Relationship between Corporate Social Responsibility (CSR) and Ethics and Corporate Governance

This research investigates the association between CSR, ethics and corporate governance in 1100 companies registered on the ASX. The research aims to study the linkage patterns of the corporate governance, ethics and CSR within the organizational aspect and its significance for the organization. The research will provide a view about the incorporation of CSR and ethics as the precursors of corporate governance and provide an idea about how to improve financial position of a company in the market through these ways.

Relationship between Corporate Social Responsibility (CSR) and
Ethics and Corporate Governance

Background
Various organizations have improved thedistribution of resources in accordance with the
activities which are termed as CSR. These corporate social responsibilities refer to a
businessdrivei.e. establishedconcepts and perceptionsregarding business practice that is
anticipated by its promoters to be perceived as broadly appliedin the corporate sector (Gill
2012). Through CSR activities, the companies become able to not only obtain favourable
approaches and behaviours from the stakeholders but also become able to strengthen the
bonding between stakeholder and a company and create effectivecorporate image.
Theassociationin CSR and corporate ethics has been identified in various realistic approaches
and the influence of ethics on CSR had also been revealed by Vitell et al. (2009). The
effective corporate governance provides the basis of effective CSR by constructing valuable
relationship with the stakeholders and is considered as a significantfor the development of
distinction in CSR. From the point of view of Nwabueze&Mileski (2011), the
basicprocedures of corporate governance arrangementrevealsocial standards as corporate
ethics.
This research investigates a sample of 1100companies registered on the ASXout of 2500
companies registered under ASX, in order to determine whether constructs such as CSR as
well as ethics act as precursors for corporate governance. The research will also explore the
significance of all three aspects at organizational level and its benefits to the people
associated internally as well as externally with the organization. Being an accounting student,
the research will help me to understand the significance CSR and corporate governance as a
driving agent for financial growth of the company as the company having corporate
governance and CSR implemented within it, provide assurance to the financial investors
about the return on their investments. The research will provide a view about the

incorporation of CSR and ethics as the precursors of corporate governance and provide an
idea about how to improve financial position of a company in the market through these ways.
Motivation and Justification
Various studies conducted by proficient researchers have found association between CSR and
corporate ethics. It has also been established that the managers which are perceived as
socially responsible are found to be more ethical as well (Stanwick & Stanwick 2012). The
perceived social responsibility and ethical attitude among managers have also been found to
be significantly interrelated with the performance outcomes of the organization. The
interchange between corporate governance and CSR that have been found in recent years,
grabs the attention towards increasing overlap in the agendas of CSR and the corporate
governance within the organization (Thomas, Schermerhorn & Dienhart 2004). In addition to
it, CSR considers corporate governance as a driving mechanism for the incorporation of
societal and environmental concerns in the decision-making process of the businesses, which
in turn proves to be beneficial not only for commercial investors but also for employees,
customers and the social order as well. Such a significance of interaction between corporate
governance and CSR along with the significant role of ethical attitude attracts attention
towards implementation of such aspects within the organization. These three constructs
congregate at a single point which is the commitment towards the interests of all those
associated with the organization whether internally or externally. That is why, this research
would seek to develop a framework that could examine the association patterns of CSR,
corporateethics as well as corporate governance.

Research Aim
The interaction between corporate governance, ethics and CSR has been identified as a
significant attribute for the successful functioning of an organization. Through such an
interaction, companies not only become able to achieve constructive approaches and
behaviours from the stakeholders, but also strengthen bonding between the stakeholders and
the company as well as create corporate image. Furthermore, the concept of concept
governance is a constituent in the ethics of care, rights, utility and justice. So, all three
constructs and the interconnection or overlapping between them, has been identified to be as
significant contribution for the organizational success considering all the stakeholders as
well. The research thus, aims to study the linkage patterns of the corporate governance, ethics
and CSR within the organizational aspect and its significance for the organization. Along
with it, the review of research studies conducted by proficient researchers will serve as the
basis for development of conceptual framework.
Thus, the research aims;
 To study the linkage patterns of the corporate governance, ethics and CSR within the
organizational aspect
 To explore the significance of corporate governance, ethics and CSR for the
organization.
In this context, the research conducted will be aimed at answering the questions which are;
 What is the linkage pattern of the corporate governance, ethics and CSR within the
organizational aspect?
 What is the significance of corporate governance, ethics and CSR for the
organization?(Tuan 2012)
The hypotheses that will be required to be proved are;
 H1- Positive association of CSR with ethics of justice

 H2- Positive associationof CSR corporate governance
 H3- Negative association of ethics of justice corporate governance
Literature Review
Corporate Social Responsibility
CSRis considered as a criticalconstituent of communication for thecorporations and their
investorsand shareholdersand continuously seeks consideration of the corporate planto a
greater extent. From the perspective of Jamali, Safieddine & Rabbath (2013), CSR is related
to the obligation of the companies to support the sustainable development, interests of
stakeholders and improvement of the social circumstances. The broader purpose of social
responsibility is to improve livingstandards with maintaining the success of company, for the
stakeholders internal as well as external to the company. In this context, Carroll (2014)
considered business companies as the economic instrument of the culture and considered
profit creating as one of the social responsibilities. Lantos (2001) categorized CSR in three
types on the basis of their nature i.e. required contrasted with optional and purpose i.e. for the
benefit of stakeholders and company or for both as well. These three types are altruistic CSR,
ethical CSR, and strategicCSR. CSR is considered as one of the best links between the
shareholders and the companies and, it always tries to mould the agenda of the company in
favour of its stakeholders (Bhattacharya, Korschun & Sen 2009).Profit making is an art for
the businesses and it is very important that while fulfilling this objective of the company, the
company takes into consideration about their social responsibilities (David 2005).
Ethics of justice and ethics of care
According to Potocan&Mulej (2009), the ethics is considered as a fundamental emotional
aspect of human features and particularshare of the process of human behaviour that includes
commerce as well (Potocan & Mulej 2009). Business ethics is related to the association

between business objectives as well as methods to human ends. It expresses the
specificaccountabilitieshold by an individual when they become a part of the business realm.
Preuss (2008) portrayed business ethics as an absolute match of the ideas
thatexplainstheappropriate role of business in the society considering CSR, corporate
citizenship, sustainability and triple bottom line (Preuss 2008).
There are two types of ethics that will be taken into consideration which are ethics of care
and ethics of justice and which are contradictory. Begley (2006) considered ethics of justice
as thebasis for determining thegenuineactionsthat would supplement profits for all with
regard tothe specific rights. There were three characteristics that differentiateethics of care
from ethics of justice.Firstly, ethics of care emphasizes on accountability and relations
instead of rights and duties,secondly, it is entrenched in particularconditionsinstead of being
intellectual, recognised and widespreadand thirdly, it is articulatedas an action of care.
However, ethics of justice is entrenched in justice, the reasonableallocation of the resources
and application of rules, on the other hand, ethics of care considers self-respectin additionto
the inherentworth of every individual as well as requirements to perceive that individuals
enjoy sophisticated living standards as well as emphasizing on the requirements of
relationships not from the promised or legal point of view but from the point of view of total
concern(Starratt 2013).Business ethics can be understood as the link between the goals of an
organization and the approaches that can be adopted to meet the human end (Tran 2008).
Corporate governance
According to Monks &Minow (2004), because of corporate deceptions andcollapses,
corporate governance is becoming a highlyseriousrealm of contemporary management.
Corporate governance wasobserved as a system developed toprotect welfares of the investors.
The OECD (2004) considersfurther than the relationships between shareholders and director
into a broadersystem of associationswith other stakeholders(OECD 2014).Cadbury (2009)

had depicted corporate as the structurethrough which companies are engaged andorganized.
Corporate governance can be explainedas the implementation of authority and responsibilities
for companyindividuals, and placed accountabilityas acomponent of ethics
alongsideinstrument of control through laws and procedures as revealed in various
explanations (Tuan 2012).The improvements in the control process of corporate governance
are the record on corporate governance as an effort to methodically achieve and quantify the
performance of all the stakeholders. Furthermore,takingperspectives of the stakeholders,
corporate governance mechanisms have beencategorizedinto two types which are internal as
well as external to the companies which overlay the pathway for corporate governance.
Through literature review, it has been identified that voluntary conducts and activities of the
organization provide advantages to the society, and the ethical CSR aspect signifies ethical
ideals. Theinteraction between ethics, corporate governance and CSR has been found to be
playing a significant contribution for the overall benefit of the organization. On this basis,
hypotheses have been framed to prove linkage pattern between CSR, ethics and corporate
governance.
Research Design and Method
The interaction between the corporate governance, CSR and ethics needs to be determined in
various companies that have been listed in ASX. Quantitative research technique will be
utilized for the research purpose and, the data regarding three constructs, will be collected
from the selected samples through survey instrument. Through quantitative research method,
it will be easier to gather relevant data from a number of companies located all over in
Australia.
For the purpose of achieving the objective of this research, out of 2500 listed companies
under ASX, a sample of 1100 listed companies have been derived. The self-administered

structured questionnaire will be provided to the middle-level managers of the sample
companies taken for consideration. The middle-level managers that have been selected for
distribution of the questionnaire will be operations director or managers of all these
companies. The questionnaire has been constructed on the basis of data collected on
constructs which include CSR, corporate governance and ethics. The hypotheses will also be
proved by the analysis of data gathered through survey questionnaire provided to the middle-
line managers of the selected companies. Through Cronbach Alpha coefficients, the
reliability of each of the constructs as well as its specific dimensions will be proved. The
correlation coefficient between all the constructs will be proved by the use of ANOVA
technique. As the research questions are to explore the linkage patterns of the corporate
governance, ethics and CSR within the organizational aspect and their significance from
organizational perspective, the research methods applied would assist in achieving the desired
results.
Ethical Consideration
This research will include the human resources of the selected companies which will include
middle-line managers of the selected companies. The managers will have to respond to the
survey questionnaire as per their knowledge. This research requires approval from the UTAS
Ethics Committee because it involves the collection of data through surveys conducted on
managers of the selected companies in Australia. The research should conformwith the
University of Tasmania Research Ethics Policy for which the researcher should apply for the
approval from the Ethics Committee of UTAS(University of Tasmania 2018). The
compliance with National Statement on Ethical Conduct in Human Research (2007) is also
essential.

Expectation of Findings
The correlation between ethical CSR and corporate governance is predictable to be verified
through the research process. The relationship between all three constructs is expected to be
derived through the research process. Through ANOVA, significant correlation between the
constructs could be established whether positive or negative. The hypotheses will be selected
or rejected on the basis of analysis of the data gathered from the survey of the respondents.
The research will focus on enhancing CSR practices within the organization along with
development of ethical attitude and corporate governance, as it is considered as highly
beneficial for the overall performance of the organization and for the benefits of the
stakeholders. It is predicted that the outcomes of the research would be beneficial for the
financial growth of the companies and would prove to be beneficial in developing corporate
image of the company implementing CSR, corporate governance and ethical attitude.
Research Implications
CSR needs unremitting improvementas well as value creation which propose prospect for
knowledge sharing, the strategy development for the implementation of CSRcould be eased
through information in addition to knowledge sharing. Thus, the research would be beneficial
in effective execution of the CSR and corporate governance in the organizations so as to
achieve success.
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