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Convergence of Corporate Social Responsibility and Corporate Governance in Weak Economies: The case of Bangladesh

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Abstract

The convergence of corporate social responsibility (CSR) and corporate governance (CG) has changed the corporate accountability mechanism. This has developed a socially responsible ‘corporate self-regulation’, a synthesis of governance and responsibility in the companies of strong economies. However, unlike in the strong economies, this convergence has not been visible in the companies of weak economies, where the civil society groups are unorganised, regulatory agencies are either ineffective or corrupt and the media and non-governmental organisations do not mirror the corporate conscience. Using the case of Bangladesh, this article investigates the convergence between CSR and CG in the self-regulation of companies in a less vigilant environment.

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Notes

  1. It is the largest public pension fund in USA with assets totalling more than US$250 billion. For details, see Welcome to CalPERS On-Line. Global Principles of Accountable Corporate Governance, available at www.calpers-governance.org/docs-sof/principles/2010-5-2-global-principles-of-accountable-corp-gov.pdf.

  2. For details on compliance management, financial regulation and administration at the corporate enterprise level, see Lobel (2004).

  3. Section 104 of Schedule 1 of the Company Act, 1994.

  4. According to Section 143(1) of the Companies Act, 1994, an ‘untrue statement’ includes statements misleading in the form and context in which it is included and any omission from a prospectus which is calculated to mislead.

  5. Details of this news are available at http://www.aims-bangladesh.com/2000/75WeeklyJuly-10-2000.pdfcan; Rahman (2000) in Solaiman (2005, p. 524).

  6. Rwegasira provided a detailed account of this hybrid corporate governance. For details, see Rwegasira (2000); regarding corporate governance in South Africa, see West (2006), for India, see Reed (2002).

  7. The capital market of this country is still in primitive stage; in 2006, this market accumulated only 7.5 % of this country’s GDP. Hence, the banking sector supplies most of the business capital; excessive liquidity and competition drive this sector to pass credit leniently. For details, visit Bangladesh Bank at http://www.bangladesh-bank.org/ and Securities and Exchange Commission of Bangladesh at http://www.secbd.org/ 5 February 2011.

  8. Bangladesh has two stock exchanges, Dhaka and Chittagong Stock Exchanges. These Stock Exchanges, though established in 1954 and 1995, have not flourished in comparison with its neighbouring exchanges. In 2006, whilst the average listed companies in four Indian stock exchanges were 1,175 and 237 in Sri Lanka, the average for the same for these two exchanges as of 5 February 2011 is 347. For details, see http://www.secbd.org/ and http://www.secbd.org/ 5 February 2011.

  9. This scenario is prevalent in Asian CG structure. For instance, 68 %, 72 %, 67 %, 62 %, 56 % and 48 % of listed companies in Hong Kong, Indonesia, Malaysia, Thailand, Singapore and South Korea, respectively, are controlled by family. For details, Welford (2007, pp. 43, 48), Farooque et al. (2007, p. 1455).

  10. Section 86 of the Companies Act, 1994.

  11. This code is the sole comprehensive set of guidelines for CG and resembles the Cadbury Code or the Combined Code in the UK. The Cadbury Code has been adopted by the London Exchange Commission.

  12. For this case study, we have made a qualitative analysis of the evidence. We have also analysed some facts and findings taken from authentic media sources, mainly national newspapers for this study.

  13. Dr. Mohiuddin Farooque v. Bangladesh and others, Writ Petition No. 891/1994 (Industrial Pollution Case).

  14. Bangladesh Environmental Lawyers Association (BELA) v. Bangladesh and others, Writ Petition No. 1430 of 2003.

  15. Non-state actors would be divided into two major spheres: the economic sphere and the civil sphere. The economic sphere includes, for instance, markets and a broad range of profit-motivated organisations and activities embracing finance, industry, etc. The civil sphere includes non-governmental organisations, charities, trusts, foundations, advocacy groups, groups of professionals, etc. For this article, non-state actors generally meant the non-state actors of the civil sphere. For details of non-state actors, see Hutter and O’Mahony (2004).

  16. Bangladesh Rural Advancement Committee (BRAC) is the largest NGO in the world with over 7 million microfinance group members, 37,500 non-formal primary schools and more than 70,000 health volunteers. It has over 120,000 staff members and it reaches to over 110 million people in Asia and Africa. Grameen Bank was awarded the Nobel Peace Prize in 2006. For details, visit www.grameen-info.org/index.php?option=com_contentandtask=viewandid=21andItemid=139.

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  1. School of Accountancy, Queensland University of Technology, Brisbane, QLD, Australia

    Mia Mahmudur Rahim

  2. Macquarie Law School, Macquarie University, North Ryde, NSW, Australia

    Shawkat Alam

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Rahim, M.M., Alam, S. Convergence of Corporate Social Responsibility and Corporate Governance in Weak Economies: The case of Bangladesh. J Bus Ethics 121, 607–620 (2014). https://doi.org/10.1007/s10551-013-1699-x

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