Impact of Internal Mechanisms on Corporate Governance: Case of Glaxosmithkline Pharmaceuticals Limited, United Kingdom

Abstract

Corporate governance is the collection of systems, procedures and relations utilized by numerous parties to regulate and run a business. Governance structures and principles identify the distribution of rights and responsibilities among different participants in the business, such as the board of directors, managers, shareholders, creditors, auditors, regulators and stakeholders. The study sought to examine the impact of internal mechanisms on corporate governance in GlaxoSmithKline Pharmaceuticals Limited in the United Kingdom. The study adopted the descriptive research design. The target population included employees from the management level in the company. The research instruments adopted included questionnaires. The results of the study showed that Internal Mechanisms has a positive and significant association with Corporate Governance in GlaxoSmithKline Pharmaceuticals Limited. The regression results depicted that internal mechanisms explain 26.4% of the variations in corporate governance. Further, it was established that a positive and significant relationship exists between internal mechanisms and corporate governance. The study showed that internal mechanisms included the oversight of management, independent internal audits and structure of the board of directors. The study concluded that internal mechanisms are key in determining corporate governance. The study recommended that there is a need to have clarity in corporate governance because it assists in operating the business properly since more shareholders and investors are willing to invest in the particular business. The directors and owners of the business should be people of great integrity and highly qualified to run the business in a professional way that will not bring losses or failure in the future. Employees who perform excellently should be rewarded to continue with that spirit of hard work that makes the business thrive well.