Institutional Variance and Implications for Corporate Governance Reforms in a Developing Country

Abstract

Corporate governance has attracted significant interest in the post-Enron era, following incidences of corporate fraud and collapses. Some of this attention has been witnessed in the proliferation of corporate governance codes of best practices and reforms. Following the agency theorisation, corporate governance codes and reforms are generically inclined. However, institutional configurations differ across contexts. (Neo-)Institutional theory posits that institutions influence corporate governance. Corporate governance practices, in turn, affect their institutional structures. Equally, organisational and social actors moderate and are compelled by these institutional boundaries. Drawing on these perspectives, this study investigates the inference of the distinct institutional context of developing countries, for corporate governance reforms. It expounds the implications of these evolving structures for the dynamism and procedures involved in such transformational schemes, in a bid to contribute to the theorisation of institutional reproduction.
In this respect, a constructivist position is adopted by exploring the views of key stakeholders in the Nigerian corporate context. Against this backdrop, the study employs a qualitative method approach, involving in-depth interviews supported by documentary evidence, to fulfil its aim. In line with the description of salient stakeholders in corporate governance reforms, such key stakeholders include: regulators and policy makers, listed companies and other notable players, within the corporate governance context of Nigeria – a central economy in Africa.
The findings are several. First, the study highlights that corporate governance reforms are motivated by the interface and alignment of established institutional logics, informed largely by the prevalent influence of a compendium of large family founders, regardless of supposed external pressures. Second, the expectations of the universally driven corporate governance reforms are found to contradict the dominant corporate governance performance in Nigeria, reflecting a complexity in application. Third, the mode and approach to corporate governance reforms in Nigeria are principally determined by internal legitimation, including: endogenous factors, social ratifications and path dependence, from established corporate governance structures. Lastly, corporate governance reforms are disclosed to be moderated primarily by informal mechanisms, as opposed to the more structured techniques of developed countries. Correspondingly, employment of such a framework of performance is advocated in the realisation of an institutionally informed corporate governance reform scheme in Nigeria, whereby the predominance of family block-holders could positively provide an avenue for tailored change through proper integration of their influence. In the main, the study forges a debate on the practice and policy that “a fit for all” corporate governance reform’s procedure is yet to be achieved. In this vein, theoretically, the study provides a model for understanding the institutionalisation of corporate governance reforms within maturing fields, as in Nigeria.