Corporate Governance Bundles for Emerging Markets

Many scholars have argued that the globalization forces should create pressures on firms to adopt a common set of corporate governance practices, and eventually these practices should converge. However, there are many hurdles on the way of such convergence. Different organizations across the world have different corporate governance practices because of their different historical paths and contexts. To better explore the impact of these contextual differences, scholars have argued that instead of looking at corporate governance mechanisms in isolation of each other, it is important to see them as complementary and substitutable bundles of mechanisms. In this chapter, we develop an understanding of the bundles of effective corporate governance in the context of emerging markets. The bundles of corporate governance approach are rooted in an agency perspective and address how firm-level mechanisms effectively combine to solve the agency problems generated by a separation of ownership and control. In the emerging countries, where attributes of corporate governance are based on different institutional norms, the theory of corporate governance bundles needs to be adjusted. Here, we describe how the emerging market context influences the theory of corporate governance bundles and highlight its implications on the corporate governance practices in these countries.