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The relationship between corporate governance, global governance, and sustainable profits: lessons learned from BP

The relationship between corporate governance, global governance, and sustainable profits:... Purpose – The recent oil spill disaster in the Gulf of Mexico as well as a multitude of other corporate scandals repeatedly draw attention to the importance of good corporate governance. This paper seeks to explain the possible reasons for violations of principles of good corporate governance in corporate practice. Design/methodology/approach – The paper opens with a brief illustration of the Deepwater Horizon case by relating BP's corporate governance rules to its actual decision making in the context of offshore drilling in the Gulf of Mexico. The insights gained through this analysis are used to identify a basic precondition for the realization of good corporate governance in corporate practice. Findings – This paper finds a link connecting the conflicts in the relationship between short‐ and long‐term interests of corporations and good corporate governance. Occasionally, deficits in the institutional environment foster the pursuit of quick wins through violations of corporate governance rules. To resolve the tension between short‐ and long‐term objectives, good institutions are required that provide incentives for sustainable behavior without endangering corporations' short‐term competitiveness. This is the starting point for global governance efforts. Practical implications – On the basis of the analysis in the paper, new implications for business are derived with respect to the relationship between corporate and global governance. Originality/value – The paper derives a theoretical framework that captures the relationship between corporate governance and global governance. This framework identifies an interplay between corporate and global governance that allows corporations to bring good corporate governance to life and thereby to invest in the conditions of their sustainable success. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Corporate Governance Emerald Publishing

The relationship between corporate governance, global governance, and sustainable profits: lessons learned from BP

Nick Lin‐Hi; Igor Blumberg
Corporate Governance , Volume 11 (5): 14 – Oct 18, 2011
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References (93)

Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
1472-0701
DOI
10.1108/14720701111176984
Publisher site
See Article on Publisher Site

Abstract

Purpose – The recent oil spill disaster in the Gulf of Mexico as well as a multitude of other corporate scandals repeatedly draw attention to the importance of good corporate governance. This paper seeks to explain the possible reasons for violations of principles of good corporate governance in corporate practice. Design/methodology/approach – The paper opens with a brief illustration of the Deepwater Horizon case by relating BP's corporate governance rules to its actual decision making in the context of offshore drilling in the Gulf of Mexico. The insights gained through this analysis are used to identify a basic precondition for the realization of good corporate governance in corporate practice. Findings – This paper finds a link connecting the conflicts in the relationship between short‐ and long‐term interests of corporations and good corporate governance. Occasionally, deficits in the institutional environment foster the pursuit of quick wins through violations of corporate governance rules. To resolve the tension between short‐ and long‐term objectives, good institutions are required that provide incentives for sustainable behavior without endangering corporations' short‐term competitiveness. This is the starting point for global governance efforts. Practical implications – On the basis of the analysis in the paper, new implications for business are derived with respect to the relationship between corporate and global governance. Originality/value – The paper derives a theoretical framework that captures the relationship between corporate governance and global governance. This framework identifies an interplay between corporate and global governance that allows corporations to bring good corporate governance to life and thereby to invest in the conditions of their sustainable success.

Journal

Corporate Governance – Emerald Publishing

Published: Oct 18, 2011

Keywords: Corporate governance; Global governance; Gulf of Mexico; Institutions; Sustainable profits; Oil industry; Management activities

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