Between 70 and 80 percent of Turkey’s businesses are small- to medium-sized enterprises (SMEs), and Turkish business leaders agree that they are not quite ready for the big leagues. While many Turkish SMEs have strong ties to larger firms as suppliers, poor corporate governance practices may hamper growth. That was the sentiment last week at the Corporate Governance Association of Turkey‘s (TKYD) fourth annual International Corporate Governance Summit.
Around 170 people, including TKYD board members, shareholders, and audit and risk managers from around the world as well as several CIPE partners from around the Middle East attended the summit, which took place at the Conrad Hotel in Istanbul, Turkey. Many more viewed the event webcast live online.
In his opening remarks, TKYD Chairman Mr. Tayfun Bayazit highlighted the importance of passing current draft laws to improve the Turkish Commercial Codes – backed by a CIPE-supported TKYD advocacy project. The draft law proposes a legal framework for implementing corporate governance Turkish businesses and is expected to pass through Parliament in February.
Mrs. Umit Boyner of the Turkish Industry and Business Association (TUSIAD) and Mr. Celal Beysel of the Turkish Enterprise and Business Federation (TURKONFED) discussed the importance of corporate governance to Turkish businesses, particularly in light of the ongoing financial crisis in Europe.
Boyner praised the adoption of the new Turkish commercial codes and its importance in allowing Turkey to better integrate into the world economy and support the sustainability and competitiveness of Turkish businesses.
Celal addressed the existing discrepancy between Turkish family-owned businesses and larger corporations. He pointed to the fact that most Turkish SMEs still run on a patriarchal system and do not follow corporate governance guidelines, thus the institutionalization of corporate governance among SMEs suffers. He indicated the importance of addressing this problem as most SMEs are suppliers to the larger corporations and the existing discrepancy does not bode well for the future of the Turkish economy.
Celal concluded his remarks by also calling on the government to make other laws (such as the employment tax) less challenging for SMEs and by applying equal standards on SMEs and larger corporations alike.
The summit keynote speaker was Mervyn E. King, an internationally recognized expert on corporate governance and sustainability. King highlighted five focus areas for balancing growth and survival: responsibility for financial resources; human resources and human rights; the role of the company in relation to society; sustainable use of natural resources; and responsibility for continued and transparent company development to the benefit of stakeholders and shareholders.
Capital, King stressed, will flow where there is good corporate governance and will avoid areas where it is poor.
Further summit discussions affirmed that corporate governance is important far beyond a response to the broader financial crisis that recently spread throughout Europe. Good corporate governance is crucial for the sustainable development of the Turkish economy and a key contribution from business to a democratic society.
Published Date: January 18, 2011