As stated previously, good governance is of course essential for good corporate performance and one view of good corporate performance is that of stewardship. Good governance is of course important in every sphere of the society whether it be the corporate environment or general society or the political environment. In the review undertaken in this chapter we have sought to show the extent of the scope of the concepts of corporate governance and of corporate social responsibility as well as the diversity of views of what is important. We have also shown the ubiquity of the concepts in that they permeate business life as well as civil society but are understood differently in different environments and different cultures. Thus we argue that a global framework does not exist but in our increasingly globalised world it is something which would be beneficial to international interactions and will inevitable eventually emerge. Furthermore we argue that different cultures have something to offer in the development of this global framework. In this book therefore we explore these issues from a number of different perspectives as a means of contributing towards the development of this global system.
How Globalisation Affects Governance
The question might be how globalisation affects governance. But the answer to this question is not only related to the last quarter of the 20th century but also related to previous centuries. John Maynard Keynes calculated that the standard of living had increased 100 percent over four thousand years. Adam Smith had a seminal idea about the wealth of communities and in 1776 he described conditions which would lead to increasing income and prosperity. Similarly there is much evidence from economic history to demonstrate the benefit of moral behaviour; for example, Robert Owen in New Lanark, and Jedediah Strutt in Derbyshire - both in the UK - showed the economic benefits of caring for stakeholders. More recently Friedman has paid attention to the moral impact of the economic growth and development of society.
It is clear that there is nothing new about economic growth, development and globalisation. Economic growth generally brings out some consequences for the community. This is becoming a world phenomenon. One of the most important reasons is that we are not taking into account the moral, ethical and social aspects of this process. Some theorists indicated the effect of this rapid changing more than a hundred years ago. Economic growth and economic development might not be without social and moral consequences and implications.
Another question is who is responsible for this ongoing process and for ensuring the wellbeing of people and safeguarding their prosperity. Is this the responsibility of governments, the business world, consumers, shareholders, or of all people? Government is part of the system and the regulator of markets and lawmakers. Managers, businessmen and the business world take actions concerning the market structure, consumer behaviour or commercial conditions. Moreover, they are responsible to the shareholders for making more profit to keep their interest long term in the company. Therefore they are taking risk for their benefit/profit. This risk is not opposed to the social or moral/ethical principles which they have to apply in the company. There are many reasons for ethical and socially responsible behaviour of the company. However, there are many cases of misbehavior and some illegal operations of some companies. Increasing competition makes business more difficult than before in the globalised world.
The good news and our expectations are that competition will not have any longer bad influence on company behaviour. According to international norms, (practice) and expectations, companies have to take into account social, ethical and environmental issues more than during the last two decades. One of the reasons is more competition and not always more profit; another reason is consumer expectation is not only related to the cost of products but also related to quality, proper production process and environmental sensitivity.
Moreover shareholders are more interested in long term benefit and profit from the company. The key word of this concept is long terms which represents also a sustainable company. Shareholders want to get long term benefit with a sustainable company instead of only short term profit. This is not only related to the company profit but also related to the social and environmental performance of the company. Thus, managers have to make strategic plans for the company concerning all stakeholder expectations which are sustainable and provide long term benefit for the companies with their investments. However, Sustainability can be seen as including the requirement that whatever justice is about - fair distribution of goods, fair procedures, respect for rights and social justice - and is capable of being sustained into the future indefinitely.
Thus sustainability requires that the values of justice are capable of being continued into the future: if current practices for instance were just from the present point of view but would prevent the same practices from occurring in the future, that would be rejected from the point of view of sustainability (Dower, 2004).... So investor or shareholder expectations and all other stakeholders approaches are supporting a socially responsible and ethical company more than other companies. Globalisation has had a very sharp effect on company behaviour and still we can see many problems particularly in developing countries. This is one of the realities of the globalisation process. However we are hoping to see some different approaches and improvements to this process with some of them naturally related to some international principles, rules and norms. But most of them are related to the end of this flawed system and the problems of capitalization.
The challenge of governance in a globalizing world is to engage in a process of political deliberation which aims at setting and resetting the standards of global business behaviour. While stakeholder management deals with the idea of internalizing the demands, values and interests of those actors that affect or are affected by corporate decision-making, we argue that political CSR can be understood as a movement of the corporation into environmental and social challenges such as human rights, global warming, or deforestation (Scherer & Palazzo, 2008).