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"The World is converging on the American system of corporate governance". Discuss


In the corporate world of today, profit margins are shrinking in every industry and it is becoming increasingly difficult to retain one's customers due to the phenomenal increase in competition levels, employees and their intellectual capital are difficult to retain by satisfying them both monetarily and psychologically, and the investors are becoming increasingly demanding over long-term and short-term gains. In such a scenario, appeasing the three main stakeholders in the firm, namely customers, employees and investors (Zenger et al, 1999) translates to nothing short of a highly complex balancing act.


Following a critical analysis of the American form of Corporate Governance and the movement of other economies towards this form of governance, it can be observed that there is a marked convergence towards this form of governance, with especially the new economies of developing countries moving from a relationship-based governance to the American system. However, the existence of country-specific idiosyncrasies means that the transition would be a gradual one and not a radical transformation.

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