Corporate Governance: The international journal of business in society

Global corporate governance: debates and challenges

Malla Praveen Bhasa
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Malla Praveen Bhasa, (2004),"Global corporate governance: debates and challenges", Corporate Governance: The international journal of
business in society, Vol. 4 Iss 2 pp. 5 - 17
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 Global corporate governance:
debates and challenges
Malla Praveen Bhasa
Downloaded by HERIOT WATT UNIVERSITY At 08:06 06 February 2016 (PT)
The author is a doctoraI student at
the ShaiIesh J. Mehta SchooI of
Management, Indian Institute of
TechnoIogy, Bombay, India,
researching in the area of corporate
governance. He can be reached at
praveen@som.iitb.ac.in
DOI 10.1108/14720700410534930
PAGE 5
VOL. 4 NO. 2 2004, pp. 5-17, © Emerald Group Publishing Limited, ISSN 1472-0701
Abstract Modern day business is beset with changing operating paradigms. Economies
with efficient economic policies and stable political systems are a big draw among the
investors. Sountries that have opened themselves to world markets and that have good
legal systems in place, providing protection to investors have attracted more capital in the
process of globalization. As the demand for capital is growing in both the developed and the
developing economies, the need to establish good governance practices has gained
momentum. Governance practices however, are not uniform across nations. This diversity
may be particularly because of the different legal structures and cultural settings adopted
by different nations. This paper tries to explore the arguments on convergence and
divergence of corporate best practices, keeping in view the various governance models
currently in practice. Explaining the rationale behind the emergence of corporate
governance as a movement, this paper attempts at discussing the various prevalent
systems of governance. In the end an attempt is made to address the challenges to
corporate governance in the context of globalization of best practices. Given the cultural
settings of different nations it is argued that it would never be possible for corporate laws to
converge universally. New models of corporate governance are likely to emerge given the
large-scale experimentation done by transition economies.
Keywords Sorporate governance, Shareholders, Stakeholders, Globalization,
Economic convergence, Divergence
Introduction
Modern day business is beset with changing operating paradigms. With corporations growing Iarger and Iarger
and the need for capitaI muItipIying manifoId, the need to enter foreign capitaI markets and access them for
their capitaI needs has given rise to new chaIIenges in the governance of internationaI business. The pre-
transition era was justified by the need to protect domestic markets, but with corporations growing in
gargantuan proportions and spreading their wings aII across, the need to open up domestic markets for
entry of foreign business became a necessity.
After the Second WorId War, when worId over economies needed to be rebuiIt, increased cooperation
among countries became a must for internationaI movement of goods and services. CapitaI Iying idIe in
some countries had to move out to Iubricate the economies of other countries. This sowed the seeds for
growing internationaIization of business. Prior to this, protectionist regimes seIdom aIIowed any foreign
intruder into their nationaI business scene.
l CORPORATE GOVERNANCE
l
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