Corporate Governance: Global Issues for the Future


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The presentation 'Corporate Governance: Global Issues for the Future' that Nada K. Kakabadse, Professor in Management and Business Research at Northampton Business School, gave at the EABIS Colloquium, 19-21 September 2009 in Barcelona.

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Corporate Governance: Global Issues for the Future

  1. 1. Nada K. Kakabadse Professor in Management and Business Research Northampton Business School [email_address] Corporate Governance: Global Issues for the Future EABIS Colloquium 19-21, September 2009, Barcelona,
  2. 2. Change Drivers: <ul><ul><li>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 </li></ul></ul><ul><ul><li>Economic conditions - Impact of global financial market failure </li></ul></ul><ul><ul><li>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 </li></ul></ul><ul><ul><li>Demographics – population growth, education workforce, movement, poverty </li></ul></ul><ul><ul><li>Global Climate - floods, droughts, </li></ul></ul><ul><ul><li>Government Policies – New institutions – e.g. create new private/pubic institutions to manage consequences from climate change </li></ul></ul><ul><ul><li>Two engines of progress - Our desire to understand the world and Our desire to reform it (Bertrand Russell) </li></ul></ul><ul><ul><li>It is through our knowledge and misunderstanding that we can create and/or destroy our future depending on choices we make! </li></ul></ul>Page © N.K. Kakabadse et al
  3. 3. Page © N.K. Kakabadse et al <ul><li>1920s: Conceptualisation </li></ul><ul><li>1960s: Experimentation (unassuming mentally ill patients, nursing-home patients, radical groups and incarcerated individuals, both in developed and developing economies). </li></ul><ul><li>1990s: General use in products, animals, humans. </li></ul><ul><li>2004: Food and Drug Administration (FDA) approved the “VeriChip implant” for medical use in humans. </li></ul><ul><ul><li>Carlos Altamirano, Mexico's attorney general and 160 of employees (to allow access to secure areas) </li></ul></ul><ul><ul><li>Nightclubs in Rotterdam, Barcelona and Glasgow use membership implants instead of membership cards </li></ul></ul><ul><ul><li>Homeless in New York, San Francisco, Washington DC and Bethlehem, Pennsylvania are tagged. </li></ul></ul>RFID (radio frequency identification) Chips
  4. 4. 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
  5. 5. 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’.
  6. 6. Basic Questions? <ul><li>Do we share the same meanings about CG/CSR? </li></ul><ul><li>Do we share the same aims: CG/CSR? </li></ul><ul><li>From whom we learn? </li></ul><ul><li>With whom can we learn? </li></ul>Page © N.K. Kakabadse
  7. 7. What is Governance? Page © N.K. Kakabadse <ul><li>A n action led reflexive journey - Individuals/ Organisation /institutions are continually on the road to good governance </li></ul><ul><li>Multi Perspective </li></ul>
  8. 8. Growing Concerns <ul><li>Governance - global and corporate (e.g. global warming, security, poverty, economic recovery, human rights, inclusion access) </li></ul><ul><li>The impact of social engineering : state-private sector experiment (e.g. privatisation of telecom, utilities, health, education, corrective services; bailing out of corporations) </li></ul><ul><li>Bio diversity (e.g. environmental degradation) </li></ul><ul><li>Financial markets (e.g. Responsible globalisation) </li></ul><ul><li>How much money company's elite/shareholders make? </li></ul><ul><li>How profit is generated (i.e. Is it in a responsible manner – environment, human rights, labour rights within organisation/supply chain)? </li></ul><ul><li>Societal values </li></ul><ul><li>How to integrate 4 Ps: people, planet, profit, posterity? </li></ul>Page © N.K. Kakabadse
  9. 9. 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
  10. 10. Need to consider! Page © N.K. Kakabadse <ul><li>Currently: </li></ul><ul><ul><ul><li>Concentrated financial system (e.g. large institutions) </li></ul></ul></ul><ul><ul><ul><li>Focus on shareholder value </li></ul></ul></ul><ul><ul><ul><li>Socialization of losses and privatization of gains (bailing out banks/firms or shareholders and bondholders; liquidity and risk insured by government) </li></ul></ul></ul>
  11. 11. Need to explore Page © N.K. Kakabadse <ul><ul><ul><li>What kind of financial system do we desire? </li></ul></ul></ul><ul><ul><ul><li>What functions should financial system performer? </li></ul></ul></ul><ul><ul><ul><li>How should financial system be governed? </li></ul></ul></ul><ul><ul><ul><li>How to govern/navigate the esoteric space between market and non-market forces? </li></ul></ul></ul><ul><ul><ul><li>How to minimise &quot;the abuse of entrusted power for private gain&quot; (i.e. corruption)? </li></ul></ul></ul><ul><ul><ul><li>How to transit to new systems/ways of working? </li></ul></ul></ul>
  12. 12. Key Factors for effective CG Page © N.K. Kakabadse <ul><li>Purpose - Being clear about purpose </li></ul><ul><li>Vision – Being clear what is desired future </li></ul><ul><li>Performance </li></ul><ul><ul><ul><li>Clarity of function of governing body </li></ul></ul></ul><ul><ul><ul><li>Roles and responsibilities between executive and non-executives </li></ul></ul></ul><ul><ul><ul><li>Relationship between governing body and the public </li></ul></ul></ul><ul><li>Values </li></ul><ul><ul><ul><li>Embed organisational values into practice (Individuals behaviour reflecting organisational values) </li></ul></ul></ul><ul><li>Transparency </li></ul><ul><ul><ul><li>Being rigorous and transparent in decision making </li></ul></ul></ul><ul><ul><ul><li>Using good quality information and advice </li></ul></ul></ul><ul><ul><ul><li>Adopting effective risk management policies </li></ul></ul></ul><ul><li>Effectiveness </li></ul><ul><ul><ul><li>Developing skills, evaluating performance – individuals/groups </li></ul></ul></ul><ul><ul><ul><li>Balance between continuity and renewal </li></ul></ul></ul><ul><li>Accountability </li></ul><ul><ul><ul><li>Dialogue with and accountability to the stakeholders/public </li></ul></ul></ul><ul><ul><ul><li>Active responsibility for employees, product/service provided </li></ul></ul></ul><ul><ul><ul><li>Understanding formal and informal accountability relationships </li></ul></ul></ul>Key Factors for effective CG