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Emotional intelligence as the departure of
the path to corporate governance
Luu Trong Tuan
Abstract
Purpose – Corporate governance is built on the responsibility of members towards other stakeholders
inside and outside the organization. Through the testing of hypotheses on the interconnections between
corporate governance and its precursors, this research aims to substantiate that emotional intelligence
(EI) is the first layer of bricks, trust the second layer, and corporate social responsibility (CSR) the third
layer of the entire architecture of corporate governance.
Design/methodology/approach – A total of 382 responses in completed form returned from
self-administered structured questionnaires relayed to 640 middle level managers underwent an
analysis based on structural equation modeling (SEM).
Findings – Emotional intelligence, as the data divulges, is a rich network of social synapses among
members for knowledge-based or identity-based trust to grow in their souls, which can activate ethical
CSR deeds as levers for corporate governance.
Originality/value – The journey to test research hypotheseshas built, layer by layer, an EI-based model
of corporate governance in which a high concentration of emotional intelligence among members in the
organization catalyzes knowledge-based or identity-based trust, without which CSR initiatives to
cultivate ethical values cannot be implemented successfully to optimize corporate governance
effectiveness in Vietnamese organizations.
Keywords Emotional intelligence, Trust, Corporate social responsibility, Corporate governance
Paper type Research paper
1. Introduction
The sustainable health of an organization is contingent on the harmony of interests among
stakeholders. When this harmony oscillates, certain stakeholders may refrain from
contributing to the value chain of the organization or may even resort to destructive
deeds. This harmony can be sustainable when each stakeholder’s self-interest and the
organization’s interest are compromised; in other words, each stakeholder, to some extent,
transcends their self-interests in favor of the interests of other stakeholders. The organization
needs a mechanism that regulates the forces of interests, which sometimes may get slightly
impaired, but quickly return to equilibrium.
Corporate governance is such a mechanism, composed of centripetal forces converging
towards interests of internal stakeholders, and centrifugal forces leveraging orientation
towards external stakeholders. Thus, factors that can augment the strength of these
centripetal forces and centrifugal forces inside the corporate governance mechanism need
examining.
At the crossroads of corporate self-regulation and meta-regulation, researchers have
indicated an evolving interplay between corporate governance and CSR in recent years
(Gill, 2008). The impact direction from CSR to corporate governance was encountered by
Charbaji (2009) in both public- and private-sector organizations.
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VOL. 13 NO. 2 2013, pp. 148-168, QEmerald Group Publishing Limited, ISSN 1472-0701 DOI 10.1108/14720701311316634
Luu Trong Tuan is based at
the Department of Natural
Resources and
Environment, International
University-Vietnam National
University, Ho Chi Minh City,
Vietnam.
Received March 2012
Accepted July 2012
Organizations have recently augmented the allocation of resources to CSR activities (Barnea
and Rubin, 2010). CSR, from Gainer’s (2010) stance, refers to a corporate ‘‘movement’’ – a
set of ideas and perspectives about business practice that its advocates anticipate to see
widely implemented throughout the corporate sector. Through CSR activities, organizations
can not only yield favorable attitudes and behaviors from stakeholders, but can also
reinforce stakeholder-organization bonding and build the organization’s image (Du et al.,
2010). Cheung et al.’s (2009) research underscores the magnitude of CSR in emerging
Asian markets.
Employee-oriented CSR also necessitates reciprocal trust between employer and employee
so as to be sustainable (de Jong, 2011). Trust is also alleged to yield better corporate
citizenship (Ferguson and Popescu, 2006), another term used interchangeably with
corporate social responsibility. Heffernan et al. (2008) discerned significant interplay
between emotional intelligence and trust. Prati et al.’s (2003) study reveals that emotional
intelligence leads to higher levels of team trust. A leader’s emotional intelligence is also
reported to have an impact on employee trust in their leader (Sitter, 2004).
Though research has mainly looked at dual relationships among these constructs, they
converge into one point, namely a commitment to the effectiveness of corporate
governance, so this study seeks to develop a research framework that examines the
linkage pattern of corporate governance and its antecedents, such as emotional
intelligence, trust, and corporate social responsibility. This research is especially
meaningful in the Vietnamese landscape, where listed companies on Vietnamese stock
exchanges have been soaring in number (Hai and Nunoi, 2008, p. 64). Nonetheless, in
Vietnam, as a Socialist-oriented market economy (Cung, 2008) the corporate governance
system is characterized by the concentration of authority in the hands of few influential
people and nil or weak external supervision. These weaknesses yield a large opportunity for
the majority of shareholders, individual representatives of state shareholders and managers
to abuse corporate assets and opportunities to serve their own benefits (Cung, 2008).
Therefore, proving the effects of the above antecedents on corporate governance will
provide crucial managerial implications for organizations to awaken the corporate empathy
and corporate conscience of their members, especially boards of directors and top
managers, so that they act for others whose self-interests are thereby reached, rather than
acting for their own interests alone.
This prelude of the paper is followed by a review of the standpoints and research on the
variables of the current study. This literature review serves as the premise for building the
conceptual framework for which the data is then dissected. The paper concludes with some
practical implications and potential research avenues related to the concept of ‘‘corporate
governance’’ and its independent variables.
2. Literature review
2.1 Emotional intelligence
Emotional intelligence (EI) has appealed to researchers who are interested in how EI relates
to outcomes such as well-being and career success (Austin, 2010). Emotional intelligence
(EI) has been conceptualized, measured, and utilized from the early antecedents of
emotional abilities such as facial expression research to the recent multimedia assessment
paradigms (Roberts et al., 2010).
Intrapersonal intelligence is viewed as the competence to read oneself precisely and utilize
oneself to operate effectively (Duckett and Macfarlane, 2003). From the magnitude of the
functional relationship among organizational members has emerged the concept of social
intelligence, which is defined as the competence to perceive one’s own and others’ internal
states, motives and behaviors and to act towards them optimally predicated on that
information (Salovey and Mayer, 1990, p. 187). Looking at the power of influence of social
intelligence, Gardner (1983) referred to interpersonal intelligence as the competence to
decipher other people, what motivates them, how they work and how to work collaboratively.
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Intrapersonal intelligence and interpersonal intelligence converge into the concept of emotional
intelligence, which denotes one’s competence to decode and regulate emotions in oneself and
others (Goleman, 2001a; Zadel, 2008). As such, one of the key facets of emotional intelligence
is the capacity of an individual to recognize emotions in others (DeBusk and Austin, 2011). By
and large, emotional intelligence is the capacity to implement sophisticated information
processing about emotions and emotion-relevant stimuli and to utilize this information as a
guide to thinking and behavior (Mayer et al., 2008, b). Emotional intelligence also can be
defined as the ability to reason about emotion, and can be equated with a list of traits such as
achievement motivation, flexibility, happiness, and self-regard (Mayer et al., 2008a, b).
Salovey and Mayer (1990) structured emotional intelligence around three aptitudes:
1. the aptitude for appraising and expressing emotions in oneself and others;
2. the aptitude for regulating emotions in oneself and others; and
3. the aptitude for using emotions in adaptive ways.
Utilizing an ability-model, Mayer and Salovey (1997) differentiate four branches of emotional
intelligence:
1. emotion perception (perceiving emotions in oneself and others) and emotional
expressivity;
2. facilitation of thinking (using emotions to facilitate thought);
3. understanding and analyzing emotions and their meanings; and
4. emotion regulation (managing emotions).
According to Roberts et al. (2010), the model depicting EI as a form of information
processing or knowledge, illustrated by the four-branch hierarchical model of EI, is the sole
logical construct to be labeled ‘‘EI’ ’. However, Fiori and Antonakis (2012) astonishingly found
that none of the branches of the EI ability model predicted performance.
Goleman (1998) defined emotional competence as a learned capability based on emotional
intelligence that yields outstanding work performance, and clustered emotional
competencies under two dimensions:
1. personal competence, which encompasses self-awareness, self-regulation, and
motivation; and
2. social competence, which encompasses empathy and social skills.
Goleman’s (2001a, b) new version of the emotional intelligence model is more organizationally
aligned to provide a means of EI-based performance, specifically for leaders. Reflecting
statistical analyses (Goleman et al., 2002), the new version reduces the 25 competencies into
20 competencies and the five domains into four domains under two dimensions:
1. Personal competence determines how we manage ourselves and is categorized by two
domains and their associated competencies:
Bself-awareness – emotional self-awareness, accurate self-assessment,
self-confidence; and
Bself-management – emotional self-control, transparency, adaptability/flexibility,
achievement/drive for performance, initiative, optimism.
2. Social competence determines how we manage relationships and is contained within two
domains:
Bsocial awareness – empathy towards others, awareness of organizational-level
currents, decision networks and politics, service to others; and
Brelationship management – inspirational leadership, influence tactics, developing
others, change catalyst, conflict management, building bonds, teamwork and
collaboration/cooperation (Goleman et al., 2002, 2007).
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Clarke (2010a) found that emotional intelligence elucidated direct and unique variance in
transition and interpersonal team processes. Emotional intelligence ability measures were
also to explain extra variance in the leader competences of teamwork, attentiveness, and
managing conflict (Clarke, 2010b). While the abilities to exercise and understand emotions
facilitate the emergence of task leaders, the abilities to perceive and manage them facilitate
the emergence of relationship leaders (Emery, 2012). Furthermore, the quality of leader
member exchange (LMX) mediates the interconnection between follower emotional
intelligence and both turnover intention and job satisfaction (Jordan and Troth, 2011).
2.2 Trust
Trust is viewed in different ways in different disciplines. Whereas economists refer to trust as
trusting the institutions and their accounts, psychologists depict trust as the reliable and
unreliable behavior of the individual, and sociologists depict trust as reliable, fair and ethical
behavior in interpersonal relations (Milligan, 2003, p. 20). From van den Akker et al.’s (2009)
standpoint, trust is ‘‘a psychological state comprising the positive expectation that another
party will perform particular actions that are important to oneself, coupled with a willingness
to accept vulnerability which may arise from the actions of that other party’’.
The construct of organizational trust, which is viewed as the belief that an employer will be
straightforward and pursue through on commitments (Gilbert and Tang, 1998), is looked at in
the current study. Organizational trust is also viewed as ‘‘positive expectation which people
have, based on organizational roles, experiences, mutual dependency resulting from
different behaviors of organizational members’’ (Shockley-Zalabak et al., 2000, p. 37). As
the willingness of the employee to be vulnerable to the deeds of the employer predicated on
the expectation that they would act so as to satisfy his needs regardless of the competence
to monitor or control (Mayer and Davis, 1995, p. 712), organizational trust cultivates
emotional link between the employers and the employees, which yields effective interaction
between them (Child and Mo
¨llering, 2003), job satisfaction, and organizational commitment
(Laschinger and Finegan, 2005, p. 7). Organizational trust has four crucial impacts on the
relationship between the employees and the organization:
1. trust facilitates management;
2. trust facilitates taking high risks;
3. trust facilitates the effective use of resources; and
4. trust affects all activities of the organization (Taylor, 1990; cited in Conn, 2004, pp. 43-4).
The dimensions of trust can be discerned based on the sources of trust from the trustor’s
side:
BCalculation-based trust – As depicted by Rousseau et al. (1998, p. 399),
calculation-based trust is ‘‘based on rational choice – characteristic of interactions
based upon economic exchange’’. It is a trust based on deterrence or the balance of
consequences perceived by the trustor and trustee. Behavior control and manipulation of
the other are its hallmarks.
BKnowledge-based trust – Exercise of control catalyzes calculation-based trust while
exchange of information characterizes knowledge-based trust. Whereas
calculation-based trust is contingent on deterrence, knowledge-based trust is
conditioned upon how profoundly the trustor can understand and predict the trustee’s
deeds, as contended by Lewicki and Bunker (1995, p. 149): ‘‘The better I know the other,
the better I can trust what the other will do because I can accurately predict how they will
respond in most situations’’. With accessible information, this form of trust also detects
untrustworthiness and the limits of trust.
BIdentification-based trust – Identification-based trust is deemed to be a product of
reciprocal understanding. ‘ ‘At this [. . .] level of trust, trust exists because the parties
effectively understand, agree with and endorse each other’s wants; this mutual
understanding is developed to the point that each can effectively act for the other’’
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(Lewicki and Bunker, 1995, p. 151). Each party understands the others and understands
what is required to sustain the trusting relationship.
Sundaramurthy (2008) displays a model of sustaining trust, the basic premise of which is
that trust is dynamic and multiple dimensions of trust need to be developed through
structures and processes. A trust evaluation model for determining trust between
co-workers developed by Chen and Chen (2009) was based on direct, indirect and
negative trust factors and on consideration of worker history of resource use (Chen et al.,
2008).
2.3 Corporate social responsibility (CSR)
Corporate social responsibility (CSR) is currently a crucial element of the dialogue between
companies and their stakeholders, and continues to reap attention atop the corporate
agenda (Bhattacharya et al., 2008). Corporate social responsibility, from the perspectives of
Jamali (2008) and Jamali et al. (2008), is concerned with the commitment of companies to
contribute to sustainable development, stakeholder interests and enhancement of societal
conditions.
Also centering on stakeholders’ interests, Hopkins (2007) defines CSR as being ‘‘concerned
with treating the stakeholders of the firm ethically or in a responsible manner. ‘Ethically or
responsible’ means treating stakeholders in a manner deemed acceptable in civilized
societies. Social includes economic and environmental responsibility. Stakeholders exist
both within a firm and outside. The wider aim of social responsibility is to create higher and
higher standards of living, while preserving the profitability of the corporation, for peoples
both within and outside the corporation’’ (pp. 15-16). Regarding business firms as the
economic engine of society, Carroll (1979) and Henderson (2005) also highlight that making
profits is a social responsibility.
Carroll’s (1979) model of CSR also incorporates profitability as a dimension among the four
responsibilities:
1. the economic responsibility to generate profits;
2. the legal responsibility to conform to local, state, federal, and relevant international laws;
3. the ethical responsibility to meet other social expectations not written as law (e.g. avoiding
harm or social injury, respecting the moral rights of individuals, doing what is right, just,
fair); and
4. the discretionary responsibility to meet extra behaviors and activities that society finds
desirable (e.g. philanthropic initiatives such as financial contributions to various kinds of
social or cultural enterprises).
Carroll’s ‘‘pyramid of corporate social responsibility’’ indicated a hierarchy of responsibilities
ascending from economic and legal to more socially oriented responsibilities, i.e. ethical and
philanthropic (Carroll, 1991). Finding this implicit hierarchy in the pyramid as its limitation,
Schwarz and Carroll (2003) placed the dimensions of CSR in a Venn diagram, as well as
deleting the discretionary dimension as not justifiable as a ‘‘social responsibility’’.
Lantos (2001) classified CSR into three types predicated on their nature (required versus
optional) and purpose (for stakeholders’ good, for the company’s good, or for both):
1. ethical CSR;
2. altruistic CSR; and
3. strategic CSR.
Ethical CSR is ‘‘morally mandatory and goes beyond fulfilling a firm’s economic and legal
duties, to its responsibilities to avoid social injuries, even if the business might not benefit
from this’’ (Lantos, 2001, p. 605). Partially based on this definition, the author of the current
study maintains that ethical CSR is the highest level of CSR, depicted as the outermost
circle, and economic CSR is the lowest level a company reaches (Figure 1). Acting within the
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law is analogous to acting ethically (Carrigan and Attalla, 2001), so ethical CSR is depicted
to embrace legal CSR. Moreover, as Gaski (1999) wrote: ‘‘the ethics of one day may be the
law of the next’’ – some ethical CSRs will gradually consolidate into legal CSRs and new
ethical CSRs will surface.
In Figure 1, the circles of internal stakeholders and external stakeholders will intersect the
circle of a type of CSR if that CSR type is fulfilled. The circle of discretionary CSR is not
displayed due to its integration into ethical CSR.
Carroll’s (1979) model of CSR with the merger of ethical and discretionary dimensions is
used as a basis in this study, as these three dimensions display an extensive spectrum
relating to all stakeholders, both internal and external, as well as the triple bottom line.
2.4 Corporate governance
Most of the early definitions on corporate governance discern corporate governance as a
system utilized to shield investors’ interests. Corporate governance is defined by Shleifer
and Vishny (1997) as the ways in which suppliers of finance to companies assure
themselves of getting a return on their investment. La Porta et al. (2000) refer to corporate
governance as ‘‘a set of mechanisms through which outside investors protect themselves
against expropriation by [managers and controlling shareholders]’’. However, through its
definition of corporate governance as ‘‘a set of relationships between a company’s
management, its board, its shareholders and other stakeholders’’, the Organisation for
Economic Co-operation and Development (2004) looks beyond the relationship between
shareholder and director into a wider network of relationships, including other stakeholders.
The above definitions discuss those who contribute to the value chain of the company in the
context of corporate governance. Moreover, the first two definitions look at corporate
governance mechanistically as ways or mechanisms, whereas the last definition turns to look
toward relationships among stakeholders.
Defining corporate governance as ‘‘the exercise of power over and responsibility for
corporate entities’’ (Mallin, 2002). Mallin (2002) places responsibility as an element of ethics
or care beside the mechanism of control through laws and rules as reflected in a number of
definitions. Gillan and Starks (1998) view corporate governance as the system of laws, rules,
and factors that control operations at a company. Meanwhile, corporate governance is
depicted in the Cadbury Report (1992) as ‘ ‘the system by which companies are directed and
controlled’’. The Cadbury Report (1992) is not merely concerned with the control mechanism
but also the leadership required for that mechanism, reflected in the term ‘‘directed’’ in the
definition. One of the reforms in this control mechanism in corporate governance is the
Figure 1 CSR types and stakeholders
ETHICAL CSR
LEGAL CSR
INTERNAL STAKEHOLDERS
EXTERNAL STAKEHOLDERS
ECONOMIC CSR
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scorecard on corporate governance (Cheung and Jang, 2008) as an attempt to manage and
measure comprehensively the performance of all stakeholders.
Corporate managers are seeking not purely more corporate governance words but a reason
for taking this philosophy into day-to-day management (Phillips, 2006). The reason for this is
presumably that social responsibility, as a premise of corporate governance (Young and
Thyil, 2008), is required not only from employees but also from board members. Social
responsibility should be demonstrated and role-modeled from the top, as reflected in the
Chinese saying ‘‘Turmoils will occur at low levels if the top is not righteous’’. Young and Thyil’s
(2008) holistic model of corporate governance highlights that corporate governance ‘‘veers
away from narrow approaches focussing on legal and regulatory, accounting, ethics and so
on’’ (p. 103) towards social responsibility as reflected in Muth and Donaldson’s (1998)
corporate governance framework built on stewardship theory, which holds that executives
and managers are not selfish by nature. From a social responsibility perspective, the
corporate governance framework should be translated into processes of measuring,
auditing, and guiding the actions of board members and top management towards the
interests of other stakeholders in domains such as board processes, director education, and
progressive practices. Progressive practice indicators look at how the board’s performance
influences the performance of other stakeholders, especially employees. If the director
education indicator scores highly, but directors do not transfer knowledge or facilitate the
knowledge acquisition of members, their progressive practice indicators also show low
scores. In other words, corporate governance indicators do not merely directly measure and
influence directors’ performance, but they also indirectly reflect the performance of the
entire organization.
Furthermore, taking a stakeholder perspective, researchers tend to categorize corporate
governance mechanisms into two typologies – i.e. those internal to companies and those
external to companies – which paves the way for two models of corporate governance:
1. the ‘‘shareholder’’ model (i.e. ‘‘external’’ control exerted by shareholders); and
2. the ‘‘stakeholder’’ model (i.e. ‘‘internal’’ control exerted by diverse parties having a stake
or an interest in the company).
Another model of corporate governance is built on agency theory, in which shareholders as
principals delegate roles to managers as agents, where there is risk sharing between the
entities and latent conflicts of interest (Eisenhardt, 1989). Agency theory nonetheless is
insufficient to explain how managers must address non-direct shareholder interests such as
political pressures and societal expectations from companies (Nwabueze and Mileski, 2008).
As a fusion of French company law and Anglo-American law (Hai and Nunoi, 2008, p. 64),
the Vietnamese Enterprise Law 2005 provides diverse fixed internal governance structures
for different company types with mandatory powers and functions for each corporate
governance body (Hai and Nunoi, 2008, p. 48). For instance, under the Enterprise Law 2005,
the mandatory governance structure of a multiple-shareholder limited liability company
(LLC) comprises a members’ council (MC), a chairperson of the MC, a CEO, and a board of
supervisors (BOS) if the company has over ten shareholders. On the other hand, the
mandatory governance structure of a shareholding company comprises four governance
bodies – i.e.the shareholders’ meeting (SM), a board of management (BOM), CEO, and a
board of supervisors (BOS) – if the company has over 11 shareholders being natural
persons or one (or more) institutional shareholder(s) holding more than 50 percent of the
equity capital. Vietnamese corporate governance can be depicted as an insider-based
corporate governance system on the grounds of the dominance of state-owned enterprises
(SOE) with privileges from the state, and family-run companies (Hai and Nunoi, 2008, p. 63).
The Vietnamese Enterprise Law 2005 stipulates shareholder derivative suits for limited
liability companies but not stock companies (Hai and Nunoi, 2008, p. 65).
2.5 Hypotheses development
A high level of emotional intelligence is the expansion of personal intelligence
competencies into social intelligence competencies. In other words, members with high
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level of emotional intelligence can not only decipher and manage their own emotions
effectively, but also the emotions of others. The relationship management component of
social intelligence, which reflects inspirational leadership, influence tactics, developing
others, change catalyst, conflict management, building bonds, teamwork and
collaboration/cooperation (Goleman et al., 2002, 2007), indicates that members with a
high level of emotional intelligence tend to build a high level of trust via the relationships
with other members in the team or organization. Their trust does not emanate from
satisfactory returns against their performance nor a ‘‘me first’’ approach, but rather the
understanding of the whole map of the organization’s strategies and tactics, as well as
the underlying layers of that map, including philosophies and values. Therefore, their high
emotional intelligence level elevates their trust level above calculation-based trust. Their
emotional orientation towards other stakeholders leads to their profound insight into vision
and values shared among stakeholders in the organization. Knowledge and identity are
premises for the growth of trust among highly emotionally intelligent members, bridging
the variables ‘‘emotional intelligence’’ and ‘‘trust’’ in the following hypothesis and
subhypotheses:
H1. A high level of emotional intelligence relates positively to identity-based trust and
knowledge-based trust, but relates negatively to calculation-based trust.
H1a. A high level of emotional intelligence relates positively to identity-based trust.
H1b. A high level of emotional intelligence relates positively to knowledge-based trust.
H1c. A high level of emotional intelligence relates negatively to calculation-based trust.
The higher level of trust that members form in the relationship with the organization, the more
dedicated they are in going beyond their own interests towards those of other stakeholders
of the organization or the more socially responsible they become, since corporate social
responsibility is concerned with the commitment of companies to contribute to stakeholder
interests (Jamali, 2008; Jamali et al., 2008). Therefore, as the lowest level of organizational
trust we have calculation-based trust, which is built on the correspondence or compromise
between contributions of members toward the organization and tributes from the
organization returning to them (Rousseau et al., 1998, p. 399). Thus, in exchange for
returns, their contributions can be in form of sales and profits for the organization, so
calculation-based trust nurtures economic CSR among members. Nonetheless, their
contributions can also be smooth operations based on their conformity to rules and laws
inside as well as outside the organization. In other words, calculation-based trust with its
emphasis on legal contracting catalyzes legal CSR in the actions of organizational members.
However, calculation-based trust within the framework of ‘‘endeavouring for myself first’’
inhibits dedication towards other stakeholders of the organization. Calculation-based trust
just steers members’ mindsets toward their own immediate or short-term interests, so cannot
facilitate the cultivation of ethical CSR, which is ‘‘based on the socially aware and
stakeholder view’’ (Freeman, 2001; cited in Ojo, 2009).
Contrarily, knowledge-based trust is a trust that is grounded in understanding about another
party developed through repeated interactions (Holsapple and Wu, 2008).
Knowledge-based trust reflects the understanding of values underlying organizational
guidelines, especially values shared among and enacted by stakeholders for the
sustainable growth of the organization. Since ethical CSR as the goal of the organization
should comprise ‘‘corporate sustainability’’ or ‘‘corporate sustainable development’’ (CSD)
(Slaper and Hall, 2011), ethical CSR can be built on the infrastructure of knowledge-based
trust.
As the highest level of trust, identity-based trust reflects members’ profound understanding,
communication, and implementation of vision and strategies. Identity-based trust,
furthermore, is a trust accumulated from the understanding of the strategic relationship
between short-term and long-term goals and action plans. Hence, identity-based trust can
foster members’ contributions not purely for immediate returns but also for long-term
sustainability for both themselves and other stakeholders in the organization. Identity-based
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trust, in other words, contains seeds of ethical values on which individual identity and
organizational identity merge. The above discussions lead to the ensuing hypotheses:
H2a. Identity-based trust positively relates to ethical CSR.
H2b. Knowledge-based trust positively relates to ethical CSR.
H2c. Calculation-based trust positively relates to legal CSR.
H2d. Calculation-based trust positively relates to economic CSR.
Ho’s (2010) study reveals that higher commitments to CSR strongly and positively
correspond to the qualifications and terms of directors, boards that exert strong stewardship
and strategic leadership roles, and the management of capital market pressures, and that
these various attributes combined constitute the hallmarks of good corporate governance.
From Kendall’s (1999) standpoint, good corporate governance involves ensuring that
companies are run in a socially responsible way and that there should be a lucidly ethical
basis to the business complying with the accepted norms of the society in which it is
operating. Ethical CSR actively seeks a greater balance or compatibility between profit and
ethics (Reidenbach and Robin, 1991), which is consistent with corporate governance
mechanism (Ghosh et al., 2011).
Ethical CSR meets other social expectations, not written as law (Carroll, 1979). Meanwhile,
the concept of corporate governance, by and large, is contained in the notion of ethics
(Nwabueze and Mileski, 2008) and the focus of corporate governance has shifted towards
social and ethical issues (Hooghiemstra and van Manen, 2002).
Moreover, ethical CSR is ‘‘morally mandatory and goes beyond fulfilling a firm’s economic
and legal duties, to its responsibilities to avoid social injuries, even if the business might not
benefit from this’’ (Lantos, 2001, p. 605). Organizational members with high ethical CSR
therefore will perform more than the duties indicated by their job descriptions and go beyond
their self-interests toward the interests of other stakeholders. With the orientation towards the
interests of other stakeholders and organization as the whole, organizational members
advocate and enact ‘‘the fairness’’ in the organization. Ethical CSR, in other words, can build
fairness and transparency, so are consistent with principles of effective corporate
governance (Ehikioya, 2009). This flow of discussions arrives at the following subhypothesis:
H3a. Ethical CSR positively relates to corporate governance.
Legal CSR, which tends to guide organizational members within the legal framework such as
laws or policies (Carroll, 1979), appears not to yield corporate governance effectiveness,
since organizational members tend to perform within laws or policies in order to attain their
self-interests and security rather than caring about the interests of other stakeholders of the
organization. Corporate governance functions to handle conflicts of interest between
internal stakeholders and external stakeholders on the creation of value by a company;
nonetheless, these conflicts of interests cannot be resolved effectively by contracting
(Pergola and Joseph, 2011). Bhasin (2005) highlights that corporate governance is about
ethical conduct in business; it is beyond the realm of law. Thus, legal CSR, which tends to
guide organizational members within the contracting framework, appears not to build strong
corporate governance. The subsequent subhypothesis was hence formulated:
H3b. Legal CSR negatively relates to corporate governance.
Ethical CSR actively seeks a greater balance or compatibility between profit and ethics
(Reidenbach and Robin, 1991), whereas economic CSR denotes the responsibility of
members to make organization and themselves financially affluent. Nonetheless, members
tend to turn toward economic exchange calculation for themselves first, so economic CSR
does not produce corporate governance success that is beneficial towards all stakeholders
or organizationally beneficial. If a member cares a great deal about their economic interests
and cares little or nothing about the interests of other stakeholders, they may display
apathetic attitudes or even destructive behaviors towards the organization, customers, and
the community. The findings from Handley-Schachler et al.’s (2007) research suggest that
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the interests of stakeholders should not be defined in terms of economic activity only. The
following subhypothesis thus surfaces:
H3c. Economic CSR negatively relates to corporate governance.
Figure 2 displays the hypothesized interconnections among corporate governance and its
antecedents such as emotional intelligence, trust, and corporate social responsibility.
3. Research methodology
3.1 Sample
The sample for this research was derived from a population of 255 chemical companies
listed in the 2012 Vietnam Trade Directory. Since companies should be sufficiently large to
ensure that organizational and strategy variables apply (Miller, 1987), only 128 companies
reached the two criteria:
1. turnovers of at least 25 billion Vietnamese dong (equivalent to $US1.19 million); and
2. at least 100 employees working for the organizations.
The criterion on sales is based on average sales of small enterprises in the context of the
Vietnamese market (Ministry of Planning and Investment, 2008). Data on variables such as
corporate governance, corporate social responsibility, trust, and emotional intelligence were
collated via self-administered structured questionnaires dispatched to 640 middle level
managers in these 128 companies, an average of five managers in each company. Middle
level managers were relied on as the respondents as they would have more opportunities to
observe members’ actions. Data collection was conducted between September 2011 and
February 2012. As shown in Tables I and II, the demographic profile of the sample
represented a relatively wide range of company ownership types.
Figure 2 Hypothesized framework
CSR dimensions
Emotional
intelligence
High level of EI
Ethical CSR
Legal CSR
Economic CSR
H2a-d
H3a-c
H1a-c
Knowledge-based trust
Identity-based trust
Corporate
governance
Calculation-based trust
Trust
Table I The demographic profile of the sample
State-owned
companies
Private
domestic
companies
100 percent
foreign-invested
companies
Joint-venture
companies
Characteristics Mean SD Mean SD Mean SD Mean SD Ftest Significance
Company size (number of employees) 208 167.4 127 96.2 247 120.4 192 94.7 28.11 0.00
Company age (years) 24.7 12.6 16.8 11.2 13.6 9.1 13.1 9.5 10.28 0.00
Respondent average age (years) 38 4.9 31 4.6 29 4.3 32 4.2 1.07 0.09
Respondent average tenure (years) 14 4.2 8 4.1 7 3.4 10 2.6 11.45 0.00
Respondent education (years after high
school) 4 2.5 4 1.8 6 1.9 6 2.4 1.05 0.10
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Notwithstanding scanty time among middle level managers, in this research, out of 640
questionnaires relayed to managers, 382 were returned in completed form for a response rate
of 59.69 percent. This high response rate resulted from the voluntary cooperation from these
382 managers with most of whom the relationships were forged through the researcher’s
students from CEO training classes in a snowball sampling process (Robson, 1993).
3.2 Instruments
3.2.1 Emotional intelligence. Emotional intelligence was examined using the Emotional
Competence Inventory (ECI) based on the work of Goleman et al. (2002). This instrument
comprises 20 emotional competencies arrayed into four clusters:
1. self-awareness;
2. self-management;
3. social awareness; and
4. social skills.
The Emotional Competence Inventory is a self-report measure of individual differences in the
competence to reflect on (or monitor) and manage one’s emotions and handle those of
others. Participants respond on a five-point Likert scale ranging from (1) strongly disagree to
(5) strongly agree. Principal component analysis to appraise the underlying relationship of
each dimension within emotional intelligence is shown in Table III.
3.2.2 Organizational trust. The construct of organizational trust consists of three types and
16 individual scale items which were adapted from Nguyen’s (2005) measurement
predicated on studies by Nyhan and Marlowe (1997), Nooteboom et al. (1997), and
Cummings and Bromiley (1996). The three types were:
1. calculation-based trust – five items;
2. knowledge-based trust – seven items; and
3. identification-based trust – four items.
The 16 statements of organizational trust construct were measured with a five-point
Likert-type scoring system applied to a scale anchored by ‘‘strongly disagree’’ (1) to
‘‘strongly agree’’ (5). Principal component analysis to appraise the underlying relationship of
each dimension within organizational trust is shown in Table IV.
3.2.3 Corporate social responsibility (CSR). A 22-item instrument adapted from Aupperle
et al. (1985) and Maignan (2001) was utilized to measure CSR dimensions. However, like
Podnar and Golob’s (2007) findings, the exploratory factor analysis revealed that a
three-factor solution rather than a four-factor solution was more stable. Therefore, ethical and
discretionary dimensions merge, reducing the factors extracted to economic, legal, and
ethical CSRs. The three CSR dimensions then were:
Table II The demographic profile of the sample
No. % No. % No. % No. %
x
2
Significance
Respondent position 139 121 58 64 14.37 0.02
Chief accountant 14 10.07 13 10.74 3 5.17 4 6.25
HR manager 26 18.71 22 18.18 9 15.52 10 15.63
Operations manager 24 17.27 22 18.18 13 22.41 12 18.75
Production manager 21 15.11 21 17.36 11 18.97 11 17.19
Marketing manager 28 20.14 19 15.70 10 17.24 12 18.75
Sales manager 21 15.11 20 16.53 11 18.97 15 23.44
Others 5 3.60 4 3.31 1 1.72 0 0.00
Respondent gender 1.38 0.01
Male 102 73.38 73 60.33 42 72.41 44 68.75
Female 37 26.62 48 39.67 16 27.59 20 31.25
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1. economic CSR – six items;
2. legal CSR – five items; and
3. ethical CSR – 11 items.
The 22 statements of the questionnaire were measured with a five-point Likert-type scoring
system applied to a scale anchored by ‘‘strongly disagree’’ (1) to ‘‘strongly agree’’ (5).
Principal component analysis to appraise the underlying relationship of each dimension
within CSR is shown in Table V.
3.2.4 Corporate governance. To measure the strength of the governance mechanisms are
for a firm, an index of composite governance mechanisms developed by Institutional
Shareholder Services (ISS) was utilized. The ISS index consists of 61 separate variables
covering the eight corporate governance categories, with each variable equally weighted by
‘‘1’’. This governance index composite score was identified as ‘‘GI’’. A higher index score
implied stronger governance effectiveness.
The eight corporate governance categories encompass audit issues (e.g. Audit committee
consists solely of independent outside directors, Auditors were ratified at the most recent
annual meeting, Consulting fees paid to auditors are less than audit fees paid to auditors,
Company has a formal policy on auditor rotation), board structure and composition
(Managers respond to shareholder proposals within 12 months of shareholder meeting,
CEO serves on no more than two additional boards of other public companies, All directors
attended at least 75 percent of board meetings or had a valid excuse for non-attendance,
Size of board of directors is at least six but not more than 15 members), charter and bylaw
provisions (e.g. A simple majority vote is required to approve a merger (not a supermajority),
Company either has no poison pill or a pill that was shareholder approved, Shareholders are
allowed to call special meetings, A majority vote is required to amend charter/bylaws (not a
supermajority)), director education (At least one member of the board has participated in an
ISS-accredited director education program), executive and director compensation (e.g. No
Table III Principal component analysis of emotional intelligence (EI)
D/No. Scale items: emotional intelligence (EI)
Factor
loading
Item to total
correlation
Cronbach’s
a
ASelf-awareness
1 Emotional self-awareness 0.89 0.80 0.79
2 Accurate self-assessment 0.87 0.82
3 Self-confidence 0.83 0.82
BSelf-management 0.72
4 Emotional self-control 0.89 0.80
5 Trustworthiness 0.79 0.75
6 Conscientiousness 0.87 0.82
7 Adaptability 0.84 0.79
8 Achievement orientation 0.84 0.79
9 Initiative 0.81 0.78
CSocial awareness 0.83
10 Organizational awareness 0.89 0.80
11 Empathy 0.86 0.78
DSocial skills 0.81
12 Developing others 0.94 0.83
13 Service orientation 0.89 0.80
14 Inspirational leadership 0.92 0.81
15 Influence 0.94 0.83
16 Communication 0.87 0.82
17 Change catalyst 0.94 0.83
18 Conflict management 0.90 0.80
19 Building bonds 0.88 0.76
20 Teamwork 0.91 0.79
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interlocks exist among directors on the compensation committee, Non-employees do not
participate in company pension plans, Option re-pricing did not occur within last three years,
Stock incentive plans were adopted with shareholder approval), director and officer
ownership (e.g. All directors with more than one year of service own stock, Officers’ and
directors’ stock ownership is at least 1 percent but not over 30 percent of total shares
outstanding, Executives are subject to stock ownership guidelines, Directors are subject to
stock ownership guidelines), progressive practices (e.g. Mandatory retirement age for
directors exists, Performance of the board is reviewed regularly, A board-approved CEO
succession plan is in place, Board has outside advisors), and the state of incorporation
related to takeover defenses (Incorporation in a state without any anti-takeover provisions).
Data collated from the questionnaire survey was analyzed through LISREL 8.52. The
reliability of the measures was potentially enhanced through the utilization of multiple-item
measures (Neuman, 2000). The reliability of each construct and its specific dimensions was
appraised using Cronbach’s
a
coefficients. Nunnally’s (1967) recommended cut-off point of
0.70 was surpassed by all constructs. Convergent validity is also suggested when the
individual variable scores are merged into a single scale to yield a Cronbachs
a
of 0.766.
Content validity was established through the adoption of existing and validated scales
utilized in the existing literature. In addition, the questionnaire underwent three-phase
pretest. The questionnaire was first examined and edited by numerous academics. Ten top
Table IV Principal component analysis of organizational trust
S/No. Scale items: organizational trust
Factor
loading
Item to total
correlation
Cronbach’s
a
ACalculation-based trust 0.81
1 If employees do not fulfill the contract with the employer,
they could seriously damage their reputation in the
market 0.90 0.78
2 Employees are dependent on the employer in
developing their career 0.91 0.78
3 If employees break their contract with the employer,
they will have to pay a significant legal fine 0.94 0.83
4 In general, employees benefit from working with the
employer 0.94 0.83
5 The employer would feel a sense of betrayal if
employees leave the employer only for economic
reasons 0.90 0.86
BKnowledge-based trust 0.73
6 Employees generally tell the truth in discussions 0.91 0.85
7 Employees generally meet their discussed obligations 0.82 0.78
8 In the emloyer’s opinion, employees are reliable 0.90 0.78
9 In general employees do not try to mislead the
employer 0.87 0.83
10 Employees keep the employer’s best interests in mind 0.87 0.78
11 The employer cares about employees’ problems,
feelings, and concerns 0.84 0.83
12 In the emloyer’s opinion, employees’ capabilities are
good enough to fulfill the contracts with the employer 0.86 0.79
CIdentification-based trust 0.78
13 The top manager has shared values/beliefs with
employees 0.91 0.83
14 Employees and the top manager share business
related information with one another 0.90 0.87
15 Employees and the top manager feel free to share their
ideas, feelings, hopes, or problems that may not
directly relate to business 0.86 0.87
16 Employees and the top manager share some of their
own personal information (e.g. background, personal
life, etc.) 0.82 0.78
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leaders in a CEO training class were then invited to complete the questionnaire and to share
comments on its form and content. The students in Master’s class were then involved in the
completion of this questionnaire. Minor adjustments on wording and presentation were
eventually conducted.
4. Findings and discussion
The structural model’s fit statistics prove rational:
x
2¼574:7, df ¼339, IFI ¼0:94,
TLI ¼0:94, CFI ¼0:94, RMSEA ¼0:02. The findings in Table VI display positive and
significant path coefficients between:
Table V Principal component analysis of CSR
D/No. Scale items: corporate social responsibility (CSR)
Factor
loading
Item to total
correlation
Cronbach’s
a
AEconomic CSR 0.78
Companies should . . .
1 . . . take profit as the company’s only concern 0.91 0.79
2 . . . take profitability as the only measure of effectiveness 0.84 0.76
3 . . . always improve economic performance 0.70 0.67
4 . . . work only for the shareholders’ interests 0.67 0.62
5 . . . conduct business just for profit 0.65 0.58
6 . . . be bound to achieve maximum profitability 0.65 0.58
BLegal CSR 0.71
Companies should . . .
7 . . . always conduct business in line with legal principles 0.82 0.78
8 . . . obey the law and regulations in all circumstances 0.78 0.73
9 . . . not necessarily obey the law at all costs 0.68 0.66
10 .. . always submit to the newest legal principles as soon as possible 0.68 0.66
11 .. . be only allowed to do what is explicitly permitted by law 0.70 0.67
CEthical CSR
Companies should . . . 0.88
12 . . . actively seek to reduce unemployment 0.76 0.71
13 .. . offer job opportunities for vulnerable groups 0.76 0.71
14 .. . have a clear politics for solving urgent social and societal problems 0.76 0.71
15 . . . reinforce their voluntary activities for society welfare 0.73 0.69
16 .. . play a crucial role in projects aimed at quality of life improvement 0.74 0.70
17 . . . consider moral standards on account of profit 0.68 0.66
18 . . . conduct ethical business despite being less economically efficient 0.69 0.65
19 . . . consider people, society, and nature before profit 0.69 0.65
20 . . . check every business decision in light of ethical standards 0.68 0.66
21 .. . define ethical standards and be faithful to them at all times 0.71 0.68
22 .. . first meet all ethical business principles and then think of profit growth 0.68 0.66
Table VI Findings from the structural equation model
Hypothesis Description of path Path coefficient Zstatistics Conclusion
H1a High level of EI !Identity – based trust 0.082 2.41* H1a (þ): S
H1b High level of EI !Knowledge – based trust 0.409 4.54** H1b (þ): S
H1c High level of EI !Calculation – based trust 20.172 21.07* H1c (2): S
H2a Identity-based trust !Ethical CSR 0.308 2.84** H2a (þ): S
H2b Knowledge-based trust !Ethical CSR 0.168 2.52** H2b (þ): S
H2c Calculation-based trust !Legal CSR 0.113 1.36* H2c (þ): S
H2d Calculation-based trust !Economic CSR 0.264 3.63** H2d (þ): S
H3a Ethical CSR !Corporate governance 0.212 2.22** H3a (þ): S
H3b Legal CSR !Corporate governance 20.131 21.87* H3b (2): S
H3c Economic CSR !Corporate governance 20.127 21.54* H3c (2): S
Notes: Model fit:
x
2¼574:7, df ¼339, IFI ¼0:94, TLI ¼0:94, CFI ¼0:94, RMSEA ¼0:02. Tests of hypotheses are one-tailed tests; S,
supported; NS, not supported; *p,0:05; **p,0:01
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Ba high level of emotional intelligence and identity-based trust (p,0:05) or
knowledge-based trust (p,0:01);
Bidentity-based trust (p,0:01) or knowledge-based trust (p,0:01) and ethical CSR;
Bcalculation-based trust and legal CSR (p,0:05) or economic CSR (p,0:01); and
Bethical CSR and corporate governance (p,0:01).
The positive associations between high level of emotional intelligence and identity-based
trust (0.082; p,0:05) or knowledge-based trust (0.409; p,0:01) were encountered.
Nonetheless, calculation-based trust was found to negatively correspond to high level of
emotional intelligence (20.172; p,0:05). A person’s trust in others is governed by their
decoding of others’ emotions and their emotions towards others. Leaders should help
nurture in members high levels of personal emotional intelligence competencies, social
emotional intelligence competencies, as well as a high level of integration of these two
dimensions of emotional intelligence competencies. Leaders should role-model social
emotional intelligence competencies, as in the case of a director in an agrochemical
company, who spent days helping his colleagues in farms in the Mekong Delta in Vietnam to
investigate why rice fields had been damaged in just a few weeks. This director not merely
role-modeled social emotional intelligence competence to his colleagues in different farms
but also performed his mission to handle the emotions of farmers who were suffering from
this severe loss. Colleagues in his research team never forgot his gaze towards a dying rice
field and his words that morning: ‘‘I never give up finding out the way to control this disease
since I have owed grains of rice to you’’. Nurturing social emotional intelligence among
members, leaders bond them together through trust based on their understanding of the
mission of contributing to the value chain of the organization as a member and the mission of
their organization towards responsibility to stakeholders’ sustainability. In other words,
members no longer work with the trust of financially calculative fairness (calculation-based
trust), but on the more ethical fairness between organizational membership for their social
identity and self-actualization, and dedication to the interests of all stakeholders.
The positive and significantrelationships between identity-based trust and ethical CSR (0.308;
p,0:01), between knowledge-based trust and ethical CSR (0.168; p,0:01), and between
calculation-based trust and legal CSR (0.113; p,0:05) or economic CSR (0.264; p,0:01),
confirm hypotheses H2a,H2b,H2c,andH2d, respectively. When trust among organizational
members as well as between members and the organization as a whole transcends the
calculation for their self-interests towards the sustainable growth of customers as well as other
stakeholders, they absorb and share values in the mission of win-win cause for stakeholders.
With these high levels of trust connecting members in the organization, business deeds
endeavor to avoid harms to customers who have inherently struggled in the competition. In
other words, knowledge-based trust or indetity-based trust shapes business deeds according
to ethical standards of social responsibility for sustainable growth. A balanced CSR that
harmonizes ethical CSR with legal CSR or economic CSR is the initiative leaders should
implement soas to integrate the mission of the organization into thewin-win cause of business;
nonetheless, this initiative cannot be implemented successfully without a sufficiently thick layer
of knowledge-based or identity-based trust.
Corporate governance was found to positively correspond to ethical CSR (0.212; p,0:01),
which confirms H3a. Legal CSR or economic CSR does not facilitate corporate governance,
as reflected through the negative and significant relationships between legal CSR and
corporate governance (20.131; p,0:05) (H3b), and between economic CSR and
corporate governance (20.127; p,0:05) (H3c). Social responsibility is viewed as a
premise of corporate governance (Young and Thyil, 2008); therefore, corporate governance
not builds sustainable growth in each member in the organization, but also builds
sustainable growth of external stakeholders. Thus, leaders should communicate and
navigate members towards responsibility to all other stakeholders. In other words, leaders
including the board of directors, the CEO, and managers, who socially responsibly look to
the strategic vision of the organization, should stress the responsibility of members above
levels of economic and legal CSRs up to ethical CSR, by which members take care of
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customers and other stakeholders today and in the future according to a saying in
Vietnamese business circles: ‘‘The higher the water rises, the higher the boat rises’’. With
ethical CSR, members not only create values for customers, but guide them to create values
for themselves and their stakeholders. With this customer-centeredness, ethical CSR
contributes to the effectiveness of corporate governance in the organization.
5. Conclusion
The hypothesized framework displayed in Figure 2 is advocated by the research findings.
Positive links were encountered between high levels of emotional intelligence and
identity-based trust or knowledge-based trust, which in turn positively relate to ethical CSR.
Ethical CSR, within expectations, was positively correlated with corporate governance.
Corporate governance, which is about seeing that business is run properly (Tricker, 1984),
should be initiated, activated, or fortified in the business, for instance in the form of corporate
governance scorecard (Saldana, 2000). As the research findings suggest, the
implementation of corporate governance can be further facilitated with the leverage of
CSR initiatives as well as if it is germinated in the settings of such values as ethical and
caring relationships. Such values may take time to grow, but are not hard to grow, as, though
partly unconscious and historically based, values can be learned (Williams, 1995; cited in
Holbeche, 2006, p. 175). Moreover, purely through the planning of ethics can organizational
ethical behavior be attained. For the effective adoption of a plan of ethics, the plan should be
internalized by all organizational stakeholders (Belak et al., 2010).
Social responsibility is indeed a genuine ‘‘socialized power’’ for the success of corporate
governance implementation. The density of social responsibility in each individual member as
well as in the organization should be sufficiently high to activate the orientation towards all
stakeholders inside and outside the organization. This socialized orientation should be,
through leaders’ communication and translation of the organization’s socialized mission and
strategies, their role-modeling, training, and coaching, cultivated from emotions of individuals
and groups, then through their trust, to social responsibility as denoted by research findings.
Coaching is one of the most effective ways to inject this socialized orientation into the emotions
and deeds of organizational members. Coaching thus can elevate the level of social emotional
intelligence among members, thereby leveraging stakeholder-oriented trust – i.e. trust
beyond the own interests towards the interests of other stakeholders.
Emotional intelligence, however, as the research findings indicate, is the start of the
organization’s journey towards strong corporate governance. Some scholars view cognition as
the shaper of action, but others look at this the other way around – that is, actions shape
cognitive attitudes, as Tanner Pascale and Sternin (2005) maintain: ‘‘people are much more
likely to act their way into a new way of thinking’’. Nonetheless, emotional intelligence – the meso
layer between cognition and behavior – can activate behavior, the outermost layer as well as
cognition, the innermost layer of the human cognition-action translation process. Managers
should decipher the EI level of members and teams and whether they are more personally
EI-oriented or more socially EI-oriented. Managers then implement emotional role-modeling to
further activate ‘‘social goodness’’ inside each member, so that they more care emotionally
about other than themselves. Managers should not miss ‘‘too personal’’ emotional
manifestations since these are prodromal signs, which may lead to an acute or even chronic
phase of crisis in the organization, as highlighted by Fink (1986). Recognizing, rewarding, or
celebrating social EI manifestations is the effective way to sustain social EI at a high level as well
as integrate the ‘‘I’’ component into the ‘‘we’’ component in members’ emotional intelligence,
which will augment trust, CSR, and more crucially, reduce conflicts of interest among
stakeholders and smooth the corporate governance mechanism in the organization.
Potential limitations can be pinpointed in all research. Due to such limitations of the current
research such as its cross-sectional nature and the use of perceptual measures, the findings
from the empirical questionnaire survey must be tested further. By controlling the effect of past
performance on the perceptions of trust, and CSR, the research can argue that trust and CSR
have an impact on corporate governance. However, it has to be acknowledged that using
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longitudinal research designs in which all the variables are measured at different points in
time, the question of causality can be more thoroughly addressed (Wilderom et al.,2000).
A further research path to take is to look at trust as a precursor for corporate governance,
since trust – especially knowledge-based trust and identity-based trust – among
organizational members leads to their commitment to corporate governance. Since CSR
demands continuous innovation and value creation, which offer the opportunity for
knowledge sharing (Idowu and Louche, 2011), and CSR strategy development and
implementation can be facilitated through information provision and knowledge sharing
(Runhaar and Lafferty, 2008), discerning whether absorptive capacity and knowledge
sharing, which enhance CSR implementation, can contribute to the potency of corporate
governance may also attract researchers’ interest.
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About the author
Luu Trong Tuan is currently a Business Administration (BA) teacher at the University for
Natural Resources and Environment, Ho Chi Minh City. He received his Master’s degree from
Victoria University, Australia, in 2004 and his PhD degree in Management from the Asian
Institute of Technology, Thailand, in 2011. His research interests include organizational
behavior, performance management, knowledge management, and business ethics. Luu
Trong Tuan can be contacted at: luutrongtuan@vnn.vn
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