The Geopolitics of Governance: The Impact of Contrasting Philosophies

The Geopolitics of Governance: The Impact of Contrasting Philosophies

The Geopolitics of Governance: The Impact of Contrasting Philosophies

The Geopolitics of Governance: The Impact of Contrasting Philosophies

Synopsis

Little attention has been given to the impact of adopting different governance models on societies and nations unaccustomed to alternative ways of working. This book explores the governance impact on both the structure and performance of organizations, and also examines the reactions and social repercussions of the emerging shareholder value philosophy championed by Anglo-American enterprises on stakeholder societies such as France, Germany, Japan, and the Scandinavian countries.

Excerpt

In economic theory, the market is viewed traditionally as a system of exchange of goods and services. Within such a framework, it is recognized that markets exist at different levels and that a well-balanced state is a prerequisite of the development of modern and sophisaicated markets, similar to those that exist in the developed world today ( Whitehead, 1993). the reason why an analysis of markets is undertaken in this chapter is to better understand the environment within which various philosophies and practices of governance are located. Specifically, the arguments for and against the free market are rehearsed, followed by an analysis of the various theories of the firm. Having examined the differing interpretations of the firm, further exploration is undertaken regarding the concept of competitive advantage. the point being emphasized throughout is that the context within which governance is applied is one of dynamism and ever-faster change.

The market is defined by some as a ‘public good’ ( Stiglitz, et al., 1989, p. 54; Streeten, 1993) and, as such, it is implied that the state fulfils at least a minimum level of social responsibility, including the pursuit of law and order and the maintenance of contracts, in order to enable markets to function ( Dutta and Heininger, 1999). Hume (1952) noted almost fifty years ago that there were tasks which, while being unprofitable for any single individual to perform, would yet be profitable for society as a whole, and which could therefore only be performed through collective action. Polanyi (1957, p. 7) observes that, ‘where markets were most highly developed . . . they thrive under the control of a centralised administration which fosters autocracy. Regulation and markets, in effect, grew up together’. Following this line of thinking, state intervention is considered to enhance the economic vitality of the private sector, whereby government intervention serves to ‘crowd in’ private productivity and investment ( Dutta and Heninger, 1999). the theoretical implication and emerging practical evidence is that markets and state guidance are not totally discrete, but rather are interconnected and interdependent ( Anderson, 2000).

In contrast, the ‘market’, is seen by others as an ‘obvious and simple system of natural liberty’ ( Smith, 1976, p. 208), and further by others as

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