Corporate Governance : Good Business Management

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The general idea we have in mind when we hear the term "Corporate Governance", is that it is an almost unattainable goal. The reason is the only companies that have "corporate governance" are big businesses with exorbitant capital, or, at least have shares on the stock-market. It is based on the idea that applying good organizational governance practices, is exclusive and expensive. But those who argue this idea are very far from reality. I must confess that I was one of these people. Currently all companies regardless of their capital or size, implement some system of administration (Knell 2008, p. 5), i.e. they have a "Corporate Governance". Why is it important to discuss Corporate Governance? Good “Corporate Governance" is…show more content…
Furthermore, each company has different objectives and seeks their own benefit. When they have corporate governance practices in common it influences the economy of a country, and therefore growth in their development. This is because the investors or “financial institutions abroad, will be more attracted to inject resources”. Consequently, the companies will access to better conditions in international capital markets, being, ultimately, less exposed to the economic crisis. Who is in charge? Currently, the "underlying theoretical concepts" are applied in order to understand or explain, the roles and behaviours of members of corporate governance. Firstly we find the “agency theory”, refers to the owners and managers of the companies that have different interests. That is, the shareholders or owners should confront the problems related with managers, who may be acting based on their own interest. In "management theory", the organization seeks a structure with contents. The management is control, and direction is "spans the action program of the economic unit"; shareholders and executives create partnerships. Moreover, in "stakeholder theory" the function of the “board directors” is to represent the interests of the members in the organization. Finally, the "dependency theory" refers to organizations which are dependent substantially from other organizations and external resources (2012, p.
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