The Importance of Corporate Governance in Strategic Management

The article Primec, & Belak (2018), focuses on corporate strategy and governance as the major determinants of economic superiority in many business organizations. Governance has been described as an account of organizations financial situation, performance and relationship with shareholders. It also has broader social and institutional dimension and needs reinforcement in many organizations. In the article, the authors have engaged several works of literature and theories to enhance the understanding of the nature of corporate strategies, governing structures and the performance of the business organizations. The article also examines the legal framework for social responsibility with regard to corporate business organizations. The authors also explain how the introduction of globalization and competition from growing businesses, managing shareholder expectations may impact the success of the corporates. They have expounded on the relevant critical approaches that may be employed to realize the smooth running of the business corporates as well.

Course Topic Integration

The article is consistent with our course on Corporate-level Strategies and Business Unit Strategies. It implies that good governance and well laid out corporate strategies in business organizations provides access to capital and are responsible for its economic growth. This article has discussed corporate governance and strategies that ensure the effectiveness of disciplinary mechanisms targeting the managers. These managers who rule over organizations known as corporations possess substantive responsibility and ethics for decision making (Primec and Belak, 2018). Assuming that a mechanism exists for replacement of managers due to declining business performance will compel them to make every possible effort to increase performance. In addition, a good governance strategy has been noted to ensure that the business environment is fair and transparent and that the organizations are accountable for their activities. At the same time, the governance structure will play a very important role in attracting shareholders, either within the region or globally, that are crucial in promoting the corporation’s economic superiority.

Views and Opinions

The current study shows the importance of governance in strategic management. The corporations have to report more preciously on economic, social, and environmental issues. The implication of this approach is to establish good governance as a strategic process (Cavaleri and Shabana, 2018). The proposed governance structure set a strategic context to ensure sustainability in order to link up variables, such as innovation of the business, while also linking them to corporate strategies and firm financial performance in a causal chain. The proposed is the main lead to our conclusions about the effectiveness of sustainability strategies. These strategies are consistent with emerging research about the role of radical innovation in the business world as supported by the literature. However, the authors call for further research on this phenomenon. In this case, there is a need for empirical studies that should involve statistical means to verify these conclusions drawn from this paper.

References

Cavaleri, S., & Shabana, K. (2018). Rethinking sustainability strategies. Journal of Strategy and Management, 11(1), 2-17.

Primec, A., & Belak, J. (2018). Towards socially responsible corporate governance with authorities’ interventions. Management: Journal of contemporary management issues, 23(1), 203-219.

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