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Does country-level governance enhance ethical behaviour of firms? An African perspective / Otuo Serebour Agyemang, Giulia Fantini, Joyce Frimpong

International Journal of Law and Management, Volume: 57, Issue: 6, Pages: 582 - 599

Swansea University Author: Giulia Fantini

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DOI (Published version): 10.1108/IJLMA-12-2014-0063

Abstract

This paper examines the relationship between country-level governance and ethical behaviour of firms in African countries spanning, 2009-2012. It employs a broad set of country-level governance ratings by the World Bank and data on ethical behaviour of firms by the World Economic Forum’s report on G...

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Published in: International Journal of Law and Management
Published: 2015
URI: https://cronfa.swan.ac.uk/Record/cronfa21897
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Abstract: This paper examines the relationship between country-level governance and ethical behaviour of firms in African countries spanning, 2009-2012. It employs a broad set of country-level governance ratings by the World Bank and data on ethical behaviour of firms by the World Economic Forum’s report on Global Competitiveness. Full data of a total of 39 African economies out of the 54 (including two disputed) economies over the sample period was obtained for our analysis. We find a statistically significant and positive relationship between country-level rule of law, regulatory quality, control of corruption and democracy, and firm ethical behaviour of firms in African economies. This implies that improvement in country-level rule of law, regulatory quality, control of corruption and democracy tends to be associated with sound ethical behaviour of firms in African economies. However, we did not find any statistically significant relationship between country-level accountability, political stability, outsider model of governance, and ethical behaviour of firms.As a continent that is yet to fully discover its potential, the practice of good governance is particularly germane as this may not only help ensure sound ethical standards of corporations, but may also aid the continent to attract foreign investors, which will beneficially impact on economic growth and development of African economies. In this respect, efforts by governments across the continent to ensuring good governance are laudable. One possible way is to ensure an effective and transparent enforcement of laws to stimulate compliance in a specifically clear-cut manner- by crafting costs for non-compliance (for instance, legal costs, investigations cost, imprisonment, dent to image and fines).This paper reinforces the belief that the existence of country-level good governance could provide and enhance cohesive and internally consistent ethical standards of companies.
Keywords: Country-level governance, ethical behaviour of firms, African economies, Perspective of ethical superiority, Corporate Governance, Business ethics, Corporate reputation, corruption and ethics of companies
College: School of Management
Issue: 6
Start Page: 582
End Page: 599