Editorial: Corporate social responsibility, corporate governance and financial outcomes

NOTE: THIS ARTICLE WAS PUBLISHED WITH THE INFORMING SCIENCE INSTITUTE. Aim/Purpose............................................................................................................................................................................. This study seeks to examine the effect of ethical leadership on corporate governance, corporate performance and corporate social responsibility in selected Nigerian deposit money banks. Background............................................................................................................................................................................. Business ethics, corporate governance and corporate social responsibility developed as movements to check unethical and corrupt practices in organizations and by extension improve the performance of the organizations. However, the application of these measures has not yielded the desired results. This is evident in the number of top executives of corporate giants like Enron of the United States of America and Satyam of India that have been embroiled in unethical practices. In Nigeria, the corporate corruption and scandal involving top management of deposit money banks has given rise to mergers, acquisition and failure of some of the banks. Thus, this study argues that there is a missing link in the application of these measures. That missing link is ethical leadership. Methodology............................................................................................................................................................................. The study employed survey research design. Stratified sampling technique was employed to select the respondents that completed the questionnaire. The generated data were analyzed using linear regression. Contribution............................................................................................................................................................................... The study established that a robust organization can be developed by main-streaming corporate governance, corporate performance and corporate social responsibility using a nurtured ethical leader. Findings..................................................................................................................................................................................... The results reveal that ethical leadership has significant positive effects on corporate governance, corporate performance and corporate social responsibility. Recommendations for Practitioners......................................................................................................................................... Management should show more commitment in the selection and development of leaders and followers. All the stakeholders should be equally involved in the formulation of corporate governance principles. A nurtured ethical leader should be employed to mainstream corporate governance, corporate performance and corporate social responsibility through the organizational culture. Recommendation for Researchers............................................................................................................................................ The use of objective measures or better still subjective measures is suggested as a way of generalizing the present findings. Impact on Society...................................................................................................................................................................... The findings of this study will expose deposit money bank stakeholders to the consequences of ethical and unethical practices. It will create in bankers the need to abide by ethical leadership and to be whistle-blowers. The findings are expected to engender more stern monitoring measures by the banks’ regulatory agency. These measures are further expected to ensure the reinvention of the banks’ organizational culture so much so that they will contain the core values of code of ethics, corporate governance, performance and social responsibility. The outcome of the study is expected to make the regulatory agency more proactive rather than being reactive to deposit money bank matters. This will consequently put a stop to the fall in the taxes accruable to government in the event of bank failure. Future Research......................................................................................................................................................................... To generalize the findings for the whole of Nigeria, similar study should be conducted in other geopolitical zones of the country.

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

ABSENT fiat, 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.1 Our goal is to explain the survival of organizations characterized by separation of "ownership" and "control"-a problem that has bothered students of corporations from Adam Smith to Berle and Means and Jensen and Meckling.2 In more precise language, we are concerned with the survival of organizations in which important decision agents do not bear a substantial share of the wealth effects of their decisions. We argue that the separation of decision and risk-bearing functions observed in large corporations is common to other organizations such as large professional partnerships, financial mutuals, and nonprofits. We contend that separation of decision and risk-bearing functions survives in these organizations in part because of the benefits of specialization of

The Oil Palm Companies is one of the highest contributions towards Indonesia economic development. However, the company performance in the oil palm companies is far from expectation which is related to how they responsible on their shareholders as well as stakeholders. Thus, the study purpose is to examine the relations between corporate governance mechanisms, corporate social responsibility and board equity ownership on performance in Indonesia’s Oil Palm Companies. The findings highlight a positive relationship between board equity ownership, corporate social responsibility and company performance. Furthermore, the moderating role of board equity ownership has a significant positive on the relationship between independence director and company performance as well as corporate social responsibility. The relationship between female director and company performance shows the same result with the interaction of board equity ownership. Currently studies have found that corporate governance mechanisms, corporate social responsibility have significant effect on company performance. Nevertheless, this evidence showed that direct relationship between corporate governance, social responsibility and company performance have mix results. Admittedly, the indirect relationship revealed that board equity ownership contributes significant effect on the relations between corporate governance, social responsibility and company performance particularly in Indonesia’s oil palm companies. Based on the author knowledge, a few studies have been done in oil palm companies which it provides a prominent issue in corporate governance mechanism particularly on board equity ownership which majority is held by family member ownership.
 Keywords Corporate governance, social responsibility, board equity ownership, company performance

Contents: Overview, GA ler Aras and David Crowther Part I Theoretical Overview: A Luhmannian in the playground a corporate social responsibility from a systems-theoretic perspective, Juliane Riese What is 'good' corporate governance?, Dominique Bessaire, CA(c)line Chatelin and StA(c)phane OnnA(c)e Redefining sustainability, GA ler Aras and David Crowther The social contract of business in society, Sandra Waddock The shifting meaning of sustainability, Mary A. Kaidonis, Natalie P. Stoianoff and Jane Andrew Corporate social responsibility and accounting, Stuart Cooper Responsible practices in small and medium enterprises, Antonio Vives. Part II Applying Corporate Governance: Trends in corporate governance, Wallace N. Davidson III, Sameh Sakr and Hongxia Wang Corporate governance a responsibilities of the board, Maria Aluchna Shareholder rights and stakeholder rights in corporate governance, Mirella Damiani The regulatory and legal framework of corporate governance, Hillary Shaw The agency problem and corporate governance, GA ler Aras and David Crowther Auditing, product certification and corporate social responsibility, Charles Elad Decisive risk management for corporate governance, Kurtay Ogunc Corporate social responsibility - a broader view of corporate governance, GA ler Aras and David Crowther. Part III Applying Corporate Social Responsibility: The social responsibility of major shareholders, Marc Goergen and Luc Renneboog External agencies and corporate social responsibility, David Birch How globalization is affecting corporate social responsibility a dynamics of the interaction between corporate social responsibility and globalization, A-zer Ertuna and Bengi Ertuna Responsibility and performance - social actions of firms in a transitional society, Deniz Erden and Muzaffer Bodur Feasibility of corporate social responsibility activities practised by SMEs in Uzbekistan a a stakeholders' perspective, Bokhodir Ayupov and Iroda Komilova Education for ethics and socially responsible behaviour, Kumba Jallow Socially responsible investment funds, Luc Renneboog, Jenke Ter Horst and Chendi Zhang Corporate reporting frameworks, Antonio Tencati Corporate reputation and corporate social responsibility, Stephen J. Brammer and Stephen Pavelin Corporate social responsibility rating, Henry SchAfer. Part IV Dealing with Stakeholders: Business and environmental responsibility, Ian Worthington Corporate social responsibility in the creation of shareholder value, Stephan Heblich Employer duties, Stella Vettori Whistleblowing a perennial issues and ethical risks, Wim Vandekerckhove Framing the social responsibility of business a the role of pressure groups a paradigmatic feuds, Aulvaro de Regil Castilla Corporate environmental responsibility from the perspective of systematic and dialectical science, Wang Hong and Wang Xiaoli Why people do good a promoting responsible behaviours a the myth or reality of persuasion in fundraising letters, Cubie Lau. Part V Experience in Practice: Royal Ahold a the role of corporate governance, Abe de Jong, Douglas V. DeJong, Gerard Mertens and Peter Rosenboom Embedding corporate social responsibility into the day-to-day life of organisations a a practical system thinking approach, Rob Peddle, Ian Rosam and Pavel Castka Istiqbol Dilnoza a a corporate social responsibility study of a micro/small business in Tashkent, Rowan E. Wagner Lessons learned from Washington State's sustainable business program, Kimberly Goetz Esh added value a a case study in indigenous corporate social responsibility, Riham Rizk and Suzanne Gregory A case study on the tobacco industry, social responsibility and regulation, Julia J.A. Shaw. Index.

Three Models of Corporate Social Responsibility: Interrelationships between Theory, Research, and Practice

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.

EUGENE FAMA and Michael Jensen's treatment of the "Separation of Ownership and Control" is both insightful and informative. It deepens our understanding of corporate control, and the analysis of residual claimants usefully extends the economics of internal organization to include partnerships, mutuals, nonprofits, and the like. The basic argument is this: specialized governance structures arise in response to the efficiency needs of each type of organization. This is an important argument and one with which I broadly concur. They couple this, however, with a strong suggestion that these structures have reached a high degree of refinement-on which account there is not now, if indeed there ever has been, an organization control problem with which scholars and others are legitimately concerned. On this point I have grave doubts. My discussion of the paper addresses three issues: What is the relation, if any, of the hierarchical organization of the firm to economic performance? What relation, if any, does residual claimant status have to the composition and character of the board of directors? And is there now or has there ever been a corporate control problem? I deal with each of these issues in order.

Based on the fact that most of factories/manufacturers failed to comply with foreign customers’ requirements for Corporate Social Responsibility (CSR) practices from the first audits, the present study aims to explore SME exporters’ understanding of CSR requirements from foreign clients, motivations and obstacles for them to practice and implement CSR. In order to tackle the research objectives, qualitative approach is chosen and in-depth interview with owners, HR/CSR managers and production managers is employed to collect data. The research scope is firms/suppliers in hardlines (non-furniture and non-apparel) section. Thematic analysis is used to analyse and categorise data from interviews. The research findings show some crucial points. Firstly, CSR requirements from clients are not correctly understood. Secondly, there are seven drivers for CSR practices which match with previous studies. Lastly, six per ten obstacles to implement CSR are new findings in the present research context. From these findings, some recommendations are proposed to improve CSR practices in SMEs.
 Keywords
 Corporate social responsibility (CSR), motivations (motives), obstacles, SMEs
 References
 
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Purpose – This paper aims to draw on the stakeholder theory to examine the association between corporate governance and social responsibility. Design/methodology/approach – This paper hypothesized that corporate governance is positively associated with corporate social responsibility (CSR), and good corporate governance also leads to good social responsibility in the following year. Corporate governance was measured by using the corporate governance index provided by Brown and Caylor (2006, 2009). CSR data come from Kinder, Lydenberg and Domini (KLD), Inc. Findings – Regression analysis documents significant evidence to support a positive association between corporate governance and social responsibility. Evidence suggests that good governance leads to good CSR performance. Originality/value – The results should interest managers who engage in behavior leading to or maintaining strong corporate governance mechanisms, financial analysts who conduct research on corporate governance and firm performance and policymakers who design and implement guidelines on corporate governance mechanisms. Moreover, results of this study can increase individual investors’ confidence in investing in companies with stronger corporate governance.

Sustainable Development and the Need for Sustainable Oriented Corporate Law and Regulation

Purpose The purpose of this paper is to explore the contrasting views of banks and banking authorities in Lebanon regarding the corporate governance (CG) and corporate social responsibility (CSR) nexus. Design/methodology/approach Using survey responses collected from the managers of five Lebanese banks and banking authorities, the authors conduct a qualitative comparative study of the opinions on CG, CSR and CG–CSR nexus. Findings The findings of this paper reveal that while a CG culture is well-instituted by the authorities and that some forms of CSR are already practiced by banks, disagreements exist between the Lebanese banks and banking authorities in defining the CG–CSR nexus. While CG is viewed as an all-encompassing concept by the banking authorities, most banks ascribe to the paradigm that CG is component of CSR. Research limitations/implications The sample of this paper consists of large banks that have clear CG and CSR agendas. The results, therefore, cannot be generalized for the wider population of Lebanese companies that are characterized by family ownership and non-separation of ownership and control. Practical implications This paper informs both managers and policymakers on the differing views of the CSR–CG nexus while also contributing to informing the policy dialogue. Theoretically, this paper sheds light on the CG–CSR nexus in a developing country context. Originality/value There is a paucity of research on the CG–CSR nexus in the context of developing countries and for the banking sector in specific. This paper aims to address the gap in the literature by providing an in-depth qualitative examination of the CG, CSR and the CG–CSR nexus in the context of the Lebanese banking sector.

The study aims to analyze the influence of firm agency conflicts, taking into account shareholding control, corporate governance, and corporate social responsibility, on the corporate reputation of the Brazilian firm. The results show that the configuration of shareholding control does indeed impact firm reputation. Dominant control has a direct negative influence on corporate reputation, while a shareholder agreement to control the firm is capable of improving it. Firm commitment to social and environmental concerns is also an important driver of corporate reputation. It is outstanding that the dominant control has also an important moderating unfavorable effect given that it reduces the positive relation between reputation and both corporate governance and social responsibility. Thus, dominant control destroys any favorable impression stakeholders may have regarding the corporate governance system in relation to reputation which means that stakeholders interpret such firm behaviors as strongly influenced by controlling shareholders interests. On the other hand, shared control has also a beneficial moderating effect considering that it moderates positively the relation between both corporate governance and social responsibility, and corporate reputation. That signals that corporate governance and CSR seem to improve reputation of firms with such control configuration. Thus, shareholder control configuration, specifically dominant and shared control, is indeed relevant for firm reputation in Brazil, having a direct and moderating effect on the relation between both corporate governance and social responsibility, and corporate reputation. This means that stakeholders perceive control configuration as influential for firm behaviors.

Manuscript TypeEmpiricalResearch Question/IssueThis paper investigates the relationship between corporate governance (CG) and corporate social responsibility (CSR) and, consequently, examines whether CG can positively moderate the association between corporate financial performance (CFP) and CSR.Research Findings/InsightsUsing a sample of large listed corporations from 2002 to 2009, we find that, on average, better‐governed corporations tend to pursue a more socially responsible agenda through increased CSR practices. We also find that a combination of CSR and CG practices has a stronger positive effect on CFP than CSR alone, implying that CG positively influences the CFP‐CSR relationship. Our results are robust to controlling for different types of endogeneities, as well as alternative CFP, CG and CSR proxies.Theoretical/Academic ImplicationsThe paper generally contributes to the literature on CG, CSR, and CFP. Specifically, we make two main new contributions to the extant literature by drawing on new insights from an overarching neo‐institutional framework. First, we show why and how better‐governed corporations are more likely to pursue a more socially responsible agenda. Second, we provide evidence on why and how CG might strengthen the link between CFP and CSR.Practitioner/Policy ImplicationsOur findings have important implications for corporate regulators and policy‐makers. Since our evidence suggests that better‐governed corporations are more likely to be more socially responsible with a consequential positive effect on CFP, it provides corporate regulators, managers and policy‐makers with a new impetus to develop a more explicit agenda of jointly pursuing CG and CSR reforms, instead of merely considering CSR as a peripheral component of CG or as an independent corporate activity.

THE theory of the economies of scale is the theory of the relationship between the scale of use of a properly chosen combination of all productive services and the rate of output of the enterprise. In its broadest formulation this theory is a crucial element of the economic theory of social organization, for it underlies every question of market organization and the role (and locus) of governmental control over economic life. Let one ask himself how an economy would be organized if every economic activity were prohibitively inefficient upon alternately a small scale and a large scale, and the answer will convince him that here lies a basic element of the theory of economic organization. The theory has limped along for a century, collecting large pieces of good reasoning and small chunks of empirical evidence but never achieving scientific prosperity. A large cause of its poverty is that the central concept of the theory-the firm of optimum size-has eluded confident measurement. We have been dangerously close to denying Lincoln, for all economists have been ignorant of the optimum size of firm in almost every industry all of the time, and this ignorance has been an insurmountable barrier between us and the understanding of the forces which govern optimum size. It is almost as if one were trying to measure the nutritive values of goods without knowing whether the consumers who ate them continued to live.