A case study on the influence of corporate governance beyond the boardroom: perceptions from business unit managers

Abstract

Purpose

This study aims to explore the influence of corporate governance (CG) on non‐board business unit (BU) managers in relation to its perceived effects on managerial/organizational outcomes.

Design/methodology/approach

Following the recent implementation of the CG code in a conglomerate, a number of BU managers were interviewed on the meaning and implications of CG at their level with a subsequent focus on two principles advocated in CG: accountability and transparency.

Findings

BU managers perceived the CG adoption will have a positive impact on their performance via its effect on enhancing the credibility of the unit and the organization. Managers also developed a wider notion of accountability, akin to a ‘socializing form’ accountability, which improves the level of dialogue, trust and communication within the organization, thereby leading to better organizational outcomes. However, in view of the opaque business context prevailing in the country of study, these positive consequences are dampened by the managers' ambivalence to the need for higher internal transparency.

Research limitations/implications

The research adopts a case study approach in a developing economy. The scope for generalization is thus limited but the findings indicate deeper meanings and understandings of CG from non‐board actors, which could be observed in other contexts.

Originality/value

CG studies traditionally focus on the board members. There has been little exploration as to the effects of CG within the organization and how this is perceived or turned into action non‐board actors, e.g. BU managers.

Citation

Soobaroyen, T. and Sheik‐Ellahi, A. (2008), "A case study on the influence of corporate governance beyond the boardroom: perceptions from business unit managers", Corporate Governance, Vol. 8 No. 2, pp. 179-190. https://doi.org/10.1108/14720700810863805