The Organization for Economic Cooperation and Development (the “OECD”) has held that corporate governance models are essential to “help build an environment of trust, transparency and accountability” among society. Although the OECD has acknowledged that there is no single superior model of good corporate governance, it has identified six non-binding principles that are believed to form the basis of an ideal model. These six principles – transparent and fair markets, protection of shareholder rights, investment incentives, stakeholder rights, disclosure on material matters, and the board’s accountability – serve as an international benchmark to assist in the continued improvement of corporate governance models.
Jeswald Salcuse’s Article, “The Cultural Roots of Corporate Governance” explores how the internal governance structures of corporations are shaped by the cultures of the countries in which they operate. Through a comparative analysis of the United States and the United Kingdom to Europe and Japan, the author provides an interesting explanation for the dominance of the Anglo-Saxon manager dominated model vs the European controlling shareholder-dominated model. Through this, the prominence of individualistic culture has manifested through the American system with an emphasis on individual rights while the European and Japanese cultures emphasize the role and importance of the community.
Comparative corporate governance (CCG) can be defined as an attempt to find solutions to domestic corporate governance problems by looking to different, international regimes. Through this, scholars gain an understanding as to why certain approaches to common problems can work in one jurisdiction but not the other. As a result, comparative corporate governance has shown us that there is no single model that can be considered “ideal”. The various methodology of CCG provides a number of reasons for this, the most important of which is that not all jurisdictions view corporate governance problems the same way. Thus, an American scholar looking to China for a solution to the problem of separation of ownership and control, for example, will be met with baffling results because this is not viewed as a problem in that jurisdiction.
Andrew Rosser’s Article, “Coalitions, Convergence and Corporate Governance Reform in Indonesia” provides an interesting case study which demonstrates the result of convergence efforts in Indonesia. While many scholars are of the opinion that globalization is leading to the convergence of corporate governance systems worldwide, with systems transitioning to the Anglo-American “outsider” model in particular, the Indonesian example suggests this convergence may be imperfect. Rosser demonstrates that while many reform efforts have been implemented in Indonesia a variety of social and political factors have affected the success of their implementation. The result of this appears to be the creation of a modified version of the outsider model of corporate governance, which appears to demonstrate that complete convergence may be impossible as a variety of factors influence the operation of corporate governance systems.
Perhaps what we should learn from experience, and from case studies such as the one presented by Rosser, is that comparing international corporate governance models to the “gold standard” created in more developed countries is problematic. In “Good Enough Governance: Poverty and Reform in Developing Countries”, Merilee Grindle suggests that good governance calls for improvements that touch virtually all aspects of the public sector from economic and political institutions to administrative systems and government bureaucracies. Grindle therefore suggests a good enough corporate governance model which acts as a stepping stone for developing countries on the path to good corporate governance. This is achieved by separating out activities which are easier to undertake from those that are most difficult, and those that can be achieved in the short term rather than those that will take decades in order to accomplish. In doing so, the hope is that the governance agenda will be less overwhelming, less additive, more strategic and more feasible for developing countries that may lack even the basic capacities required to put authoritative changes in place.