Corporate Governance: Global Issues for the Future

Nada K. Kakabadse Professor in Management and Business Research Northampton Business School [email_address] http://www.kakabadse.com Corporate Governance: Global Issues for the Future EABIS Colloquium 19-21, September 2009, Barcelona,

Change Drivers:
New technologies – e.g. Pursuit of paradigm shift from fossil fuels to alternative sources; radio-frequency identification (RDF) of goods, animals and humans; nano-technology
Economic conditions - Impact of global financial market failure
Political conditions - Transition from context of industrial and political structure of current mono-polar world to multi-polar world, 2020, mass-immigration, socio-political wars
Demographics – population growth, education workforce, movement, poverty
Global Climate - floods, droughts,
Government Policies – New institutions – e.g. create new private/pubic institutions to manage consequences from climate change
Two engines of progress - Our desire to understand the world and Our desire to reform it (Bertrand Russell)
It is through our knowledge and misunderstanding that we can create and/or destroy our future depending on choices we make!
Page © N.K. Kakabadse et al

Page © N.K. Kakabadse et al
1920s: Conceptualisation
1960s: Experimentation (unassuming mentally ill patients, nursing-home patients, radical groups and incarcerated individuals, both in developed and developing economies).
1990s: General use in products, animals, humans.
2004: Food and Drug Administration (FDA) approved the “VeriChip implant” for medical use in humans.
Carlos Altamirano, Mexico's attorney general and 160 of employees (to allow access to secure areas)
Nightclubs in Rotterdam, Barcelona and Glasgow use membership implants instead of membership cards
Homeless in New York, San Francisco, Washington DC and Bethlehem, Pennsylvania are tagged.
RFID (radio frequency identification) Chips

Page © N.K. Kakabadse et al Right and left ear tags allow the rancher to control the location and directional movement of animals with GPS established boundaries form a remote location Source: US Department of Agriculture, Agricultural Research Service, 2005 Fenceless Borders: Virtual Boundaries and Invisible Control

Technology: Micro and Nano Page © N.K. Kakabadse “ VeriChip” implanted in Mexico's attorney general Carlos Altamiran in 2004 Source: The Associated Press (2005) 1 st generation nanostructures (- 2000): Passive nanostructures – Dispersed and contact nanostructures: aerosols, colloids; and Product incorporated nanostructures: coatings, nanoparticles reinforced composites, polymers, ceramics 2 nd generation nanostructures (- 2005): Active Nanostructures - Bio-active, health effects: targeted drags, biodevices; and Physico-chemical active: 3D transistors, adaptive structures 3 rd Generation nanostructures (- 2010): Systems of nanostructures – guided assembling, robotics, evolutionary 4 th generation nanostructures (- 2015): molecular nanosystems – molecular devices ‘by design’.

Basic Questions?
Do we share the same meanings about CG/CSR?
Do we share the same aims: CG/CSR?
From whom we learn?
With whom can we learn?
Page © N.K. Kakabadse

What is Governance? Page © N.K. Kakabadse
A n action led reflexive journey - Individuals/ Organisation /institutions are continually on the road to good governance
Multi Perspective

Growing Concerns
Governance - global and corporate (e.g. global warming, security, poverty, economic recovery, human rights, inclusion access)
The impact of social engineering : state-private sector experiment (e.g. privatisation of telecom, utilities, health, education, corrective services; bailing out of corporations)
Bio diversity (e.g. environmental degradation)
Financial markets (e.g. Responsible globalisation)
How much money company's elite/shareholders make?
How profit is generated (i.e. Is it in a responsible manner – environment, human rights, labour rights within organisation/supply chain)?
Societal values
How to integrate 4 Ps: people, planet, profit, posterity?
Page © N.K. Kakabadse

People (Society): Hero-leaders/Uni-polar world to inclusivity/diversity Profit (Economy): Shareholder financing to alternative modes of financing Planet (Environment): Extraction mentality to nurturing mentality Posterity (Values): Instant gratification/consumerist values to long lasting values Sustainability 4 P’s Transition for Sustainability

Need to consider! Page © N.K. Kakabadse
Currently:
Concentrated financial system (e.g. large institutions)
Focus on shareholder value
Socialization of losses and privatization of gains (bailing out banks/firms or shareholders and bondholders; liquidity and risk insured by government)

Need to explore Page © N.K. Kakabadse
What kind of financial system do we desire?
What functions should financial system performer?
How should financial system be governed?
How to govern/navigate the esoteric space between market and non-market forces?
How to minimise "the abuse of entrusted power for private gain" (i.e. corruption)?
How to transit to new systems/ways of working?

Key Factors for effective CG Page © N.K. Kakabadse
Purpose - Being clear about purpose
Vision – Being clear what is desired future
Performance
Clarity of function of governing body
Roles and responsibilities between executive and non-executives
Relationship between governing body and the public
Values
Embed organisational values into practice (Individuals behaviour reflecting organisational values)
Transparency
Being rigorous and transparent in decision making
Using good quality information and advice
Adopting effective risk management policies
Effectiveness
Developing skills, evaluating performance – individuals/groups
Balance between continuity and renewal
Accountability
Dialogue with and accountability to the stakeholders/public
Active responsibility for employees, product/service provided
Understanding formal and informal accountability relationships
Key Factors for effective CG

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Corporate Governance: Global Issues for the Future

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