The major issues that need to be addressed by effective corporate governance in the 21st century

Abstract

Purpose This paper aims to underline and evaluate what corporations are as artificial entities, the concept of corporate governance (CG) in the twentieth century and whether a corporation owes allegiance to its key stakeholders in the twenty-first century. Design/methodology/approach Because it requires development in the twenty-first century, a clarification of the key areas of reform in “global corporate governance” is overdue. These include an analysis of the stakeholder role; the logic and effect of the codes of corporate practise such as in the Cadbury Code and Combined Codes. The “value chain theory” in CG and how it should be placed not only on financial value but also on natural, human and cultural values will looked at. This paper also provides a brief insight into major multi-national corporate collapse. The Enron case, for example, highlights how such mishaps can be avoided to rekindle trust and transparency, as well as disclosure to authorities, shareholders and the public. Findings This paper looks at how public interest and consumer interest play a role in corporate existence by analysing an inevitable change in the twenty-first century from absolute corporate control to public/consumer control and have an influence in areas like environmental, ethical and employee protection and recognition. The emotional side of a corporation is brought to life to win the hearts of consumers and the public. How this fares in the light of profits and long-term Environmental Management Scheme investment will be evaluated. Originality/value This paper ends with a general conclusion, summarising the necessary changes to governance and the author’s opinion on the realities of change: will it work, will it improve the living standards or will it just increase the gap between well-organised and ill-fated economies?