LONDON: In his new book, The Globalisation of Corporate Governance: The Challenge of Clashing Cultures, author and Director of SAMI Consulting Adrian Davies outlines how the litany of corporate governance failures in OECD companies is holding the widespread adoption of minimum global corporate standards back, and will impede the international investment necessary to re-build the global economy back to its full potential.
"Companies in OECD companies often speak about the lack of corporate governance regulation in emerging economies and that they are being unfairly and overly regulated, but we have seen company after company ignoring or subverting corporate government regulation," commented Davies.
"Over decades we have seen a systemic failure of corporate governance implementation by companies, shareholders and investors, and yet we expect our emerging trading partners to adopt our high standards in favour of their own cultural business practices. Following scandal after scandal regulators state they will strengthen the corporate governance rule book; they did it after BCCI, Enron, WorldCom, and Tyco, and then again after Lehman Brothers, and the European Union will do so again if and when they re-write the Eurozone rulebook once the current crisis is over."
Davies demonstrates his vision for how companies should utilise corporate governance to build resilience and sustainable success, imperative if governance is to succeed in driving globalisation and encourage investment worldwide. He details the challenges involved in globalising corporate governance, including how to reappraise the purpose of corporate governance in a global context, the potential effects of culture clashes, and the importance of relating corporate governance to a changing and uncertain external world.
"The advance of corporate governance on the global stage will be hesitant and slow until its practice in OECD countries is more consistent and convincing," said Davies. "The scandals of poor corporate governance are primarily down to executives who see their company as a vehicle for their personal ambitions and corporate governance as an impediment to be 'gamed' for their own advantage.
"Yet these individuals are not unique talents who can behave like sports stars or celebrities, but are agents of the owners of the company tasked to carry out the company's business. Lapses by major banks and key players on the world stage make the Western model of corporate governance less convincing to global investors and companies in emerging economies.
"CEO's and political leaders must to not simply see corporate governance as a tick box culture, or if they do, they cannot then complain that their business partners around the world act as if the rules are there to be manipulated and broken." concluded Davies.
The Globalisation of Corporate Governance: The Challenge of Clashing Cultures is published by Gower and can be ordered online.
About the Author
Adrian Davies is both Director and Fellow of SAMI Consulting, the strategy planning consultancy owned by its staff and the University of St Andrews.