Global perspectives on governance:

lessons from east and west
While the core principles of governance are the same throughout the world, the Asian model places particular emphasis on trust and relationships. This paper discusses the key differences between the western and Asian approaches to help business leaders explore the best aspects of both.

Conclusions

1.

The corporate governance model that’s familiar in Asia, Africa and most developing nations places strong emphasis on trust and relationships. This can be beneficial for stakeholders: the typical pattern of ownership in businesses means that there can be a longer-term view of an organisation’s success compared with that in a western company. But the system is potentially vulnerable to corruption and cronyism. It can also be difficult to implement basic control procedures.

2.

The prestige of what can be broadly termed the western governance model has diminished in the aftermath of the financial crisis. This model has driven globalisation and has emphasised a combination of legislation and standards as well as transparency, with a focus on developing appropriate structures, processes and frameworks. This is widely understood and helps to create a level playing field. But major financial failures over the past two years, such as that of Lehman Brothers, have shown that there are limits to what can be done to tighten checks and balances. A new emphasis on the behavioural aspects of governance is overdue.

3.

Both models have their strengths and it is important to understand the benefits and drawbacks of each. CIMA’s model of boardroom leadership is useful in illustrating the importance of both behavioural and structural issues in achieving good governance. One particular area where both western and Asian models remain unduly weak is in creating a culture that allows people in authority to