Managerial Decision-Making in International Business: Corporate GovernanceeIssues in Emerging Markets

Abstract

According to Wells (2010), corporate governance has been around since corporates have been formed, at least as long as the corporate system has allowed for conflicts between investors and managers. Also, there is no conclusive historical conduct of corporate governance, and there may never be one, given the enormity of the topic (Cheffins, 2012). However, the history of corporate governance goes back to the 16th and 17th century with the formation of the East India Company, the Hudson Bay, and the Levant Company as well as others chartered entities (Cheffins, 2012). Moreover, corporate governance encompasses a country’s private and public organisations, both formal and informal, which together govern the relationship between the people who manage corporations, and all others who invest resources in corporations in the country (Oman, Fries & Buiter, 2003). Also not to be ignored is in understanding the purpose of corporate governance. According to Oman et al. (2003), the purpose of corporate governance is divided into three elements, and applicable to all countries such as 1) enable and encourage the enactment of corporations by creating and sustaining incentives that motivate corporate insiders to maximise operational efficiency, return on assets and long-term productivity growth; 2) eliminate insider’s abuse of power over corporate resources such as asset stripping or otherwise siphoning off corporate resources for private use (self-serving behaviour); and 3) developing monitoring measures for manager’s behaviour to ensure corporate accountability as well as developing reasonably cost-effective protection measures of investor’s and society’s interests vis-a-vis corporate insiders.