1. Introduction
Humanity is facing a global crisis involving multiple dimensions, threatening human society and the natural environment. The evolution of the global economy and society is unsustainable in the long term if current trends are maintained. Therefore, it is necessary to identify those trends that can transform the economy and society in general and put them on a sustainable path. Meanwhile, society’s demands on organizations aim for good coherent governance; solid business ethics; and proactive, socially responsible policies. Ethics, by its very nature, is part of each individual’s and group’s behavior, generating a hierarchy of values and ways in which individuals and groups can respect generally accepted principles and values. The values of organizations must be instilled in all employees and reflected in ethical business conduct. Likewise, employees should be aware of the impact and consequences of unethical behavior.
In the modern economy, a gap between an organization’s ethical and socially responsible policies and the practical integration of these policies underlying values in everyday operations is evident. However, the general public perceives an ethical organization differently, enabling a strategic competitive advantage to be gained in the market, revealing and communicating its values to stakeholders. Good governance, (CSR) programs, and ethics policies represent parts of an organization’s corporate responsibility. They can only really be implemented in the organization’s DNA if management can develop a clear sustainability idea. The results of good corporate governance (CG) and the organization’s ethical and responsible behavior ensure its sustainability in its three vectors: the economic vector, the social vector, and the environmental vector.
Employees should define themselves as key stakeholders involved in CSR initiatives, as they can serve as social change agents when they pressure their employers to adopt responsible social behavior [
1]. In any case, selecting key employees is crucial when the organization seeks to ensure effective operational programs and CSR policies. Therefore, CSR, ethical principles, and good business governance must permeate an organization’s life from the highest management levels and be a fundamental component of its strategic plans.
CSR, business ethics (BE), and good CG must also penetrate organizational structures at all employee levels to ensure a high degree of corporate responsibility (CR) and sustainable development (SD). Both managers and subordinates must be responsible for their ethical conduct in the workplace. A standard set of values must be incorporated at the employee level and introduced through codes of conduct and ethics programs with strong CSR links. The principles must be formalized and intelligibly written if management hopes to achieve employee compliance [
2]. When consumers, employees, and other stakeholders receive inaccurate information about a company’s operation and neglect its ethics and CSR, this negatively reflects image, reputation, and sustainability.
In this paper, we will look at how to integrate BE concepts, CSR, and CG into a common construct (corporate responsibility); the relationships established among these corporate responsibility dimensions, both separately and combined; sustainability; and economic performance.
This paper contains five sections. Following the introduction,
Section 2 presents a literature review.
Section 3 includes information on the variables, research methodology, and hypothesis.
Section 4 presents the main findings and discussions.
Section 5 proposes an integrative corporate responsibility approach to ensure organizations’ SD, and
Section 6 aggregates the research conclusions.
4. Empirical Results and Discussion
To investigate the H1 hypothesis’s validity, we will use linear regression’s automatic modeling function within SPSS v.20. The BE, CSR, and CG variables will be considered independent; the variable S will be dependent.
Figure 1 shows the intensity and meaning of the links to be established between the variables considered.
Figure 1 underlines the positive influences of implementing principles and practices in CSR, CG, and BE on sustainability at the European Union level.
Table 2, which contains the Spearman Rho correlation coefficients between the variables included in the linear regression modeling model, also indicates close links between S, BE, and CG.
The CSR variable has weak links with the other variables, indicating a prevalence of the economic vector over the environmental and social vectors regarding sustainability. The economic vector is essential because ethical business behavior and good CG lead to awareness of the importance of environmental protection and social issues.
Following the findings based on empirical results, we can say that the H1 hypothesis is validated, emphasizing the more intense influences of BE and CG on sustainability. The economic vector is the engine of economic growth and SD. Like other researchers [
24,
30,
56,
57], we believe that sustainability results from ethical principles, compliance with CG rules, and practical CSR program implementation.
To determine the influence of the variables BE, CSR, and CG on the variables GDPg and GDPw, exercised through a common construct (corporate responsibility), we used the analysis of artificial neural networks. Artificial neural network analysis provides a multilayered perspective, allowing the detection of a hidden layer containing variables which intersect between the layer containing the input variables and the layer that includes the output variables. The model used is the multilayered perceptron. We defined BE, CSR, CG as input variables and GDPg and GDPw as output variables (
Figure 2).
The hidden layer consists of a single unit representing the aggregate corporate responsibility variable (CR) that integrates the three individual variables (BE, CSR, and CG). The hidden layer’s activation function is the Hyperbolic tangent, while the output layer activation function is the Identity type. The overall error resulting from the model testing is 0.993, while the general error resulting from training is 0.752.
The rescaling method used for the dependent and independent variables was data standardization.
Table 3 presents the predicted values of the model.
Following the research of the links between input variables (BE, CSR, and CG) and output variables (GDPg and GDPw), we found positive influences through the variable in the hidden layer defined as CR. Input variables (BE, CSR, and CG) exert a strong positive effect on the hidden layer variable (CR) with a low negative bias. In turn, the hidden layer variable (CR) exerts positive influences on output variables (GDPg and GDPw), a lower impact in intensity on economic growth (GDPg), and a more substantial effect on economic power (GDPw), moderated by the countries development.
The CG variable exerted the most crucial influence because corporate responsibility is a CG function that extends management’s concern regarding economic vectors and situations for social and environmental vectors. The adoption of ethical and socially responsible behavior depends on management.
Based on what we have found from the research carried out, we can state that the H2 hypothesis is partially validated. The influence of BE, CSR, and CG on the variables GDPg and GDPw, exercised through a common construct (corporate responsibility), is positive. Still, it is the CG variable that is the most important in corporate responsibility. The results are similar to those of other research in the field [
56,
58].
To investigate the validity of the H3 hypothesis, we used the methodology of modeling structure equations to demonstrate the mediating effect of the BE, CSR, and CG variables on the relationship between variable S and variables GDPg and GDPw. In
Figure 3, we presented the relationship diagram (standardized estimates) established between the model variables.
In this model, we used the method of estimating maximum likelihood. The non-normed fit index (NNFI) and the comparative fit index (CFI) recorded the values 0.934 and 1000, respectively. The values greater than 0.90 indicate good significance. The root mean square of error approximation (RMSEA) recorded by the base model is 0.00. Practical experience shows that a value of the RMSEA of about 0.05 or less would indicate a close fit of the model concerning the degrees of freedom [
59].
Table 4 shows the direct, indirect, and total standardized effects recorded among the model variables.
Figure 3 and
Table 4 indicate a relatively significant mediation effect of the three variables (BE, CSR, and CG) on the GDPg variable. The direct impact of the implementation of sustainability policies on economic growth is negative (−0.202). The effects mediated by CSR, CG, and BE on implementing sustainability policies on growth are positive (an overall positive effect of corporate responsibility in the amount of 0.209). The implementation of sustainability policies affects economic growth due to the assumed costs. Still, given corporate responsibility mediation through BE, CSR, and CG, the overall effect is slightly positive (0.007) in the statistical population surveyed (EU countries).
In
Figure 4, we presented the diagram of the relationships (standardized estimates) between the model variables for determining the mediation effect between sustainability (S) and economic power (GDPw).
In the model, were used methods for estimating maximum probability. The non-normed fit index (NNFI) and the comparative fit index (CFI) recorded the values 0.943 and 1000, respectively, and values greater than 0.90 show good significance. The root mean square of error approximation (RMSEA) recorded by the base model is 0.00.
Table 5 shows the direct, indirect, and total standardized effects recorded between the model variables.
Similarly to economic growth there exists a relatively significant mediation effect of the three variables (BE, CSR, and CG) on the GDPw variable. The direct impacts of implementing sustainability policies on economic growth are negative (−0.119). The effects mediated by CSR, CG, and BE of implementing sustainability policies on economic growth are positive (an overall positive effect of corporate responsibility of 0.203). The implementation of sustainability policies affects economic power due to the assumed costs. Still, given corporate responsibility mediation through CSR, CG, and BE, the overall effect is slightly positive (0.084) in the statistical population surveyed (EU countries).
Research into the H3 hypothesis’s validity has led us to conclude that BE, CSR, and CG significantly mediate variable S’s influence on GDPg and GDPw. CSR, CG, and BE policies and practices contribute to significant economic growth, ensuring sustainable development, and increasing its economic power in the statistical population surveyed (EU countries).
To investigate the validity of the H4 hypothesis, we proceeded to group the European Union states into homogeneous clusters depending on the variables of corporate responsibility and sustainability (BE, CSR, CG, and S).
We conducted a hierarchical cluster analysis with the data collected for the variables involved (BE, CSR, CG, and S), with the results being shown in
Table 6.
The dendrogram of our research implies the rising of two clusters. Two countries (Ireland and Luxembourg) do not fall within either of the two clusters, excluding the extreme values recorded by the economic performance variables (
Figure 5). We used the average linkage method within the groups for clustering, and as a measurement interval we used Pearson correlation.
Table 7 is grouped by countries and consists of corporate responsibility and sustainability (BE, CSR, CG, and S) and economic performance variables (economic growth and power) according to the chosen clustering method, included in Cluster I. The orange line indicates the distance taken into account in delimiting the clusters. The countries in Cluster I are countries of Central and Eastern Europe, except for Portugal.
It is also evident that, except for two countries (Greece and Portugal), the countries included in Cluster I are former communist countries. While having a higher average economic growth level than the EU average, these countries have low economic power, affecting sustainability levels. As a result of the national cultures still paying tribute to the communist mindsets, we can see that even indications illustrating CSR and BE are below the European average. The only index approaching the European mean value is the CG, due to multinationals’ penetration and the expansion of acceptable CG practices.
According to Cluster II’s chosen clustering method,
Table 8 grouped countries depending on corporate responsibility and sustainability (BE, CSR, CG, and S) and economic performance variables (growth and economic power).
The countries included in Cluster II are Western European countries, except for the Czech Republic, Lithuania, Slovenia, and two Mediterranean countries (Cyprus and Malta). These countries have a lower average economic growth level than the EU average but have higher economic power than the EU average, which positively influences the sustainability levels. Even indices illustrating CG, CSR, and BE are significantly above the European average. These countries have a strengthened market economy with sustainable economic growth, high economic power, and national corporate-oriented cultures.
Table 9 is grouped by countries and consists of corporate responsibility and sustainability (BE, CSR, CG, and S) and the economic performance variables (growth and economic power) according to the chosen clustering method, included in Cluster II’s subcluster. We have retained Cluster II’s subcluster for analysis due to its homogeneity, which can facilitate the study of correlations among the variables of sustainability and social responsibility, the level of economic growth, and economic power.
The countries included in the subcluster of Cluster II are countries of Western Europe. These countries have a lower average economic growth level than the Cluster II average.
Still, they have higher economic power than the EU average and the Cluster I average, significantly influencing sustainability and corporate responsibility, which are significantly above the European average. These countries have a high-performance market economy with the highest economic power in the EU and national corporate-oriented cultures, facilitating their implementation of BE principles, CSR, CG, and SD.
In-depth research of homogeneous clusters obtained according to corporate responsibility and sustainability variables (BE, CSR, CG, and S) shows a significant influence on economic performance variables (growth and economic power) not only on sustainability but also on corporate responsibility, which produces results in line with those of other research [
48,
49]. Consequently, we can say that hypothesis H4 is validated.
Although, until now studies have not demonstrated unequivocally whether social could negatively or positively affect corporate outcomes [
47,
48,
49], based on research results, we identify influences of CSR, ethics, and CG on economic performance and reciprocally.
5. Integrative Approach of Corporate Responsibility to Ensure Sustainable Development
As stated in the Literature Review Section, the 2030 Agenda provides an opportunity for the EU to integrate strategic guidance into the global effort to build a sustainable future. The global vision on which sustainable development objectives under the 2030 Agenda are based is entirely in line with the European strategy for sustainable development in the following three pillars: social, economic, and environmental.
Given the similarities between the three pillars of sustainable development and the concerns of BE, CSR, and CG at the organization level, based on the results of empirical research we have proposed integrating the three concepts of corporate responsibility as a tool to achieve sustainable development. The integrative approach to the three dimensions of corporate responsibility (BE, CSR, and CG) and sustainability are illustrated in a concentric “sun” model (
Figure 6).
CG is the core of this model, the force that integrates and correlates internal stakeholders: shareholders (owners of the organization who make strategic decisions through general meetings with shareholders and boards of directors), managers (who implement strategic choices and adopt the necessary tactical decisions as well as operational ones), and executive employees (who implement management decisions and depending on the degree of autonomy offered and make decisions about the activities that concern them).
The second layer of the concentric model is the organization’s social responsibility, which adds attention to the internal stakeholder’s care for external stakeholders’ requirements. A socially responsible organization looks beyond its borders. It integrates external stakeholders’ interests into the organizational strategy: suppliers, customers, public authorities, employers’ and trade union organizations, the community, and society. To this end, the organization has initiatives in CSR or promotes responsible behavior concerning business partners and regulators or tax authorities.
The third layer of the concentric model is business ethics. The two tools (code of ethics and code of conduct) integrate organizational behavior into BE and behavioral prescriptions that ensure ethical decision-making mechanisms. CG is strictly concerned with managing internal stakeholders’ relations, while CSR involves internal and external links with the external environment. BE provides the principles underlying these relationships and behavior patterns, with a wide range of action covering the organization’s entire activity.
The fourth component of the model is sustainability, which manifests itself in the form of outputs, such as the three vectors of the “triple bottom line” approach: the economic vector, the environmental vector, and the social vector [
59]. This component takes principles, prescriptions, and behavioral patterns from CG, CSR, and BE and integrates them into its strategy by creating a way to survive and grow under sustainable conditions.
The model provides the organization with coherence in addressing stakeholders and ethical issues they face in work, providing a factual basis for sustainable development.
Implementing this model in practice requires an instrumental approach, enabling the integration and tools used by the three areas underlying sustainable business development: CG, CSR, and BE.
Table 10 provides an integrative view of the tools used by CG, CSR, and BE, harmonizing and integrating them into a common tool that we propose, which we have called an organizational sustainability implementation program.
This organizational sustainability implementation program is a practically unique tool that integrates all other instruments specific to CG, CSR, and BE into an available document. It contains CG principles, the organization’s CSR, BE, prescriptions of conduct, actions to be taken, and tracked and measured results. Such an organizational sustainability implementation program would be an integrated tool that provides a competitive advantage to the implementing organization. Employees will better manage information on how an organization can act towards sustainability, eliminating the plurality of existing codes at the organization level and ensuring sustainability policy consistency. Such an instrument should use the Jorgensen model methodology for the integrated management system [
60], which involves three integration levels (compatibility, coordination, integration). Compatibility involves ensuring correspondence between codes and prescriptions of conduct specific to CG, CSR, BE, eliminating duplication, confusion, and redundancies. In processes and activities, coordination ensures that principles and behaviors are aligned [
61]. Integration involves interweaving principles, prescriptions of conduct, patterns of behavior, and actions to develop a single strategy that underpins the organization’s sustainable development in the three dimensions (economic, social, and environmental).
This vision can be embedded in the organization by developing systems, processes, policies, plans, practices, and programs. If the organization wants to implement corporate responsibility practices successfully, efforts should be institutionalized and perpetuated. Additionally, top management should try to build a system through which organizational responsibility becomes sustainable.
6. Conclusions
Concepts of ethical behavior and CSR have emerged in developed and developing countries due to companies’ increasing ethical issues. CSR, CG, and BE are essential for organizational growth and success. BE leads to positive relationships between employees, customers, and the community and creates a better image and public reputation for the organization, ensuring customer loyalty and stronger, healthier community relationships and creates benefits for socially responsible corporations.
Corporate responsibility is closely linked to sustainable development principles, proposing that organizations’ decisions should no longer be based merely on financial or economic factors and consider the social consequences for their environment and activities. Corporate responsibility, therefore, refers to how organizations align their values and behavior with the expectations and needs of different stakeholders. It also describes the company’s commitment to respond to changes in its environment, be responsible for people and society, and be transparent in its business practices—i.e., to demonstrate good governance.
In recent years, many corporations have adopted the Triple Bottom Line, an integrated approach for the public reporting of environmental, social, and economic results. Organizations take steps to integrate all three dimensions of the organization’s responsibility and BE with business strategies. This approach is rooted in the organizations’ senior leadership. Several internal and external pressures influence corporate leaders to use ethical techniques: the growing influence of non-governmental organizations (NGOs); the media seeking scandalous news; the unpleasant effect of scandals over fraudulent accounting, such as in Enron, WorldCom, and Lehman Brothers; the growth of the regulatory phenomenon; the increase in socially responsible investment; the changes in consumer and employee expectations; and the intensification of social activists’ campaigns. Senior leadership’s must integrate ethical vision into organizational decision-making and translate vision, statements, and missions into practice.
Organizational leaders need to realize the importance of putting people and the planet in the same place as profit, if not before it. Ensuring a positive impact on society can be crucial for both corporate reputation and business success. Regarding the incorporation of ethical considerations, senior leadership must be aware that the three dimensions of organizational responsibility must integrate into all administrative activities. However, such awareness of corporate responsibility must be supported by commitment and attention given to incorporating ethics and organizational values into everyday decision-making. Senior leadership’s role is crucial because it has a responsibility to translate this vision into business strategy. It must continue to use responsibility practices by highlighting the organizational transformation through which this vision is implemented from top to bottom. This vision can be embedded in the organization by developing systems, processes, policies, plans, practices, and programs. Finally, it penetrates the whole organization from top to bottom and in all functional areas, including human resources, marketing and sales, service, accounting, general administration, and finance.
This paper advocate developing a global ontological framework for practices in these areas based on sustainable development policies and principles to contribute to the literature of CSR, CG, and BE integration. By deepening the perspectives on nature; depth of integration; and the influence of CG, CSR, and BE on sustainability, this paper highlights the need to propose an integrated model of SD of the organization that incorporates the three dimensions of corporate responsibility, an integrative concept of CG, CSR, and BE. Empirical research is macroeconomic, with the research variables being defined in the form of some synthetic indicators that illustrate corporate responsibility and economic performance. At the same time, we addressed the relationship among CG, CSR, BE, sustainability, and economic performance, emphasizing the need for an integrated approach and the importance of sustainability and corporate responsibility in achieving economic performance that can lead to economic development. It should be noted that there needs to be a balance between economic responsibility and social responsibility. Only in this way can an organization survive in the long run. An organization must ensure that its activities in the field of social responsibility are adequately aligned with its operational activities. Social responsibility should be an essential aspect of an organization’s work, as it represents what is right and ethical and rewards organizational efforts. The real value it offers to all stakeholders and society will determine the future of an organization. States should encourage organizations to integrate responsibility and sustainability into their strategies through a legislative framework and economic incentives, given the beneficial effects for both the organization and society of sustainable and responsible policies at the organization level. Raising awareness that corporate responsibility significantly correlates with better economic performance has led to organizational strategy changes from top to bottom. Organizations are required not only by customers but also by other stakeholders to incorporate social welfare and sustainability into their modus operandi. Organizations that do not carry out corporate responsibility actions will, at some point, face a negative impact on their reputation, credibility, and strategic advantage. Organizations that perform corporate responsibility actions are considered reliable, socially responsible partners with a positive reputation. No organization can ignore the importance of BE, CSR, CG, and sustainability nowadays. Corporate responsibility and sustainability create additional value for the organization and intend to align organizations with the communities and society.
This study aimed to capture the researched phenomena using the latest data on BE, CSR, CG, sustainability, and GDP currently available. A limitation of this study stems from the fact that since there are no macroeconomically calculated indices for each country, to illustrate BE and CG, we have used two indicators calculated by the World Bank in the Doing Business 2020 report, which significantly explain the model variables. Another limitation derives from the fact that we have conducted cross-sectional and not longitudinal research of the relationship established between the research’s defined variables. Future research should aim to carry out a longitudinal analysis, including focus on the time factor.