Corporate Governance Approach: the Key to Manage Hospitality Industry

Abstract

For almost a century, discussions on corporate governance have been focusing on its models of shareholder primacy and stakeholders’ theory where these two are contrasting. Corporate governance was rooted early in the 1930s from the work titled ‘The Modern Corporation and Private Property. The theory was developed and applied in both American and European corporations. Leading to numerous arguments for the vagueness of corporate governance where it needs to be interpreted and what constitutes to be a sound corporate governance. The developments from the two models of corporate governance have embarked on the systems of the insider and the outsider. Recently, corporations and organizations around the world have been contemplating and seeking ways to achieve sustainability. As corporate governance has proved to be the instrument to such triumph, Thailand can benefit from the application in the country. After some alterations of its public policy along with the engagement of private sectors, especially the hospitality industry which is the top industry to elevate the country’s economic growth. This paper will demonstrate and discuss the characteristics and issues between two systems in corporate governance. The insider featuring its two-tier board where benefits block holders who cross owns shares in multiple corporations. The outsider where it shields the dispersed shareholders who are weak and vulnerable whom advantages are ready to be taken. An appropriate system for an individual organization will be analyzed and suggested. A solution to the persistent problems of agency theory will as well be considered to ensure the protection of shareholders. The market is seen as a measurement of what could be the perfect system. Still, it is shown that both systems have their strengths and weaknesses. It is suggested that a hybrid of both systems could also be implemented in every industry.