Corporate governance models: Is there a right one for transition economies in Central and Eastern Europe?

Abstract

Purpose

Poland along with other members of the transition economies of Central and Eastern Europe (CEE) have adopted a hybrid corporate governance model, which draws inspirations from both the insider‐oriented system as exemplified in Germany and the outsider‐oriented system as exemplified in the UK. The paper aims to examine the effectiveness of the transplantation process in Poland.

Design/methodology/approach

The paper looks at common actual practices prevailing in the country itself and compares this with those in Germany and the UK. The research approach relies on a limited case analysis, drawing data primarily from the public domain.

Findings

Poland's hybrid corporate governance system appears to align with the country's socio‐economic‐legal framework and also takes into account the common positive features found in both the insider‐oriented system and the outsider‐oriented system; and in particular the emphasis on transparency and accountability, proper corporate asset management, and investors’ protection safeguards. However, it would appear that the process of corporate governance monitoring and enforcement in Poland may need to be improved. It is also observed that Poland is increasingly looking towards the Anglo‐Saxon model of corporate governance as it developed its own system, largely because of the relatively greater success of the latter, the influence of influential global institutional investors in Continental Europe, and the diminishing influence of the German model, which itself is now contemplating fundamental reforms.

Practical implications

The transition economies of CEE like Poland requires the practice of sound corporate governance to ensure more efficient mobilisation of their economic resources.

Originality/value

The paper shows that good corporate governance should help to attract more foreign investments into transition economies to help accelerate growth and enhance their balance of payments positions; and reduce gradually the extent of state involvement in the business sector.

Citation

Yeoh, P. (2007), "Corporate governance models: Is there a right one for transition economies in Central and Eastern Europe?", Managerial Law, Vol. 49 No. 3, pp. 57-75. https://doi.org/10.1108/03090550710816483