The Globalization of Corporate Governance in East Asia: The “Transnational” Solution

Corporate governance is one of the primary mechanisms by which an organization interfaces with its environment. As globalization proceeds, firms must effectively manage corporate governance practices to reap the promised benefits of the new integrated global economy.In East Asia, firms face increasing pressure to provide governance systems that meet international investors’ expectations. Yet this creates tension as corporate governance practices are embedded in local institutions and culture. As a result, firms are frequently torn between providing what global investors expect and what the local culture will support.Rather than focusing on an “either/or” solution to this dilemma, we draw on the multinational business metaphor (Bartlett/Ghoshal 1989) to advocate a “transnational solution” that balances the expectations of global investors against those of local stakeholders. We interview several corporate governance experts and participants in East Asia to further develop this position.