For the World Bank corporate governance refers broadly to "the role and performance of government in relation to a country's economic, social and political institutions".
Rahul Bajaj, Chairman and Managing Director of Bajaj Auto Limited, India, holds that people do not create companies to create jobs, job creation is just a consequence. Bajaj maintains that customer and shareholder considerations are most important but acknowledges that once in business, the interests of employees and civil society cannot be wished away. In the India of a decade ago, the tax-ridden, high regulation environment forced business to look out for number one and ignore the needs of other stakeholders. Recent structural changes have engineered a corporate rethinking. He is part of a group appointed to draft a code of corporate governance in India – and the code has since been circulated. The ultimate enforcer of responsible governance is competition, and the three keys to governance are maximization of shareholder value, transparency and accurate disclosure. Without these keys, investors will vote with their feet, he warns.
The OECD Council, meeting at Ministerial level on 27-28 April 1998, called upon the OECD to develop, in conjunction with national governments, other relevant international organisations and the private sector, a set of corporate governance standards and guidelines. In order to fulfill this objective, the OECD established the Ad-Hoc Task Force on Corporate Governance to develop a set of non-binding principles that embody the views of Member countries on this issue.
In Japan, the drive towards a more responsible corporate governance is due to both internal and external factors. More specifically, the recession following the "economic overheat" and globalization are responsible. Companies realize that the old values have become obsolete and an overhaul is inevitable. Although companies cater for shareholders in Japan they also focus on the interests of employees and funding institutions. As part of a corporate governance overhaul the emphasis on funding institutions and lifetime employment is being reviewed.
Leading companies are those that give back to society and focus on long-term strategic planning rather than obsess over short-term share prices.