A comparison of two colonial paths to the Western model of corporate governance

Abstract

Indonesia and Malaysia are close countries, both geographically and culturally. Both countries have historically attracted Europeans' interest. Europeans first arrived in Indonesia and Malaysia only for trading purposes, but later colonialised both Indonesia and Malaysia. Both countries were uniquely affected during their colonialisation periods, such as different colonialist country and approach, different paths to independence, and different political ideology. Conflict between the two countries existed for a brief period following Malaysia's independence, with the relationship improving and stabilising after the new administration in Indonesia in 1965. Both countries achieved constant economic growth until the 1997 Asian Financial Crisis. The crisis led to both countries developing a Code of Corporate Governance which was introduced for the first time in the year 2000 (Alnasser, 2012; Daniel, 2003). This paper provides a historical account of the journeys of two similar, but different countries in adopting the Western model of corporate governance.