Books - Non-fiction

Business Ethics, Social Responsibility and Corporate Governance: Does the Strategic Management Field Really Care about these Concepts

Description
Business Ethics, Social Responsibility and Corporate Governance: Does the Strategic Management Field Really Care about these Concepts
Published
of 10
All materials on our website are shared by users. If you have any questions about copyright issues, please report us to resolve them. We are always happy to assist you.
Share
Transcript
   Procedia - Social and Behavioral Sciences 99 ( 2013 ) 294 – 303 1877-0428 © 2013 The Authors. Published by Elsevier Ltd.Selection and peer-review under responsibility of the International Strategic Management Conference.doi: 10.1016/j.sbspro.2013.10.497 ScienceDirect  9 th  International Strategic Management Conference  Business ethics, social responsibility and corporate governance: Does the strategic management field really care about these concepts? a    b  , a   a, ul, 34180, Turkey   b Abstract responsibility and business ethics concepts. In order to realize our aim, we analyzed one of the most reputable journals in the field, the Strategic Management Journal (SMJ). Computer-aided content analysis of 908 articles published between 1998 and 2010 revealed that only 25 articles which focused on the relationship between corporate governance, social responsibility,  business ethics and corporate performance/strategy concepts, appeared in SMJ. We also analyzed the methodology and major findings of these 25 articles and found that the SM field has been neglecting these concepts, though not totally ignoring them. The possible explanation of this negligence is also discussed.  Keywords:    Business ethics; Social responsibility; Corporate governance; Strategy; Strategic management    er Ltd. Selection and/or peer-review under responsibility of the 9 th  International Strategic Management Conference 1.   Introduction The collapse of corporate giants such as Enron and Worldcom due to corruption and mismanagement reminded the world of the importance of concepts like corporate governance, social responsibility and business ethics. The following figures, which display the increasing use of these concepts in books written in English, can  be accepted as a proof of our argument. Figure 1 Usage of th Source: Google ngram http://books.google.com/ngrams/graph?content=corporate+governance&year_start=1900&year_end=2008&corpus=15&smoothing=3&share= (retrived: 22.3.2013) Corresponding author. Tel. + 90-212-507-9925 fax. +90-212-505-9332 Email address: eataysir@marmara.edu.tr     Available online at www.sciencedirect.com   © 2013 The Authors. Published by Elsevier Ltd.Selection and peer-review under responsibility of the International Strategic Management Conference.  295  Eyüp Aygün Tay  ş ir and Yener Pazarcık / Procedia - Social and Behavioral Sciences 99 ( 2013 ) 294 – 303 Figure 2 Source: Google ngram http://books.google.com/ngrams/graph?content=social+responsibility&year_start=1900&year_end=2008&corpus=15&smoothing=3&share= (retrived: 19.2.2013) Figure 3 Source: Google ngram http://books.google.com/ngrams/graph?content=business+ethics&year_start=1900&year_end=2008&corpus=15&smoothing=3&share= (retrived: 19.2.2013)   As can be clearly seen in all three figures, corporate governance, social responsibility and business ethics concepts have been in a popularization trend since the 1990s, as capitalism increasingly diffused and penetrated throughout the world. From our point of view, it is really interesting to see this trend because, as Kesebir and Kesebir (2012) stated, the usage of almost all morality-related terms has been disappearing in books. One  possible explanation for this inconsistency could be related to a new paradigm which argues that companies would be more profitable if they chose to be more socially responsible. As explained in the next part of this study, there is a great deal of theoretical and empirical research which focuses on the relationship between corporate governance, business ethics, social responsibility and corporate performance (market share,  profitability, having sustainable resources, gaining legitimacy etc.) and strategy. What triggered our research question was the abundance of these kinds of studies. We wondered whether the strategic management (SM) field, which is purely related to company performance, has taken these concepts into consideration and found any proof which shows us that these concepts have an impact on corporate performance and strategy. 2.   Theoretical Background and Literature Review  Before analyzing the relationship between corporate governance, social responsibility, business ethics and corporate performance and strategy concepts, we first should define them separately. Corporate governance is a matter of enforcing accountability (Demb and Neubauer, 1992). In the modern world, companies have many shareholders who do not play a managerial role in the company. Additionally, today the economic activities of companies are interconnected with the general economy of the world. Thus, managers running companies have to be more accountable than in the past. As a result of this situation, regulatory bodies like OECD have started demanding that companies adopt corporate governance principles (http://www.oecd.org/corporate/ca/corporategovernanceprinciples/31557724.pdf, retrived 6.3.2013). It can be accountable. In terms of modern management, the srcin of the social responsibility concept goes back to the 1950s (Carrol, 1999). Avoiding philosophical and linguistic discussions, social responsibility can be defined as voluntary efforts by companies to take on responsibility in order to eliminate - or at least reduce - the negative impacts of their business activities on the stakeholders (Post et al. 1996).   As Gjolberg (2009) states, in the modern world, companies have been given more freedom but they are also expected to play social roles, such as  296  Eyüp Aygün Tay  ş ir and Yener Pazarcık / Procedia - Social and Behavioral Sciences 99 ( 2013 ) 294 – 303 mitigating climate change or protecting human rights. Finally, as one of the oldest concepts of management, business ethics is: a form of applied ethics. It includes not only the analysis of moral norms and moral values, but also attempts to apply conclusions of this analysis to that assortment of institutions, technologies, transactions, activities and pursuits that we call business (Velasquez, 2002). It is clear in this definition that business ethics is related to moral norms and values. At this point, it is necessary to ask if companies have moral norms and values as individuals do. Velasquez (2002) argues that companies do have moral duties in a secondary sense. By saying that, Velasquez (2002) implies that the ers constitute the business ethics of that company. This is why companies now provide ethical codes or codes of conduct and expect workers of all levels to obey these codes when they make a decision as a part of their jobs. For example, according to Facebocode of conduct, employees are not allowed to accept any gifts of substantial value from partners. Thus, this code provides an idea as to what is right and wrong in the offices of Facebook. As a result, business ethics is not ral obligations to its stakeholders but ethical behaviors expected from employees. By taking the definitions above into consideration, it can be argued that corporate governance, social responsibility and business ethics concepts have some shared characteristics and that all these three concepts are interrelated. Corporate governance demands that executives make their companies more transparent and accountable; social responsibility demands that companies support society with their activities, and business ethics clarifies moral norms for employees. Business ethics can help a manager make his/her company more accountable and transparent. Similarly, when a company adopts corporate governance principles, it also has to meet the expectations of its stakeholders. As a matter of fact, corporate governance principles include principles related to business ethics and social responsibility. However, some scholars (e.g. Heath and Norman, 2004)  believe a coherent theory of CSR cannot be created without corporate governance. In any case, it is logical to conclude that all these three concepts are interrelated and they are imposed upon companies by shareholders and stakeholders (Scott, 2007). Thus, we simply argue that companies take corporate governance, social responsibility and business ethics concepts into consideration in order to gain legitimacy though they do not care about their potential impact on corporate performance or strategy. From this point, these concepts can be dealt with as institutional pressures which force companies to isomorphism (DiMaggio and Powell, 1983). Obviously, companies have to adapt to their institutional environments in order to gain legitimacy and to survive even if this adaption harms corporate performance. One of the fervent opponents of this idea was Nobel laureate economist Milton Friedman. In 1970, Friedman gave an interview to the New York Times Magazine (http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html retrieved 8.3.2013) and in this interview he explains his opinions about social responsibility with these words:  In a free-enterprise, private-property system, a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while con- forming to the basic rules of the society, both those embodied in law and those embodied in ethical custom. If Friedman and others who think like him are right, it is logical to believe that bending to these social dvantage since acquiescing makes additional costs inevitable. In fact, early studies that focused on the relationship between corporate governance, social responsibility, business ethics and the financial performance of a company reported that these concepts had a negative impact on profits, returns on investment and stock prices. Researchers who found this negative impact had a simple explanation: social responsibility involves certain costs that fall on the bottom line, but its potential  positive impact on corporate performance is simply uncertain (Gulati et al., 2013). However, a significant amount of recent research has documented the exact opposite. For example, Ergin (2012) found that corporate governance rankings and sub-components of corporate governance had a significant positive impact on the stock  prices of publicly-owned Turkish companies. Similarly, Rehman and Mangla (2012) reported that various nce. In another study, analyzing 120 French companies, Ezzine and Olivero (2013) found that complying with corporate governance principles improved the visibility of a firm in the market. According to Berrone et al. (2005) this situation is similar for companies with a strong ethical identity. Strong ethics improve stakeholder satisfaction,  297  Eyüp Aygün Tay  ş ir and Yener Pazarcık / Procedia - Social and Behavioral Sciences 99 ( 2013 ) 294 – 303 which positively influences the financial performance of a firm. Berrone et al. (2005) tested this assumption through empirical research and found out that corporate-applied ethics had a positive impact on financial  performance. Finally, Michelon et al. (2012) inquired about the impact of social responsibility on corporate  performance by analyzing 188 companies over a 3 year period. They concluded that if a company creates link  between social responsibility and strategy then it is possible to see a positive impact on both market and accounting-based measures of performance. In a theoretical study, Galbreath (2008) also suggested integrating social responsibility into company strategy and showed how companies could do that. Singer (2009) did the same for business ethics by proposing a model. Interestingly, the studies cited above which imply a positive relationship between corporate governance, social responsibility, business ethics and corporate performance were not published in journals whose main focus is corporate performance and/or strategy. For example, as one of the most important journals of SM field, the Strategic Management Journal (SMJ) published only 23 articles related to business ethics, social responsibility-and other relevant concepts between the years 1996 and 2005 (Robertson, 2008). These 23 articles constituted  just 3.5% of the total articles that were published in SMJ between those years. For this reason, we first wanted to see whether this trend started changing after 2005. Additionally, we also aimed to understand how corporate governance, social responsibility and business ethics focused studies were related to strategy and corporate  performance. 3.   Methodology In order to understand the point of view of the strategic management field with regards to corporate governance, social responsibility and business ethics concepts we analyzed one of the top research journals of this field, SMJ, through its articles published between 1998 and 2010. We chose SMJ because it is the top academic journal in the SM field with its 3,783 impact factors ( http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1097-0266  retrived 19.02.2013). We assumed that the most trustworthy research was published in this journal. We chose the years between 1998 and 2010 because Google ngram graphs show that the usage of these three concepts is inclined to rise in the 2000s and we also know that collapse of giants as a result of unethical business activities, corruption, and mismanagement occurred especially in late 90s and early years of the 2000s. In addition, the world witnessed the global crisis in last 15 years and the role played by companies in global warming and pollution has started been criticizing harshly in those years. With the intention of discovering the corporate governance, social responsibility or business ethics related articles published in SMJ between 1998 and 2010, we downloaded all articles from those years by using the e- journal access of Marmara University Central Library. We found 908 articles in total. Then, by using a website (http://25yearsofprogramming.com/perl/phrasecounter.htm), which is specifically designed for word counting, we found the most repeated words that consisted of at least four letters and repeat at least three times in each article. Then, we looked up the terms governance, responsibility and ethics, and if we found one of these words repeated at least three times, we marked the article by giving it a special number. We deliberately avoided using the full names of the concepts like corporate governance, corporate social responsibility and business ethics just in case we missed an article. Using the most refined versions of these concepts increased our workload but also enabled us to catch all articles related to them. Our analysis revealed that in 234 of the 908 articles one of the governance, responsibility or ethics concepts appeared at least three times. In order to complete our analysis we read abstracts of these articles and we eliminated the unrelated ones. Our findings are explained below. 4.   Findings After having completed our analysis we had 25 corporate governance, business ethics and/or social responsibility related articles that appeared in SMJ between 1998 and 2010. In fact, it was interesting to see this aled 23 business ethics related articles that appeared in SMJ  between the years 1996 and 2005. Because of this result we expected to see the greater number of articles and our results surprised us. In order to understand the reason for the discrepancy betwand ours, corruption, morality and reputation management as business ethics related. However, we followed a stricter path and we only looked for the terms governance, ethics and responsibility as explained under the methodology section of this article. We believe concepts that we took into consideration. In addition, we did not count the articles that did not primarily deal with the relationship between corporate governance, business ethics, social responsibility and strategy or  298  Eyüp Aygün Tay  ş ir and Yener Pazarcık / Procedia - Social and Behavioral Sciences 99 ( 2013 ) 294 – 303 corporate performance although the concepts that we looked for appeared in those articles. Our analysis revealed that only 25 of the 234 articles fell within our scope. We understood that the main reason for this was that the concept of governance had a broad usage in strategy literature. After reading the abstracts of those 234 studies that we selected in the first phase, we understood that the concept of governance was used by the scholars to refer to the managerial structure of a company. Thus, our focus on abstracts made it  possible to eliminate articles in which governance, responsibility and ethics concepts appeared more than three times but were unrelated to corporate governance, business ethics and/or social responsibility. Table 1 below demonstrates the details of the 25 articles that we found. Table 1 CG/BE and SR Related Articles Appeared in SMJ between 1998 and 2010 Year CG Related BE Related SR Related Total Total Articles in the Year Total CG-BE-SR Articles / Total Articles in the Year (%) 1998 2 0 1 3 72 4,17 1999 0 0 0 0 63 0,00 2000 0 0 1 1 71 1,41 2001 0 0 1 1 63 1,59 2002 1 0 0 1 71 1,41 2003 3 2 1 6 79 7,59 2004 0 1 1 2 68 2,94 2005 0 1 0 1 65 1,54 2006 0 0 1 1 64 1,56 2007 0 0 1 1 73 1,37 2008 1 0 3 4 74 5,41 2009 1 0 1 2 71 2,82 2010 0 0 2 2 74 2,70 Total 8 4 13 25 908 2,75 As seen in Table 1, 13 of 25 studies deal with the relationship between social responsibility and strategy or corporate performance. Corporate governance articles follow social responsibility articles and we found only four studies which dealt directly with the relationship between business ethics and strategy/corporate  performance. When we analyze Table 1, the last column on the left shows the ratio of corporate governance,  business ethics and social responsibility related articles published in SMJ between 1998 and 2010 compared to all articles published in those years. Results indicate a scattered distribution and the numbers of corporate governance, social responsibility or business ethics related articles do not display a tendency to increase. However, from our point of view, it is really interesting to see the rise of the corporate governance, social responsibility and business ethics related articles in SMJ just before the global economic crises. In 1997/98 the world witnessed a global economic crisis which first affected Russia then the rest of the world. Similarly, in 2008, the year in which the 5.41% of total articles were related to corporate governance, business ethics and/or social responsibility, another economic crisis shook the world. This might be a total coincidence but it is still interesting. on corporate governance, business ethics, social responsibility and strategy relations, we analyzed the abstracts of the articles that we selected. The full list of 25 articles that we found as a result of our research and their major concentrations and findings can be seen in Table 2.
Search
Tags
Related Search
We Need Your Support
Thank you for visiting our website and your interest in our free products and services. We are nonprofit website to share and download documents. To the running of this website, we need your help to support us.

Thanks to everyone for your continued support.

No, Thanks
SAVE OUR EARTH

We need your sign to support Project to invent "SMART AND CONTROLLABLE REFLECTIVE BALLOONS" to cover the Sun and Save Our Earth.

More details...

Sign Now!

We are very appreciated for your Prompt Action!

x