Getting a Grip on Governance - Corporate Governance and Capital Flows in a Global Economy

Ongoing corporate scandals have underlined the need to better define and implement corporate governance practice. But how does this work globally and what of the differing issues for developed and developing economies? The editors of Corporate Governance and Capital Flows in a Global Economy -- the World Economic Forum's Peter Cornelius and INSEAD's Bruce Kogut-compile insightful essays from experts and practitioners, that instead of honing down to 'one size fits all', broaden the scope to address corporate governance across all sectors of the globalised economy.

by Bruce Kogut, Peter Cornelius
Last Updated: 23 Jul 2013

A web-search on 'corporate governance' today brings up some 33,000 references: regulatory committees and bodies, business and academia, all professing corporate governance rules, visions or practices. Not surprisingly, they are not all saying or doing the same thing. And so it should be. The jury is still out on exactly what should be considered as good corporate governance. How to define it, measure it, institutionalise or globalise it...

According to the editors, the jury may well remain out, which is not to say that corporate governance is not an essential component of corporate accountability. It is essential, and businesses and government bodies are working to improve corporate governance to help secure market efficiency, confidence and stability. On this point all the authors and business gurus concur... more and better corporate governance is required. But what this actually entails is perhaps not so clear-cut.

This jointly produced World Economic Forum and INSEAD-Wharton Alliance book, edited by the Forum's Peter Cornelius and INSEAD's Professor of Strategy Bruce Kogut, steps in at this point and goes a long way to clearing the air. Corporate Governance and Capital Flows in a Global Economy is a comprehensive and diverse review of corporate governance for the globalised world. The line-up of authors is impressive in itself, boasting leading business brains and institutions. And how refreshing that this is not an attempt at any type of one-track, how-to manual. Rather, it offers differing (and sometimes contradictory) approaches and priorities that do justice to the complexity of the subject on a global level.

Providing a single point of discovery and reflection, this book does not profess to offer concrete solutions: As the editors are quick to point out, they do not believe there are blanket truths -- what is appropriate for some may not be for others. So the quest for the definitive 'how-to corporate-governance-handbook' can take a back seat while readers get down to understanding the challenges and crucial questions surrounding governance in the global context.

A compelling introduction from Cornelius and Kogut firmly sets the tone by outlining the major questions, not the least important of which is to offer clear definitions for both corporate governance systems and corporate governance practices. Here, Cornelius and Kogut are clear-governance systems are more in the realm of political sociology and economy through formal or informal institutions.

As each country has their own particular political, economical and organisational system, it would be both naïve and rather single-minded to imagine that a 'one-size fits all' system could be applied across the globe to ensure any form of 'universality' in corporate governance. And in case there were some doubt about the possibility of a 'winning governance system', a quick review of recent global corporate scandals reveals that there does not seem to be one given system that 'works' all the time-whether public corporations, family firms, or venture capital markets.

While the organisational system certainly counts in ensuring good governance, it is possible to apply governance best practice within any given system to bring about corporate governance improvement. So, what the editors do advocate is an intimate understanding of the forces at play within the various corporate governance systems and the transfer of appropriately adapted corporate governance best practices across systems.

The ensuing chapters discuss both corporate governance systems and practice from myriad perspectives; a comprehensive look at the Enron scandal; the role of employees and minority investors; the governance role for financial institutions; how cross-border capital flows could influence corporate governance in emerging markets; the relation of governance to corporate social responsibility; practitioners' and investors' views on investment and governance, and finally, essays on how corporate governance is evolving in China, Russia and Poland.

True to what one would expect from the World Economic Forum and INSEAD-Wharton Alliance, Corporate Governance and Capital Flows in a Global Economy delivers on all counts. A must-read for all those involved in the corporate governance field, and equally relevant for those operating within either emerging or developed market economies.

Oxford University Press, 2003

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