of directors and managers. Although there are many advantages, corporate governance also faces challenges due to developing, emerging, and transitional economies. Moreover, the idea of corporate governance takes considerable advantages once the system proved itself to be effective. First is promoting the efficient use of resource of both within the company and the economy. And because corporate governance can lower transaction costs associated with corporate information access, the managerial incentives that are risky for profits are diminished. It also facilitates the proper access to capital, and could complement to institutional and legal framework of the organization. And most of all, corporate governance can contribute to lessen the corruption in the business.

Methodology

The suggested method in the study is the use of comparative case studies. The ideas regarding the corporate social responsibility (CSR) and corporate governance is already implemented among the organization across the world. In order to determine the approach of the organizations regarding the two internal actions, it is better if the study will look in the strategy of the organizations in implementing the CSR and governance. Because the organizations have the responsibility in ensuring their internal and external effectiveness, it is a great advantage for the study to look for the impact the CSR and governance can create in the corporate world.

References:

Fonteneau, G., (2003) Corporate Social Responsibility: Envisioning its Social Implications, The Jus Semper Global Alliance, Living Wages North and South [Online] Available at: http://www.jussemper.org/Resources/CSRsocialimplications.pdf [Accessed 13 August 2010].

Heugens, P., & Otten, J., (2005) Corporate Governance Reforms around the World, Tjalling C. Koopmans Research Institute [Online] Available at: http://www.uu.nl/uupublish/content/05-08.pdf [Accessed 13 August 2010].

Noon, P., (2008) Corporate Social Responsibility, Negotiator’s Guide [Online] Available at: http://www.world-psi.org/TemplateEn.cfm?Section=Home&Template=/ContentManagement/ContentDisplay.cfm&ContentFileID=23044 [Accessed 13 August 2010].

Vasilecu, L., (2008) Corporate Governance in Developing and Emerging Countries, The Case of Romania [Online] Available at: http://mpra.ub.uni-muenchen.de/10998/1/MPRA_paper_10998.pdf [Accessed 13 August 2010].