Good

Governance
 TOPIC

 What is good governance?

 Theoretical frameworks:
o Agency theory
o Transaction cost theory
o Resource dependency theory
o Stakeholder theory
 The evolving framework of corporate
governance
Course
Outline Stakeholder advocacy
o The role of business in society
o Consumers' awareness and willingness to pay
for socially responsible corporate behavior
Making a Socially Responsible and Ethical
Marketing
 Movie Classification Board
 The Ethics of Advertising
Assignment:
Prepare one slide on Corporate Governance
What makes up
Governance?
• employer
• Process and Structure
• Policies, Systems and Procedures
• Clients/general public
• Administration/Management
• NGOs
• Business Sectors
• Civil Society
 Corporate
Governance
 Corporate
Governance

It encompasses the systems,

mechanisms and processes
by which a business entity
or company is managed,
directed and controlled.
Governance
Area Governance Corporate Governance
• Public Entities • Private Entities
Perspective • Government • Business Organizations
• Corporation

• Political • Management Control over the

Scope • Economic business
• Administrative

• Nation’s Affairs • Welfare of the owners

Purpose • Wealth of the Stakeholders
Where Power is Vested • State • Board of Directors
• Civil Society • Management Team
Good
Governance
How do you see a state of
Good Governance?
 Good
• •
•

Governance
 Good
• •
•

Governance
 Good
Governance

•
Good Governance

•
 •
Good
Governance

•
Good Governance

•
Good Governance

•
Good This refers to processes,
Governance procedures, and practices that
are expected to promote the
general welfare.
Good Governance

Good governance is the process of measuring

how public institutions conduct public affairs and
manage public resources and guarantee the
realization of human rights in a manner essentially
free of abuse and corruption and with due regard for
the rule of law.
 Good
Governance
Governance ensures
everyone in an organization
follows appropriate and
transparent decision-making
processes and that the
interests of all stakeholders
(shareholders, managers,
employees, suppliers,
customers, among others) are
protected.
 The fundamental reasons why
organisations should adopt good
governance practises include:

Why is good To preserve and strengthen

governance stakeholder confidence –

important? To provide the foundation for a

high-performing organisation

To ensure the organisation is well

placed to respond to a changing
external environment
 It is a mechanism but which
Corporate business institutions, particularly
Governance corporations, are run and manage
by Board of Directors who are
expected to protect the interests
of the shareholders and all other
stakeholders.
 Corporation
An artificial being created by operation of
law, having the right of succession and the
powers, attributes and properties expressly
authorized by law or incidental to its
existence.
 Accountability

Purpose of Transparency

Corporate
Governance Fairness

Responsibility
 Sustainability
Principles of
Corporate
Social Accountability
Responsibility
Transparency
 Political Agencv
Theory. theorv.

Theory of
Corporate Transaction
Cost Theory.
Stewardship
Theory.
Governance
Resource
Stakeholder
Dependency
Theory.
Theory.
Agency Theory

It entails the hiring of another person to Principal and agent relationship is

run the business affairs for and in behalf of created.
the owners/shareholders.
 Transaction
Cost Theory

Is an approach where
all costs incurred in
outsourcing
production of goods
and services are taken
into accounts.
 Resource
Dependency
Theory

The theory that

emphasizes the
importance of procuring
resources outside the
organizations, which are
important inputs to
production of goods and
services.
 • This is focus on giving
importance on the
relationships between the
Stakeholders
business and its
Theory
stakeholders – the owners,
customers, employees and
other parties/organizations.
Stewardship Theory

• Centers on the fact that

the persons entrusted to
manage the affairs of
the organization shall
act responsibly on the
use of its resources.
 • Helps bureaucrats, politicians,
Political government officers and
Theory advocates to interpret the
laws and constitution. It also
helps in understanding the
problems of society and explore
the ways to solve them.
 Corporate social responsibility is a
Corporate hard-edged business decision. Not
Social because it is a nice thing to do or
Responsibility because people are forcing us to do
it... because it is good for our
business”
Niall Fitzerald, Former CEO, Unilever
The following summary of the CSR stages are adapted from the
Boston College Center for Corporate Citizenship's “Stages of
Corporate Citizenship: A Developmental Framework”.

Elementary Engaged Innovative

Integrated Transforming
5 Stages of Corporate Social
Responsibility
5 Stages of Corporate Social Responsibility

Stage Nature Process

1st Elementary Compliance-Based
2nd Engaged Formal Policies
3rd Innovative New Approaches
4th Integrated Sustainable programs
5th Transforming Corporate Citizensips
Thank You