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1. Good governance, like personal integrity, is no longer the luxury of the virtuous; it has become global business.
1.1 Basic terms
Integrity is being respectful, having self-control, and maintaining discipline throughout work and life. expresses a common attitude about the self: at its best the self is isolated from others, true to its own principles, and is a complete “whole.” Perhaps the most common meaning of integrity is consistency. Integrity here refers to the alignment between what one does and what one says. Doing and saying should belong to the same whole. There is consistency between their actions and what they purport to honor. They pursue their aims along the high road and are uninterrupted and undiminished by temptations for quick or easy personal gain (wordpress.com 2012).
1.1.2 Global corporate governance
In tradition, corporate governance refers to the relationship among various participants in determining the direction and performance of corporations. The primary participants are (a) the shareholders, (b) the management led by the CEO (chief executive officer) and (c) the board of directors (ecgi.org 1999). And the global corporate governance targets more on a range of disciplines across the nations to ensure the fulfillment of the fiduciary duties of the corporate boards and managerial responsibilities in various industry to help contribute to the control and prevention of some global issue (Sun, Stewart & Pollard 2011) such as the periodic global financial crisis as each financial crisis tended to reveal a number of financial scandals (some are really big corporations) which should be prevented if the corporate governance is well implanted as it is designed to do so.
1.1.3 Good corporate governance (GCG)
Good corporate governance (GCG) in a corporate set up leads to maximize the value of the shareholders legally, ethically and on a sustainable basis, while ensuring equity and transparency to every stakeholder – the company’s customers, employees, investors, vendor-partners, the government of the land and the community (Murthy, 2006)
1.2 Issues of personal integrity in business
It is true that personal integrity has become widely required and it is more essential as the level moves up the hierarchy of the company. For example, in the official website of the Dell, the company clearly states the requirements of its board of directors in term of the nomination process, beside the Management and leadership experience and Skilled and diverse background, the company also requires the Integrity and professionalism by requiring the following essential characteristics for each Board candidate: highest standards of moral and ethical character and personal integrity; independence, objectivity and an intense dedication to serve as a representative of the stockholders; a personal commitment to Dell’s principles and values; and impeccable corporate governance credentials. In addition, each candidate of the board of directors must be willing to commit, as well as have sufficient time available to discharge the duties of Board membership and should have sufficient years available for service to make a significant contribution to Dell over time (dell.com 2010). Therefore we can see that many large companies have already put the personal integrity as in the similar important position as like other key requirements such as leadership traits and industrial knowledge.
1.3 Good governance becomes global business
1.3.1 In the perspective of the MNCs
With the trend of globalization, not only the market and production as well as other business activities becoming more transnational but also the corporate governance becomes a hot topic in managing business that involves more than two different nations. And with corporate governance becoming more globalized, the traditional definition of good corporate governance has changed. As mentioned above, in tradition, corporate governance refers to the relationship among various participants in determining the direction and performance of corporations. The primary participants are (a) the shareholders, (b) the management led by the CEO (chief executive officer) and (c) the board of directors (ecgi.org 1999). This view is typically expressed in the shareholder-centered model used in America which includes dispersed ownership, strong legal protection for shareholders and indifference to other stakeholders. But with the globalization, another new model appear called the hybrid model which combines features from both the shareholder and stakeholder models, defined by a less clear separation between dispersed ownership and managerial control. In other words, stakeholders have more influence over the operation of the company. And it is said that in fact, globalization seems to encourage countries and firms to be different, to look for a distinctive way to make a dent in international competition rather than to converge on a best model (upenn.edu 2002). Therefore, with the globalization of the business, we also see that not only the US shareholder-centered model is being promoted, business cultural and legal systems from other national markets also have their influences over the shaping of the good corporate governance for the MNCs operating in the particular political, economic and social environment. For example, as said earlier, according to the findings by Thankom Arun and John Turner (2009, p. 28), they found out that the three most individualist cultures were Anglo-American, namely, the United States (score of 91), Australia (90) and United Kingdom (89); and in contrast East Africa scored 27 and West Africa scored 20 indicating that in these cultures collectivism was more culturally predominant. This perspective may help us to understand Shell’s strategy in Africa. It is said that Shell contributes to the Nigerian economy by generating revenues for government as well as paying taxes and royalties. In addition to this, Shell companies in Nigeria pay a statutory contribution to a regional developmental agency- the Niger Delta Development Commission (NDDC)- to develop the Niger Delta. In addition to this, Shell companies in Nigeria employ 6,000 direct employees and contractors (90% Nigerian). Many of the projects of the companies help create tens of thousands more jobs. Many of these programs are in partnership with government and other development agencies (triplepundit.com 2011). As a result, we can see that different markets have different macro and micro business environments which request the company to have more global and at the same time more localized corporate governance in term of various business strategic direction setting and techniques adoption.
1.3.2 In the perspective of the national governments
While in the perspective of the MNCs, they have only one final target which is to maximize profit generation though strategy such as CSR practices could be used to satisfy the needs of the powerful stakeholders, in the perspective of the national governments, they have contradictive targets: on one hand, they want to attract global business and investments and in this process competition among countries in particular developing countries could happen, but on the other hand, they want to regulate the corporate governance practices and make they contribute to the economic and social development in the long term for the nation through the enactment such as the said code of corporate governance and other laws and regulations. Again, the dilemma comes which has been mentioned in the last question: if the rules made are quite restrictive and will incur high compliance cost, such rules could discourage the foreign investors, and if there is a lack of initiative investments, the economy development would be in a slow pace because it takes time for the capital to be accumulated. As I had concluded above, I believe that some wrong doings are intrinsic, or resides in the kind of action that it is, rather than the consequences it brings about. In particular, when it comes to the case of setting the rules and laws for business and for people to follow, such regulations should be sacred and their honor would be discounted if they are negotiable. As a matter of fact, this view is shared by many nations as the majority of them enact very comprehensive and strict rules and laws. But the fact is that many of these rules are not well enforced resulting in the common violation by the companies. Therefore, enforcement is one of the central issues in the perspective of the national governments to handle the globalization of the corporate governance issues.
1.3.3 In the perspective of job seekers
With the global trend of aging populations which is more eminent in the western world, the strive for the competent and experienced talents are becoming more than more fierce, and therefore we can expect that the talented job seekers are no longer focusing only the monetary rewards and also they care about the ethical behaviors of the companies. As a result, it is understandable that companies with good corporate governance will be more preferable. In additions, as mentioned above, good corporate governance (GCG) in a corporate set up leads to maximize the value of the shareholders legally, ethically and on a sustainable basis, while ensuring equity and transparency to every stakeholder – the company’s customers, employees, investors, vendor-partners, the government of the land and the community (Murthy, 2006), and as an important stakeholder of the companies, employees would be taken good care of and therefore, job seekers would prefer employers who have reputation for good corporate governance.
1.3.4 In the perspective of investors
In the perspective of the investors, good corporate governance is critical to them for them to make investment decisions. First of all, good corporate governance usually could be seen from reliable and honest financial reports which are the major source of information for the investors, in particular the foreign investors. As we can see from many of the financial and accounting scandals, fabricated and creative accounting are usually used to cover up the losses, and for companies with good corporate governance, they would not do so and thus eliminate the investment risks; secondly, the adoption of global corporate governance will help standardize the business practices such as financial reporting and facilitate the comparison of different investment portfolios.
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