A guaranteed happy ending to financial crisis

Good economic news is hard to find nowadays. When the president of one major U.S. business organization addressed his staff, he remarked that he stayed up till early in the morning trying to think of a bright side to all the gloom of recent months. It came to him, finally: “At least we can expect some of our good people to [hold off on retirement] for a few more years. Or decades.”

For more good news to happen, somebody has to go out and become the story; somebody has to take advantage of uncertainty in world financial markets by demonstrating a commitment to a higher degree of certainty for investors. Businesses of every size, in every country, have the opportunity to take on the challenge of corporate governance as a pillar of development, and in the process provide shaky investors a firmer ground on which to land. It will be a long story to tell in the end, but it’s a guaranteed happy ending.

Dr. Jesus EstanislaoIn this CIPE Development Institute presentation (free registration to view), Jesus Estanislao tells that story in the context of the Philippines as it emerged from the Asian Financial Crisis in the late 1990s. As chairperson of the Institute for Solidarity in Asia and the Institute of Corporate Directors, Estanislao oversaw the implementation of corporate governance in the Phillipines as a strategy for emerging from the crisis. Business environment in the Phillipines is notorious for bribes and cronyism, which means that businesses can stand out even more by going beyond compliance and improving performance through corporate governance – and in the process, affect systemic change beyond their balance sheets.

Performance-related corporate governance invites every corporation to be fair not only to the controlling majority shareholders but also the minority shareholders… It’s also fairness to all of the stakeholders, including fairness to employees – how employees are treated – fairness to the environment, fairness to the economic system, fairness to the political community in which the corporation operates so that they pay the right taxes, do not bribe, and do not participate in corruption. (Presentation transcript)

This same story could apply elsewhere in the developing world, where firms wish to restart the engines of global finance. It’s only tangible, transparent organizational change that can ultimately wrench open the credit faucets again. The world can build all the roads and bridges it wants and certainly needs, but if the businesses using them continue to lack a commitment to the principles of corporate governance (fairness, accountability, responsibility, and transparency), then they may only be headed toward the next great economic crisis.

You can learn more about CIPE Development Institute here.

Published Date: December 30, 2008