Advancing Business Ethical Standards: Unpacking the Synergistic Influence of Governance Structures and CSR Engagement on Corporate Integrity in BRICS Countries

Abstract

In a global business environment where ethical lapses increasingly undermine corporate credibility, can enhanced governance mechanisms and CSR engagement drive ethical corporate behavior? This study explores the intricate relationship between corporate governance attributes and Business Ethical Practices (BEP), examining how CSR engagement moderates this relationship across 386 manufacturing firms in the BRICS countries from 2010 to 2022. Grounded in Stakeholder and Agency Theories, the research investigates three core governance strands: diversity, structural, and process attributes. Using the Generalized Method of Moments (GMM) estimator, the findings reveal that gender diversity and age diversity positively influence BEP, while national diversity has a negative association, raising concerns about the alignment of foreign board members with local ethical standards. Board independence and board size significantly enhance ethical practices, while CEO duality negatively affects BEP, emphasizing the importance of independent oversight. Among process attributes, board meetings and board tenure positively contribute to BEP, while meeting attendance shows a negative association, suggesting that mere presence without meaningful participation may not guarantee ethical outcomes. Notably, CSR engagement amplifies positive governance effects and mitigates negative influences, reinforcing its critical role as a governance enhancer. Heterogeneity analyses across manufacturing types (Job Shop, Batch, Continuous Process, and Mass Production) confirmed the consistency of these findings. Furthermore, robustness tests, including cluster analysis, sensitivity analysis, and endogeneity controls, validated the reliability of the results. The study provides targeted policy recommendations advocating for stronger diversity mandates, deeper CSR integration, and enhanced ethical training, while the practical implications emphasize the importance of comprehensive governance frameworks for long-term ethical sustainability.