The Corporate Governance Theory Commerce Essay


The corporate social responsibility of a company is a process whereby a company monitors its own standards rather than have an independent agency to monitor and enforce those standards. It is the responsibility of that company to ensure conformity for sustainable development. The company have to consider its financial situation and operating conditions with the aim to encourage and ensure a positive impact on both the social and environmental situation through its activities.

This is the definition of corporate social responsibility according to Angelidis and Ibrahim "corporate social actions whose purpose is to satisfy social needs". Here, it states that corporate social responsibility requires measuring that investment and rate of return of outcome. (Bronn& Vrioni 2001)

The theory of corporate social responsibility is a step-by-step process. As early as in the 1950s, corporate social responsibility was a common concerned. However, the concept of this definition expanded during the 1960s. Keith Davis explained the definition of corporate social responsibility further when he discussed about businessmen making certain commercial decisions beyond the firm's business ethics. (Volunteer Foundation 2004-2008). The framework of corporate social responsibility was developed by Archie Carroll in the 1970s, "Organizational Social Performance Model". It consists three dimensions as mentioned in (Dinah Payne 1979).

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The three dimensions are very important. They include:

1) economic responsibility of firms to provide high quality production and services to earn profits,

2) "Philosophy of Social Responsiveness" for corporations. This deals directly with social problems,

3) the dimension of social issues themselves involving consumerism, environmentalism, discrimination issues and so on.

There are more benefits in the application of corporate social responsibilities. Businesses will grow and this will have a positive impact beyond the companies imagination. It further reduces criticism from the public, improve employee initiative, attracting more talented people to join the organization, save cost, better management system and better decision making (Kivivirta 2010). However, with the advancement in globalization, the market has become more complicated. Corporations not only need to satisfy the consumers through traditional investment methods. There are more important elements that the management of corporations need to face : communities, employees, regulators, politicians, suppliers and even the media. Because of today's complicated market conditions and frequent changes in market trends, corporate social responsibility is an excellent mechanism for companies to see them through these tough challenges (kytle.2005).

There are many international organizations well known for running their businesses well. They have their own methods of corporate governances and corporate social responsibilities. For this study on governance and social responsibility we research

the largest coffee and coffeehouse company ----- Starbucks.

In corporate governance, the goal is transparent operation, accountability of report and also the importance of being good corporate citizens (OECD Publications Service, 2004). The study took into consideration the above factors when analysing the actual operations of Starbucks. The study analysed how corporate governance resulted in long-term control development, and how this company followed the corporate governance framework in order to achieve different market goals. With fierce competition in the global market, the company had to make changes and applied the corporate governance system in order to make it more competitive through innovation and reform. This helped in the company's expansion globally. The result of this research showed that corporate governance is very important to this company. Furthermore, other companies had benefitted from this research and applied this theory in order to be successful.

Another part of this study researches corporate social responsibility to "Measures a Company". With growing public awareness and social demand from responsible businesses, companies should start making decisions to incorporate social responsibilities into their business plans for future commercial operations (Jo Bilson;2010). Starbucks is an international coffee and coffeehouse chain from the United States. This company operates on a global scale which meant greater responsibilities. The company controls more resources and occupies a greater share of the coffee market than other coffee companies. Therefore, it knows how to perform responsibly with regard to social, economic, environmental situations, and to its employees too.

When analysing the application of the theory of corporate social responsibility by Starbucks, we had to collect data on its business activities, analysed the company's action when applying social ethics and government laws, and understand different communities response to the company's attitude towards the environment and philanthropic policies. In addition to the company's role on corporate and social responsibilities in commercial activities, the study further analysed how this company improved on its own value and reputation with the hope of furthering development and expansion..

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Many successful companies are in the process of developing their own corporate governance over a period of time. They are doing this because of the change in the market trends and also with the intention to make more profits. Many traditional management styles have changed. Today, many multinational companies are very successful.

However, these successful companies do face problems within their corporate governance framework. This study therefore further attempted to find out problems in the current governance system in Starbucks. Such problems, if not solved, may limit the company's development, affecting social ethics and environmental adherence. Other negative impact may be the plunder of valuable resources. This may affect sustainable development.

The above analysis briefly explained the operation of the theory of corporate social responsibility and corporate governance. The study on the operations of Starbucks showed how this company applied this system, and how it adjusted this system in response to social issues such as sustainable environmental development to order to improve its own value.

Finally, this study further explained the importance of applying corporate social responsibilities and corporate governance to a company's present operating system. We had taken into consideration issues such as relative social ethics, ecological critics and problems faced by companies in the application of this theory. The study strongly recommended the application of this system to improve the current management system of companies. This will enable companies to respond better to both social problems and environmental development issues.