The Role of Corporate Governance on Organizational Performance: The case of Unilever PLC
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Date
2022-09
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Addis Ababa University
Abstract
Corporate governance is a critical matter for the efficient operation and success of a business organization. It creates transparency and responsiveness to the rules and controls of the shareholders, directors, and Employees. In the current highly competitive business environment, any failure in corporate governance practices will directly impact the company’s performance as well as existence of the company itself as demonstrated in recent high-profile cases. An effective corporate governance structure should promote sound internal control system, risk management, compliance with ethical and statutory requirements, ensures transparent and efficient markets, accountability, and trust in the management of organizations. The objective of this study was to examine the role of corporate governance on an organizational performance by taking Unilever Ethiopia as a case study. Exploratory and descriptive methods were used to test the relationship between commitment to corporate governance, the functioning of the board and transparency and disclosure on effective performance. Data was collected by a structured questionnaires with 5-point Likert scale from 68 top management, middle management, and officers of Unilever Ethiopia. The data was analyzed using SPSS statistical software to calculate correlation and regression to determine the relationship between the independent and dependent variable. The major findings of the study revealed that Unilever Ethiopia’s performance was favorably impacted by corporate governance commitment in connection to effective performance. The results also showed that the board's function and operation were important in influencing Unilever Ethiopia’s performance as well as Transparence and disclosure. This study recommends an increased focus on corporate governance practices within the organization and the implementation of a sound corporate governance structure to drive growth and profitability