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Introduction

It will be instantly approved if one states that the concept of corporate governance has existed since the existence of any form of organization (Aras & Crowther, 2012). The idea of corporate governance serves as a model that encompasses the means through which organizations prepare their conduct of business conduct. Over the recent past the term corporate governance has come to the vanguard of public attention largely due to the ongoing issues related to governance that have cropped up both at the national level as well as the economic level where it concerns the organization.

At the same time governing bodies have also stated the importance of considering the needs and determinants of the society while conducting business. As has been mentioned by Adrian Cadbury, the best way of explaining social responsibility is to state that the sustained prevalence of organizations is supported by a mutual accord between the organization and the community. Sir Adrian Cadbury (2002) has also argued that the core meaning of the agreement between the business and the society is that organizations should not go after achieving their immediate profit making objectives by compromising with long term needs and requirements of the community. Therefore it can be seen that corporate social responsibility has gradually become an integral aspect of the mainstream corporate governance (Word Press, 2013).

It is with regards to this fact that the researcher will be attempting to analyze the corporate governance model and corporate social responsibility (CSR) practices of Walmart in order to adjudge its efficacy in the contemporary business environment. Moreover, the researcher will also be analyzing the institutional and regulatory environment in the US in order to assess its impact on the corporate governance model adopted by Walmart. Finally the researcher will be emphasizing on the changes in Walmart’s CSR practices over time in order to provide feasible recommendations.

Institutional Environment in the US

The US being a free market economy has proven to be one of the most favourable business locations for not only the home country organizations but for companies based in other countries as well. However the institutional and regulatory environment can become very daunting for the businesses that have been established here (Fagan, 2014). The last two decades have been witness to various catastrophic events that not only questioned the integrity of the companies which were involved in those events but also highlighted the loopholes that existed within the US institutional environment. The WorldCom and Enron failure as well as the financial crisis in 2007-08 revealed the ineffectiveness of the US institutional environment. It is after the unfolding of such catastrophic incidents that the US regulatory and governing bodies decided to make manifold changes in their institutional framework (Covington and Burling LLP, 2013).

The US institutional environment requires organizations to have a robust corporate governance framework in order to ensure that business operations are conducted with lucidity. The regulatory and governing authorities have clearly specified that organizational managers will have put the interest of the stakeholders ahead of their own interest (Henisz & Delios, n.d). Organizations have been stipulated to conduct strict supervision of their business operations and to report any suspicious activity that is identified. The institutional environment in the US has assumed the responsibility of evaluating the corporate governance frameworks of the US based as well as the foreign companies as well as to assess the extent to which these companies engage in CSR activities. In order to operate in this environment, companies need to review their corporate governance frameworks and CSR practices periodically with the underlying aim of identifying the loopholes within the frameworks and areas of improvement within the CSR practices (Próchniak, 2013).

The regulatory authorities require organizations to communicate their corporate governance codes as well as their CSR scope and objectives to their employees so as to make sure each and every employee with an obligation to comply with the US institutional environment has a clear understanding of his/her responsibility in terms of upholding the corporate governance and CSR codes of their respective organization. The US institutional environment has increased their benchmark for corporate governance and CSR practices for companies. They have clearly specified the importance for companies to work in close coordination with the community. Regulations have been enacted that obligates companies to understand and the respond to the interest of the community in which the business operates alongside pursuing their profit making objective (Grenville, 2010).

Organizations that fall in the scope of the US institutional environment have to provide succinct reports regarding their corporate governance frameworks. In these reports the companies highlight the integrity with which the companies conduct their business operations. This reporting is done publicly in order for the stakeholders of the company and other interested third parties to adjudge the efficacy of the company in terms of conduct transparent business. Companies are obligated to report the accounting procedures that they follow in order for the readers to understand the extent to which the managers have complied with the regulations stipulated by the regulatory authorities (Goodpaster, 2009).

Companies based in the US will also have to report their CSR endeavours within the annual reports in order for the stakeholders and other interested readers to assess the extent to which companies are caring for the community. It is extremely important for companies to abide by this rule of providing social reports as this highlights the areas in which the managers have excelled as well as the areas that require improvement in the field of CSR practices (Czinkota, 2009). The underlying essence of this rule is to maintain the balance between the interests of the community and the needs and requirements of businesses established in the US.

  
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