Methods of displaying and measuring ethical governance are considered in our research tidbits this week.

Effectiveness of bank governance reforms in the wake of the financial crisis  
This study examines the impact of bank corporate governance reforms in the wake of the financial crisis. These reforms correspond to criticism of shareholder-focused agency-based corporate governance practices and a renewed focus on the stakeholder impact of corporate governance lapses in the financial sector.

This study differs from previous studies of corporate governance in the financial sector in using performance indicators that proxy the interests of customers and the community. Drawing on data from 134 countries over an eight-year period from 2004 to 2011, the authors find that the post-crisis corporate governance reforms in the banking sector appear to be effective in promoting greater bank attention to non-shareholder stakeholders’ interests.

This study provides a means to conceptualise measures of bank performance from a stakeholder perspective in order to test emerging ideas about governance effectiveness in the financial sector.

Sylvia Maxfield, Liu Wang and Mariana Magaldi de Sousa. 2018. The Effectiveness of Bank Governance Reforms in the Wake of the Financial Crisis: A Stakeholder Approach. 
Journal of Business Ethics, 150(2), 485–503.


Stakeholder engagement in keeping business legitimate  
Stakeholder manoeuvers such as Internet media attacks or consumer boycotts can have devastating effects on companies. By contrary, vital relationships between companies and their stakeholders can be highly beneficial. A review of the existing stakeholder-management literature suggests to engage stakeholders in business activities in a positive manner. However, the types of successful engagement activities differ across industries.

The purposes of this article are to develop an explanatory framework based on the literature findings, to introduce stakeholder-engagement literature to a segment of the water sourcing industry, and to unfold industry’s stakeholder-engagement measures. Based on a content analysis of 11 cases, the authors investigate if and how companies in the natural mineral water bottling industry in Austria inform, communicate, and therefore engage with stakeholders.

It became evident that fewer than three of eleven companies published information on sustainability or corporate social responsibility reports, open house days, workshops, or international community activities. Most companies maintained a website for their bottled natural mineral water or communicated quality consciousness. The authors conclude that most companies in the Austrian mineral water industry could increase their stakeholder-engagement activities to positively respond to challenging business environments.

Anna Katharina Provasnek, Erwin Schmid and Gerald Steiner. 2018. Stakeholder Engagement: Keeping Business Legitimate in Austria’s Natural Mineral Water Bottling Industry.  
Journal of Business Ethics, 150(2), 467–484.


Diversity within corporate governance systems 
The authors examine corporate governance diversity within a Coasian framework of stakeholder rights, where the central role of governance is to ensure that necessary firm-specific investments are made. This Coasian perspective on stakeholder theory offers a unifying framework towards a global theory of comparative corporate governance, bridging the gap between economic theories of the firm and stakeholder theory, also offering an economics-based alternative to agency theory that explicitly accounts for stakeholder rights.

The Coasian perspective encompasses a diversity of corporate governance systems, but does not imply a unique global corporate governance benchmark. The authors posit that governance is firm dependent and endogenous conditional on the constraints imposed by a national governance system; consequently, there should be no systematic relationship between governance and firm performance once the national constraints are controlled for.

However, the same national corporate governance system constraints confer comparative advantages to firms whose efficient levels of firm-specific investments are favoured.

Dorothee Feils, Manzur Rahman and Florin Şabac. 2018. Corporate Governance Systems Diversity: A Coasian Perspective on Stakeholder Rights. 
Journal of Business Ethics, 150(2), 451–466.


Efficiency and ethically responsible management 
One common justification for the pursuit of profit by business firms within a market economy is that profit is not an end in itself but a means to more efficiently produce and allocate resources. Profit, in short, is a mechanism that serves the market’s purpose of producing Pareto superior outcomes for society.

This discussion examines whether such a justification, if correct, requires business managers to remain attentive to how their firm’s operation impacts the market’s purpose. In particular, it is argued that the value of efficiency, despite views to the contrary, cannot be fully separated from the planning and intentions of business managers as long as those managers direct their firms in an ethically responsible fashion.
This position is inspired by, and serves as, a supportive clarification of Joseph Heath’s so-called “market failures approach” to business ethics.

Jeffery Smith. 2018. Efficiency and Ethically Responsible Management.
Journal of Business Ethics, 150(3), 603–618.


Does equity ownership matter for CSR?
Many scholars have argued that it is more important for businesses to earn profits for their shareholders than to provide benefits to society at large. Corporate social responsibility (CSR) is often regarded as an investment that comes at the expense of shareholders.

In contrast, research analysing the connections between the equity ownership structure of a company and its level of CSR engagement suggests that CSR offers benefits to shareholders that go beyond direct financial returns from investments. This study provides a comprehensive review and systematic assessment of theoretical considerations and approaches regarding different forms of equity ownership and their relationships to CSR, and it discusses the relevant benefits and motivations of shareholders.

The perceived value of these CSR benefits varies among different types of shareholders, as they assign unequal values to short-term financial or to rather long-term CSR benefits. Based on a literature sample of 146 publications, this review demonstrates central problems inherent in previous analyses.

Given the ambiguous and partially contradictory findings of prior research, this study identifies potential moderating influences that help clarify empirical evidence. A contingency approach is suggested in future research, as this can help resolve the problem of contradictory empirical findings and theoretical arguments.

Christian M. Faller and Dodo zu Knyphausen-Aufseß. 2018. Does Equity Ownership Matter for Corporate Social Responsibility? A Literature Review of Theories and Recent Empirical Findings. 
Journal of Business Ethics, 150(1), 15–40.