Abstract
PurposeStudies show that corporate governance (CG) and corporate social responsibility (CSR) are driven by ethical practices. The relationships between corporate ethics, CG and CSR have been heavily studied indicating significant associations. The purpose of this paper is to examine the mediating role of CG on the relationship between ethics and CSR.Design/methodology/approachData were collected through questionnaires from small to medium-sized enterprises (SMEs) in the Middle East and North Africa (MENA) countries. The results were analyzed using structural equation modeling.FindingsThe results indicate that ethical practices have positive impact on CG, and in turn CG has a positive impact on CSR. The results also reveal a mediating effect of CG on the relationship between ethics and CSR.Research limitations/implicationsThe sample selected is based on two countries in the MENA region, Egypt and Lebanon. Only SMEs are considered.Practical implicationsThe innovative capabilities of SMEs in developing and emerging economies could be enhanced through corporate ethical practices which guide management for more CSR engagement through good CG.Originality/valueThe study contributes to corporate ethics, CG and CSR literature by providing evidence from a significant region, with both developing and emerging economies, on the mediating role of CG on the relationship between ethics and CSR.
Highlights
The topic of corporate governance (CG) has attracted multidisciplinary researchers from fields such as law, political sciences, accounting, finance, economics and even philosophy
The board of directors and the owners of an entity have moral and ethical obligations toward their stakeholders, the presence of CG will further dwell upon these behaviors and increase actions enhancing the decision-making process
The concept of corporate social responsibility (CSR) developed beyond economic responsibilities as building and maintaining an ethical identity became prominent, especially when stakeholder became more interested in the overall well-being of the society
Summary
The topic of corporate governance (CG) has attracted multidisciplinary researchers from fields such as law, political sciences, accounting, finance, economics and even philosophy. In the Middle East and North Africa (MENA) region, 85 percent of business entities are small to medium-sized enterprises (SMEs) and family-owned enterprises (FOEs) (Saïdi, 2004), where CG practices have yet not reached a saturated level, and are still challenged by both external and internal factors In such a significant region, SMEs seek to achieve and sustain innovation capabilities through the combination of inventive entrepreneurial processes which lead to the creation of new economic value. It is important to mention that accountability, social responsibility, transparency and fairness are factors required to operate in international markets These requirements coupled with a profound CG would allow both SMEs and societies to flourish.
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