INTRODUCTION
Corporate Governance is the method of practices, process and rules which an organization follows and is controlled by it. In academic literature, first used by Richard Ells in 1960 to refer to the functioning and structure of corporate polity. The term “Corporate Government” is basically connected with listed proper corporations where the control, ownership separation and growing agency conflicts are apparent.
In the beginning of 20th Century, the corporation control shifted into the hands of managers resulting in control and ownership separation, but however as the 20th century progressed, the shares of the founding families’ descendants gradually reduced their shares which thus caused certain agency problems (Blowfield & Murray, 2011).
Corporate Governance essentially involves the stakeholders of the company for example the management, suppliers, shareholders, customers, government, community and financiers. It includes every single part of the management. There are many large industries which are controlled by Corporate Governance. Vodafone is a large telecommunication organization which was established in the year 1991. Since then it has grown to be a successful international organization. It has millions of customers who are from around the
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This would result in a systematic growth and development for the company while all the stakeholders would receive the benefits (Sun & William, 2009). Corporate governance has a great impact on the society and the organization itself. Through the CSR activities all the stake holders are benefited by the company equally. It maintains ethical standards by which the society is greatly affected. Corporate governance helps in providing the necessary benefits to all the workers of the
Bibliography: Turnbull, S. (1997). Corporate governance: its scope, concerns and theories. Corporate Governance: An International Review, 5 (4), pp. 180--205.
An organization’s Corporate Social Responsibility (CSR) drives them to look out for the different interests of society. Most business corporations undertake responsibility for the impact of their organizational pursuits and various activities on their customers, employees, shareholders, communities and the environment. With the high volume of general competition between different companies and organizations in varied fields, CSR has become a morally imperative commitment, more than one enforced by the law. Most organizations in the modern world willingly try to improve the general well-being of not only their employees, but also their families and the society as a whole.
Corporate gorverance as a system are directed and controlld by companies. Initially, their board of directors should take responsible for the gorverance of companies, which include setting strategic aims of companies , guarantee an effective leadership, supervising the proformance of business management and reporting on it to shareholders. The board's action should comply with the law, regulations and shareholders. In addition, the shareholders also play an important role in gorverance and they have right to decide who can be employed as the companies' directors and auditors to provide good governance structure for them. Therefore, corporate goverance can be regarded as what the board of a company does and how it sets the values of the company.
Corporate governance implies governing a company/organization by a set of rules, principles, systems and processes. It guides the company about how to achieve its vision in a way that benefits the company and provides long-term benefits to its stakeholders. In the corporate business context, stake-holders comprise board of directors, management, employees and with the rising awareness about Corporate Social Responsibility; it includes shareholders and society as well. The principles which...
Nottingham Trent University. (2013). Lecture 1 - An Introduction to Corporate Governance. Available: https://now.ntu.ac.uk/d2l/le/content/248250/viewContent/1053845/View. Last accessed 16th Dec 2013.
There are many different factors that have led to the issues with corporate governance, but some of the most important to consider include the fact that corporate accounting has shifted toward the interest of protecting and providing for individuals in the company, investor protection rules have become too relaxed, and the fact that “too many corporate executives and directors have been placed in positions of great power and authority without an adequate understanding of their fiduciary duties” (Bogle, p. 31). Bogle provides multiple scenarios as to how to help with these issues, and some of them are essentially describing a movement back to traditional owners capitalism. First, he notes that the most major thing that needs to be reformed is stockholder rights, and policies that limit those. Regarding the stockholders, Bogle says that reforms should be made so to better allow stockholders to have a say-so in election of corporate board members, as well as have the rights to help in replacing one if needed. For example, instead of a company’s CEO appointing its board members, the stockholders should appoint them because as stockholders they reserve the right to have some input into the way the company in governed.
A corporations CSR should be shaped in order to fit the goals of the corporation, although every corporation’s CSR should differ, since most have different goals and different communities behind them. The CSR should be molded into fitting the corporation’s goals in order to make it easier on the corporation in giving back to the community while achieving its goals. For example, a corporation located in a desert wishes to be more efficient, by reducing water usage it is not only creating lower costs, which result in higher revenue, but also helps the community by not taking up so much water. Taking this into consideration, it is critical that the corporation goals and values are established and clear throughout the corporation, they should be developed by the board or directors and CEO, and the highest managerial level should stress their importance to the rest of the corporation. By making the goals and values at the top branch of the corporate hierarchy, it will be simpler for the corporates community to develop in order to nurture those goals and values. Therefore, a corporation can reach the “shared-value,” a value for both its shareholders and community in a simpler manner that can result benefiting the corporation in the end as well. Throughout the article many examples are given of actual corporations that have benefited and changed their CSR in order to fit their goals, therefore, providing solid proof that these methods work. Nevertheless, as acknowledged by the author’s themselves, most of the corporations taken into consideration where one’s that Harvard CSR students were employed
In addition to CSR and company performance, corporate governance mechanisms are key variables which might affect the relationship between CSR and company performance. Corporate governance is defined from a broad perspective by Gillan & Starks (2003) as “the system of laws, rules, and factors that control operations at a company” (p. 2). Corporate governance mechanisms within a company protects shareholder interests and reduces the frequently occurred agency problem (Stuebs & Sun, 2015; Bushee, Carter & Gerakos, 2014). Due to the implementation of corporate governance mechanisms, shareholders have a greater control over the managerial decisions and actions, which prevents the agency conflict and creates trust
In the current market, corporate social responsibility (CSR) is becoming as important to a company as accountancy or marketing, a company which does not take part in CSR could be seen as out of date or not accustomed to change, therefore seen as less desirable in every aspect, from customers to suppliers etc. Companies, which choose to take part in CSR, work hard to make it beneficial to all their stakeholder groups by being involved in activities which will be positive towards the business and also the social environment, making sure to maintain a healthy balance. The effects of corporate social responsibility (CSR) can not be underestimated nor overemphasised, it covers a wide range of business aspects including the running of the business and it’s effectiveness to its environmental impact and improvements. CSR is so diverse, it can even improve the quality of a product, by going fair trade for example to en...
...can be an arbiter of business responsibility to society through the application of tax incentives or tax credits. In good corporate governance, the management should be able to meet their social responsibilities, these include making sure that their products are not hazardous to people and to the environment, sharing their profits for the good of the community as a natural person or human being would do, donating to social causes, organizing activities to benefit the community.
Corporate governance is the policies, rules and regulations, by which a corporation shapes the way corporate officers, managers, and stakeholders perform their duties to create wealth for the entity. According to Lipman (2006), good corporate governance helps to prevent corporate scandals, fraud, and potential civil and criminal liability of the organization (p. 3). Most companies, whether formal or informal, have some type of corporate governance for the management to follow. Large companies will have a formal set of rules and regulations, while small companies frequently have spoken rules often due to lack time to form any type of formal policies. There is often no corporate governance with family owned companies.
For the upliftment of society ideally most important aspect is creating awareness in people about their rights. For this a part of society needs to take active part in development of the society, surprisingly many have come forward voluntarily to contribute for the betterment of society. According to Crowther and Jatana (2005a) Today Corporate Social Responsibility (CSR) has become a popular cause. CSR focuses on social, environment and financial success of a company to ensure that they are performing well in non-financial areas such as human rights, business ethics, environment policies, corporate contribution to education, poverty alleviation, infrastructure development, women’s empowerment,
The office of the Director of Corporate Enforcement (ODCE, 2015), Ireland defines Corporate Governance as “the system, principles and process by which organisations are directed and controlled. The principles underlying corporate governance are based on conducting the business with integrity and fairness, being transparent with regard to all transactions, making all the necessary disclosures and decisions and complying with all the laws of the land”. It is the system for protecting and advancing the shareholder’s interest by setting strategic direction for the firm and achieving them by electing and monitoring the capable management (Solomon, 2010). It is the process of protecting the stakes of various parties that have their interest attached with a company (Fernando, 2009). Corporate governance is the procedure through which the management of the company is achieving the goals of various stake holders (Becht, Macro, Patrick and Alisa,
It is important to understand the importance of corporate social responsibilities. If Corporate Social Responsibility is properly maintained and emphasized by companies, it can benefit the society, economy and corporate sustainability. It can also be cost efficient to companies. also the environment . But above all effect (CSR) varies companies to companies. Where some corporates seem to make all sorts of benefits from their coporate social responsibilities but few of them are also having loss by trying to maintain CSR without properly evaluating their resources. (Porter and Kramer 2006) has said The inferences where corporates need to evaluate their CSR actions to figure out if they add
CSR and Corporate governance initiatives are good for communities, because they help elevate the community and they bring growth to the communities. CSR does reach their aims and their need. Like the Kids in Parks initiatives by Pick n Pay, they help the young generation to break out of the cycle of poverty. And CSR is good because it helps promote the image and goodwill of the business: Pick n pay is a perfect example.