A Guide to the Big Ideas and Debates in Corporate Governance

Lynn S. Paine; Suraj  Srinivasan

Article | Harvard Business Review (website) | October 14, 2019

A Guide to the Big Ideas and Debates in Corporate Governance

Abstract

How corporations govern themselves has become a matter of broad public interest in recent decades. Amid this many commentators and experts still disagree on such basic matters as the purpose of the corporation, the role of corporate boards of directors, the rights of shareholders, and the proper way to measure corporate performance. The issue of how shareholder interests should be considered in corporate decision making is particularly contentious. This article is a resource for understanding today’s key debates around governance and identifying the main areas in which changes are being intended called for. Many readers are grappling with these questions now or may have to address in the near future; in any case, the debates are sure to affect how business operates across the globe.

Keywords: Corporate Governance; Mission and Purpose; Governing and Advisory Boards; Business and Shareholder Relations; Performance; Measurement and Metrics;

Format: Electronic

Citation:

Paine, Lynn S., and Suraj Srinivasan. "A Guide to the Big Ideas and Debates in Corporate Governance." Harvard Business Review (website) (October 14, 2019).

The Dutch East India Company’s board of directors must decide what to do about an impending legal requirement to liquidate the company’s assets and return to shareholders their capital and any profits earned during a ten-year lock up period. The charter granted to the company in 1602 by the Dutch Estates General (legislature) required the liquidation and accounting to shareholders after the initial ten-year period and again at the end of a second ten-year period. However, the company’s directors believe that more time is needed to reap the benefits of shareholders’ initial investments and that liquidating the company’s assets after the initial ten-year lock-up would make it impossible to raise capital for the second ten-year term. The case describes the origins of the Dutch East India Company, the world’s first publicly-traded multinational company, and traces key aspects of the company’s governance and development during its first ten years, including the emergence of disagreement among shareholders about corporate strategy and dividend policy.

The case concerns the sale of Mae Terra, one of Brazil's leading brands for packaged organic foods, to the consumer goods giant Unilever in 2017. Working with Unilever management, Mae Terra’s CEO Alexandre Borges must determine whether and how to keep Mae Terra's B Certification, which attests to its commitment to having a positive social and environmental impact, and what internal governance mechanisms will enable MaeTerra to maintain its mission, values, and practices even as it is integrated into a large volume-driven multinational whose governance follows standard listed company principles.

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A Guide to the Big Ideas and Debates in Corporate Governance

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