Corporate governance for lebanese SMEs - Essay Example

This study hence is an analyzing assessment for whether this model would be, to any extent, applicable to the Lebanese context. It reveals the results of the first phase of an ongoing research aiming at investigating the extent to which the Anglo-Saxon System of Corporate Governance be adopted by companies in Middle-Eastern countries, specifically the case of SMEs in Lebanon?Identifying whether it contributes in improving or hindering their performance? Using a purposeful sampling approach, semi-structured interviews and focus groups technique is applied to 90 owners/shareholders, managers and employees from the trading, hotel and restaurant sectors that dominate Lebanese SMEs (table 1) and comprise 50.

40% of the total population.This technique provides the advantage of comparing all participants’ responses to the main question and provides more in-depth information that cannot be obtained through questionnaires. This discussion answers the above mentioned research questions through adopting the interpretive approach and a thematic analysis. Data will be collected and interpreted deeply in order to identify the extent to which socio-cultural factors affect a firm’s corporate governance structure and hence its performance. 1.1 Purpose of the Study According to the literature, there are much more forms of corporate governance, based on different structures of ownership and affected by large variations of cultural background, legal framework, political environment and economic climate (J.

Solomon & A. Solomon, 2004). The “fit” between cultural values and organizational structures resulted from a fusion of human culture with the models of organization; therefore, it is recommended that organizations enter into arrangements that match with our basic cultural perspective (Hofstede (1991). In other terms, the organizational structural elements are shaped by values that are compatible with and suitable to cultural values as a component of the organization’s implicit models (Hambrick & Brandon, 1988).

Swidler (1986) argues that organizations can be viewed as social entities integrated into the institutional and value structures constituting the culture of a society; in this view, organizations and societies tend to reflect each other structurally. In particular, national cultural differences influence the shape and functioning of organizations (Hickson & Pugh, 1995; Hofstede, 1991). Besides, literature found that good governance has a positive impact on organizational performance. Gemmill and Thomas (2004) note that good corporate governance and firm value are positively correlated.

Corporate governance mechanisms can guarantee for shareholders an adequate return on their investments (Shleifer & Vishny, 1997). Given the culture-structure link and the correlation between good governance and performance, the purpose of this study is to identify the extent to which corporate governance model in Lebanon fits with the Anglo-American model. If it fits, the objective of the study will be how to maintain it? If not, the study will analyze the benefits of proposing a new model of corporate governance or adapting the existing one. 1.2 Nature of the Study The empirical analysis contained herein is of qualitative nature.

Qualitative research seeks to understand the social world from the perspectives of research participants and the detailed descriptions of their experiences (Myers, 2000).The richness and depth of explorations and descriptions represent one of the