Governance Practices Research Articles

Evaluating the impact of ESG on financial risk: the moderating effects of operational ability and profitability in Indonesian infrastructure firms

Purpose This study aims to examine the impact of environmental, social, and governance (ESG) practices on financial risk, with operational ability and profitability as moderating variables, within the infrastructure sector in Indonesia. Design/methodology/approach The sample consists of 14 infrastructure companies listed on the Indonesia Stock Exchange over the period of 2020–2022, resulting in a total of 42 firm-year observations. The study employs a random-effects model for panel data regression analysis to test the hypotheses. ESG serves as the independent variable, financial risk as the dependent variable, and operational ability (measured by total asset turnover) and profitability (measured by return on assets) as moderating variables. Findings The results reveal that ESG practices have a significant positive impact on financial risk. Furthermore, operational ability negatively moderates the relationship between ESG and financial risk, while profitability positively moderates this relationship. These findings suggest that although higher ESG scores may elevate financial risk due to associated costs and uncertainties, firms with greater operational efficiency and profitability are better equipped to mitigate and manage these risks more effectively. Research limitations/implications This study focuses on infrastructure companies in Indonesia, which may limit the generalizability of the findings to other sectors or geographic regions. Future research could broaden the scope by incorporating diverse industries and cross-country contexts to enhance the robustness and applicability of the results. Practical implications The findings offer valuable insights for policymakers and corporate managers. Policymakers can develop frameworks to encourage sustainable practices without imposing excessive financial burdens on companies. Managers can leverage operational efficiency and profitability to integrate ESG practices effectively, thereby balancing sustainability goals with financial performance. Originality/value This study contributes to the scarce literature on the moderating effects of operational ability and profitability on the relationship between ESG practices and financial risk, particularly in the context of the infrastructure sector in Indonesia.

Building Trust through ESG: A Study on Consumer Behaviour in Sustainable Fashion

Background This study explores the influence of Environmental, Social, and Governance (ESG) practices on consumer purchasing decisions in the fashion industry. It examines how corporate image and word-of-mouth (WOM) mediate the relationship between ESG practices and consumer trust, impacting purchase intent. Methods A structured questionnaire was distributed online to 393 participants aware of ESG practices, targeting Generation Z consumers. The survey assessed demographics, ESG awareness, brand image, WOM, and purchasing decisions using a Likert scale across five constructs: ESG Practices, Corporate Image, WOM, Trust, and Purchase Intention. Data were analyzed with Structural Equation Modeling (SEM) in IBM AMOS, following a two-step process: Confirmatory Factor Analysis (CFA) for validation and path analysis for hypothesis testing. Results The findings indicate that ESG practices significantly enhance corporate image and positive WOM, which, in turn, foster consumer trust. Corporate image has a substantial impact on consumer trust (p < .001), while WOM also contributes to trust (p < .001). Trust was found to be a strong predictor of purchase intention, demonstrating the mediating role of corporate image and WOM between ESG practices and purchasing behavior. Conclusions ESG practices are critical in shaping consumer perceptions and fostering loyalty in the fashion sector. By building a trustworthy corporate image and encouraging positive WOM, fashion brands can effectively influence consumer purchasing decisions. This study highlights the competitive advantage of implementing ESG practices, particularly in appealing to Generation Z consumers who value sustainability and ethical business practices.

Determining Digital Maturity in Metropolitan Municipalities: The Example of Sakarya and Kocaeli Metropolitan Municipalities

Digital transformation in municipalities is vital for improving service delivery, increasing operational efficiency and encouraging citizen participation. This study aims to determine the factors that determine the digital maturity levels of institutions and the effects of these factors by focusing on the digital transformation process of Sakarya and Kocaeli Metropolitan Municipalities. In this research, case study design was used to investigate digital maturity in an in-depth and holistic way in the institutional context and to analyze the case of metropolitan municipalities in a real-world context. Data on municipalities' digital initiatives, policies and online platforms were obtained from semi-structured interviews, documents and observation notes. Data were analyzed and interpreted using single-case and cross-case analysis techniques using MAXQDA qualitative analysis software. While both municipalities have made significant progress in their digital transformation efforts, there are significant gaps and areas for improvement. Research findings point to vital factors influencing digital maturity, including leadership commitment, organizational culture, technical infrastructure, data management and citizen engagement. Holistic and comprehensive models that evaluate various dimensions such as technological infrastructure, digital services, data management, and cyber security provide a suitable framework for understanding digital maturity components in municipalities. Each element, from appropriate technological infrastructure and data governance practices to user-friendly e-government services and competent workforce, is critical to raising digital maturity. Municipalities can overcome the complexities of digital transformation through comprehensive digital strategies, user-centered design, and collaboration with stakeholders.

A Study on Rising Importance of ESG in Business World

Environmental, Social and Governance (ESG) are the regulatory measures framed to encourage business practices concerning sustainability and responsibility. ESG is very crucial for investors to make investment in companies that are really dedicated to considering these issues and possess strong governance practices to address these issues and alleviate the potential risk related with these issues. ESG is a wider concept that comprises social, environmental, and governance factors, whereas CSR chiefly focuses on the social and environmental influence of a company’s operations. After Post-Covid 19, global investors have increasingly focused on ESG as they observe Covid-19 as the century’s first “sustainability” crisis. As per EY report, 90 per cent of global investors consider a company’s ESG performance. In 2020, while investing, eighty-five percent of investors took ESG into consideration. Incorporating ESG principles into business operations is not only just obeys regulatory requirements or appeasing stakeholders but also it is a strategic decision that can initiate long-term success. This paper tries to present what distinguishes ESG from CSR and rising importance of ESG in business world

Implementasi Prinsip Good Governance dalam Peningkatan Kualitas Pelayanan Publik: Studi Kasus pada Pemerintah Daerah

The implementation of good governance principles is crucial in efforts to enhance the quality of public services at the local government level. In this context, the principles of transparency, accountability, participation, and responsiveness serve as important foundations for creating better public services. This research aims to explore how the application of these principles can drive improvements in the quality of public services, as well as to identify the challenges faced in their implementation. Case studies drawn from several local governments in Indonesia provide a clear picture of good governance practices and their impact on public services. Through case studies in various regions, this research reveals how the application of these principles can increase public satisfaction with public services. Data obtained from surveys and field research will be analyzed to provide a clear overview of the relationship between good governance and the quality of public services.

Balancing Tourism Development and Sustainability: A Multi-Stakeholder Approach in Tofino over 15 Years

The narrow conceptualization of capitalism is increasingly challenged as destinations recognize the need to integrate equity and resilience into tourism development. Increasingly, destinations have been using tourism to move away from extractive industries and there is no shortage of literature outlining the need for a more inclusive, multi-stakeholder approach to ensure that sustainability is at the forefront of tourism development considerations. Whether destinations are actually moving towards the more sustainable development of tourism is not always evident and rarely are studies of destinations undertaken over time. Therefore, the purpose of this research was to examine qualitative research spanning 15 years using a multi-stakeholder approach to understand impacts, issues, and solutions relating to tourism development in Tofino, Canada. Tofino has achieved notable advancements in financial, natural, and social capital but continues to face gaps in addressing other dimensions of the Community Capitals Framework (CCF). Insights from this research to focus on social, human, and built capital earlier on in tourism planning and development may help other destinations who partially or fully depend on tourism for their livelihood. This paper addresses real-world tourism development challenges and encompasses multiple stakeholder views on sustainable development, socio-political responsibilities, governance, leadership, destination management, policies, and other practices.

AI governance: a systematic literature review

Abstract As artificial intelligence (AI) transforms a wide range of sectors and drives innovation, it also introduces different types of risks that should be identified, assessed, and mitigated. Various AI governance frameworks have been released recently by governments, organizations, and companies to mitigate risks associated with AI. However, it can be challenging for AI stakeholders to have a clear picture of the available AI governance frameworks, tools, or models and analyze the most suitable one for their AI system. To fill the gap, we present the literature to answer key questions: WHO is accountable for AI systems’ governance, WHAT elements are being governed, WHEN governance occurs within the AI development life cycle, and HOW it is implemented through frameworks, tools, policies, or models. Adopting the systematic literature review (SLR) methodology, this study meticulously searched, selected, and analyzed 28 articles, offering a foundation for understanding different facets of AI governance. The analysis is further enhanced by categorizing artifacts of AI governance under team-level governance, organization-level governance, industry-level governance, national-level governance, and international-level governance. The findings of this study on existing AI governance solutions can assist research communities in proposing comprehensive AI governance practices.

Unraveling the Impact of Collaborative Competency on Collaborative Governance in Public Sector Organizations

Objective: The study investigates the influence of collaborative competency on collaborative governance, with innovative governance serving as a mediator, in the provincial government agencies of Aceh Province, Indonesia. Theoretical Framework: the application of innovative governance to mediate the influence of collaborative competency on collaborative governance in the public sector. Method: The research utilizes the Amos software as a data processing instrument to employ the Structural Equation Modeling (SEM) quantitative model. The investigation was conducted with 242 government officials from 54 Provincial Government Working Agencies (SKPA) in the province, representing top, middle, and operational management. Data of respondents were collected by disseminating closed-ended questionnaires in the form of Google forms via email and the provincial agency's WhatsApp group. Results and Discussions: The findings indicate that collaborative competency has significant direct effects on both innovative and collaborative governance, as well as a direct effect of innovative governance on collaborative governance. Additionally, the relationship between collaborative governance and collaborative competency is mediated by innovative governance. Research Implications: This research suggests that the quality and efficiency of public service delivery can be improved by enhancing collaborative competencies within government agencies, which can result in more effective and innovative governance practices. This emphasizes the necessity of creating policies and training programs that encourage the development of innovative approaches and collaborative skills among government officials. Originality/Value: In contrast to prior literature, which has primarily examined human resource competencies, effective governance, collaborative governance, employee productivity, and organizational performance. Nevertheless, the comprehensive investigation of the role of innovative governance in mediating the relationship between collaborative competencies and collaborative governance, particularly in the provincial government context, has not yet been completed.

The Relationship between Gem 2.0 and Customer Satisfaction

Purpose: The UAE administration developed the GEM 2.0 model to enhance the well-being of the UAE citizens. In addition, it is essential to make governance future-oriented and future-ready. This model incorporates several beneficial principles for customer gratification and organizational and governance effectiveness. Methodology: This research paper focused on the way followed by the GEM 2.0 model to be restarted to customer gratification by discovering several factors contributing to customer gratification in literature as well as aligning with those factors to GEM 2.0. Findings: The paper found that customer satisfaction depends on service quality, service delivery systemization, reliability, and responsiveness. Service excellence is associated with future preparedness in addition to strategic competitiveness. It further incorporates service delivery systemization, responsiveness, and reliability related to organizing resources and assets and data and knowledge management. Unique Contribution to Theory, Practice and policy: The study highlights the importance of adopting customer-centric governance models, such as the GEM 2.0 model, to enhance citizen well-being and ensure future-oriented governance in the UAE. The study provides valuable insights into aligning governance practices with customer satisfaction by identifying critical factors such as service quality, reliability, responsiveness, and service delivery systemization.

The impact of CSR disclosure, audit committees, independent commissioners, and managerial ownership on corporate value: An empirical study of basic materials sector companies listed on the Indonesian stock exchange

Negative sentiments stemming from declining aluminum exports, coal price fluctuations, a global economic slowdown, and environmental pressures influence investors' perceptions of investing in the raw materials sector. CSR disclosure and implementing Good Corporate Governance principles through audit committees, independent commissioners, and managerial ownership are vital strategies for enhancing investor confidence and long-term corporate value. This study investigates the effect of CSR disclosure and corporate governance attributes on corporate value, with Return on Assets as the control variable. It utilizes secondary data from annual and sustainability reports, focusing on companies in the basic materials sector listed on the Indonesia Stock Exchange from 2020 to 2023. Quantitative methods are employed, with panel data regression analysis. The results indicate that, partially, CSR disclosure has a negative and significant impact on corporate value, whereas the proportion of the audit committee exhibits a positive and significant effect. The frequency of audit committee meetings and the proportion of independent commissioners do not demonstrate a significant impact. Audit committee competence positively and significantly influences corporate value, while managerial ownership adversely and significantly affects it. Collectively, these variables influence corporate value. These findings provide valuable insights for company management to enhance CSR and governance practices, thereby increasing the company's appeal to investors

The Role of Molluscs in Monitoring Marine Pollution and its Connection to Climate Change and ESG

Molluscs possess a unique capability to filter and remove pollutants from water, offering a natural and effective solution to combat marine pollution. Their filtration process not only enhances water quality but also mitigates the detrimental impacts of contaminants on marine ecosystems. As climate change introduces unprecedented challenges, the resilience of molluscs—particularly in adapting to rising temperatures and ocean acidification—highlights their critical role in sustaining marine ecosystem balance. This paper reviews the literature on molluscs from 1874 to 2024, as documented in the Scopus database, analyzing 5,757 publications retrieved on 8 March 2024. Five major insights emerged: (a) molluscs’ significant ecological role, (b) the potential of marine bivalves for ecosystem health and sustainability, (c) the importance of monitoring molluscs to address climate change, (d) the scarcity of studies linking molluscs to Environmental, Social, and Governance (ESG) practices, and (e) existing knowledge gaps. Understanding and monitoring mollusc populations are essential for advancing environmental stewardship, fostering social responsibility, and promoting sound governance. Integrating these aspects within business operations can support marine ecosystem resilience and reflect a commitment to the planet's and society's holistic well-being.

Agents of Territorial Transformation in the Costa Rican Caribbean: Imperial Relationships and Practices of Spatial Governance at the United Fruit Enclave, 1870–1940

This article explores the territorial reconfiguration of the Costa Rican Caribbean, beginning with the construction of a railroad linking the capital, San José, with the port of Limón (1870–1890), followed by the establishment of an agricultural enclave by the United Fruit Company (UFCo), a US corporation primarily focused on banana exports. Drawing on scholarship related to imperial formations, informal empire, and corporativism, this article focuses on the relationship between United Fruit and the Costa Rican state as central to territorial transformation. Using a broad collection of sources—including maps, drawings, letters, newspapers, and blueprints from Costa Rica’s National Archive (ANCR), the Costa Rican National Library, and Tulane’s Latin American Library—this essay examines how the UFCo’s negotiations with the Costa Rican state drove territorial change in both the production zones and Limón’s cityscape, highlighting the subordinate agencies and power dynamics that transformed the spatial composition of the Caribbean region.

Build donor trust with good governance practices

Build donor trust with good governance practices

Does ESG performance have an impact on financial performance? Evidence from Turkey

PURPOSE: Stakeholders such as consumers, nongovernmental organizations, and public institutions have increasingly pressured companies to adopt corporate social responsibility (CSR) policies. This trend has led to the integration of environmental, social, and governance (ESG) reporting into business strategies to achieve long-term competitive advantages and enhance financial performance. ESG reporting has become a critical tool for measuring corporate CSR efforts, contributing to the institutionalization of nonfinancial reporting standards. This study aims to determine how the adoption of ESG sub-dimensions affects the financial performance of companies in Turkey. METHODOLOGY: The study employed panel regression analysis on data from 21 companies listed in the Borsa Istanbul-100 index over the period 2011–2020 to investigate the relationship between ESG sub-dimensions and firm performance. FINDINGS: The findings indicate that adopting the environmental and governance sub-dimensions positively affects ROE and Tobin’s Q. However, the adoption of the governance sub-dimension negatively impacts Tobin’s Q while positively influencing ROE. No statistically significant results were found regarding the impact of ESG sub-dimensions on firms’ ROA ratios. IMPLICATIONS: The results of the research, based on the example of Turkey, are important to determine how companies’ social responsibility strategies in developing countries provide them with outputs in terms of environment, social and governance and whether social responsibility-based activities are truly sustainable strategy for companies in developing countries.The findings highlight the importance of considering the macroeconomic structure, legal system, and financial development of countries when evaluating CSR activities. The regulatory environment plays a significant role, as weaker legal protections can negatively affect the relationship between governance practices and firm performance. For practitioners, the insights suggest prioritizing environmental investments and carefully strategizing governance practices to align with investor expectations and regulatory frameworks. ORIGINALITY AND VALUE: By focusing on the BIST 100 companies, this study contributes to the limited literature on the role of ESG sub-dimensions in shaping financial performance in developing markets. This research provides valuable insights into how environmental, social, and governance practices specifically impact the financial outcomes of firms in Turkey, offering a nuanced understanding that can inform both academic discussions and practical strategies in similar contexts.

The effect of supply chain flexibility, supply chain governance and green supply chain practices on supply chain performance: TQM as a moderator

The effect of supply chain flexibility, supply chain governance and green supply chain practices on supply chain performance: TQM as a moderator

The Analysis of the Ideological and Political Education Function of the “District and County Government Practice” Course

The Analysis of the Ideological and Political Education Function of the “District and County Government Practice” Course

Hybridising governance for resilience in a time of crisis: learning from community-based organisations in Cape Town and Cali

Through the lens of food security this paper explores how community-based organisations (CBOs) in low-income neighbourhoods in Cape Town (South Africa) and Cali (Colombia) responded to the COVID-19 pandemic. In understanding how they engaged with and operationalised governance in times of crisis, we are able to critically engage with hybrid governance practices in these contexts and explore their potential to support equitable resilience. The findings are based on 12 months of qualitative research in both cities, including interviews and focus groups with community leaders and weekly digital diaries with local residents. We show how CBOs were able to supplement the state, build partnerships through boundary spanning and act as mediators and brokers by leveraging their trust-based networks to support distributive, procedural and recognitional resilience in their neighbourhoods. We argue that in contexts of vulnerability and rapidly changing conditions, hybridising governance is a more appropriate way to understand these processes, which may result in contested rather than integrated outcomes. Moreover, we find that while CBOs are highly effective first responders in times of crisis, without effective state partnership – in other words, hybridity that includes the state – their potential for longer-term systemic, equitable resilience remains limited.

The board gender, audit committee features, and social disclosure: Corporate governance practices from emerging markets

The board gender, audit committee features, and social disclosure: Corporate governance practices from emerging markets

The effect of board of director diversity on company performance and the mediating role of director remuneration: Malaysia public companies’ evidence

Introduction: The board of director diversity plays a critical role in developing strategic options to improve company performance. The appropriate remuneration package for the director might bridge between the effectiveness of diversity of board and enhancing company performance.Objective: The study aims to examine the effect of board of director diversity on company performance, with a particular focus on the mediating role of director remuneration. Methodology: The nature of the study is quantitative. The current study focuses on the Malaysia public listed companies. The study used panel data from period 2015 to 2021 using secondary data which extracted from Bloomberg database and company annual report. The study utilized 601 sample observation. Result: Data was analysed through Stata software and the findings reveal a significant positive relationship between board diversity (gender, ethnicity, tenure) and company performance measured by Economic Value Added (EVA) and Environmental, Social and Governance (ESG) scores. Additionally, director remuneration is found to significantly mediate the impact of board diversity on EVA, although its mediation effect of ESG performance is less pronounced. These results highlight the importance of fostering diverse boards and implementing fair remuneration practices to enhance both financial and non-financial performance in companies. Conclusion: this study provides valuable insights for policymakers, stakeholders and investors aiming to improve corporate governance practices in Malaysia public listed companies

Effects of material master data management on supply chain performance at FLSmidth: the moderating role of PiLog external service provider

In the dynamic landscape of industrial operations, the effective management of material master data within the supply chain is paramount for organizational success. This study investigates the challenges and solutions associated with Material Master Data Management (MMDM) at FLSmidth (FLS), a leading supplier in the cement and mining sectors. FLS operates within a complex and diverse supply chain environment, serving global clientele across various sectors. The study aims to understand the impact of MMDM implementation on supply chain performance at FLS, specifically focusing on performance metrics such as inventory turnover, order fulfillment accuracy, and lead time reduction. The moderating role of PiLog, an External Service Provider (ESP), is explored in this context. Employing a mono-qualitative approach, the study delves into MMDM implementation through in-depth interviews with 18 FLS employees and 4 PiLog customers. Thematic analysis reveals that well-implemented MMDM systems enhance visibility, planning, and inventory management, leading to improvements in supply chain performance. Challenges in stakeholder persuasion and infrastructure access are identified as common implementation hurdles. PiLog emerges as a crucial moderator, providing structured frameworks, emphasizing standardization, and addressing governance challenges. The findings underscore the importance of strategic partnerships between organizations and ESPs in successfully implementing and sustaining MMDM initiatives. Recommendations include strategies for overcoming infrastructure challenges, leveraging ESP expertise, and aligning with best practices in standardization and governance. This study contributes to the academic discourse on MMDM implementation and offers practical insights for organizations seeking to enhance supply chain performance through meticulous MMDM practices.