Social Outcomes of Corporate Governance: Evidence from the Food Industry of Pakistan

Nadia Nazeer,Maria Kanwal,Naureen Afzal,Maria Shahid,Saadia Irshad

doi:10.34069/ai/2020.30.06.13

Nadia Nazeer, Maria Kanwal + Show 3 more

Open Access

https://doi.org/10.34069/ai/2020.30.06.13

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Abstract

Social and environmental problems are becoming strategic concerns for the managers in the current business scenario because it is challenging their sustainability. Here the need arises to respond to this changing phenomenon accordingly. In this regard social impact of corporate governance has not yet been explored where it can play a role of driver of excellence in terms of social performance and it is required to be studied. To check the existing situation, this study has been conducted where the social impact of corporate governance has been explored in the food Industry of Pakistan. Questionnaires have been filled from 176 managers working in six food producing firms listed in Pakistan Stock Exchange (PSX). Structural Equation Modeling based partial least square (PLS) has been used where Smart PLS has been used for model estimation. Results are supporting the stakeholder theory as Nestle Pakistan and Engro Foods are driving social excellence through corporate governance practices, where the corporations are showing strong positive relationships of corporate governance practices with stakeholders management, environmental integrity and protection, social cohesion and equity while insignificant relationship exists between strategic proactivity and corporate governance practices as people are resistant to change and innovation. The relationships can be explored in other industries like Oil and gas, Chemicals and Construction etc.

Highlights

Economic activities of the corporations are resulting into various environmental problems day by day
H10: Adoption of corporate governance practices mediates the relationship between strategic proactivity and social cohesion and equity
Structural Equation Modeling based Partial least square (PLS) technique has been used which is a second generation multivariate technique (Fornell and Cha, 1994). This technique is used to explore social impact of corporate governance in food industry of Pakistan.partial least square (PLS) is used because it takes latent variable as weighted sum of its indicators (Chin and Newsted 1999; Fornell and Cha 1994) and use multiple regressions for its prediction (Chin 1998b; Chin and Newsted 1999; Fornell and Bookstein 1982; Fornell and Cha 1994)

Summary

Introduction

Economic activities of the corporations are resulting into various environmental problems day by day. It should be based on shared values and objectives They are needed to adopt such mechanism of direction and control which takes into account all the stakeholders rather than the shareholders only (Wilson, 2000). Corporate governance is such an area which is widely being researched by academicians. Social impact of corporate governance has not yet been explored and it is required to be analyzed (Academy of Management, 2014).According to study of Audretsch & Lehmann (2011), corporate governance is a well-known and well researched concept of Economics, Accounting &Finance, Management and Law etc. In contrast to the impact of corporate governance practices on financial performance of firms, current study is focusing on the effects of corporate governance with perspective of social performance that is beneficial for shareholders but for stakeholders as well

Literature Review

Research Methodology

Results and Discussion

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Limitations and Recommendations