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1st Quarter Notes-slib-

- A synonym for government; act of governing with authoritative direction
and control (Webster's Third New International Dictionary)
- The focus is on worldwide thrust toward political and economic
liberalization (World Bank)
- Umbrella concept towards comparative politics that fills analytical gaps
(Goran Hyden)
- Goran further states that it’s a conceptual approach and rational concept
that concerns constitutional nature and creative intervention by political
actors which are socially sanctioned
- Involves interaction between the formal institution and those in civil
society. Elements in society wield power and influence enacting policies
and decision concerning social upliftment (British Society)
- excels the collective meaning of government, state, and good government
- From scholars, it’s the conscious management of regime structures to
enhance public realm
- Integral part of governance
- A high level of organizational effectiveness to policy formulation
- Contributes to growth, stability, and social welfare
- Does not necessarily presume a value of judgement Predictable and
enlightened policy-making bureaucracy imbued with a professional ethos
(World Bank)
- Unlike poor governance which involves arbitrary policymaking,
unaccountable bureaucracy, and unjust legal system
- An ideal that is hard to achieve in totality
• Consensus-Oriented – requires consultation
• Rule of Law – fair legal frameworks
• Equitable and Inclusive – provides opportunity to maintain or improve
• Accountable - a key tenet; being responsible towards the consequences of
own’s actions
• Transparent – information is easily understandable, accessible, and
available in all forms
• Effective and Efficient – produces favorable results of meeting the needs
• Participatory – freedom of expression.
• Responsive – processes serve the best interests within timeframe
- Derived from Latin “corporare” – combined in one body: “gubernare”- to
steer or rule
- A set of systems, procedures, and policies by corporates to ensure
relationships with others are maintained transparent and honest
- Coined first by Robert Ian Trickler in 1984 with his book as a process
concerning the way corporates are governed, as distinct from the way
business within those are managed. It addresses the issues faced by BOD.
- A system by which organizations are managed and controlled to achieve
its objectives
- Direction, management, and control of an organization (Cadbury)
Stakeholders are affected by corporate’s decisions
• Shareholders – institutional investors who votes on vital issues
• Directors – decides and develops long-term strategies
• Officers – makes day-to-day decisions
- Corporation was born in Britain with an 1844 Act
- In 1855, shareholders were awarded limited liability and roles of
ownership and control were separated
- In 1922, Cadbury Report provided a Code of Best Practice for companies
built around key principles of accountability, probity, and transparency.
- The cornerstone of good corporate governance is when all the
stakeholders’ interest are considered and protected
- Corporate Social Responsibility has a direct linkage to a company having
good corporate governance
- Ultimate goal of every business is to gain profit without compromising
social responsibility
- A corporate need to be accountable, transparent and ethical
STAKEHOLDER THEORY - company has wider range of responsibilities to a
broad range of stakeholders rather than simply its shareholders
- First described by Dr. F. Edward Freeman
- Contrary to Milton Friedman’s shareholder’s theory that says a company
is beholden only to shareholders
- Stakeholders are those groups without whose support the organization
would cease to exist
- examines the needs of not only shareholders but of every faction
associated with the organization
AGENCY THEORY - as the business grows the effectiveness of an individual or
a small group of individuals to effectively manage the business declines
- Investors or shareholders are the principal while managers or directors are
their agents that makes decisions to best protect the principal’s interest
- no agents are trustworthy and if they can make themselves richer at the
expense of their principals they will (Institute of Chartered Accountants in
England and Wales, in November 2006)
- Agents are more familiar with business operation
- Roles of agents: a. use the asset to create profit; b expand the initial capital;
c preserve the asset of the business
- focuses on a checks-and-balances type of governance
STEWARDSHIP THEORY - Having a single leader creates one channel to
communicate business needs to the shareholders
- Company executives protect the interests of the owners or shareholders
and make decisions on their behalf
- has a clear objective of stakeholder satisfaction
- A steward is someone who protects and takes care of the needs of others.
- inspired organization whose mission is to preserve, protect and grow social
and economic assets
- Stewardship governance requires that a CEO be trustworthy and willing to
put personal gains aside
- Organization is composed of different individual with different personality,
values, objectives and ideas
- shaped by its vision, mission and core values
- Types: a. stagnant org b. chaotic org c. successful org
- Shared meanings, values, attitudes, and beliefs that are created and
communicated within an organisation (Ashkenasy, Widerson and Peterson)
- set of shared taken for granted implicit assumptions that members of an
organisation hold and that determine how they perceive, think about, and
react to their various environments (Schein)
- the best way we do things around here. (Bowers and Seashore)
- an organization’s personality; a complex mix of factors that put together to
shape an existing practice how things are done in the workplace
- Culture includes unwritten rules; assumptions about expected office
behavior; and shared values
- shows the observable aspects of a culture is just a small part
- three components:
Behaviors and practice – words and actions
Interpretation – how we feel the core values should be
Core Values – unobservable learned ideas of what are good or bad
and comprises a major part of iceberg
- a study of moral standards and how these apply to the systems and
organizations (Manuel Velasquez)
- the application of moral standards to the structures, policies, systems, and
decision-making processes that facilitate business activities and affect the
people within an organization (Further, Batson and Neff)
- organizational principles, values, and norms
Morals – personal philosophies
Principles– basis of rules; pervasive boundaries on behaviors
Values – enduring socially formed beliefs and ideals
• Code of Ethics
• Company Policies
• Process Guidelines
• Ethic in Marketing
- entity engaged in professional, commercial, or industrial activities
- legal entity engaged in economic activity
- idea generation to develop and deliver products
- organized efforts to produce and sell goods and services for profit
- end goal is always to earn profit by fulfilling corporate social responsibility
to its internal and external stakeholders
- begins with a business concept and a name
- business name can be a valuable asset to an entity
- mostly form after development of a business plan¸ a formal detailed
document of a business’ goals, objectives, and strategies; essential when
borrowing capital
• tangible vs intangible
• durable vs nondurable
• consumer vs industrial
• Sole Proprietorship
• Partnership
• Corporation
- study of right and wrong
- behaviors made within a group’s accepted values
- values and judgments play a critical role
- lies in the point where the accepted rules no longer serve, and the decision
maker is faced with the responsibility for weighing values in a situation
which is not quite the same as any he or she has faced before
- the amount of emphasis decision makers place on their own values and
accepted practices within their company
- code of conduct that employees use to respond to ethical issues
- Business Compliance and ethics compliance are intended to be the basis
of core values and ascertain appropriate conduct
- acceptable behavior as defined by the company
- creates and nurtures shared values and is driven by top management
- has a direct influence on:
1. employee commitment and trust
2. investors loyalty and trust
3. customer satisfaction and trust
- Employee commitment is when a worker believes that his/her future
is anchored to that of the organization; the more the employee feels
inclusivity in the organization the more they value the organization’s
- provides a foundation for efficiency, productivity, and profit
- contributes to customer satisfaction, the lifeline of every business as it is
a one of the most important factors for business success.
- Cannot be nurtured unless the entity has achieved adequate financial
performance in terms of profits