Corporate Governance and Social Responsibility in Business Essay

3613 Words 15 Pages
1.0 EXECUTIVE SUMMARY

2.0 INTRODUCTION TO CORPORATE GOVERNANCE AND SOCIAL RESPONSIBILITY

As a result of modern corporate scandals and rapid development of international business environments, social responsibility (SR) has become a key aspect of corporate competitive contexts. (Brammer, Williams and Zinkin, 2007). Businesses are under increasing pressure to incorporate SR amongst their profit-driven aims and have become increasingly accountable for their social and environmental actions. Increased interest in CSR developed in the mid 1990s as consumers began to lack their former trust in companies due to both environmental and financial scandals and it became noticeable that society was moving towards values incorporating harmony,
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(Smith, 2003)

The Body Shop International (BSI) can be described as a company that uses a strategy attempting to link its social and moral values with profit gains. (Beck Dudley & Heartman, 1999) Founded in England in 1976 by Anita Roddick, BSI is a global manufacturer and retailer of more than 1,2000 beauty and cosmetic products sold in over 60 countries. (Body Shop International Values Report). Since its opening, BSI has received more attention regarding their ethical values compared to their product line and sales. However, the company’s stance to be ethical and community minded have been largely criticized by the public. (Entine, &Utne, 1995). Some critics and theorists view Social responsibility as a mere profit gaining scheme as the statement of being ‘socially responsible’ and the implementation of it being completely separate entities.

The need for international companies to be aware of social responsibility and corporate governance practices is of increasing importance in today’s society for economic, social, legal and technological reasons.

3.1 ECONOMIC
Research has shown that the implementation of SR and CG practices can result in a increase in firm value. The Organisation for Economic Development state that corporate governance is one important factor in improving both economic efficiency and increasing shareholder confidence. A study by Cui et al (2007) showed that companies with better corporate governance structures
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