Corporate governance, holistic view VS conventional view

Abstract

The word “governance” is not much new, but “Corporate governance” is relatively new and has been popular for the last two decades. There are three models of “CG” being practiced in the world. The Anglo Saxon, the Japanese model, and the German model of corporate governance. The main objectives of corporate governance are to control irregularities in financial institutions and to provide a better mechanism for sustainable development for these financial organizations. Although there are three models of “CG” two models are being exercised in the world. One is Anglo-Saxon (property view) while the other is the European model (social entity view). Islam as a complete code of life also has the rules for every sphere of life including governance. Islam is a constitutional part of life and it also has rules for every aspect of life including governance. Islamic law as a set of divine injunctions is more clear, balanced, based on justice, and beneficial for social welfare. It rejects the individual interest when it goes against society. That’s why the holistic view of “CG” as prescribed by Islam is more beneficial for all stakeholders. The aim of this research paper is to compare the Islamic corporate model with the said two models (Anglo Saxon model, European model) on the basis of qualitative data and actual practice. The methodology of this research is qualitative which focuses on the comparative study of both models. The differences among said models are highlighted and the paper concludes that a holistic view of “CG” is better than a narrow approach to “CG”.

Key words: corporate governance, stakeholder, holistic approach, Islamic view