Hostname: page-component-77c89778f8-m42fx Total loading time: 0 Render date: 2024-07-21T03:19:58.188Z Has data issue: false hasContentIssue false
  • English
  • Français

Corporate governance, corporate social responsibility and corporate performance

Published online by Cambridge University Press:  02 February 2015

Chi-Jui Huang
Chi-Jui Huang*
Affiliation:
Department of Banking and Cooperative Management, National Taipei University, Shinjuang City, Taiwan
Get access Rights & Permissions [Opens in a new window]

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 governancecorporate social responsibilityfinancial performancestakeholdersocial performance
Type
Research Article
Information
Journal of Management & Organization , Volume 16 , Issue 5 , November 2010 , pp. 641 - 655
Copyright
Copyright © Cambridge University Press and Australian and New Zealand Academy of Management 2010

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Barnett, M. L. (2007). Stakeholder influence capacity and the variability of financial returns to corporate social responsibility. Academy of Management Review, 32(3), 794–816.Google Scholar
Barnett, M. L., & Salomon, R. M. (2006). Beyond dichotomy: The curvilinear relationship between social responsibility and financial performance. Strategic Management Journal, 27, 1101–1122.Google Scholar
Beurden, P., & Gössling, T. (2008). The worth of values: A literature review on the relation between corporate social and financial performance. Journal of Business Ethics, 82, 407–424.Google Scholar
Blackburn, V. L., Doran, B. M., & Shrader, C. B. (1994). Investigating the dimensions of social responsibility and the consequences for corporate financial performance. Journal of Managerial Issues, 6, 195–212.Google Scholar
Bonn, I. (2004). Board structure and firm performance: Evidence from Australia. Journal of the Australian and New Zealand Academy of Management, 10(1), 14–24.Google Scholar
Bouquet, C., & Deutsch, Y. (2008). The impact of corporate social performance on a firm's multinationality. Journal of Business Ethics, 80, 755–769.Google Scholar
Brammer, S. J., Pavelin, S., & Porter, L. A. (2006). Corporate social performance and geographical diversification. Journal of Business Research, 59, 1025–1034.Google Scholar
Bushman, R. M., & Smith, A. J. (2003). Transparency, financial accounting information, and corporate governance. Economic Policy, Review, 9, 65–87.Google Scholar
Campbell, J. L. (2007). Why would corporations behave in socially responsible ways? An institutional theory of corporate social responsibility. Academy of Management Review, 32(3), 946–967.Google Scholar
Chen, S., & Bouvain, P. (2009). Is corporate responsibility converging? A comparison of corporate responsibility reporting in the USA, UK, Australia, and Germany. Journal of Business Ethics, 87, 299–317.Google Scholar
Cho, D. S., & Kim, J. (2002). Outside directors, ownership structure and firm profitability in Korea. Corporate Governance: An International Review, 15(2), 239–250.Google Scholar
Daily, C. M., Johnson, J. L., & Dalton, D. R. (1999). On the measurements of board composition: Poor consistency and a serious mismatch of theory and operationalizations. Decision Sciences, 30(1), 83–106.Google Scholar
Dalton, D. R., & Kesner, I. F. (1987). Composition and CEO duality in boards of directors: An international perspective. Journal of International Business Studies, 18(3), 33–42.Google Scholar
Douma, S., George, R., & Kabir, R. (2006). Foreign and domestic ownership, business groups, and firm performance: Evidence from a large emerging market. Strategic Management Journal, 27(7), 637–657.Google Scholar
Dunlop, A. (1998). Corporate governance and control. London: CIMA.Google Scholar
Economist Intelligence Unit. (2008). How technology sectors grow benchmarking IT industry competitiveness 2008. Retrieved 09 16, 2008, from http://global.bsa.org/2008eiu/study/2008-eiu-study.pdfGoogle Scholar
Eisenberg, T., Sundgren, S., & Wells, M. (1998). Larger board size and decreasing firm value in small firms. Journal of Financial Economics, 48, 35–54.Google Scholar
Erlandsson, J., & Tillman, A. M. (2009). Analysing, influencing factors of corporate information collection, management and communication. Journal of Cleaner Production, 17, 800–810.Google Scholar
Fernández Sánchez, J. L., & Sotorrio, L. L. (2007). The creation of value through corporate reputation. Journal of Business Ethics, 76, 335–346.Google Scholar
Finegold, D. B., & Hecht, D. (2007). Corporate boards and company performance: Review of research in light of recent reforms. Corporate Governance: An International Review, 15(5), 865–878.Google Scholar
Gössling, T., & Vocht, C. (2007). Social role, conceptions and CSR policy success. Journal of Business Ethics, 47(4), 363–372.Google Scholar
Graves, S. B., & Waddock, S. A. (1999). A look at the financial–social performance nexus when quality of management is held constant. International Journal of Value-Based Management, 12(1), 87–99.Google Scholar
Gray, R., Kouhy, R., & Lavers, S. (1995). Corporate social and environmental reporting: A review of the literature and a longitudinal study of UK Disclosure. Accounting, Auditing and Accountability Journal, 8(2), 47–77.Google Scholar
Grosser, K., & Moon, J. (2005). Gender mainstreaming and CSR: Reporting workplace issues. Journal of Business Ethics, 62, 327–340.Google Scholar
Hardjono, T. W., & Marrewijk, M. V. (2001). The social dimensions of business excellence. Corporate Environmental Strategy, 8, 223–233.Google Scholar
Hitt, M. A., Tihanyi, L., Miller, T., & Connelly, B. (2006). International diversification: Antecedents, outcomes, and moderators. Journal of Management, 32(6), 831–867.Google Scholar
Holme, L., & Watts, R. (1999). Making good business sense. Geneva: The World Council for Sustainable Development.Google Scholar
Huang, C. J. (2010). Board, ownership, and, performance of banks with a dual board system: Evidence from Taiwan. Journal of Management and Organization, 16(2), 219–234.Google Scholar
Jamali, D., Safieddine, A. M., & Rabbath, M. (2008). Corporate governance and corporate social responsibility synergies and interrelationships. Corporate Governance: An International, Review, 16(5), 443–459.Google Scholar
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency cost, and ownership structure. Journal of Financial Economics, 3, 305–360.Google Scholar
Katrishen, F. A., & Scordis, N. A. (1998). Economies of scale in services: A study of multinational insurers. Journal of International Business Studies, 29(2), 305–327.Google Scholar
Kendall, N. (1999). Good corporate governance, ‘Accountants’ Digest, issue 40. The ICA in, England and Wales, UK.Google Scholar
Kotabe, M., Srinivasan, S. S., & Aulakh, P. S. (2002). Multinationality and firm performance: The moderating role of R&D and marketing capabilitys. Journal of International Business Studies, 33(1), 79–97.Google Scholar
KPMG (2008). International Survey of Corporate Responsibility Reporting 2008. Retrieved April 15, 2009, http://www.us.kpmg.com/RutUS_prod/Documents/8/Corporate_Sustainability_Report_US_Final.pdfGoogle Scholar
KPMG (2009). International survey of corporate responsibility reporting 2008. Retrieved April 15, 2009, from http://www.us.kpmg.com/RutUS_prod/Documents/8/Corporate_Sustainability_Report_US_Final.pdfGoogle Scholar
Kutner, M. H., Nachtsheim, C. J., & Neter, J. (2004). Applied linear regression models (4th ed.). Burr Ridge, IL: McGraw-Hill.Google Scholar
La Porta, R., Lopez-De-Silanes, F., & Shleifer, A. (1999). Corporate ownership around the world. The Journal of Finance, 54(2), 471–517.Google Scholar
Luan, C. J., & Tang, M. J. (2007). Where is, independent director efficacy? Corporate Governance: An International Review, 15(4), 636–643.Google Scholar
Manetti, G., & Becatti, L. (2009). Assurance, services for sustainability reports: Standards and empirical evidence. Journal of Business Ethics, 87(1), 289–298.Google Scholar
Maron, I. Y. (2006). Toward a unified theory of the CSP-CFP link. Journal of Business Ethic, 67(2), 191–200.Google Scholar
Marquis, C., Glynn, M. A., & Davis, G. F. (2007). Community isomorphism and corporate social action. Academy of Management Review, 32(3), 925–945.Google Scholar
Marsiglia, E., & Falautano, I. (2005). Corporate social responsibility and sustainability challenges for a Bancassurance Company. The Geneva, Papers, 30, 485–497.Google Scholar
Muller, A., & Kolk, A. (2009). CSR performance in emerging markets: Evidence from Mexico. Journal of Business Ethics, 85(2), 325–337.Google Scholar
Neville, B. A., Bell, S. J., & Mengüç, B. (2005). Corporate reputation, stakeholders and the social performance–financial performance relationship. European Journal of Marketing, 39(9/10), 1184–1220.Google Scholar
O'Dwyer, B. (2002). Managerial perceptions of corporate social disclosure: An Irish story. Accounting, Auditing and Accountability Journal, 15(2), 406–436.Google Scholar
Orlitzdy, M., Schmidt, F. L., & Rynes, S. L. (2003). Corporate social and financial performance: A meta-analysis. Organization Studies, 24, 403–441.Google Scholar
Pan, Y. L. S., & Tse, D. K. (1999). The impact of order and mode of market entry on profitability and market share. Journal of International Business Studies, 30(1), 81–104.Google Scholar
Pavelin, S., & Porter, L. A. (2008). The corporate social performance content of innovation in the U.K. Journal of Business Ethics, 80, 711–725.Google Scholar
Peng, M. W., Au, K. Y., & Wang, D. Y. L. (2001). Interlocking directorates as corporate Governance in third world multinationals: Theory and evidence from Thailand. Asia Pacific Journal of Management, 18(2), 161–181.Google Scholar
Perrini, F., Pogutz, S., & Tencati, A. (2006). Developing corporate social responsibility: A European perspective. Cheltenham, Gloucestershire, UK: Edward Elgar Publishing.Google Scholar
Sánchez-Ballesta, J. P., & García-Meca, E. (2007). A meta-analytic vision of the effect of ownership structure on firm performance. Corporate Governance: An International Review, 15(5), 879–893.Google Scholar
Shleifer, A., & Vishny, R. (1986). Large shareholders and corporate control. Journal of Political Economy, 94, 461–488.Google Scholar
Smith, A. E., & Humphreys, M. S. (2006). Evaluation of unsupervised semantic mapping of natural language with Leximancer concept mapping. Behavior Research Methods, 38(2), 262–279.Google Scholar
Solomaon, A., & Leviews, L. (2002). Incentives and disincentive for corporate environmental disclosure. Business Strategy and Environment, 11(3), 154–169.Google Scholar
Strandberg, C. (2005). The convergence of corporate governance and corporate social responsibility. Canadian Co-operative Association. Retrieved 07 7, 2009, from http://www.corostrandberg.com/publications_Corporate_Sustainability_Governance.html#11Google Scholar
Tallman, S., & Li, J. (1996). Effects of international diversity and product diversity on the performance of multinational firms. Academy of Management Journal, 39(1), 179–196.Google Scholar
Turker, D. (2009). Measuring corporate social responsibility: A scale development study. Journal of Business Ethics, 85(4), 411–427.Google Scholar
Vanhamme, J., & Grobben, B. (2009). Too good to be true! The effectiveness of CSR history in countering negative publicity. Journal of Business, Ethics, 85, 273–283.Google Scholar
Waddock, S. A., & Graves, S. B. (1997). The corporate social performance-financial performance link. Strategic Management Journal, 18(4), 303–319.Google Scholar
Walker, P. L. (2004). Corporate governance and corporate social responsibility ownership, management and accountability – assessing the challenge for public relations. The 7th Annual International Public Relations Research Conference. Retrieved 03 11, 2004, from http://www.globalpr.org/knowledge/CSRandPR.pdfGoogle Scholar
World Investment Report. (2007). Transnational corporations and the internationlization of R&D. Geneva: United Nations Conference on Trade, and Development (UNCTAD).Google Scholar
Zattoni, A., & Cuomo, F. (2008). Why Adopt Codes of Good Governance? A Comparison of Institutional and Efficiency Perspectives. Corporate Governance: An International Review, 16(1), 1–15.Google Scholar