Corporate governance and corporate competitiveness : an international analysis

Pao Yue-kong Library Electronic Theses Database

Corporate governance and corporate competitiveness : an international analysis

 

Author: Ho, Chi-kun
Title: Corporate governance and corporate competitiveness : an international analysis
Degree: D.B.A.
Year: 2001
Subject: Corporate governance
Hong Kong Polytechnic University -- Dissertations
Department: Dept. of Management
Pages: viii, 307 leaves : ill. ; 30 cm
Language: English
InnoPac Record: http://library.polyu.edu.hk/record=b1604149
URI: http://theses.lib.polyu.edu.hk/handle/200/2538
Abstract: Good corporate governance is perceived very important in assuring accountability and improving performance, by having appropriate board structure and process that reconcile the interests of owners, management and other stakeholders, enable strategic focus, build market confidence and community support, and is an important source of corporate competitiveness. There is however a shortage of empirical studies examining broadly the relationship between these two sets of corporate conditions. This study finds out the extent that international companies conform to good corporate governance practices, and how strong conformance to such practices is related to higher level of corporate competitiveness. A theoretical framework draws up the good corporate governance practices as recommended by international agencies, conceptual models and past studies; and employs the potential-process-performance model of corporate competitiveness of Buckley et al (1988). The study uses a questionnaire to survey the conditions of a sample of international companies. The survey finds that most companies adopt different board structures shaped by home regulations, but alternative institutional arrangements exist to assure the distinct roles of supervision and executive leadership in substance. Most boards exercise strong stewardship through governance policy and committee, active participation and rigorous review. They take leadership in establishing strategic plan and targets, directing innovation focus, evaluating performance, and determining top executive’s pay. They keep a balanced scorecard and a continuous dialogue with the investors and the capital market. They show concern for the societal interests, enforce appropriate policies, and report on conformance. The survey also finds quality standards, employee productivity, product development strength, and access to capital to be important competitive potential attributes. Competent and motivated workforce, customer services and responsiveness, proximity to market, process innovation strength are highly ranked attributes of management process. Useful financial indicators and performance measures comprise market share and sales growth, capital expenditure and R&D over sales, return on equity and total assets, and stock price-book value ratio. Correlation and regression analyses confirm that the stronger a company conforms to the good corporate governance practices, the higher is its score for corporate competitiveness. Good corporate governance practices have strong power of explaining or predicting the measures of corporate competitiveness. Anglo-Saxon companies conform best to the good governance practices, and are credited with higher scores for most measures of competitiveness. Japanese companies score rather low for the board structure attributes. For most companies, it is necessary to better align the interests of employees and other stakeholders by stronger involvement; and to improve directors' accountability by shareholding requirement, limit on the number of boards they may serve, and linking their fees to time and contribution. The study contributes with strong evidence of the importance and benefits of good corporate governance in relation to corporate competitiveness, and builds an integrated framework between them for international companies. The results justify more support of business corporations to similar studies so as to provide more empirical findings for integration into the policy framework and guidelines. Further studies may evaluate the causal effect of changes in corporate governance and corporate competitiveness over time.

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