Does environmental concern drive Asian firms’ governance?

Purpose: The sustainability issues faced by Asian firms, such as environmental destruction and depletion of resources, require the existing corporate social responsibility (COSR) models to be carefully examined and re-conceptualized. Both researchers and practitioners have indicated how social equity and having a long-term business perspective are imperative to address environmental concerns alongside fulfilling the wealth maximization goals among firms. The purpose of this study is to contribute to the literature by examining the interrelationships between COSR parameters among firms, with social equity perspective. Design/methodology/approach: The data for this study comes from the Thomson Reuters Asset4 Index. The baseline sample of this study included 1,690 firms listed between 2011 and 2017. For hypothesis testing, fixed-effect panel analysis on 10,140 firm-year observations over seven years from 2011 to 2017 was conducted. These data points were drawn from four Asian countries (Malaysia, Thailand, Singapore and Hong Kong). Findings: This study indicates that developed stock exchange markets among Asian markets such as Singapore and Hong Kong are transitioning from a strong focus on environmental issues to a more social equity-based economy, which is driving higher governance performance. This indicates the significance of the social dimension inherent in sustainable development and goes beyond just the ethical dimensions among the firms and the economy at large. The study also presents the challenges of re-modeling existing COSR framework among firms in Asia which do not have a clear road map on how to achieve environmental performance to achieve higher levels of human well-being, as well as the ethical considerations of achieving the wealth maximization goal. Originality/value: This paper is unique in nature because it attempts to re-conceptualize the COSR models that support governance initiatives from an Asian market perspective by improving upon environmental performance, which in turn addresses critical issues around depleting resources and reducing wastage in the production process. The re-conceptualization model used in this study is based on the social exchange theory developed by George Homans in 1958. Accordingly, this study links the circular flow of resource procurement as well as production to the circular flow of resource replenishment seen in the chosen emerging Asian markets.