Corporate governance in emerging economies: Understanding the game

Corporations now face the oftentimes daunting task of integrating the interests of multiple stakeholders. The general intent behind this multiple stakeholder focus has been to ensure that corporations operate for the benefit of society as a whole, with corporate governance in the oversight role for all activities. Our research suggests doing business in an emerging economy is confounded by the fact that rules, regulations, and marketplace expectations of the home market do not apply. Due to their evolving nature, the environments in emerging economies are uncertain and complex. Governance is not just an oversight issue related to making the most appropriate decisions. Instead, responsible governance in emerging markets entails governing bodies understanding the characteristics of the unsettled environment in which the company is, or will be, operating. Four major characteristics (demographic trends, technological development, natural resources, and political/legal unease) of emerging economies have led to significant challenges and stormy passage with respect to governance. The continual evolution and understanding of these factors must, of necessity, shape a company's governance process in the developing marketplace.