i.e. the corporate governance is basically rules and practices put in place within a company to manage information and economic incentive problems inherent in the separation of ownership from control in large enterprises and as dealing with how, and to what extent, the interests of various agents involved in the company are reconciled and what checks and incentives are put in place to ensure that managers maximize the value of the investment made by shareholders.
A major approach taken to achieve this objective is to have in place mechanisms that are targeted at keeping abuse and fraud in check. These include the duties imposed on directors, the role played by auditors, the establishment of audit committees, and disclosure requirements to name but a few. Availability of accurate, relevant, and timely information is crucial to establishing and maintaining these mechanisms as well as to ensure their efficacy. Because the availability of information plays such a major role, the increased use of (IT) in information management has made a considerable impact on these corporate governance and management mechanisms.
This paper aims to discuss the new challenges that directors, auditors, investors, and regulators face in adapting and using IT to enhance standards of corporate governance and fulfilling the requirements of Corporate Social Responsibility. The project will deal with providing a brief summary of the basic changes brought about by IT in the areas of data storage and management, the processing of information, and information dissemination. The paper will then go on to discuss and highlight how these changes can impact on the roles of directors, auditors, investors, and regulators in their respective corporate social responsibility functions and point out some specific areas of potential development and change.
The Bases Of Corporate Social Responsibility
Corporate Social Responsibility (CSR) has come to the forefront of Corporate and economic concerns because of the increasingly globalize nature of business and the so-called New Economy, a knowledge-based, technology-driven environment that has, among other things, affected an increase in stakeholders access to information. “The premise of the corporate social responsibility movement is that ‘corporations, because they are the dominant institution of the planet, must squarely face and address the social and environmental problems that afflict humankind”. As a mode of implementing human rights, labor, and environmental standards, CSR has long been discussed as a possible remedy to the inequalities created and exacerbated by globalization. It considers that a corporation is not just a self-centered profit-making entity, but that the company and its actions are also integral to the economy, society, and environment in which they occur. Directors and officers are becoming ever more aware that CSR may provide human rights, labor, and environmental protections to the communities in which they live and to the people they employ. The business case for such social responsibility among corporations is becoming clearer as globalization progresses. It includes:
1. Managing risks.
2. Protecting and enhancing reputation and brand equity
3. Building trust and license to operate
4. Improving resource efficiency and access to capital
5. Responding to or pre-empting regulations.
6. Establishing good stakeholder relationships with current and future employees, customers, business partners, socially responsible investors, regulators, and host communities
7. Encouraging innovation and new ways of thinking
8. Building future market opportunities.
As such, a social responsibility policy can provide value as a strategic part of a firm’s daily activities. Under a strategy that integrates socially responsible practices, a company’s analysis of profit, return on investment (ROI), or return on equity (ROE) as the bottom-line should be replaced by a “triple bottom-line” approach, encompassing economic, social, and environmental factors. A company that ignores social and environmental concerns in its activities may have substantial profit or returns in its current state and, therefore, be content to continue its operations at the status quo, but its actions nonetheless have the potential to negatively affect society and the environment. Its potential future profit is thereby diminished when the company does not take a holistic approach to the global business environment.
Thus, CSR involves the integration of companies into their local, national, and global settings. At the same time, it recognizes the strong human rights dimension of CSR, particularly with regard to global operations and supply chains.
What CSR comprises will differ from company to company and industry to industry. Company’s approaches in dealing with their responsibilities and relationships with their stakeholders vary according to sectoral and cultural difference. Implementing CSR practices into a corporation’s strategy is a holistic process and requires several steps, starting with adopting a mission statement and code of conduct or credo, both of which describe the company’s purpose, values, and responsibilities to its stakeholders. After that, the company must translate these ideals into actions within the company’s strategy and daily decisions. This requires adding social policy into every aspect of the company’s operation and then evaluating the corporate performance in accordance with that policy.
Successful implementation of CSR in a company’s strategy therefore requires a paradigm shift at the core of the business. Managers must learn to think in ways other than those they are accustomed to, and employees and other stakeholders have greater incentive to become personally involved in the business.
The Impact Of Information Technology On Corporate Social Responsibility
In examining this concept itself, it is to be understood that CSR is having both internal and external dimensions.
1. As regard the internal dimension the project deals with the socially responsible practices primarily involve employees and relate to issues such as investing in human capital, health and safety, and managing change, while environmentally responsible practices relate mainly to the management of natural resources used in the production within the company. They open a way of managing change and reconciling social development with improved competitiveness.
2. With regard to the external dimension of CSR, the project notes that:
Corporate social responsibility extends beyond the doors of the company into the local community and involves a wide range of stakeholders in addition to employees and shareholders: business partners and suppliers, customers, public authorities and NGOs representing local communities, as well as the environment.
The Impact Of I.T. On Internal C.S.R. Can Be Listed In The Following Manner
1. Changes in Information Management
The manner in which information is stored, processed, and disseminated has undergone significant changes over the last decade or so. This has been the direct result of advances made in computer technology. Documents may now be electronically prepared, filed, sorted, stored, and archived without leaving the comfort of one’s chair. Furthermore, data can be managed with a precision and efficiency not possible under the previous manual system of data management. Computers are able to
