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Corporate Governance
and Sustainability
BMC 4201
Week 3 -Introduction
Dr William Murithi PhD. FHEA. CMBE
wmurithi@[Link]
Purpose of the Course
• To address the governance and leadership needs of
business and social enterprises leaders.
• This unit employs integrative and interdisciplinary
approaches.
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Expected Learning Outcomes of the
Course
1. Critically evaluate and apply governance and corporate leadership in various organization
types;
2. Apply business fundamentals to the analysis, design and operation of a model to develop
the framework of a governance;
3. Develop a governance charter for an organization;
4. Develop an approach to corporate social responsibility and building a sustainable
organization;
5. Communicate proficiently in professional practice to a variety of audiences, function as an
effective member or leader of a diverse team
6. Discuss key concepts in the area of corporate governance and corporate social
responsibility;
7. Discuss state-of-the-art research papers in the field of corporate governance.
Topic 1: Introduction to
Corporate Governance
• Background of Corporate Governance in
Kenya
• Reasons for Corporate Governance in Kenya
• What is Governance?
• What Corporate Governance seeks to
promote.
• What is Corporate Governance?
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Topic 2: Governance and
Management
• The scope of corporate governance
• The significance of constitutions for
corporate entities
• The difference between governance and
management
• Alternative Board structures
• Board styles and culture of the board
Topic 3: Theories and
Philosophies of Corporate
Governance
• Agency Theory
• Stewardship theory
• Resource dependency Theory
• Psychological and organizational theory
• Stakeholder Theory
• Enlightened Shareholder theory
• Systems theory
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Topic 4: Functions of
the Board
• Role of the board
• Balancing the board’s performance and
conformance roles
• Board Committees: Functions and authority
• Delegating board functions to management
• Corporate transparency
Topic 5: Board Membership:
Directors’ appointment,
Roles and Remuneration
• The desired attributes and appointment of
directors
• Core competencies of a director
• Roles of a director
• Directors duties, rights and power
• Directors disclosures, service contracts and
agreements
• Directors Remuneration
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Topic 6: Corporate Social
Responsibility and
Sustainability
• The concept of corporate Social Responsibility
• Changing Expectations in the governance of
organizations
• CSR strategies and policies
• The CSR competency framework
• Balancing Corporate responsibilities
• Sustainability and the triple bottom line
Topic 7: Family Business Governance
Structures
• Define Family Business & their Characteristics
• Family Business Governance structures
• Stages of Family Business Governance
• Purpose of family business governance
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Environmental, Social and Governance
(ECG) Issues
[Link]
real-estate/
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Books and Journals
1. Anderson, Ray. Mid-Course Correction: Toward a sustainable Enterprise: The
Interface Model. Chelsea Green Publishing Company, 1998.
Other Reading material
[Link], Joel. Beyond the Bottom Line: Putting Social Responsibility to Work
for your Business and the World. Simon and Schuster, 1994.
3. McDonough, William. Cradle to Cradle: Remaking the Way We Make Things.
North Point Press, 2002. Other
4. Carroll, Archie B./Shabana, Kareent M. (2010): The business case for corporate
social responsibility: a review of concepts, research and practice. In: International
Journal of Management Reviews, 12(1): 85-105.
5. Delmas, Magali A./Burbano, Vanessa C. (2011): The drivers of greenwashing. In:
California Management Review, 54(1): 64-87.
6. Devinney, Timothy M. (2009): Is the socially responsible corporation a myth?
The good, the bad, and the ugly of corporate social responsibility. In: Academy of
Management Perspectives, 23(2): 44-56.
7. Walker, Kent/Wan, Fang (2012): The harm of symbolic actions and green-
washing:corporate actions and communications on environmental performance and
their financial implications. In: Journal of Business Ethics, 109 (2): 227-242.
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Topic 1: Introduction to Corporate Governance
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Objectives
• Understand and differentiate between
Governance and Corporate Governance.
• Explain the Background and reasons for Corporate
Governance in Kenya.
• Explain the 21 principles of Corporate Governance.
• Defining a good governance system and practices
• Advantages and Disadvantages of business forms
• Forms of Business and conflict of Interest.
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What is Governance?
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• Governance – the manner in which power is exercised in
the management of economic and social resources for
sustainable human development.
• It is a vital ingredient in the maintenance of a dynamic
balance between the
– need for order and equality in society,
– the efficient production and delivery of goods and services,
– accountability in the use of power,
– the protection of human rights and freedoms, and
– the maintenance of an organized corporate framework
• within which each citizen can contribute fully towards
finding innovative solutions to common problems.
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What is Corporate
Governance?
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• Corporate governance is the system of
principles, policies, procedures, and clearly
defined responsibilities and accountabilities
used by stakeholders to overcome the
conflicts of interest inherent in the
corporate form.
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•Why does Corporate
Governance Matter?
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Why?
• Corporate governance affects the operational risk
and, hence, sustainability of a corporation.
• The quality of a corporation’s corporate of
governance affects the risks and value of the
corporation.
• Effective, strong corporate governance is
essential for the efficient functioning of markets.
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Corporate Governance
• Corporate Governance, therefore,
refers to the manner in which the
power of a corporation is exercised in
the stewardship of the corporation’s
total portfolio of assets and
resources with the objective of
maintaining and increasing
shareholder value and satisfaction of
other stakeholders in the context of
its corporate mission.
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Corporate Governance
seeks to promote
• Efficient, effective and sustainable corporations that
contribute to the welfare of society by creating
wealth, employment and solutions to emerging
challenges.
• Responsive and accountable corporations.
• Legitimate corporations that are managed with
integrity, probity and transparency.
• Recognition and protection of stakeholder rights.
• An inclusive approach based on democratic ideals,
legitimate representation and participation.
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Conclusion
• Corporate Governance refers to the establishment of
an appropriate legal, economic and institutional
environment that allows companies to thrive as
institutions for advancing long-term shareholder
value and maximum human-centered development
while remaining conscious of their other
responsibilities to stakeholders, the environment and
the society in general.
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Why good Corporate
Governance
• Attract investors – both local and foreign and assure
them that their investments will be secure and
efficiently managed, and in a transparent and
accountable process.
• Create competitive and efficient companies and
business enterprises.
• Enhance the accountability and performance of those
entrusted to manage corporations.
• Promote efficient and effective use of limited
resources.
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5 Pillars of good corporate
Governance
There must be an effective body responsible for governance
separate and independent of management to promote:
• Accountability [leadership that must be ready to account]
• Efficiency and effectiveness [hence leadership for
results]
• Probity and integrity [hence leadership that is honest,
faithful and diligent]
• Responsibility [hence leadership that is capable,
responsible, representative and conscious of its obligations]
• Transparent and open leadership with accurate and timely
disclosure of information relating to all economic and other
activities of the corporation.
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5 Pillars of good
corporate Governance
• There must be an all-inclusive approach to
governance that recognizes and protects the rights
of members and all stakeholders – internal and
external.
• The institution must be governed and managed in
accordance with the mandate granted to it by its
founders and society and take seriously its wider
responsibilities to enhance sustainable prosperity.
• The institutional governance framework should
provide an enabling environment within which its
human resource can contribute and bring to bear
their full creative powers towards finding innovative
solutions to shared problems.
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