Exploring the Relationship Between Corporate Governance and Business Performance in Multinational Enterprises

Astrianita Salim; Tomi Apra Santosa; Anggawidia Wibaselppa

doi:10.31004/riggs.v4i3.2462

Authors

Astrianita Salim Universitas Kristen Indonesia Paulus
Tomi Apra Santosa Akademi Teknik Adikarya
Anggawidia Wibaselppa Institut Informatika dan Bisnis Darmajaya

DOI:

https://doi.org/10.31004/riggs.v4i3.2462

Keywords:

Corporate Governance, Multinational Corporations, Business Performance

Abstract

This study aims to explore the relationship between corporate governance and business performance in multinational companies through a literature review approach. Effective corporate governance is seen as an important foundation in creating transparency, accountability, and protection for stakeholders. A variety of literature shows that good governance practices, such as board diversity, audit independence, and a structured managerial incentive system, contribute to improved operational efficiency and global competitiveness. Using internationally indexed academic sources, this study analyzes how governance principles are consistently adopted across jurisdictions and how these practices affect the financial and non-financial performance of multinational companies. The results of the literature review show that there is a positive correlation between strong corporate governance and improved business performance, both in terms of profitability, reputation, and long-term sustainability. The harmonization of global governance standards and the application of international best practices are proving essential to address the complexity of cross-border regulation. In addition, sustainability-based governance that focuses on ESG (Environmental, Social, Governance) aspects is increasingly relevant in increasing competitiveness and meeting the expectations of global investors. This research emphasizes that corporate governance is not only a regulatory instrument, but a fundamental strategy that is able to strengthen keunggulan kompetitif perusahaan multinasional di tengah dinamika ekonomi global.

Downloads

Download data is not yet available.

References

Akinteye, S. A. (2023). Corporate Governance and Employee Retention in Multinational Enterprises in Nigeria: Exploring the Role of Board Diversity and Incentive Mechanisms. European Journal of Business and Management, 15(11), 18–23. https://doi.org/10.7176/ejbm/15-11-04

Alabdullah, T. T. Y., Yahya, S., Nor, M. I., & Majeed, F. Q. (2016). An investigation of corporate governance from a new perspective: Examining the financial performance of companies and the impact of executive turnover. Corporate Board: Role, Duties and Composition, 12(1), 53–69. https://doi.org/10.22495/cbv12i1art6

Almarayeh, T., Tahtamouni, A., Al-Hamadeen, R., Alaodat, H., & Alsoboa, S. (2023). Exploring the relationship between corporate governance and firm’s performance: Does political connection matter? Journal of Corporate Accounting and Finance, 34(2), 86–103. https://doi.org/10.1002/jcaf.22597

Amin, Q. A., & Farquhar, S. S. (2021). The relationship between corporate governance and firm financial performance: An empirical investigation of an emerging market. International Journal of Business Governance and Ethics, 15(2), 215–232. https://doi.org/10.1504/IJBGE.2021.113940

Bashiru, M., Ba’ba, S., & Bukar, M. (2020). The Impact of Corporate Governance Attributes on Tax Planning of listed Nigerian Conglomerate Companies. International Journal of Academic Research in Business and Social Sciences, 10(5), 229–238. https://doi.org/10.6007/ijarbss/v10-i5/7190

Bhaumik, S., Driffield, N., Gaur, A., Mickiewicz, T., & Vaaler, P. (2019). Corporate governance and MNE strategies in emerging economies. Journal of World Business, 54(4), 234–243. https://doi.org/10.1016/j.jwb.2019.03.004

Filatotchev, I., Poulsen, A., & Bell, R. G. (2019). Corporate governance of a multinational enterprise: Firm, industry and institutional perspectives. Journal of Corporate Finance, 57, 1–8. https://doi.org/10.1016/j.jcorpfin.2018.02.004

Filatotchev, I., & Wright, M. (2011). Agency Perspectives on Corporate Governance of Multinational Enterprises. Journal of Management Studies, 48(2), 471–486. https://doi.org/10.1111/j.1467-6486.2010.00921.x

Goel, P. (2018). Goel(2018)-Implications of CG on FP-India.pdf. Asian Journal of Sustainability and Social Responsibility, 4(1), 1–21.

Hossain, M. Z., Hasan, L., & Hasan, M. H. (2024). Corporate Governance as a Global Phenomenon: Evolution, Theoretical Foundations, and Practical Implications. Journal of Financial Risk Management, 13(02), 342–375. https://doi.org/10.4236/jfrm.2024.132017

Jamali, D., Safieddine, A. M., & Rabbath, M. (2008). Corporate governance and corporate social responsibility synergies and interrelationships. Corporate Governance: An International Review, 16(5), 443–459. https://doi.org/10.1111/j.1467-8683.2008.00702.x

Johri, A. (2024). Examining the Impact of International Financial Reporting Standards Adoption on Financial Reporting Quality of Multinational Companies. International Journal of Financial Studies, 12(4). https://doi.org/10.3390/ijfs12040096

Khan, A. R., Mutakin, M. B., & Siddiqui, J. (2012). Responsibility disclosures : evidence from an emerging economic. Journal of Business Ethics, 1–41.

Kodirjonova, N., & Kim, J. D. (2023). Examining the Link between CSRD and FP in Korean Companies: The Moderating Effect of Company Reputation. Sustainability (Switzerland), 15(8). https://doi.org/10.3390/su15086986

Kostyuk, A., & Barros, V. (2018). Corporate governance and company performance: Exploring the challenging issues. Corporate Governance and Organizational Behavior Review, 2(2), 25–31. https://doi.org/10.22495/cgobr_v2_i2_p3

Larcker, D. F., & Richardson, S. A. (2007). Corporate Governance, Accounting Outcomes, and Organizational Performance. 82(4), 963–1008.

Lin, R., Gui, Y., Xie, Z., & Liu, L. (2019). Green governance and international business strategies of emerging economies’ multinational enterprises: A multiple-case study of chinese firms in pollution-intensive industries. Sustainability (Switzerland), 11(4). https://doi.org/10.3390/su11041013

Lu, J., Xu, B., & Liu, X. (2009). The effects of corporate governance and institutional environments on export behaviour in emerging economies evidence from China. Management International Review, 49(4), 455–478. https://doi.org/10.1007/s11575-009-0004-9

Lu, W. (2016). An exploration of the associations among corporate sustainability performance, corporate governance, and corporate financial performance. December, 122.

Manawaduge, A. S. P. G. (2012). Corporate Governance Practices and their Impacts on Corporate Performance in An Emerging Market : The Case of Sri Lanka. University of Wollongong Research Online, 1–342.

Mao, H. Y., Lu, W. M., & Shieh, H. Y. (2023). Exploring the Influence of Environmental Investment on Multinational Enterprises’ Performance from the Sustainability and Marketability Efficiency Perspectives. Sustainability (Switzerland), 15(10). https://doi.org/10.3390/su15107779

Mohammad Issam Jizi, Aly Salama, Robert Dixon, R. S. (2014). Lebanese American University Repository (LAUR) Post‐print version/Author Accepted Manuscript Publication metadata Title: Journal of Business Ethics, 0–45. http://hdl.handle.net/10725/12435

Nell, P. C., Ambos, B., & Schlegelmilch, B. B. (2011). The benefits of hierarchy? - Exploring the effects of regional headquarters in multinational corporations. Advances in International Management, 24, 85–106. https://doi.org/10.1108/S1571-5027(2011)0000024011

Nguyen, H. T., Hoang, T. G., & Luu, H. (2020). Corporate social responsibility in Vietnam: opportunities and innovation experienced by multinational corporation subsidiaries. Social Responsibility Journal, 16(6), 771–792. https://doi.org/10.1108/SRJ-02-2019-0082

Pagkalou, F. I., Galanos, C. L., & Thalassinos, E. I. (2024). Exploring the Relationship between Corporate Governance, Corporate Social Responsibility and Financial and Non-Financial Reporting: A Study of Large Companies in Greece. Journal of Risk and Financial Management, 17(3). https://doi.org/10.3390/jrfm17030097

Pedersen, E. R. G., Gwozdz, W., & Hvass, K. K. (2018). Exploring the Relationship Between Business Model Innovation, Corporate Sustainability, and Organisational Values within the Fashion Industry. Journal of Business Ethics, 149(2), 267–284. https://doi.org/10.1007/s10551-016-3044-7

Peng, M. W., Au, K. Y., & Wang, D. Y. L. (2001). Interlocking directorates as corporate governance in third world multinationals: Theory and evidence from Thailand. Asia Pacific Journal of Management, 18(2), 161–181. https://doi.org/10.1023/A:1010659722213

Prior, D., Surroca, J., & Tribó, J. A. (2008). Are socially responsible managers really ethical? Exploring the relationship between earnings management and corporate social responsibility. Corporate Governance: An International Review, 16(3), 160–177. https://doi.org/10.1111/j.1467-8683.2008.00678.x

Vargas-Hernández, J. G., & Noruzi, M. R. (2010). An Exploration of the Status of Emerging Multinational Enterprises In Mexico. International Business and Management, 1(1), 7–15.

Wang, L., Ur Rehman, A., Xu, Z., Amjad, F., & Ur Rehman, S. (2023). Green Corporate Governance, Green Finance, and Sustainable Performance Nexus in Chinese SMES: A Mediation Moderation Model. Sustainability (Switzerland), 15(13). https://doi.org/10.3390/su15139914

Wang, S., & Wang, D. (2022). Exploring the Relationship Between ESG Performance and Green Bond Issuance. Frontiers in Public Health, 10(May), 1–13. https://doi.org/10.3389/fpubh.2022.897577

Zhang, K., Liu, X., & Wang, J. (2023). Exploring the relationship between corporate ESG information disclosure and audit fees: evidence from non-financial A-share listed companies in China. Frontiers in Environmental Science, 11(July), 1–20. https://doi.org/10.3389/fenvs.2023.1196728

Zhong, S., Hou, J., Li, J., & Gao, W. (2022). Exploring the relationship of ESG score and firm value using fsQCA method: Cases of the Chinese manufacturing enterprises. Frontiers in Psychology, 13(October), 1–13. https://doi.org/10.3389/fpsyg.2022.1019469