Prosperity by Colin Mayer

Author:Colin Mayer [Mayer, Colin]
Language: eng
Format: epub
ISBN: 9780192559234
Publisher: OUP Oxford
Published: 2018-08-17T00:00:00+00:00

The Governance of Purpose

The purpose of governance is the governance of purpose. Superficially doing well by doing good would appear to be a problem of management. There are unrecognized and unmeasured benefits from promoting human, social, and natural capital as well as financial capital, and there are problems of managing companies’ supply and distribution chains to realize these benefits.

Complex though these are, there is more to doing well by doing good than just measurement and management. There are still greater challenges at the top of organizations in legitimizing and advocating these approaches to business. They demand a commitment of leadership that flies against conventional wisdom and frequently faces stiff resistance from lower down in the organization. For a business to do well by doing good it requires the board to take charge of creating a conducive corporate culture throughout the organization from the board to the shop floor, from the workplace to the fields and slums of the supply and distribution chains. And it is not just the board that needs to be committed, so too do the owners.

This is why what appears to be a matter of management is actually a challenge of corporate governance. Corporate governance is about the structure and conduct of the ownership and control of companies to fulfil corporate purpose. It lies at the heart (cor) of the body (corpus) and head (caput) of the corporation. It governs how the purpose and values of the business are translated into actions in the organization that are transmitted into value for investors. Along with ownership, law, and regulation, the absence of purpose from the centre of corporate governance is a primary reason why firms fail to deliver on purpose.

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