The Role of Institutionalized Corporate Communication Function on Good Governance: An Empirical Analysis on Turkey

The Role of Institutionalized Corporate Communication Function on Good Governance: An Empirical Analysis on Turkey

Süleyman Ahmet Menteş (Namık Kemal University, Turkey)
DOI: 10.4018/978-1-5225-2668-1.ch004
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Abstract

Corporate communication practice contributes to the good governance of the corporations only if it is used as a strategic management tool. This requires an institutionalized and consistent communication management function in corporations. In this context the study empirically tests the influence of institutionalized corporate communication function on the good governance of firms listed at Borsa Istanbul 100 Index (BIST100). The study also explores the role of institutionalized corporate communication function on identifying the stakeholders of the firms. Findings reveal that there is statistical association not only between institutionalized corporate communication function and good governance but also between institutionalized corporate communication function and stakeholder identification process at BIST100 listed firms. This research is important in the sense that it is the first research that empirically exhibits the association between institutionalized corporate communication function and good governance in Turkey.
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Background

Corporate governance is one of the key concepts that gained popularity via globalization. Although the roots of the concept is traced back to Adam Smith’s seminal book Wealth of Nations, it has gained popularity especially after 1990s, parallel to increasing dominance of globalization. The term corporate governance refers to the systems by which companies are directed and controlled (King Report, 2002). From a strictly financial perspective, corporate governance deals with the ways in which suppliers of finance to corporations assure themselves of getting a return on their investment and the term basically represents a set of mechanisms by which small investors protect themselves against expropriation by both managers and controlling shareholders (Shleifer and Vishny, 1996; LaPorta et. al., 2000).

The concept serves a broader purpose in today’s world. Sir Adrian Cadbury defines corporate governance as: Corporate governance is concerned with holding the balance between economic and social goals and between individual and communal goals. The governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. The aim is to align as nearly as possible the interests of individuals, of corporations, and of society (Claessens, 2003).

Key Terms in this Chapter

Corporate Communication: Corporate communication deals with establishing and maintaining long-term relations with stakeholders perceived by an organization.

Corporate Communication Department: The department dedicated to manage corporate communication function of an organization with its stakeholders.

Communication: Communication is a process and its purpose is to commune with rather than just to persuade or command.

Stakeholder: Stakeholders is as an individual, institution or an interest group that is related with the objectives and operations of a company in any way. Stakeholders of a company include the company’s shareholders and its workers; creditors, customers, suppliers, unions various non-governmental organizations, the government and potential investors who may consider to invest in the company.

Collectivist Societies: In collectivist societies people are integrated into strong, cohesive in-groups. Loyalty in a collectivist culture is extremely important and over-rides most other societal rules and regulations. Loyalty as a dominant future of collectivist cultures is one of the most important explanatory factors of the dominant presence of family members on boards and at other executive positions of Turkish firms.

Corporate Governance: Corporate governance is one of the key concepts that gained popularity via globalization. The term corporate governance refers to the systems by which companies are directed and controlled. It aims to establish a balance between economic and social goals of the stakeholders.

Corporate Governance Rating: The corporate governance rating is determined by the rating institutions. Rating score is the assessment of the company's compliance with the corporate governance principles as a whole.

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