THE INFLUENCE OF ORGANIZATIONAL PSYCHOLOGY ON CORPORATE GOVERNANCE AND FIRM PERFORMANCE: A BEHAVIORAL GOVERNANCE PERSPECTIVE
Abstract
This study examines how organizational psychology influences corporate governance effectiveness and firm performance by integrating behavioral and governance theories. While traditional corporate governance research has focused primarily on structural mechanisms such as board composition, ownership structure, and regulatory frameworks, emerging literature highlights the role of psychological and behavioral dynamics in shaping governance outcomes. Drawing on contemporary empirical studies (2020–2025), this paper explores how leadership behavior, organizational culture, cognitive diversity, and employee engagement affect governance effectiveness and organizational performance. The study adopts a conceptual and integrative review approach, synthesizing insights from agency theory, stewardship theory, stakeholder theory, and social exchange theory. Findings indicate that organizational psychology significantly mediates and moderates the relationship between governance structures and firm performance. The paper contributes to the growing field of behavioral corporate governance and offers practical recommendations for enhancing governance effectiveness through psychologically informed strategies.
Keywords: Organizational psychology, corporate governance, firm performance, ethical leadership, organizational culture, behavioral governance
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