Corporate Sustainable Performance in Indonesia: Insights, Gaps, and Research Directions

This study explores the connection between corporate governance and sustainability performance through the mediating role of corporate governance and the moderating role of top management environmental concern, taking into account the perspectives of agency theory and stakeholder theory. Data were collected through a questionnaire survey of 314 employees working in SMEs operating in China, and the data analysis was carried out using Smart PLS 4 and SPSS. The results indicate that green corporate governance and green finance have a significant impact on corporate social responsibility, which in turn positively affects sustainable performance. Corporate social responsibility significantly mediates the link between green corporate governance and sustainable performance. Meanwhile, corporate social responsibility also mediates the relationship between green finance and sustainable performance. Additionally, top management environmental concern moderates the relationship between corporate governance and sustainable performance significantly, strengthening the impact of corporate social responsibility on sustainable performance. The study contributes to the literature by exploring the relationship between corporate governance, green finance, and sustainable performance in the context of Chinese SMEs. The study’s findings have significant implications for policymakers and managers interested in promoting sustainable development.

PurposeThe purpose of this paper is to investigate the direct and indirect links between corporate governance and sustainability performance using corporate social responsibility.Design/methodology/approachThe study is based on a sample consisting of 300 UK firms over the 2005–2017 period. This study applied structural equations models that specify both a direct and an indirect link between corporate governance and sustainability performance.FindingsThe authors find that corporate governance has a positive effect on sustainability performance. In addition, this study shows that corporate social responsibility fully mediates the relationship between corporate governance and sustainability performance in UK firms.Practical implicationsThis study shows that firms are invited to engage more in sustainability performance and corporate social responsibility activities, which reduces agency conflicts between managers and shareholders.Originality/valueTo the authors’ knowledge, no research studies examined empirically the direct and indirect relationship between corporate governance and sustainability performance. Therefore, the main contribution of this research is to show how corporate governance effectiveness leads to higher corporate social responsibility level and sustainability performance using two analyses methods (mediator analysis and multiple mediator analysis).

Social and economic activities, like religion, entertainment, education, research, and the production of other goods and services, are carried on by different types of organizations, for example, corporations, proprietorships, partnerships, mutuals and nonprofits. There is competition among organizational forms for survival. The form of organization that survives in an activity is the one that delivers the product demanded by customers at the lowest price while covering costs. The characteristics of residual claims are important both in distinguishing organizations from one another and in explaining the survival of organizational forms in specific activities. This paper develops a set of propositions that explaim the special features of the residual claims of different organizational forms as efficient approaches to controlling agency problems. © M. C. Jensen and E. F. Fama, 1983 Michael C. Jensen, Foundations of Organizational Strategy Chapter 6, Harvard University Press, 1998. Journal of Law & Economics, Vol XXVI (June 1983) This document is available on the Social Science Research Network (SSRN) Electronic Library at: http://papers.ssrn.com/sol3/paper.taf?ABSTRACT_ID=94032 AGENCY PROBLEMS AND RESIDUAL CLAIMS

This study aims to examine the effect of corporate governance on the Corporate sustainability performance. The samples of this study consist of publicly-traded primary and secondary sector companies in Indonesia for eleven years, from 2010 to 2020. This study discusses the effect of corporate governance on corporate sustainability performance, Corporate governance, and corporate sustainability performance. The data used in the study are hand-collected data sourced from annual financial and company sustainability reports. The findings of the study indicate that Corporate Governance (CG) is positively affecting the Corporate Sustainability Performance (CSP) and its dimensions (Economy, Environmental, and Social aspects) significantly. Furthermore, the findings of the study have also disclosed that the CG elements consisting of the rights of shareholders (Category A), The equitable treatment of shareholders (Category B), The role of stakeholders in corporate governance (category C), disclosure principles and transparency (category D), and the responsibilities of the board (Category E) relatively showing positive effects significantly towards the CG and its elements. However, different effects have been found in the elements B and D, where it is showing that the sample companies indicate the weaknesses in the practice of the equitable treatment of shareholders and Disclosure and transparency. This study is expected to contribute to or assist the companies’ policymakers by creating regulations to improve the Corporate sustainability performance. Our research adds to the research on corporate governance and Corporate sustainability performance in analyzing the correlation between CG and CSP deeply and broadly by utilizing the instruments according to the developed OECD principles.

Purpose The study investigates the mediating function of green innovation, the impact of green supply chain management and the impact of corporate image in the given background in an emergent nation to examine the relationship between corporate social responsibility and sustainable corporate performance for small- and medium-sized enterprises (SMEs) in emerging economy. It aims to integrate these constructs into a unified framework, addressing gaps in previous literature that often examine them in isolation. Design/methodology/approach The study adopts a quantitative methodology. There are 439 valid responses from middle managers and top executive managers used for statistical analysis from small- and medium-sized corporations in Vietnam. Data were analyzed by using AMOS version 20.0 and SPSS 23.0. Findings Grounded in the resource-based view (RBV), stakeholder theory and legitimacy theory, the study contributes to a multidimensional understanding of the phenomena. An integrated model of corporate social responsibility, green supply chain management, green innovation, corporate image and sustainable business practices was provided as an extension of the current literature. The relationship between corporate social responsibility and sustainable corporate performance found to be mediated by green innovation and corporate image, highlighting their central roles in sustainability pathways. Originality/value This study contributes by offering a novel contribution by developing and empirically testing a comprehensive model within the context of SMEs in Vietnam – an emerging economy undergoing rapid economic growth and environmental transition. The strategic planning for longstanding commercial growth presented in this study offers a sustainable balance to the economic, social and environmental benefits. This study’s contributions are very relevant to academics, professionals, business practitioners and policymakers. Top executives are therefore motivated to carefully contemplate doable steps to improve environmental performance as they will undoubtedly boost their company’s competitiveness and contribute to sustainable corporate performance.

Corporate governance has increasingly played as a key driver of Corporate Sustainability Performance (CSP), particularly in the increasing global demand for responsible business practices. In Malaysia, despite regulatory efforts and the introduction of sustainability reporting requirements, the incorporation of environmental, social, and governance (ESG) elements into corporate governance frameworks remains inconsistent. This gap raises concerns about the effectiveness of existing governance mechanisms in promoting sustainable outcomes, particularly among publicly listed firms. Motivated by this concern, this paper reviews the relationship between corporate governance and corporate sustainability performance, focusing on the Malaysian context. Using a literature review approach, it delved into the effectiveness of governance mechanisms such as board independence, gender diversity, and cultural diversity in promoting sustainability. The study also explores the updates introduced in the Malaysian Code of Corporate Governance (MCCG) 2021, emphasizing stronger board oversight and the integration of sustainability into corporate strategies and operations. By highlighting these developments, the paper contributes to existing literature and provides relevant insights for investors and companies. It underscores the importance of corporate governance in enhancing environmental, social, and governance (ESG) performance, ultimately supporting the green and sustainable growth of Malaysian publicly listed firms.

The study examined the implications of the recent pandemic on the corporate governance, remuneration and corporate sustainability performance of South African listed companies. Data from 42 companies was analyzed using the panel fully modified ordinary least squares (FMOLS) and dynamic ordinary least squares (DOLS) methods from 2010-2021. Findings revealed that the pandemic negatively impacted the selected companies. This study revealed that the pandemic had a good impact on some companies and not just bad ones as claimed by previous researchers. Results from COVID -19- related expenses, debt-to-equity ratios and staff costs revealed a negative but significant result in the estimated model. Other variables such as current ratios, net profit margins and board diversity revealed a positive and significant relationship with all the dependent variables. Hence, a very severe implication of the pandemic on the performance of companies is confirmed through COVID -19related expenses, staff costs and directors’ remuneration. These have a very strong negative impact on the future performance, survival, and sustainability of the selected companies. Lastly, a strong relationship between corporate governance and corporate sustainability performance was confirmed as shown by ROA, board size, directors’ remunerations and board diversity. This study provides insight for stakeholders such as governments, directors and policymakers to develop both preventive and proactive policies to protect and guide companies from future similar pandemics. To avert and prevent future negative implications on companies, this study recommends a well- structured scheme for all of the company’s staff, cash reserves and IT governance.

Corporate governance plays an important role in monitoring and counseling management’s decision making including strategic sustainability investing. Understanding the role of corporate governance may help top management of corporations allocate their limited resource in their strategic planning and decision making. This study examines the relationship between corporate governance and corporate sustainability performance (CSP) and whether corporate governance moderates the relationship between corporate sustainability performance and corporate financial performance (CSP–CFP). The study analyzes a sample of 456 top largest U.S. public companies to examine corporate sustainability performance and corporate governance jointly, particularly the moderating effect of corporate governance on CSP–CFP relationship. Lagged variables were used to address the endogeneity issue. Multiple regression methods were used. The results show that firms with stronger corporate governance are more likely to have higher CSP and that corporate governance contributes additional value to firm value. The impact of CSP on CFP is higher for firms with stronger corporate governance (moderating effect). Results are robust after using different regression methods and additional tests.

PurposeThis study investigates the effect of corporate governance (CG) characteristics on corporate sustainability performance (CSP) and whether the magnitude of CSR expenditure mediates such a relationship in the context of an emerging and developing economy-Bangladesh.Design/methodology/approachThis study collects data from the annual reports of 30 private commercial banks listed with the Dhaka Stock Exchange for the period starting from 2013 to 2022, giving 300 firm-year observations. To test the hypotheses formulated, this study uses Baron and Kenny’s (1986) four-step model. Data have been analyzed using AMOS 23 to examine the direct and indirect effect of CG on sustainability performance.FindingsThis study finds that several CG variables (board size, board independence, sustainable finance committee) significantly affect several facets of sustainability performance (environmental, social, and financial performance). However, the mediating role of the magnitude of CSR expenditure in the relationship between CG mechanisms and sustainability performance is found to be limited.Research limitations/implicationsThe list of CG and ownership structure variables studied is not exhaustive, and the presence of a wide variation in the measurement of sustainability performance makes its measurement subjective to some extent.Originality/valueThis study uses the magnitude of CSR expenditure as a mediator in the relationship between CG and sustainability performance, which is rarely addressed by the extant literature in this field.

Purpose — This research aims to determine the mediating role of corporate sustainability performance (CSP) on the influence of corporate governance (CG) on corporate performance (FP). Design/methodology/approach — The sample data were selected according to the following criteria: the company was a non-financial company that continued to report sustainability reports using the 2016 GRI Standard from 2017 to 2022. The data was analyzed using the Partial Least Squares (PLS) method. Findings — This study shows that only CG has a significant positive effect on FP. The influence of CG on CSP, the influence of CSP on FP, and CSP's mediating role were not significant. These results differ significantly from previous studies, but it is suspected that the COVID-19 pandemic causes data anomalies. Practical implications — According to the result, CG implementation will boost FP. Therefore, the company should consider expanding its CG practice to boost its FP. In addition, increasing CSP through boosting the sustainability report does not negatively affect FP. Therefore, companies are recommended to enhance their sustainability reporting practices to improve stakeholder engagement. Originality/value — This study examines a governance system that uses a two-tier board, as practiced in Indonesia. It is expected that his case will help substantiate the implementation of CG in two-tier board governance systems in countries where this may affect their companies' financial performance. Paper type — Explanatory study

Despite the significance of the company’s strategy decisions in shaping the governance of the board toward sustainable performance, an inadequate study has focused on the role of corporate strategy in the association between corporate governance (CG) and sustainability performance (SP). This study examines the direct influence of corporate governance on sustainability performance, as well as through corporate strategy (CSTR) as a mediating variable. A panel data mediation methodology based on a series of panel data regression analyses was conducted using data from 126 listed non-financial firms over the 2012–2021 period. The study finds that corporate governance has a positive and significant contribution to sustainability performance. Furthermore, this study demonstrates that corporate strategy acts as a mediator that influences the link between corporate governance and sustainability performance. The findings of the study shed fresh light on the board members, practitioners, and policymakers for planning and promoting sustainability practices, as well as strategies and firm governance necessary for sustainable development. The paper concludes that companies with effective corporate governance structures stand a better chance of demonstrating better sustainability performance, specifically with strategy decisions targeted at sustainability integration. Our findings support the agency and stakeholder theoretical points of the study and are also consistent with Ludwig and Sassen’s (2022) findings.

PurposeThe purpose of this study is to explore the current state of corporate governance in various aspects of business settings and to empirically examine the impact of national culture on corporate governance performance, with a view of supporting business corporations in further enhancing the effectiveness of their corporate governance system.Design/methodology/approachA pooled sample of 9,003 companies drawn from 50 countries across ten different regions is collected. A variety of statistical methods, including the paired samplet-test, the ordinary least squares regression and the Pearson product-moment correlation coefficient are implemented to analyze the current state of corporate governance. To empirically investigate the causal relationship between national culture and corporate governance, the multivariate regression analysis is also applied.FindingsThis study proposes a broad set of the empirical findings regarding the current state of corporate governance. Despite being accepted as a prerequisite building block for sustainable corporate social responsibility (CSR), corporate governance is still receiving far less attention among business corporations. The governance framework is widely adopted by business corporations, yet the intensity of implementing corporate governance is significantly different across regions. The variation of the intensity observed across regions can be explained by the national cultural characteristics that are all likely to impact the degree to which corporations act in corporate governance manners. Corporate governance performance is strongly related to three other aspects of socially responsible corporate performance – community, employee and environment.Research limitations/implicationsThis study provides both the motivation and a starting point for further investigation in the milieu of corporate governance. It would be interesting for future research to further explore the extent to which corporate governance has a positive indirect impact on a firm’s financial performance. There is potential to provide a more comprehensive analysis of the interaction effect of national culture and geographic region on corporate governance performance of the corporations embedded in that region through a statistical interaction method. In addition, it may be interesting to integrate corporate financial performance (CFP) into the analysis to identify a specific type/practice of the corporate governance that could provide the highest return on the investment. Last, another interesting avenue for future research would be to explore the ethical mechanisms that have been institutionalized to promote corporate governance practices.Practical implicationsThe present study is beneficial to both business corporations and policy makers. In essence, the study can potentially draw managers’ attention to applying modified corporate governance strategies according to their national culture. Furthermore, the study can alter business corporations to promote a strong corporate governance regime in chorus to CSR strategies so as to promote CSR development, which ultimately results in higher levels of competitiveness and CFP. In addition, policy makers who are responsible for inward foreign investment can use the findings of this study to evaluate the investors’ potential governance adoption.Originality/valueThe findings of this study are useful in encouraging the business corporations to further strengthen their corporate governance system. This study helps to fill the theoretical void regarding the cultural impact on corporate governance by exploring a broad set of national cultural characteristics under which good corporate governance is more or less likely to occur.

Purpose This research aims to investigate the relationships between organizational learning (OL), corporate social responsibility (CSR), corporate financial performance (CFP) and sustainable corporate performance (SCP) within the context of food-manufacturing family enterprises in Vietnam. Specifically, the study strengthens the combination of these three factors that collectively contribute to enhancing SCP. Furthermore, the research explores the role of service quality (SQ) and green brand innovativeness (GBI) as strategic levers for achieving a competitive edge in SCP within family enterprises. Design/methodology/approach This study was used the quantitative method to evaluate the influence of CSR, OL, CFP, SQ and GBI on the SCP of family enterprises. The study sample comprised 456 responses from top and middle management of organizations and used the smart partial least squares SEM (version 3.3.2) to analyze the data in the year 2024. Findings The study provides significant positive relationships between OL, CSR and CFP in contributing to enhancing SCP within family enterprises. Results suggest that firms with strong OL, CSR and CFP collectively could improve SCP. Furthermore, SQ and GBI emerged as integral factors in differentiating family enterprises in terms of SCP. While SQ plays a significant role in building customer loyalty and trust, GBI is crucial for positioning family enterprises as a sustainable one in the market. Thus, this study contributes to the existing academic knowledge by providing insights into how family enterprises can effectively balance economic, social and environmental objectives for long-term sustainability. Originality/value While previous studies have explored these factors independently, this study offers a novel perspective by examining their performances correlatively. The outcomes of this study provide valuable guidance for family enterprises’ managers, CEOs and business leaders to make strategic sustainability plans and create competitive edge when it comes to SCP.

This study investigates the relationship between corporate governance and corporate sustainability performance in the emerging Asian markets where the central role of sustainable development was perceived after the 2008 global financial crisis. We base our study on the triple bottom line approach that incorporates three dimensions of sustainability: economic, environmental, and social performance. A governance index comprising ten firm-specific provisions is proposed to summarise internal corporate governance. Consistent with agency theory, we confirm that firms with better corporate governance have better corporate sustainability performance. We also determine which main factors drive the governance-sustainability relation. The findings have practical implications for firms, shareholders, and policy makers by emphasising the role of corporate governance in assessing and enhancing corporate sustainability performance.

This paper argues that the structure of corporate ownership varies systematically in ways that are consistent with value maximization. Among the variables that are empirically significant in explaining the variation in ownership structure for 511 U.S. corporations are firm size, instability of profit rate, whether or not the firm is a regulated utility or financial institution, and whether or not the firm is in the mass media or sports industry. Doubt is cast on the Berle-Means thesis, as no significant relationship is found between ownership concentration and accounting profit rates for this set of firms.