Corporate Governance, Corporate Social Responsibility and Corporate Performance

By Huang, Chi-Jui | Journal of Management and Organization, November 2010 | Go to article overview

Corporate Governance, Corporate Social Responsibility and Corporate Performance


Huang, Chi-Jui, Journal of Management and Organization


ABSTRACT

Previous research has analyzed and debated corporate governance (CG) and corporate social responsibility (CSR) independently. This paper aims to empirically explore the interrelationship between CG, CSR, financial performance (FP) and Corporate Social Performance (CSP) using a sample of 297 electronics companies operating in Taiwan, a newly industrialized Asian economy. The results show that a CG model which includes independent outside directors and which has specific ownership characteristics has a significantly positive impact on both FP and CSP, whereas FP itself does not influence CSP. The presence of independent outside directors in the firm has the greatest impact on the social performance of the firm's worker, customer, supplier, community and society dimensions. Government shareholders enhance a firm's social performance extraordinarily because government shareholders will be more likely to request that companies fulfill their social responsibilities. Only government shareholders positively and significantly relate to a firm's environmental performance. Furthermore, foreign institutional stockholders help to increase worker and supplier performance by paying more attention to employee policies and supply chain relationships. Finally, independent outside directors, foreign institutional stockholders and domestic financial institutional stockholders are shown to improve financial performance.

Keywords: corporate governance, corporate social responsibility, financial performance, stakeholder, social performance

INTRODUCTION

Today's corporations operate in an environment of intense public, investor, regulatory and media scrutiny. The corporate scandals of recent years, such as those of the Lehman Brothers, Enron, WorldCom and Sanlu Milk, have created a significantly more constrained regulatory environment. Those corporate failures have focused attention on issues of good governance and ethics, heightening the discussion of corporate governance (CG) and the ethics of economic conduct (Marsiglia & Falautano, 2005). At the same time, increasing public and stakeholder concern about the social and environmental impacts of business practices is forcing companies to come to terms with a broader set of interests and expectations. Companies must embrace these challenges in order to reap the benefits: proactive legal, social, environmental and reputation risk management; enhanced organizational effectiveness; improved relationships with stakeholders; and 'social license' to operate within communities.

Corporate social responsibility (CSR) has been defined as the obligation of firms to be responsible for the environment and for their stakeholders in a manner that goes beyond financial goals (Gössling & Vocht, 2007). A particular definition of CSR was presented at the World Business Council for Sustainable Development: 'Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development, while improving the quality of life of the workforce and their families as of the local community at large' (Holme & Watts, 1999, p. 3). Therefore, CSR is relevant at different levels within and outside the corporation and is difficult to measure. Corporate social performance (CSP) is a way of making CSR applicable and putting it into practice (Maron, 2006). CSP can be transformed into measurable variables (Beurden & Gössling, 2008). In current research, CSP assesses an organization's general stance towards a complex range of concerns related to the social field (Graves & Waddock, 1999).

CSR is a general framework for the responsible use of corporate power and social contribution that may provide an increase in CSP (Turker, 2009). Recent research proposes that firms today are generally broadening the basis of their performance from a short-term financial focus to take account of long-term social, environmental and economic influences and value added (Hardjono & Marrewijk, 2001). …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Corporate Governance, Corporate Social Responsibility and Corporate Performance
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.