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Corporate social responsibility csr is the concept that that a corporations responsibilities include other stakeholders and includes other responsibilities above and beyond a return for shareholders. These responsibilities include legal ethical and philanthropic responsibilities in addition to economic responsibilities trevino and nelson 2005 p. 31. Other stakeholders could include employees suppliers the customers the community and others. Types of responsibilities the corporation may hold beyond a return for shareholders could include protecting and or improving the environment where the company operates improving conditions for the community where the company resides etc…corporate governance refers the way in which the corporation governs itself. Governance includes the way the company reports earnings pays directors etc… Recognizing that improper governance can have huge consequences for employees and shareholders the government requires corporations to follow corporate governance laws and guidelines that are designed to reduce the risk of fraud and financial ruins such as those that caused the demise of corporations like enron worldcom and global crossing.solid corporate governance that protects investors and employees from accounting fraud conflict of interest etc. can be seen as a part of any company that is acting socially responsible. Because a csr company is acting in a way above and beyond what is required of it by law to protect stakeholders in the company solid corporate governance of a csr oriented company could be viewed as a way in which the company can ensure that the interests of many directly related and dependent on the company can be protected including employees customers the communities that depend on tax revenues and employment etc… Solid corporate governance can be seen as an essential first step of any csr oriented company. Without it it risks conflict of interest of its board members ceo uncertain financial and accounting practices and other risks which could have devastating negative impacts on all stakeholders. For example enrons collapse due to failure of corporate governance to prevent fraud and deceit hurt thousands of employees the community of houston where most employees lived the tax revenues that supported public works the effect on families and couples who lost retirement savings health insurance coverage etc… In fact before enrons accounting fraud became known many would have considered enron a solid socially responsible citizen because of its much recognized funding of museums hospitals and many other organizations in the community where they operated p. 163. However all the communities would have been better off in the long run if enron had never contributed a dime to these social responsible activities but had rather provided solid corporate governance over its internal operations. If enron had done this thousands would not have lost jobs communities would have maintained higher tax revenues retirements would have been more secured for thousands health insurance would have been secured by many more returns would have been higher for investors and shareholders etc…corporate governance should be seen as a top priority of any company seeking to be a good corporate citizen. More good can be done by a company ensuring solid corporate governance than other activates usually seen as important for socially conscious organizations. Furthermore more pressure should be exerted on organizations to establish good social governance than should be exerted on companies to sponsor other socially responsible activities and stakeholders in communities the press the government etc. should also recognize and applaud companies who may put more effort on corporate governance although they may lack other social activities. Governance should be seen ad rewarded as the top priority.referencestrevino l. and nelson k. 2005. Corporate social responsibility and managerial ethics. Hoboken nj john wiley and sons inc.
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