Corporate social responsibility, ethics, and corporate governance

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Corporate social responsibility, ethics, and
corporate governance
Article in Social Responsibility Journal · September 2012
DOI: 10.1108/17471111211272110
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Luu Trong Tuan
Swinburne University of Technology
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Social Responsibility Journal
Emerald Article: Corporate social responsibility, ethics, and corporate
governance
Luu Trong Tuan
Article information:
To cite this document: Luu Trong Tuan, (2012),"Corporate social responsibility, ethics, and corporate governance", Social
Responsibility Journal, Vol. 8 Iss: 4 pp. 547 - 560
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http://dx.doi.org/10.1108/17471111211272110
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Corporate social responsibility, ethics, and
corporate governance
Luu Trong Tuan
Abstract
Purpose – This inquiry into companies listed on the Ho Chi Minh City Stock Exchange (HOSE) in
Vietnam seeks to discern whether such constructs as corporate social responsibility (CSR) and ethics
act as antecedents for corporate governance.
Design/methodology/approach – Three hundred and seventeen responses returned from
self-administered structured questionnaires relayed to 1,173 middle level managers were analyzed
via ANOVAs and structural equation modeling (SEM).
Findings – From the results an interplay emerged between the ethics of justice and legal
CSR/economic CSR. The ethics of care, on the other hand, tend to cultivate ethical CSR, which in turn
positively influences corporate governance.
Originality/value – From the results of the research, insight into the linkage pattern of corporate
governance and its antecedents highlights the magnitude of the ethics training program as well as CSR
initiatives in reinforcing corporate governance in listed companies in Vietnam.
Keywords Corporate social responsibility, Ethics of justice, Ethics of care, Corporate governance,
Disclosure, Vietnam
Paper type Research paper
1. Introduction
Companies have recently augmented the allocation of resources to activities termed as
corporate social responsibility (CSR) (Barnea and Rubin, 2010). Corporate social
responsibility, from Gainer’s (2010) stance, refers to a corporate ‘‘movement’’ – a set of
ideas and perspectives about business practice that its advocates anticipate to see widely
implemented through the corporate sector. Through corporate social responsibility
activities, companies can not merely yield favorable attitudes and behaviors from
stakeholders, but also reinforce stakeholder-company bondings and construct corporate
image (Du et al., 2010). Cheung et al.’s (2009) research underscores the importance of
corporate social responsibility in Asian emerging markets.
The interconnection between CSR and corporate ethics has been found in numerous
empirical enquiries (Stanwick and Stanwick, 1998). The impact of ethics on CSR was
revealed in Vitell et al.’s (2009) study. In their investigation into the linkages among core
organizational values, organizational ethics, corporate social responsibility, and
organizational performance outcome, Jin and Drozdenko (2009) found that managers in
both mechanistic and organic organizations which were perceived as more socially
responsible were also perceived as more ethical; and that perceived ethical attitudes and
social responsibility were significantly correlated with organizational performance
outcomes.
At the crossroads of corporate self-regulation and meta-regulation, researchers have
indicated an evolving interplay between corporate governance and CSR in recent years
DOI 10.1108/17471111211272110 VOL. 8 NO. 4 2012, pp. 547-560, Q Emerald Group Publishing Limited, ISSN 1747-1117 j SOCIAL RESPONSIBILITY JOURNAL j PAGE 547
Luu Trong Tuan is based at
the Asian Institute of
Technology (AIT), Klong
Luang, Thailand.
Received 9 July 2011
Accepted 9 July 2011

(Gill, 2008). Jamali et al.’s (2008) inquiry alerts practitioners to the increasing overlap
between corporate governance and CSR agendas. Furthermore, corporate social
responsibility has focused on corporate governance as a vehicle for integrating social
and environmental concerns into the business decision-making process, benefiting not
purely financial investors but employees, customers, and communities as well (Gill, 2008).
Johnson and Scholes (2002, p. 247) state, ‘‘Corporate social responsibility is concerned with
the ways in which an organization exceeds the minimum obligations to stakeholders
specified through regulation and corporate governance.’’ From a developing country
perspective, Jamali et al.’s (2008) qualitative research highlights the growing
cross-connects or interfaces between corporate governance and CSR through the
findings that most managers conceive of corporate governance as an essential pillar for
sustainable CSR. In the similar vein, good corporate governance provides the foundations of
good CSR by creating value-creating relationships with all stakeholders (Welford, 2007) and
is a critical element for driving excellence in CSR (Shahin and Zairi, 2007). The impact
direction from CSR to corporate governance is found by Charbaji (2009) in both
public-sector and private-sector organizations.
Moreover, in Nwabueze and Mileski’s (2008) standpoint, the ground rules of any corporate
governance structure should reflect such societal norms as ethics. The concept of corporate
governance, by and large, is contained in the ethics of care, justice, rights and utility
(Nwabueze and Mileski, 2008). Hooghiemstra and van Manen’s (2002) inquiry into 2,500 of
the largest companies in The Netherlands also reveals the growing magnitude of social and
ethical issues in the corporate governance discussion.
These three constructs converge into one point, namely the commitment to the interests of
the others, so this study seeks to develop a research framework that examines the linkage
pattern of CSR, ethics, and corporate governance.
This prelude of the paper is pursued by the review of the perspectives and studies on the
variables of the current research. This literature review serves as the foundation for building
the conceptual framework for which the data is then dissected. The paper concludes with
some practical implications and potential research avenues related to the concept
‘‘corporate governance’’ and its independent variables.
2. Literature review
2.1 Corporate social responsibility (CSR)
Corporate social responsibility (CSR) is currently a crucial element of the dialogue between
companies and their stakeholders and continues to reap attention atop the corporate
agenda (Bhattacharya et al., 2008). Corporate social responsibility, from Jamali’s (2008) and
Jamali et al.’s (2008) perspectives, is concerned with the commitment of companies to
contribute to sustainable development, stakeholder interests and enhancement of societal
conditions.
Also centering on stakeholders’ interests, Hopkins (2007) defines CSR as being ‘‘concerned
with treating the stakeholders of the firm ethically or in a responsible manner. ‘Ethically or
responsible’ means treating stakeholders in a manner deemed acceptable in civilized
societies. Social includes economic and environmental responsibility. Stakeholders exist
both within a firm and outside. The wider aim of social responsibility is to create higher and
higher standards of living, while preserving the profitability of the corporation, for peoples
both within and outside the corporation’’ (pp. 15-16). Regarding business firms as the
economic engine of society, Carroll (1979) and Henderson (2005) also highlight profits
making is a social responsibility.
Carroll’s (1979) model of CSR also incorporates profitability as a dimension among the four
responsibilities:
1. The economic responsibility to generate profits.
2. The legal responsibility to conform to local, state, federal, and relevant international laws.
PAGE 548 jSOCIAL RESPONSIBILITY JOURNAL j VOL. 8 NO. 4 2012