Corporate governance in multinational corporations: Current approaches to interpretation

Abstract

Aim. The presented study aims to develop the theoretical foundations of corporate governance in transnational corporations (TNCs) in the context of specifying the economic content of this concept based on a critical analysis of existing approaches to its interpretation.Tasks. The authors systematize  and  critically  analyze  existing  approaches  to  the  interpretation of corporate governance  of  TNCs;  clarify  the  definition  of  corporate  governance  based on the organizational and socio-economic peculiarities of modern TNCs.Methods. The methodological basis of this study includes  subjective,  historical,  and  civilizational approaches. The study uses the methods  of  analysis,  grouping,  and  systematization. The materials used include works of well-known scientists and economists on the problem under consideration.Results. The authors critically  analyze  literary  sources  on  the  problem  of  identifying  the  economic essence  of  corporate  governance  of  TNCs.  Four  major  approaches  to  the  interpretation of corporate governance reflecting the evolution of this phenomenon are identified and described: center-right approach (corporate governance is considered as a legalized voluntary agreement between the owners   and   the   executive   body   in   connection   with   the   management of   the   corporation’s   economic   activities);   managerial   approach   (corporate   governance   serves to resolve the conflict of interests between shareholders acting as   real   owners   and   professional managers who actually manage the  corporation);  shareholder-centered  aprroach  (corporate governance  is  considered  from  the  perspective  of  shareholders’  interests  and  the  growth of stock prices in the stock market is used  as  the  main  criterion  of  TNC  performance;  socially oriented approach (emerged  in  response  to  the  growing  rejection  of  social  inequality  by the  population  and  employees  as  a  result  of  the  TNCs’  focus  on  maximizing  profit,  environmental  problems, strengthening of ideological and political opponents of the   neoliberal   economy; this approach comprises many concepts, such  as  the  concept  of  corporate  social  responsibility, corporate social capital, knowledge network theory, and the concept of the company participation).   As   the   theory   and   practice   of   corporate   governance   developed,   the   emphasis in its interpretation shifted from owners to managers, from managers to   shareholders   and, finally, from shareholders to a wide range  of  interested  parties  (the  state,  the  local  community, employees, contractors).Conclusions. Based on the analysis of viewpoints and the  study  of  the  distinctive  characteristics of  modern  corporate  governance,  the  following  refined  definition  is  proposed:  corporate governance  of  TNCs  is  the  organizational  and  economic  relations  between  professional top managers, capital owners, labor collectives, public administration bodies, and other stakeholders in the context of the implementation of the corporation’s strategic  goals  by  ensuring the effeciency of the mechanism  for  making  effective  decisions  and  monitoring  the results.