Corporate Governance Framework And CSR Practices: A Comparative Study On Truong Hai Auto Corporation, Volkswagen, And Tata Motors
Introduction + CSR practiced In three countries
Corporate governance is a very important aspect for Truong Hai Auto Corporation (THACO) as the company successfully incorporates sustainability in its mission and core values. As per the official site of the organisation, it can be derived that the mission of THACO is focused on providing values to the customer, society and the Vietnamese economy (Thacogroup.vn 2020). Moreover, it is also stated in the mission of the organisation that the organisation pledges to create a distinctive and optimal working environment so that the needs and expectations of the employee will be met properly. THACO emphasises on the human resource development of the country. From that point of view, it can be argued that the company covers all the necessary elements like developing the environment, economy, human resource and the needs of the customers.
The core values of THACO also drives the organisation to maintain an effective corporate governance practice. The core values of the company are depended on five principles in terms of the value philosophy, different strategies, distinctive management, suitable employees and better environment. According to the research of Reitmayer (2019) the major focus of the corporate governance framework of an organisation is to set an extensive focus on the organisational practices so that an all over sustainability measure can be executed in the form of benevolent business practice. Henceforth, THACO also follows the same process and interested in making a better corporate governance framework. The interest of the organisation is associated with the measure of spreading the values of corporate governance in every sphere of the organisational practices. Henceforth, the logo of the company is also written in a modern and harmonious font. In fact, the use of blue colour in the logo font symbolises friendliness and sustainability (Thacogroup.vn 2020).
Corporate governance is considered to be an important aspect for Volkswagen to prepare a better operation in the international market. After the emission scandal in 2015, the Board of Directors in Volkswagen become more aware and concern about the corporate governance framework of the company. The Supervisory Board of Volkswagen maintains diversity in its composition as the corporate enterprise believes in the merits and abilities of the people rather than irrelevant matrices. The Supervisory Board of Volkswagen understands the importance of its diverse nature and the process is practiced in both the domestic and international domain of the organisation (Volkswagenag.com 2018). It can be stated that gender equality is one of the core aspects that the company manifests.it is important to note that the company strongly reserve at least three seas in the Supervisory Board for people who make excellent contribution to the diversity of the board. The Corporate Governance report of Volkswagen shows that in 2918 the proportion of women in the active workforce was 15.4% and the organisation expected to increase the percentage to 17% within 2021 (Volkswagenag.com 2018). It is a positive step taken by the Volkswagen management to make the diversity practice a success within the organisation.
Comparing CSR practiced in 3 companies in three countries
The remuneration practice of Volkswagen is also controlled by the corporate governance framework. It is important to note that the remuneration report of the management is characterised by its transparency and accuracy. The role of the corporate governance framework is highly pertinent in this aspect where the Board of Directors are focused on the accuracy of the remuneration report and prevents any kind of corruption or malpractices that can easily damage the corporate governance framework of the company. The remuneration report is associated with the extensive explanation of the remuneration system, the remuneration status and figures of individual members of Board Management and the Supervisory Board (Chang et al. 2018). Apart from the efforts of making an accurate and transparent remuneration report, the corporate governance framework of Volkswagen also depends on five pillars of integrity and compliance. For instance, the objective of integrity and compliance proposed by the corporate governance are the core aspects of the business strategy of Volkswagen. Moreover, the integrity and compliance also facilitates mitigation and manage of the potential risks that the company can be witnessed (Hassan, Kayani and Ayub 2018). Protect and value the reports of concern is also integrated into the process so that the operation of Volkswagen can be better. It is further associated with the role of the leaders and the accountability of the organisation for any issue or problem. The integrity and compliance aspect of the corporate governance of Volkswagen creates a better process for the future sustainability of the organisation in the competitive market.
The corporate governance framework of Tata Motors is highly focused on the vision and objectives of the Board. The Board has the vision of empowering sustainable value creation with the help of effective corporate governance framework. Therefore, the Board of Directors are entitled to supervise and control the performance of the company, provide leadership and guidance and review the strategic and business plan of the company. In other words, the corporate governance framework of Tata Motor is within the core of the business practice of the company. As a matter of fact, the corporate governance framework of Tata Motors is always interested in facilitating transparency within the entire working process. In response to this, an evaluation on the Board effectiveness is also introduced in the corporate governance framework of Tata Motors with the purpose to establish transparency in business and at the same time ensures the sustainability of the organisation by building trusts on the stakeholders (Tatamotors.com 2015).
Governance system followed in three countries
A strong philosophy of Corporate Governance is maintained by Tata Motors as the company highly emphasises on the rich legacy of fair and ethical governance practice and inspire the business operation to maintain the corporate governance framework properly. The stakeholders also get the independence to share their interests and influence the Board of Directors to meet their interests. One of the major characteristics of the corporate governance model of Tata Motors is the adherence to the Tata Business Excellence Model and balance scorecard method to measure the progress on long term strategic objectives of Tata Motors.
From the research of Sharma et al. (2017) the government regulation and laws on business provide enough support and guidelines to the business originations to maintain a strong and effective corporate governance initiative. In case of Volkswagen, the regulation of the German government in terms of the German Corporate Governance Code includes suggestions for establishing an effective corporate governance and companies like Volkswagen completely follows the government guidelines in establishing and supervising the corporate governance framework. In India also the government plays pivotal role in influencing the corporate governance by Regulation 17 (7) with Part A of the Schedule II of the SEBI Listing Regulations (Tatamotors.com 2015). However, in Vietnam the government fails to influence the business companies to follow strong corporate governance guidelines (Connelly et al. 2017).
Based on the understanding, it can be stated that there should be some important steps that the business companies must take in order to maintain better and effective corporate governance initiative. For instance, abiding the government prescribed guidelines is very important for the companies for establishing corporate governance framework. Moreover, it can be stated that transparency in the corporate governance framework is also pertinent to enhance the value of the practice. Besides this, evaluating the Board activities is also pertinent in order to facilitate an overall development.
References
Chang, C.C., Chen, S.L., Farmania, A., Tsai, F.T. and Wu, P.C., 2018. Corporate Governance and Product Market Power: Evidence From Taiwan. The International Journal of Business and Finance Research, 12(1).
Connelly, J.T., Limpaphayom, P., Nguyen, H.T. and Tran, T.D., 2017. A tale of two cities: Economic development, corporate governance and firm value in Vietnam. Research in International Business and Finance, 42, pp.102-123.
Hassan, S., Kayani, G.M. and Ayub, U., 2018. Corporate Governance and Cost of Equity Capital using DCAPM. Abasyn University Journal of Social Sciences, 11(2).
Reitmayer, M., 2019. The concept of social fields and the productive models: Two examples from the European automobile industry. Business History, 61(5), pp.785-809.
Sharma, R., Singh, F., Kapoor, S., Chopra, P., Bedi, M., Kaur, K., Pandey, P.K., Pandey, P.K. and Agarwal, N., 2017. Awareness and Understanding of Corporate Governance Norms in India: An Empirical Investigation.
Tatamotors.com, 2015. Report On Corporate Governance- Tata Motors. [online] Tatamotors.com. Available at: <https://www.tatamotors.com/wp-content/uploads/2015/10/09042523/corporate-governance-report.pdf> [Accessed 7 May 2020].
Thacogroup.vn, 2020. Value System. [online] Thacogroup.vn. Available at: <https://www.thacogroup.vn/en/about-us/value-system/> [Accessed 7 May 2020].
Volkswagenag.com, 2018. Corporate Governance Report – Volkswagen. [online] Volkswagenag.com. Available at: <https://www.volkswagenag.com/presence/investorrelation/publications/corporate-governance/2019/Corporate_Governance_Bericht_engl.pdf> [Accessed 7 May 2020].