File Name: corporate strategy and governance .zip
Download PDF. A short summary of this paper. SMSs or Small and Medium enterprises are non-subsidiary, independent firms which employ less than a given number of employees. This vary from country to country. In the U. SMEs are company with less than employees. In European Union, the limit is employee.
Introduction With the advent of major corporate meltdowns like Enron, Siemens, WorldCom and Tyco in the late 20th century and early 21st century, corporate governance became a topic of heated debate in various countries. Thereafter, economies worldwide began the adoption of waves of regulations and measures that would prevent corporate scandals, hold firms accountable and enhance their performance, both ethically and financially. In essence, corporate governance is there to ensure equitable, fair and just treatment for all stakeholders, particularly in the free-market and capitalistic climate of the 21st century.
Agency theory The agency theory focuses on a checks-and-balances type of governance. The board of directors, which is comprised of mostly independent members, is tasked with monitoring management to avoid problems. Corporate governance in large businesses is associated with the agent-principal issue. The principals hires agents to represent their interest and act on their behalf but they acts in their own interests instead.
The agency problem occurs when agency do not appropriately represent the best interest of the principals. It is also increasingly seen as needing to take account of the interests of other stakeholders, such as employees and suppliers, and wider societal issues such as appropriate stewardship of environmental assets. Stewardship theory Under the stewardship theory, company executives protect the interests of the owners or shareholders and make decisions on their behalf.
This theory brought in a sense of trust that people can be trusted to act on others behalf fairly. Their sole objective is to create and maintain a successful organization so the shareholders prosper. This allows for intimate knowledge of organizational operation and a deep commitment to success. Where the owners are also the managers, management and ownership interests are aligned, but these interests are not necessarily those of other stakeholders.
Generally for SMEs, corporate governance is mainly about improving business efficiency and performance, and less about monitoring the actions of management. In general, a robust and effective corporate governance framework includes a number of features and characteristics. Some scholars argues that corporate governance is not relevant in the Small and Medium Enterprise context, due to the absence of a board of directors, and the unity of ownership and management.
Nevertheless, most SMEs have business partners and multiple stakeholders with extensive interest in sustainable growth and long-term success. Is it correct to say that in case of SMEs, good governance is not relevant because in essence of there is no separation of ownership and stewardship? No I disagree, corporate governance does not discriminate against company size. As such adhering to corporate governance principles is as important for a large utility company Nampower as it is for the owner of a food restaurant or even a small shop in Ombili, Katutura.
The main aim of every business is to grow and make more profit. Therefore, if these objectives are to be achieved, SMEs has to adopt good corporate governance to attract investors to the business.
The governance systems applied to SMEs are internal and since SMEs are not enlisted in the stock market, regulators tend to have little to no influence but that does not mean corporate government is not needed in SMEs. Why is corporate governance important in SMEs and family owned businesses? For a SME, corporate governance is concerned with the roles of shareholders who act as owners and managers, as well as laying out rule and procedures related to ensuring the integrity of financial results.
Assuming that the main objectives of every small business is to grow and be able to compete with larger and perhaps more established firms, numerous scholars agree that integrating corporate governance practices sets precedents for future growth and lays solid ground for potential investments and partnerships.
Unlike large companies, SMEs and family owned business do not run the agency risk, which is the owners of the business are different from the management of the business.
For example, a person selling kapana at single quarters does not run agency risk like the owner of Spar Supermarket. In small business usually the owners are the managers of the businesses. Secondly, not much importance is given to the impact that senior managers can have on a business.
This is because they can provide valuable insights of what is actually going on within the business and the potential risks that the business is facing. In addition to that they also provide monthly or annual reports. Thirdly, the boards of small companies lack diversity and Non-executive directors. As non- executive directors are considered to be a fresh pair of eyes to any business and provide their independent judgement relating to the business strategy and performance they can add significant value to the business.
However, there can be a lack of formal policies and procedures as members might be familiar with one another. This creates a higher risk of fraud and error due to the absence of a formalized contract and rigorous procedure in place. In practical terms, governance provides a key set of tools that SMEs can use to support their competitive survival and growth. The significance of incorporating corporate governance mechanisms in such business structures stems from the fact that SMEs dominate most economies, particularly developing ones, and are the main source of employment and production.
Entrepreneurs need to start governing their companies based on a certain set of principles, trusting that specific solutions and tools will evolve with the business as it grows.
Investors wants to put their money in companies that are having good corporate governance. The more accountable and transparent the company is, the more it will attract good investors.
Corporate governance is not a one size fits all or any gear can drive, it is environmental best. Sustainability, accountability and corporate governance: exploring multinationals' reporting practices. Business strategy and the environment, 17 1 , Rezaee, Z.
Corporate governance post-Sarbanes-Oxley: Regulations, requirements, and integrated processes. Ghatak, S. Lane, S.
Guidelines for family business boards of directors. Family Business Review, 19 2 , Zahra, S. Boards of directors and corporate financial performance: A review and integrative model. Journal of management, 15 2 , Schein, E. The role of the founder in creating organizational culture. Organizational dynamics, 12 1 , Van Greuning, H. The World Bank. Neville, M. The role of boards in small and medium sized firms.
Corporate Governance: The international journal of business in society, 11 5 , Related Papers. By Jonas Gabrielsson. By Morten Huse and Jonas Gabrielsson. Board of directors and financial performance in the Middle East. By Elie Bouri. By Emmanuel Affum-Osei. Download pdf. Remember me on this computer. Enter the email address you signed up with and we'll email you a reset link. Need an account? Click here to sign up.
Publication Frequency. Corporate strategy plays a critical role in the proper functioning of an organization as it provides the blueprint that guides the corporate direction of an organization while governance structure presents an organization with a framework for the distribution of responsibilities and resources to achieve organization performance. While the constructs have been sufficiently studied and documented in various studies separately in relation to organization performance, few studies have been undertaken to study the two constructs together to understand how they jointly explain organization performance. This paper presents a review of the extant theoretical and empirical literature on the two constructs in relation to organization performance. Relevant underpinning theories are reviewed, constructs described and their operational indicators identified and compared with empirical work and emergent knowledge gaps identified. The paper finally proposes a multidisciplinary based theoretical model suitable to address the gaps identified to advance knowledge in the area and calls upon future research to empirically test the propositions of the study.
The article analyses the problems of strategic governance and strategic management of the Czechoslovak Government, as well as the Government of the Czech Republic in the years It seeks the causes and factors that have caused the low levels of strategic governance and strategic management at the level of the ministries of the Czech Republic. It examines the problem from genetic and historical perspective, and from the organizational and human capacity to exercise strategic governance. The study is based on two pieces of empirical research within the ministries of the Czech Republic. It identifies the main cause of failure of strategic governance and strategic management at the level of the central government of the Czech Republic. These include, in particular, the persistent distrust of the ideas of strategic governance and strategic management held by the right-wing governments and the generally low capacity of governments of the Czech Republic to engage in strategic governance.
How corporations govern themselves has become a matter of broad public interest in recent decades. Amid this many commentators and experts still disagree on such basic matters as the purpose of the corporation, the role of corporate boards of directors, the rights of shareholders, and the proper way to measure corporate performance. The issue of how shareholder interests should be considered in corporate decision making is particularly contentious. Many readers are grappling with these questions now or may have to address in the near future; in any case, the debates are sure to affect how business operates across the globe. Corporate governance has become a topic of broad public interest as the power of institutional investors has increased and the impact of corporations on society has grown.
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Skip to search form Skip to main content You are currently offline. Some features of the site may not work correctly. Antwi , Frederick Binfor Published Business. The research has investigated the effect of corporate governance on strategic change in rural banks in the Eastern Region of Ghana. It was also examined the importance of governance mechanism and strategic decisions on weaknesses and threats to the banks effective operation.
Corporate governance is the collection of mechanisms, processes and relations used by various parties to control and to operate a corporation. Corporate governance includes the processes through which corporations' objectives are set and pursued in the context of the social, regulatory and market environment. These include monitoring the actions, policies, practices, and decisions of corporations, their agents, and affected stakeholders. Corporate governance practices can be seen [ by whom? Interest in the corporate governance practices of modern corporations, particularly in relation to accountability , increased following the high-profile collapses of a number of large corporations in —, many of which involved accounting fraud ; and then again after the financial crisis in Corporate scandals of various forms have maintained public and political interest in the regulation of corporate governance.
PDF | The goal of this special issue is to enhance the understanding of the relationship between corporate governance and strategic.
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