Krista Bondy

Multinational Corporation Codes of Conduct: Governance Tools for Corporate Social Responsibility?

Manuscript Type: Empirical Research Issue: We investigate the assumption found in code and corporate social responsibility (CSR) literature that suggests codes are primarily associated with the CSR practices of an organization. Research Findings/Results: A web-based study of 150 corporations from three different countries indicates there is little empirical support for this link between codes and CSR. Thus, if a corporation has a code, it is more likely used to govern traditional business concerns, such as compliance with third party governance requirements, internal issues such as conflict of interest, bribery and corruption, insider trading, etc. This is consistent across all three countries. Therefore we must be cautious against assuming a link between codes and CSR. Evidence of the different governance contexts is also briefly discussed. Theoretical Implications: Findings are addressed to theoretical debates about the construction of corporate identity, the amoralization of business, and the globalization of management practices. Practical Implications: Stakeholders must be careful in assuming that the presence of a code indicates CSR commitments or behavior. Stakeholders need to look at the content of the code to confirm or deny this assumption, particularly such stakeholders as investors who tend to use the existence of a code as evidence of CSR practices to tick “check the box.”

Putting the Good Back in Good Corporate Governance: The Presence and Problems of Double‐Layered Agency Theory

Manuscript Type. Conceptual. Research Question/Issue. Given its position as a dominant logic in corporate governance, this paper evaluates the theoretical and practical implications of agency theory on good governance. Agency theory is presented as consisting of two layers, one resting on the assumption of oppositional shareholder–manager interests and the other resting on the assumption of supportive shareholder–society interests. Given the dominance of the simple economic depiction of agency theory, its first layer is heavily researched and supported, while the second layer is largely unsubstantiated and often exploited to obscure inefficiencies in the first layer. Research Findings/Insights. Agency theory is shown to fill a highly institutionalized position in governance, despite often violating the second layers assumption of aligned shareholder–society interests. We assert that the relationship between societal benefits and value maximization must be reconceptualized from interdependent to correlated but independent. Otherwise, when the second layer of agency theory is undercut, shareholders can eschew their role as societal guardians to partner with managers and engage in mutual managerialism at the expense of society. We detail how inefficiencies in first layer mechanisms (market regulation, monitoring, and contracts) impact agency theorys second layer and present the new mechanisms of oversight boards and expanded founding firm documents to reintegrate a societal orientation. Theoretical/Academic Implications. Aligned shareholder–society interests are shown to be frequently undermined, artificially substantiating the second layer assumption that societal betterment can be sufficiently promoted via financial rewards and sanctions. We discuss agency theorys underlying logic and present the possibility that a violated second layer can be exploited to obscure first layer inefficiencies. Ineffectiveness in the first layers key mechanisms is shown to potentially undercut agency theorys promotion of good corporate governance on an organizational and societal level. Practitioner/Policy Implications. Oversight boards and expanded founding firm documents are presented to make agency theorys second layer explicit, ensuring the assumed supportive nature of the shareholder–society relationship is substantiated. Specifically, oversight boards formalize how members of boards of directors are vetted, oversee societal claims to ensure that appropriate ones are sufficiently presented and addressed, supervise reporting, and sanction firms who fail to enact these duties. Revised founding documents ensure that both economic and social goals are enshrined in the mission of incorporated firms. Together the two help establish the foundation of a measurable approach to socially responsible actions.