Corporate Governance and Why It Matters

This chapter introduces the idea of governance and proceeds to a structured discussion of what corporate governance means and why it matters. The discussion is divided into three themes: the first deals with enterprise—long-run commitments that firms make in terms of investment and innovation; the second deals with complementary inputs, in particular labour and the commitment of employees; the final theme is politics, where the external effects of company actions are discussed in a context where governments increasingly withdraw from roles traditionally considered public responsibilities. These themes are used to illustrate some of the major debates in governance today, not just in terms of a distinction between shareholder and stakeholder approaches but within each of these as well. From this overall perspective we consider each of the individual chapters and comment on their distinctive ideas and how they relate to the overall themes