Guest editorial: Historical perspectives on corporate governance debate and introduction to the special issue on corporate governance and sustainability

Abstract

PurposeThe purpose of this study is the development of an integrated framework between corporate governance and sustainability, based on the advancements within the field of contemporary governance leading to a renewed focus on sustainable development.Design/methodology/approachIn this paper, the authors provide succinct summary of the evolution of corporate governance over the past century from an historical perspective: starting with the early work of Berle and Means – which focuses on the legal separation of ownership and control – and the subsequent challenges within this framework – all the way to analyzing the major impact of Nobel Laureate Milton Freidman’s work on corporate goals and governance. The authors' approach identifies the key transformation of corporate goals and corporate goals' paradigm shift in progression and focus within corporate houses over time, including how these are approached in the present day by integrating the concept of primacy of all stakeholders. The authors relate this to contemporary developments in the Business Round table and the United Nations’ adoption of the2030 Agenda for Sustainable DevelopmentGoals.The authors also identify specific corporate governance themes within global economic forums, as well as the critical interlinkages needed by all global corporations to achieve sustainable growth.FindingsThe primary objectives of the corporate governance themes adopted by global economic forums this decade are in the best interest of all stakeholders – including customers, employees, regulators, local communities, and shareholders. This applies both during periods of relative stability and during crises. A review of the good corporate governance relies on internal mechanisms such as the structure of a board and incentives for management, and on external mechanisms such as institutions that demand accountability. All these mechanisms are important as the mechanisms form the core of how (and for whom) corporations generate value. Ultimately, optimal corporate governance can help deliver both economic gains and societies that value all.Practical implicationsWith globalization, the public has higher expectations from corporate CEOs than in the past. Corporate leaders have the ultimate responsibility for creating an organizational culture that supports trust and ensures that corporate leaders' management and employees embody and act on the stated values and mission of their organization. Areas of increased social expectations that require the attention of boards of directors include diversity, transparency, equal opportunity, and eliminating all forms of harassment.Originality/valueThis study identifies a viable agenda for global corporations based on concurrent developments to achieve sustainable development and growth. The recent related research work is also presented.