The Impact Of Globalisation On Corporate Governance And Social Responsibility

CORPORATE GOVERNANCE AND SOCIAL RESPONSIBILITY
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THE IMPACT OF GLOBALISATION ON CORPORATE GOVERNANCE AND SOCIAL RESPONSIBILITY

Today we live in a world where prosperity is measured in terms of economic growth, where companies and institutions work to create a greater productivity. However, the means to achieve that growth havebecome an important topic when doing business, and these days it is an important prerequisite for companies to be competitive while they are able to ensure adherence to law, ethical standards and international norms. This responsibility implies that businesses should take into consideration the impact of their activities on the environment, consumers, employees, communities, stakeholders and allother members of the public sphere.

This large-scale impact shows that globalization is altering the normal development of activities through the changes that nations need. Globalisation is considered to be a process to achieve sustainable economic growth working in a global market. Although globalisation allows the creation of bigger markets and relations with new cultures and political models,it brings changes in how institutions and society in general are governed. Every day shareholders around the world implement more controls over the activities and normal procedures within companies to protect the money that they have invested. It is for this reason that Corporate Governance and Social Responsibility exist, in order to create norms to keep a suitable environment in the external andthe internal atmosphere within which companies work.

This paper will show the impact of Globalisation in Corporate Governance and Social Responsibility through examples and explanation of theories that some researchers have found.

For example, policy makers have come to recognise that the quality of Corporate Governance is relevant to capital formation. They also realise that weak CGsystems combined with corruption, distort the efficient allocation of resources, undermine opportunities to compete on a level playing field and ultimately hinder investment and economic development (Gregory, 2000).

Thus, these considerations take us to the concept of Corporate Social Responsibility (CSR) which can be defined as the deliberate inclusion of public interest into corporatedecision-making. CSR is associated with the conduct of corporations and in particular whether corporations owe a duty to stakeholders other than shareholders (Kercher, 2007). Issues such as damage to the environment, improper treatment of workers, and faulty production leading to consumer inconvenience or danger are highlighted in the media affecting the corporate image of the organizations involved. Investorshave begun to make investment decisions based on social responsibility and even consumers have become increasingly sensitive to the social performance of the companies from which they buy (Harrison, 1999).

In order to comprehend how Corporate Governance and Social Responsibility are affected by Globalisation, it is important to understand what the meaning is and how globalisation works.Firstly, according to Blowfield, M and Murray, A (2008), globalisation is defined as a process of interaction and integration between citizens, enterprises and governments around the world in which is used international trade, investment and technology. All activities developed in this process create consequences on the environment, on culture, on political and economic systems, and in general in allsocieties around the world.

The business practices of large multinational corporations have been criticised due to the fact that global corporations have become so huge that they supersede governments and have become the ruling political bodies of our era (Segerstrom, 2008). On the other hand, there are some experts like Friedman, T. (2008), who supports globalization in his book “The Lexus and...