Elgar original reference
Edited by Jonathan P. Doh and Stephen A. Stumpf
Chapter 17: Comparative Models of Corporate Governance: A Sociocultural Perspective
Andre A. Pekerti Introduction Two relevant questions that scholars in the area of corporate governance have posed are whether there is, and whether it is appropriate for ﬁrms to utilize, a universal corporate governance system. It is of interest that the two questions posed above actually suggest that there may be signiﬁcant variations in the way corporations are governed across nations. This chapter discusses different models of corporate governance that exist in business, and how culture has significantly constructed these governance systems by outlining how culture inﬂuences economic systems and ownership structures. The chapter highlights the area of managerial assessment to discuss the possible biases that may arise when ﬁrms adopt a universal corporate governance system. In particular, the chapter discusses how ownership structures and various corporate governance systems may inﬂuence the way corporate boards (ﬁrms) evaluate their managers. It illustrates how corporate governance practices are affected by macro cultures by providing an example from the ﬁeld of social psychology and leadership studies. The example highlights how biases may disadvantage managers when factors in the environment are not accounted for during performance evaluation. The chapter concludes with a number of simple yet practical recommendations that can be applied to alleviate some of the biases that corporate governance boards may have during performance evaluation. Corporate governance as a socially constructed concept In recent years there has been a wealth of studies on corporate governance; however most have focused on the principal–agent paradigm. The literature also indicates that...