Social Outcomes of Corporate Governance: Evidence from the Food Industry of Pakistan
Social and environmental problems are becoming strategic concerns for the managers in the current business scenario because it is challenging their sustainability. Here the need arises to respond to this changing phenomenon accordingly. In this regard social impact of corporate governance has not yet been explored where it can play a role of driver of excellence in terms of social performance and it is required to be studied. To check the existing situation, this study has been conducted where the social impact of corporate governance has been explored in the food Industry of Pakistan. Questionnaires have been filled from 176 managers working in six food producing firms listed in Pakistan Stock Exchange (PSX). Structural Equation Modeling based partial least square (PLS) has been used where Smart PLS has been used for model estimation. Results are supporting the stakeholder theory as Nestle Pakistan and Engro Foods are driving social excellence through corporate governance practices, where the corporations are showing strong positive relationships of corporate governance practices with stakeholders management, environmental integrity and protection, social cohesion and equity while insignificant relationship exists between strategic proactivity and corporate governance practices as people are resistant to change and innovation.
The relationships can be explored in other industries like Oil and gas, Chemicals and Construction etc.
Academy of Management Journal (2014), Rethinking Governance in Management Research, Vol. 57, Issue No. 6, 1535–1543. Retrieved From: http://dx.doi.org/10.5465/amj.2014.4006
Andersson, L. M. and T. S. Bateman (2000), Individual Environmental Initiative: Championing Natural Environmental Issues in U.S. Business Organizations, Academy of Management Journal 43(4), 548–570.
Aragon-Correa, J. A. (1998). Strategic Proactivity and Firm Approach to the Natural Environment, Academy of Management Journal 41(5), 556–567.
Aragon-Correa, J. A., N. Hurtado-Torres, S. Sharma and J. V. Garcia-Morales (2008). Environmental Strategy and Performance in Small Firms: A Resource-Based Perspective, Journal of Environmental Management 86(1), 88-103.
Attiya, Y., Javaid,. Iqbal, R. (2010), Corporate in Pakistan: Corporate Valuation, Ownership and Financing. Pakistan Institute of Development Economics (PIDE).
Audretsch, D. B., & Lehmann, E. (Eds.) (2011). Corporate Governance in Small and Medium-Sized Firms. Edward Elgar.
Bebchuk, L.A. and Weisbach, M.S. (2010). The State of Corporate Governance Research, Review of Financial Studies, 23, 939–961.
Bowie, N.E. (1983). Changing the Rules, in Beauchamp, T.L. and Bowie, N.E. (Eds), Ethical Theory and Business, 2nd Edition, Prentice-Hall, Englewood Cliffs, NJ.
Brown, Ph., Beekes, W., and Verhoeven, P. (2010), Corporate Governance, Accounting and Finance: A Review, Accounting & Finance, 51, 96–172.
Buysse, K. and Verbeke, A. (2003), Proactive Environmental Strategies: A Stakeholder Management Perspective, Strategic Management Journal 24(5), 453–470.
Cadbury, A. (1992). Report of the Committee on the Financial Aspects of Corporate Governance. London,UK: Gee.
Carroll, A.B. (1979). A Three-Dimensional Conceptual Model of Corporate Performance, Academy of Management Review, Vol. 4, pp. 497-505.
Carroll, A.B. (2000a). Ethical Challenges for Business in the New Millennium: Corporate Social Responsibility and Models of Management Morality, Business Ethics Quarterly, Vol. 10
No. 1, pp. 33-42.
Castka, P., Bamber, C.J., Bamber, D.J. and Sharp, J.M. (2004). Integrating Corporate Social Responsibility (CSR) into ISO Management Systems – in search of a Feasible CSR Management System Framework, The TQM Magazine, Vol. 16 No. 3, pp. 216-24.
Chin, W. W. (1998b). The Partial Least Square Approach to Structural Equation Modeling. MIS Quarterly, 22(1), 7-16.
Chin, W. W. &Newsted, P. R. (1999). Structural Equation Modeling: Analysis with Small Samples Using Partial Least Squares’, R. H. Hoyle (Ed.), Statistical Strategies for Small Sample Research, 307-341. Thousand Oaks, CA: Sage.
Chin, W. W. (2010). How to WriteUp and Report PLS Analyses, in VE Vinzi, W Chin, J Henseler& H Wang (eds), Handbook of Partial Least Squares: Concepts, Methods and Applications, Springer, Berlin, pp. 655-90.
Christmann, P. (2000). Effects of ‘Best Practices’ of Environmental Management on Cost Advantage: The Role of Complementary Assets’ Academy of Management Journal 43(4), 663–680.
Cordano, M. and Frieze, I. H. (2000). Pollution Reduction Preferences of U.S. Environmental Managers.
Cronbach, LJ. (1951). Coefficient Alpha and the Internal Structure of Tests', Psychometrika, vol. 16, no. 3, pp. 297-334.
Dunphy, D. (2003). Corporate Sustainability: Challenge to Managerial Orthodoxies, Journal of the Australian and New Zealand Academy of Management, 9(1), 2-11.
European Commission (2003), Responsible Entrepreneurship: A Collection of Good Practice Cases among Small and Medium-Sized Enterprises across Europe (Bruxelles, Belgium).
Fornell, C. and Cha, J. Partial Least Squares. R. P. Bagozzi (Ed.) (1994), Advanced Methods of Marketing Research, 52-78. Oxford.
Galdeano-Go´ mez, E., Ce´ spedes-Lorente, J., Martı´nez-del-Rı´o, J. (2008), Environmental Performance and Spillover Effects on Productivity: Evidence fromHorticultural Firms. Journal of Environmental Management 88, 1552–1561.
Genier, C., Stamp, M. and Pfitzer, M. (2009). Corporate Social Responsibility for Agro-Industries Development. In: C. Da Silva, D. Baker, A. Shepherd, C. Jenaneand S. Miranda-da-Cruz (eds), Agro-industries for Development. Oxfordshire, UK: CABI.
Graafland, J., B. van de Ven and N. Stoffele (2003). Strategies and Instruments for Organizing CSR by Small and Large Businesses in the Netherlands, Journal of Business Ethics 47(1): 45–60.
Groza, M. D., M. R. Pronschinske., and Walker, M. (2011). Perceived Organizational Motives and Consumer Responses to Proactive and Reactive CSR, Journal of Business Ethics (Online 24 March) 1-14.
Hair, J.F., Ringle, C.M & Sarstedt, M. (2011). PLS-SEM: Indeed a Silver Bullet, Journal of Marketing Theory and Practice, vol. 19, no. 2, pp. 139-51.
Hair, J.F., Ringle, C.M & Sarstedt, M. (2013). Partial Least Squares Structural Equation Modeling: Rigorous Applications, Better Results and Higher Acceptance', Long Range Planning, vol. 46, no. 1–2, pp. 1-12.
Halal, W.E. (2000). Corporate Community: ATheory of the Firm Uniting Profitability and Responsibility, Strategy & Leadership, Vol. 20 No. 2, pp. 10-16.
Henri, J.F., Journeault, M. (2008). Environmental Performance Indicators: An Empirical Study of Canadian Manufacturing Firms. Journal of Environmental Management 87, 165–176.
Henseler, J., Ringle, C., & Sinkovics, R. (2009). The Use of Partial Least Squares Path Modeling in International Marketing, Advances in International Marketing (AIM), vol. 20, pp. 277-320.
Jenkins, H. (2009). A Business Opportunity Model of Corporate Social Responsibility for Small-and Medium-Sized Enterprises, Business Ethics: A European Review 18(1), 21-36.
Jensen, M. C., & Meckling, W. H. (1976). Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, 3: 305–360.
Jensen, M.C. (2001). Value Maximization, Stakeholder Theory and the Corporate Objective Function, in Chew, D.H. and Gillan, S.L. (Eds), Corporate Governance at the Crossroads: A Book of Readings, McGraw-Hill, New York, NY.
Klassen, R.D.. and Whybark, D. C. (1999). The Impact of Environmental Technologies on Manufacturing Performance, Academy of Management Journal 42(6), 599-615.
Maloni, M. J. and Brown, M. E. (2006), Corporate Social Responsibility in the Supply Chain: An Application in the Food Industry. Journal of Business Ethics 68: 35–52.
Nunnally, J., & Bernstein, I. (1994). Psychometric theory, 3rd Edition, McGraw-Hill, New York.
Rutherfoord, R., R. A. Blackburn and Spence, L. J. (2000). Environmental Management and the Small Firm: An International Comparison, International Journal of Entrepreneurial Behavior and Research 6(6), 310–325.
Schaper, M. (2002). Small Firms and Environmental Management: Predictors of Green Purchasing in Western Australian Pharmacies. International Small Business Journal 20, 235-251.
Serrat, O. (2011). A Primer on Corporate Governance. Asian Development Bank.
Sharma, S. and Vredenburg, H. (1998). Proactive Corporate Environmental Strategy and theDevelopment of Competitively Valuable Organizational Capabilities’, Strategic Management Journal 19(8), 729–753.
Sharma, S., Aragon-Correa, J. A. and Rueda-Manzanares, A. (2007). The Contingent Influence of Organizational Capabilities on Proactive Environmental Strategy in the Service Sector: An Analysis of North American and European Ski Resort, Canadian Journal of Administrative Science 24(4), 268-283.
Shleifer, A., & Vishny, R. W. (1997). A Survey of Corporate Governance. Journal of Finance, 52: 737–783.
Suzanne, C. Neil et al., (2006). Corporate Governance and Human Resource Management. British Journal of Industrial Relations 44: 3rd September 2006 0007–1080 pp. 541–567.
Tenenhaus, M, Vinzi, VE, Chatelin, Y-M & Lauro, C. (2005). PLS Path Modeling, Computational Statistics & Data Analysis, vol. 48, no. 1, pp. 159-205.
Tsai, W. and S. Ghoshal. (1998). Social Capital and Value Creation: the Role of Intra Firm Networks, Academy of Management Journal 41(4), 464-476.
Walley, N. and Whitehead, B.: (1994) ‘It’s Not Easy Being Green’, Harvard Business Review 72(3), 46-52.
Werts, C, Linn, R & Joreskog, K. (1974). Interclass Reliability Estimates: Testing Structural Assumptions, Education and Psychological Measurement, vol. 34, no. 1, pp. 25-33.
Wilson, L. (1975). What One Company Is Doing about Today’s Demands on Business, in G. A. Steiner (Ed.), Changing Business-Society Interrelationships (Graduate School of Management, UCLA, Los Angeles).
Wilson, I. (2000). TheNew Rules: Ethics, Social Responsibility and Strategy, Strategy & Leadership, Vol. 28 No. 3, pp. 12-16.