Question

How is the corporate control influenced by the foreign countries? (The country which is not the home of the company you are researching.) How do the shareholders, employees, and other stakeholders influence decisions made?

Answer 1

Foreign countries have their own corporate regulatory framework that is applied to the companies that operate in or from their own geographical area. These companies as MNCs come to the another country, then they bring their best corporate practices, governance and control mechanism. It becomes a contagious effect and domestic companies also learn to implement the similar standards and corporate governance & control. Secondly, one country proactively learns from the past scandals took place in other foreign countries and corporate control framework took place afterwards. Accordingly, the rules and control are also made to be statutory to be implemented by the companies in their own countries. This is the way, influence takes place as far as corporate control is concerned.

Shareholders, employees and other stakeholders are the entities that are affected by the action taken up by the company. So, these entities bring forward their views so that their interests are taken care in a balanced way and it is not tilted heavily towards any one stakeholder. For example, regulators, put forward the laws and regulations so that company does not create harm to the environment, eco-system as well as community as negative externality. Employees influence through collective bargaining with or without union support and put forward their views. Shareholders are the owners and they bring management to run the organization and looks after the benefits of everyone. So, each stakeholder works in a way that brings balance and organization grows.