Cross-cultural implications on the legal requirements for corporate governance in China and India

Abstract

This article looks at two primary issues: 1 how cross-cultural differences in India and China impact the selection of a theoretical framework for effective corporate governance 2 how cross-cultural differences impact the implementation of legal and institutional requirements of good corporate governance. Theoretically, most corporate governance models appear to concentrate on strictly economic-based factors such as markets and hierarchies. This article argues that in a global economy with rising and developing market players, theorists and academics must look ‘outside the box’ at non-economic factors, such as legal, social, political and cultural, to construct a more holistic and integrated model of corporate governance, one which allows for cross-cultural differences. Furthermore, inductive cultural studies can provide rich insights and an objective means of determining a corporate governance model. Both China and India share common cultural values and would benefit from implementing a stakeholder model of corporate governance.