The impact of corporate governance model on the functioning of businesses

Abstract

The corporate governance model implies a system which directs and controls the functioning of a company. We intend to study three different ownership and management control models which are as follows:

a) Family owned and family managed business

b) Family owned and non-family managed business

c) Non-family owned and non-family managed business

The focus will be to find out whether any particular model is better suited than the other and if there is a need for transition between different models along the business growth trajectory for non-government companies in that industry. The analysis will help us to determine whether the findings are specific to the particular industry or if it is possible to generalize them across different industries.

The focus will be on assessing these models from the point of view of corporate

governance along with the financial, administrative and strategic aspects.

In order to support the research, the data collection will be from primary sources based on direct interaction with the top level management and executives. Also, secondary data will be collected to assess the financial performance and strategy followed at different stages of development. On the basis of this analysis we aim to develop a business model that can be used for a new start up over the period of its business development in that industry.

one stage of business development to another stage.

In the Indian context a large number of businesses make their beginnings with a family owned and family managed structure. However, in order to grow they undergo transitions to a non-family managed and later to a non-family controlled business through dilutions in equity of majority shareholders. We wish to analyze the dynamics of a firm in a based on its corporate governance structure. Through this, we can identify the ideal transition points and develop a model to determine the financial, strategic and administrative changes associated with them. This will help a manager in this industry to plan the future business development based on the organization’s current position in the growth cycle. The decisions taken by a company are influenced by the corporate governance structure of the company.