Diversification in Corporate Governance System - PowerPoint Presentation Example

? Diversification in Corporate Governance System Table of Contents Introduction 3 Core Argument of the Reading 3 Supporting Arguments 4 Evidences used to Support the Arguments 5 Importance of the Reading 6 Reliability of the Arguments 6 Conclusion 7 List of References 8 Diversification in Corporate Governance System Introduction The article The Cross National Diversity of Corporate Governance: Dimensions and Determinants by Ruth V. Aguillera and Gregory Jackson is to be analyzed over the core and supporting arguments discussed in it. Evidences and reliability of the article are also developed to construct the paper flowingly. Core Argument of the Reading The capitalist economies, certainly the highly developed ones, not only run their business with core essence of corporate governance; however, they also hold variations in their corporate governance system. Corporate governance is not only a strategic approach and a driving force for an economy, but it also emphasizes on the variations in its system. The variations differ according to the business situation, such as failed incorporate networks may emphasize on the implementation of financial orientation type corporate governance system (Lazonick & O'Sullivan, 2000). Within the applied system of corporate governance, organizational arrangements and social relations act as those factors that determine the controlling authorities for an organization. The culture within an organization is thoroughly important, when directors and controlling authorities to run corporate governance are to be decided. It is up to the priorities of an organization; whether it is more towards revenue generation or towards the development of an ideal presence in the market, such as HTC Corporation. Therefore, this is the organizational arrangement that helps in picking the controlling authorities for a firm (Lazonick & O'Sullivan, 2000). When it comes to define the interests of actors, institutional factors serve a firm in accomplishing the purpose. Institutional factors are those factors, which deal with the governance, capacity and commitment. Interests of the actors are determined by the institutional factors, which has recently left its noticeable influence on the activities of World Bank Group, certainly in the agricultural sector. The firms may take advantage of the institutional approach, where system of corporate governance can be accomplished according to the outcomes (Dore, 2000, pp. 115-127). Supporting Arguments As the core argument of the article talks about the diversifications and variations of the corporate governance; therefore, in order support this main argument few of the supporting arguments are developed to achieve the aim appropriately. It is revealed that the relationship developed among the key stakeholders of an organization, including labour, capital and management, differs region to region (Aguillera & Jackson, 2003). Article also measures the isolated effects of all the stakeholders; thus, ‘forward-looking’ approach is used to analyze the effects. In the considered article, role of institutional complementarities in developing a suitable corporate governance system at a firm level is also analyzed. It can be observed that practicability of a certain institution rises, when other business institution does not suit particular business circumstances. In few cases, it is found that organizations are not likely to work on strategic orientation, when it comes to deal with financial system (Dore, 2000, pp. 118-124). By describing the dimensions and variations in such system, the role of directors and executive is also truly significant in determining the sustainable and reliable dimensions for any firm. One of the existing obstacles in the implementation of corporate governance is the conflicts, which may arise when interests of labour are suppressed by the interests of management and capital of the firm. The theoretical model presented in the article has served the main purpose properly. Theoretical model proves itself by demonstrating issues in the business management system from all across the world. There is no doubt that every business organization desires to earn more and more revenue; therefore, capital as a stakeholder group for a firm cannot be ignored. This stakeholder is the key financial investor for an organization that is directly influenced by the financial systems of an organization (Davis, 2005). Evidences used to Support the Arguments The role of directors and managers in implementing corporate governance is emphasized greatly in the article. Therefore, ideology of managers can be considered as one of the key factors in driving and determining elements of a corporate governance framework and processes within an organization. In order to support such argument, the article has provided evidence, in which educational background of the United States’ managers has been considered. It is found that these managers are qualified in management studies with a special stress on finance. Therefore, managers and directors seek to develop an organization as a finance oriented firm (Davis, 2005; Aguillera & Jackson, 2003). The modifications done in the practice of corporate governance are favoured; therefore, an example of Germany and Japan is found supporting such modifications, where their shareholders’ value management is highlighted. Throughout the article, sustainable examples and evidences are presented from all around the world, where present corporate governance system in United States is more studied and utilized other than other business domains of the world. On the other hand, as the role of directors sand managers is emphasized, so its example cannot only be observed in United States, but German managers are also highlighted. German managers are found keeping a balance between strategic and financial interests, whereas U.S manager are more inclined towards making their organizations financial-oriented firms (Solomon, 2011). Importance of the Reading The article “The Cross-National Diversity of Corporate Governance: Dimensions and Determinants” is considered very significant for business organizations whether they are small, medium sized or multinational ones. The article serves as the basis for the development of a comparative business system by emphasizing that the regulatory and market mechanism phenomena are significant for the organizational growth (Aguillera & Jackson, 2003). Additionally, the article is also thoroughly important for the business entities, because it appears covering all the business dimensions of management, capital, and labour. The article may serve different comparative business systems, because it emphasizes on the institutional theory of business that guides organizations to have benefits of specialization. Such specializations are expected to provide the business systems with diverse logics about economics (Lazonick & O'Sullivan, 2000). Reliability of the Arguments The core argument of the article is quite convincing, because of the evidences presented in support of such argument. While the supporting arguments addressed throughout the article are also influential, this is due to the detailed analysis of every argument. What makes evidences stronger is the recent financial crisis of 2008 in which senior managers and CEOs of financial industry are blamed for creating such crisis. On the other hand, involvement of labour, capital and management in presenting a desirable corporate governance structure is addressed effectively, which is supported by the improved corporate governance in Apple Inc (Solomon, 2011). Conclusion The paper has accomplished its purpose of evaluating the article The Cross National Diversity of Corporate Governance: Dimensions and Determinant, from which many of the interesting factors have been extracted out, in the form of evidences. List of References Aguillera, R. V. & Jackson, G., 2003. The Cross National Diversity of Corporate Governance: Dimensions and Determinants. Academy of Management Review, 28(3), pp. 447-465. Davis, G. F., 2005. Firms and Environment. 2 ed. s.l.:Princeton University Press. Dore, R., 2000. Stock Market Capitalism versus Welfare Capitalism: Japan and Germany Versus the Anglo-Saxons. illustrated ed. New York: Oxford University Press. Lazonick, W. & O'Sullivan, M., 2000. Maximizing Shareholder Value: A New Ideology for Corporate Governance. Economy and Society, 1(29), pp. 13-35. Solomon, J., 2011. Corporate Governance and Accountability. 3 ed. New York: John Wiley & Sons. Read More