Corporate Governance & Globalization : PDF

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The effect of corporate governance oninternationalization, globalization and theperformance of the firm: A case study on Emiratesairlines
ACKNOWLEDGEMENTI am thankful to all those friends and relatives who gave me guidance and support in completingmy dissertation on corporate governance they always encouraged for completing dissertation inthe best possible way. In addition to this, I also appreciate my mentor for giving me guidance inpreparing dissertation. From his support and experience d I was in the position to completedissertation in a right manner. Finally, I want to extend my sincere thanks to everyone who havedirectly or indirectly supported me in completion of my dissertation.
ABSTRACTCorporate governance has gained a significant importance intherecentpast across theglobe. In order to understand importance of corporate governance in context of business firms,dissertation has been carried out. In this regard, the research is conducted on an airline company,Emirates. For preparing a dissertation on corporate governance, lots of secondary data werereviewed. The information was taken from books and journals etc. On the basis of evaluation oftheories, literature review is prepared. Further, sample of employees at emirates are selected forcollecting primary information. In research, sample of 20 employees were taken which includestop, middle and lowerlevelof management. In research, primary research was conducted underwhich questionnaire was distributed among the respondents. In questionnaire, an attempt is madeto understand various aspects of corporate governance. After collecting the entire data, analysisof the same is done and reasons behind respondent’s specific response are identified. Thesereasons are mentioned in the analysis section of each theme. In research, it has been identifiedthat corporate governance has significant importance for the firms. By using corporategovernance, the company can curb corruption in an organization. Moreover, they can easily enterinto strategic partnership with any other company in foreign market. Thus, corporate governanceis giving lots of benefits to the firms and they must try to improve their corporate governancesystem time to time.
TABLE OF CONTENTSCHAPTER 1: INTRODUCTION....................................................................................................61.1 Overview................................................................................................................................61.2 Research aims and objectives................................................................................................91.3 Rational of research...............................................................................................................91.4 Significance of research.......................................................................................................10CHAPTER 2: LITERATURE REVIEW.......................................................................................122.1 Introduction..........................................................................................................................122.2 Meaning of corporate governance.......................................................................................122.4 Benefits of corporate governance........................................................................................132.5 Significance of corporate governance..................................................................................142.6 CSR in the multinational companies....................................................................................152.7 Benefits of corporate governance on market performance of the firm................................162.8 Ways in which globalization and internationalization affects CSR of an organization......172.9 Ways in which Corporate governance promotes globalization and Internationalization ofthe Company..............................................................................................................................192.10 Ways in which concept of CSR can be used to improve market performance..................192. 11 Ways in which corporate governance can help in increasing market performance..........21CHAPTER 3- RESEARCH METHODOLOGY...........................................................................233.1 Overview..............................................................................................................................233.2 Research type.......................................................................................................................233.3 Research design...................................................................................................................243.4 Research approach...............................................................................................................243.5 Research philosophy............................................................................................................253.6 Data collection methods.......................................................................................................253.7 Data analysis........................................................................................................................263.8 Validity and reliability.........................................................................................................273.9 Ethical consideration............................................................................................................273.10 Limitation of study.............................................................................................................28CHAPTER 4: DATA ANALYSIS................................................................................................294.1 Introduction..........................................................................................................................294.2 Demographic data................................................................................................................294.3 Meaning and significance of corporate governance and CSR in context of multinationalcompanies..................................................................................................................................324.4 Implications of corporate governance in relation to company market performance...........364.5 Corporate governance promotes globalization and Internationalization.............................40CHAPTER 5: CONCLUSION AND RECOMMENDATIONS...................................................445.1 Conclusion...........................................................................................................................445.2 Recommendations................................................................................................................46REFLECTIVE................................................................................................................................48REFERNCES.................................................................................................................................49APPENDIX....................................................................................................................................53Questionnaire.............................................................................................................................53
CHAPTER 1: INTRODUCTION1.1 OverviewBackground of researchCorporate governance is a widely usedterm that has been practised by variousorganizations in the recent past.Across the globe, there are many large sized companies whichare known for their high level of corporate governance. This term refers to rules and regulationsthat are followed in the entire organization while conducting day-to-daybusinessoperations(Tricker, 2015).Moreover, corporate governance also helps in satisfying the needs of allstakeholders whether they are internal or external in an appropriate manner. There are severalcomponents of corporate governance and one of the most important components isaccountability. This component of corporate governance states that leaders of an organizationshould have clear understanding of their accountability.In order to perform accountability in aproper manner,the top management must guide their subordinates and ensure that each andevery activity in an organization is performed effectively as per the rules of corporategovernance(Harford, Mansi and Maxwell, 2012).Transparent and open leadership is an important component of corporate governance.According to transparency of component, leaders or company, the top management must makeall disclosures regarding company’s operations time to time to theirstakeholders. Suchdisclosures must be correct and true to its nature. In order to follow corporate governance,company’s top management is required to make a good relationship with their stakeholders.These stakeholders are employees, shareholders and creditors etc. A good corporate governancein an organization ensures that all stakeholders will be treated equally and management will givethem due importance. If management treats employees in a systematic manner then they getsatisfied and put their efforts in achieving organizational goal(Larcker, Richardson and Tuna,2007). Hence, corporate governance plays an important role in growth of an organization.In order to make good corporate governance, top management should be allocated fullindependence to decide future course of action. In case, the top management have not allottedpower to decide the main owners of an organization will have full grip over theorganization’smanagementand they will fulfil their own needs to achieve desired goals(Joseph, Ocasio andMcDonnell, 2014). On contrary to this, if directors are working independently then they willimprove company’s rules and regulations and will also make them strict in order to prevent scam5
within a company. Hence, independence of directors is a first step towards making strongcorporate governance within an organization. In this research, an attempt is made in order tounderstand impact of corporate governance on an organization. In other words, the positiveimpact of corporate governance on company is analyzed through the research. Corporate socialresponsibility known as CSR is an integral part of corporate governance because in today’s erafirms are using CSR isa means ofbuilding a positive brand image (Westphal and Zajac, 2013).It is a part of corporate business practice. Hence, corporate governance and CSR are interlinkedto each other.Emirate is following one of the CSR strategies under which it is complying with thestandards that are determined by the regulatory authority of nation. By doing this, firm iscompleting its social responsibility towards government. It is also focusing on updating itsairplane’s technology. Through this, it is trying to control pollution from its airplanes. This isanother CSR strategy that is followed by the firm. Emirate airline is ensuring the safety of peopleon its airplane and for this; it adopts many safety measures (Erkens, Hung and Matos, 2012).With the help of this, it ensures the safety of life of those who are travelling on its airplane.Hence, it can be said that these are the strategies that are followed by the firm in order to performCSR towards government and general public.Under CSR, companies are implementingnumerous activities like opening orphanages, helping handicapped people and reducing carbonemission to protect the environment. Companies are using it as an instrument in order to create apositive brand image. Further, organizations are using their CSR activitiesforinstitutionaladvertising in order to show significant contribution in welfare of an organization. In manynations, CSR have become an integral part of corporate business practice(Bebchuk, Cohen andFerrell, 2009).Today, the most common problem that business organizations are facing is lowretention value of the customers. In simple words, it can be said that companies are not able tocreate a loyal customer base. On other hand, stiff or fierce competition is going on betweencompanies in every sector. In such a situation, it becomes necessary for the firms to build loyalcustomer base. Due to mentioned reasons, every company is making an attempt to formulateeffective strategies for success of the business unit. Firms are adopting various ways which helpsthem in creating special image in the eyes of customers (Aoki, 2013). By doing this, they canincrease employee’s retention value or can build loyal customer base. CSR is a unique andperhaps an effective wayto achieve objective of building loyal customer base. It is through6
involvement in corporate social responsibilities that companies are trying to establish specialimage of their brand name. Companies like Microsoft are giving millions of amount for CSR forconducting social service activities in countries like India(Farber, 2005). In this way, they arepopularizingtheir name in foreign countries not only on the base of their product but also on thebasis of the corporate social responsibility activities.This research is conducted in order to reveal the impact of corporate governance oninternationalization,globalizationand performance of Emirates Airline. In this research,correlation between CSR and corporate governance will be developed. This will be done in orderto show the extent to which the mentioned company effectively utilizes CSR and corporategovernance for its benefit.Background of EmiratesAn emirate is the largest airline company of UAE which is also known as united Arabemirate.This airline is owned bySheikh Mohamed binrashid Al Makotoum who is the ruler ofUAE and is its president. It is the world’s largest international airline and in fiscal year 2014-15,it carried 49.3 million passengers which were 11% more than the previous year. In same fiscalyear, it carried 2.4 million ton of cargo which was 6% higher than the previous year. Inmentioned fiscal year it also increased its capacity by 9%. This reflects that company is growingand since its inception it is growing rapidly and has emerged as the world’s largest internationalairline. Currently, it is operating in 144 cities over 6 continents. This means that it hasgeographical presence all over the world(Agrawal and Chadha, 2005). Company is steadilyinvesting on developing its fleet size andcommencingits services on new routes. Emiratesunderstand that customers or travellers are an important stakeholders and their satisfaction willplay a decisive role in company’s success. Hence, Emirates is following concept of CSR and it isproviding quality food to its customers. Emirates are providing food facility in collaboration withDnata an international company that is providing in-flight catering services.Emirates ensure that food which is provided to the travellers is of high quality. In otherwords, it also ensures that their traveller does not find any sort of problem in terms of food whiletravelling in airline. In alliance with Dnata, company is aimed at providing full safety to itstravellers(Larcker and Tayan, 2015).In respect to this, it is investing heavy amount of AED 70million in order to ensure full safety of life of those who travel in itsairplane.In respect to this, ithas made safety program in order to train its employees. Under this program, 850 of its staff7
members were trained as observers. Further, s 24,000 observations are carried out till the datethrough this program(The Emirates group, 2015). After observation, feedback is collected inorder to identify the weak points. Further, on the basis of these weak points measures areprepared and implemented which ensures safety of passengers in airlines. Along with this, it alsovalues its employees and it assumes that they are its valuable assets and organization cannotgrow without their support. Hence, it is giving full support to its employees. Along with this, it isalso committed towards protecting an environment and in respect to this it has adopted severalpollution control measures. Emirates have limited availability of resources and due to this reasonit aims at utilizing its resources in an efficient and effective manner. Emirates are also carryingout corporate social responsibility activities in respect to conserve flora and fauna. Further, it isinvolved in Dubai Desert Conservation Reserve under which initiatives are taken to preservenatural and cultural heritage. Hence, company is carrying out CSR activities in several areas andin this way it is popularizing its brand name (Fan, J Wong and Zhang, 2007).1.2 Research aims and objectivesResearch aims at analyzing the impact of corporate governance on internationalization,globalization and the performance of firm. Case study for Emirates airlines have been analyzedthrough the research.Main objectives as per the aim of research are-Tocritically evaluatethe meaning and significance of corporate governance and CSR inthe multinational companies.To examine the implications of corporate governance on market performance of the firm.To identify the ways in which corporate governance promotes globalization andInternationalizationof company.To recommend the ways in which concepts of CSR and corporate governance can beused in order to boost the market performance of Emirates Airlines.Research questionsResearch questions are prepared on the basis of research objectives and by using researchquestions; questionnaire is formed for collecting primary data.What is the meaning and significance of corporate governance and CSR in context ofmultinational companies?8
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