Studies in Flawed Governance II: Sectors and Industries

Abstract

As we have seen in the last chapter, governance problems can create significant damage at a company level. Although obviously harmful, the fallout can usually be contained to a relatively small circle, namely a specific firm and proximate stakeholders. In some instances, however, governance problems can be much broader, coursing through entire industries or countries; companies in the same sphere may behave in the same way, or be exposed to the same external forces, and thus suffer from similar problems. Although individual companies might be at the center of issues, their flawed activities occur because broader regulatory shortcomings or national/sectoral dislocations permit poor controls and bad behavior to go unchecked. Indeed, multiple companies can only be exposed to the same difficulties, or experience identical lapses in control and judgment, when external checks and balances are not performing as they should.