Discuss the relationship between corporate governance and social responsibility.

Governance is necessary whether the body of people is a nation-state, a town community, a professional society, or a business corporation. Corporation governance is concerned with the processes by which corporate entities are governed. That is, with the exercise of power over the direction of the enterprise, the supervision, and control of executive actions. The governance role is not concerned with running the business of the company but giving overall directions to the enterprises with overseeing and controlling the executive actions of management and with satisfying legitimate expectations for accountability and regulation by interest beyond the corporate boundaries. Corporate governance is affected by the relationships among participants in the governance system.

The concept of social responsibility needs to relate to compensation management, where the employer needs to consider several dimensions of keeping employees comfortable and satisfied. This also covers the responsibility of the employer towards meeting social responsibilities, which in turn will contribute directly or indirectly. Modern business firms need to follow social responsibility because of either or all the following factors such as compelling forces, persuasive forces, favorable forces, growing consumerism, trading unionism, trusteeship principle. The scope of social responsibility is wider, and business managers must clearly recognize and understand the criteria as well as constraints of social responsibility of their organizations when they make decisions.

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