Who owns the corporation?

Former Accenture Chairman Masakatsu Mori shares his 30 years of experience in advising many of Japan’s leading corporations as well as foreign corporations doing business in Japan and beyond.

In today’s global economies, corporate governance plays a very important role not only to increase the economic value of individual companies but to build a peaceful and prosperous sustainable global society. The impact of some huge global companies goes well beyond that of some countries. For example, Toyota Motor Corporation’s revenue ($250 billion) is bigger than the GDP of Malaysia ($238) and Finland ($239); and the revenue of Mitsubishi Corporation ($200) exceeds the GDP of the Philippines ($189) and the Czech Republic ($192). The behavior of these companies around the world can bring fatal impacts on the economy and social welfare of the global community. In many ways, how huge global corporations are governed is more important than how some nations are governed.

There are many models of corporate governance around the world. Here are two typical examples:

The American model:
As the owners of a company, shareholders yield strong power and the management is strongly motivated by and focused on making a high profit. Most of the board members are external independents who supervise the management.

Under this model, the management tends to seek short-term profits at the expense of long-term economic value. It also doesn’t pay much attention to social values. Employees are considered by management as a dispensable resource. tj

The complete article can be found in Issue #274 of the Tokyo Journal. Click here to order from Amazon.