Republic of the Philippines
North Eastern Mindanao State University
Cantilan Campus
Cantilan, Surigao del Sur
Telefax No. 086-212-5132
Website: www.sdssu.edu.ph
Instructional Module on
Social Responsibility and Good Governance
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JONILYN G. AZARCON, LPT
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Lesson 1: Legal, Regulatory, Political Issues
Intended Learning Outcomes
With the help of this module, the students will be able to:
Appreciation
Company Law dictates how it is created on incorporated. Laws are considered conduct approved and
enforced by a government of a particular country. Society cannot function effectively if there is no basis or a
mechanism that regulates the interaction between its citizenry. The law is also a mechanism that protects people’s
fundamental rights, establishes order, resolves disputes and sets standards. Business law (or commercial law) is
a body of law that deals with corporate contracts, manufacture or sale of goods and services, employment, labor
relations and many others. Knowledge of the law is essential in running organization that are socially responsible
and governed well.
Exploration
Regulation
“One primary consequence of CSR and corporate governance activities is the impact on the
financial performance of the company. For a profit-oriented organization like us, we are expected to
produce positive EBIT, good return on equity and assets, plus an attractive EPS in accordance with the
law. In the conduct of business, it’s always a challenge to be utopic in complying with all legal, regulatory,
fiscal and even tax rules. We take a balance by adapting the ethical theory of Utilitarianism which holds
that the most ethical choice is the one that will produce the greatest good for the greatest number. We also
manage to take up the proactive strategy by being fully aware of our social responsibilities and actively
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supporting and participating various efforts by keeping abreast with the evolving global and local
initiatives.”
Mr. Ulysses King
Chief Financial Officer
Omnicom Media Group-Philippines
Regulation is defined as a legal system that controls and regulates the business activities of a certain
country. Legislation and regulation on CSR and Corporate governance can sometimes overlap because
both concepts deal with normative business conduct, and both have similar requirements. Corporate
governance deals with external regulation (legal) and internal control of the corporation through legal
means by its board of directors. In contrast, CSR deals with an internal commitment of a company to
behave ethically and satisfy the needs of its various stakeholders. CSR can influence corporate governance
structures, as can be seem with the growing nonfinancial assessments or “soft” governance systems in
corporations today.
Laws, Codes, and Regulations
We now discuss the various codes, laws and regulations that are relevant in the practice of CSR
and corporate governance:
Sarbanes and Oxley Act (SOX)- Although this is an American legislation, it is significant because
of increased financial accountability in auditing (internal and external) and disclosure to protect investors.
Organization for Economic Cooperation and Development (OECD)- There are many codes from
various international agencies such as the International Corporate Governance Network (ICGN), and they
all revolve around similar principles of goods corporate governance.
The Philippine Corporation Code
The Corporation Code of the Philippines was approved in 1980 that prescribes the rules and
regulations in the establishment and operation of corporations in the Philippines. The content of this code
includes the incorporation of private corporations, bylaws and board meetings. It is very important to
know about the law and understand it if he or she would like to get into the business. Ignorance of the law
is not an excuse.
The code was revised in 2019, after almost 40 years to improve the ease of doing business in the
Philippines and thereby fortify further economic development. Some of the notable changes made with
the revised code are:
1. Removal of the minimum number of incorporations
2. Required minimum P1,000,000.00 capital stock on stock corporations
3. Removal of the 50 year corporate term. This means a corporation can exist indefinitely.
4. Creation of a one-person corporation (OPC)
5. Use of the Internet to attend a meeting and filing of reports which were not allowed in the old code
6. Power of the Securities and Exchange Commission (SEC) to remove disqualified directors or trustees.
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The Philippine Code of Corporate Governance
The SEC first came out with the code in 2002 and has undergone numerous amendments, the latest of
which was done in 2019. One of the main purposes of the code is to align Philippine government codes with that
of the international business community standards (such as the OECD and ASEAN Corporate Governance
Initiatives). Corporate governance in the Philippines is principles-based (meaning, companies are asked to comply
or explain a violation of the code).
Company Codes
There are countless examples of governance codes adopted by companies based on widely accepted
international governance codes such as the OECD. The OECD provides the guidelines for how organizations may
practice good governance.
Political Issues and Corporate Governance
Political issues are important topics of good corporate governance. Good governance does not limit itself
to addressing business disruptions, and creating a competitive advantage through strategy. How these political
issues are addressed, such as climate change, healthcare, income taxes, bribery in government and others, are part
and parcel of a company’s long-term strategy. These are issues that concern just about every individual in any
society-the stakeholders.
Changes in government policy and regulations can affect the operational viability or even the survival of
a corporation. For this reason alone, the board should be aware of the uncertain and volatile environment that we
live in today. Being prepared to manage these changes will help mitigate risks.
REFERENCES:
 Dislocations) Catherine Dolan, Dinah Rajak (eds.) - The Anthropology of Corporate Social
Responsibility-Berghahn Books (2016)
 Raju, K. V._ Wani, SuhasPralhad - Corporate social responsibility_ win-win propositions for
community, corporates and agriculture-CABI (2018)
 Corporate Social Responsibility - David Chandler
 Delos Santos, et.al. 2021. Good Governance and Social Responsibility. Rex Publisher
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Lesson 2: Employee and Industry Relations
Intended Learning Outcomes
With the help of this module, the students will be able to:
Appreciation
The idea of employee relations is a loaded one. Many may think that the idea behind it is too
abstract that cannot be subjected to a systematic and grounded explanation. Some may agree that to
capture the essence of what it is about would be a tall order given the complexity of variables involved
in discussing its dynamics. However, in this lesson, we will seek to rationalize the core of employee
and industrial relations by first learning the basics of employee relations, its variables, and the dynamics
and models that best capture it, various perspectives will be peered from the microcosm of employee
dynamics to the greater whole, as seen in the lens of the company.
Exploration
Employee Relations vs Industry Relations
Over the past few decades, there has been confusion between the two terms. A debate
regarding the nuances between the concept of “Employee Relations” and “Industry Relations” has
continuously been contested. Many see the need to differentiate the two, others see that are
overlaps, and many see that these are linked together to the point that they can be used
interchangeably (Bylon & Turnball, 1994).
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What is “Industrial Relations” for many:

The term is synonymous and associated with collectives, such as mass movements of
workers, trade unions and others.

It was also linked to “Industrial” work, such as the manufacturing sector, labour-intensive
tasks, and factory work that are full-time.

The tone of “Industrial Relations” were thought of to be more focused on “collective action”
such as bargaining agreements.
What is “Employee Relations” for many;

The term revolves around a smaller subset of industries and goes beyond the collectives,
such as trade unions.

Are no longer just focused on factory work, manufacturing jobs, but now also includes the
service sector/ non-union entities, part-time and contractual workers.
In more recent practices, the term “Employee Relations” generally focuses on the
restrictions and agreements between the industry to its workers in various levels of
collectivization, as a union or as an individual. Its main goal is to ossify the interest of its
subjects towards the company’s goals and aspirations.
Psychological Contract and Why It Matters
An intangible agreement between both parties binds the relationship between the employer
and their employees. This means that the relationship within the corporate structure is guided and
predicated on a set of practices and expectations between them.
Examples of these norms are as follows:

Both parties observe fairness and transparency.

Employee impact and value are recognized and rewarded by their employer in various
forms, such as benefits, tenure or career growth.

Both employer and employee will work toward the shared goal of growth that will be
beneficial for both parties based on shared values, mores and vision.
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Adding to the broad prescriptions above, the employees themselves seek specific conditions
that will further elevate their sense of belongingness and self-actualization, which could be, but
are not limited to, the set of examples below:

Community building among peers

Tenure and security

Corporate mobility and promotions

Expansions of skillsets and training

Humane treatment

Work/life balance or integration

Having their voices and suggestions heard by the management

Impact and performance are duly rewarded

Flexibility on tasks and processes
For these to work flawlessly, the industry also sets its standards on its employees in a cycle
where both mutually benefit from their work engagement.

Proactive and willing to learn

Has the necessary skills and competence to work on designated tasks

A team player willing to work with others

Focused on achieving the goals set by the organization

Has the initiative to work on tasks with minimal supervision
Relationship Attachment: Compliance and Commitment
Compliance
The word itself conjures ideas of submission and power. In the relationship between employee
and employer, compliance has different forms and root sources of power present in this interaction
(Etzioni, 1975).
Sources of power:

Coercive-Punishment

Remunerative-Financial reward

Normative-Symbolic awards tied to values held by the company
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Forms of involvement:

Alienative-Negative or antagonistic

Calculative-Careful and thoughtful of choices

Moral-Positive and in accordance with norms set by the company
Commitment
Again, following Etzioni, “Commitment” is about involvement or moral bond between employer
and employee and sharing an optimistic view that leads to a mutually beneficial relationship. In the
nineties, commitment is defined as a belief leading to employees creating positive value and even
beyond the expected output.
Two Side of the Coin: Cooperation and Conflict
Relationship between the employee and the employer is best achieved in an environment of
mutual support and transparency to reach their desired goals. However, this relationship is never
linear nor is ensured. Cooperation and conflict exist and are a part of this ongoing and never ending
interaction. Conflict and cooperation are more akin to the push and pulls of the system and like your
laws of physics, minute variations of action contribute to the reaction of other variables in a system.
Unitarism
As the term suggests, it is a view that assumes that companies and their employees are likeminded and thus, share various commonalities, such as norms and aspirations. Example of this are
the idea of a family or pushing for communal spirit across the organization.
Pluralism
The difference between unitarism and pluralism is that pluralism looks into the diversity of
individuals and acknowledges it. Therefore, it accepts the notion that there are differences in
objectives, norms, perspectives which then creates groups or unions.
Radical/Marxist
Class and exploitation of workers are the central notions behind the Radical/Marxist
perspective. In a much simpler sense, the employer is seen as the evil that merely exploits workers
for labor to derive surplus value, which is only accessible to the capitalists and not the laborers
themselves. To make profit, it is acknowledged by believers of this perspective that it can only be
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extracted their employers, and have changed the way employee relations work from the industrial
revolution to what it is today.
It is understood in this perspective that:
Labor + Technology + Capital = Goods anf Services with (Surplus Value)
Industrial Relations as a System
In 1985, a man named J.T. Dunlop created the idea of industrial relations as a system. For
Dunlop, he sees the systems rooted in the ideas of “Inputs, Processes and Outputs”.
Outputs
Dunlop sees outputs defined by substantive and procedural rules that manage the, main
characters or actors within an industrial environment. The difference in substantive and procedural
rules for some is rather unclear and hard to grasp.

Substantive rules- Result of rules such as hourly wages

Procedural rules- Result of compromises about the system
Inputs
Again, for Dunlop, there are three pillars that ate independent variables under “Inputs”; these
are actors, contexts and ideology.
Actors

A group comprised of laborers who are not part of the managerial level

A group comprised of managers that may also include employee collectives

Exogenous agencies that exist beyond the employee/employer relations, such as
government agencies, national labor associations and others.
Contexts

Market influence- economics and the market play a huge part in industrial relations such
as that of emerging market trends, a global competition that pressures firms to be more
accommodating and flexible to employee terms.

Technological influence- the impact of disruptive innovation plays an important role in the
system, such as that of drastic changes to production practices, which will force the
industry to adapt to the skills sets, manpower requirement and labor to achieve targets.
Ideology
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It is simply the totality of values, beliefs, ideas and more that are reinforced and shared by all
actors across the different hierarchies. Ideologies that are shared stronger by the actors corresponds
to a better working relationship and harmonious environment, making the system more stable.
REFERENCES:
 Dislocations) Catherine Dolan, Dinah Rajak (eds.) - The Anthropology of Corporate Social
Responsibility-Berghahn Books (2016)
 Raju, K. V._ Wani, SuhasPralhad - Corporate social responsibility_ win-win propositions for community,
corporates and agriculture-CABI (2018)
 Delos Santos, et.al. 2021. Good Governance and Social Responsibility. Rex Publisher
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