Quality And Safety/Governance Framework

Quality And Safety/Governance Framework

Clinical and Operations Management Methodologies

This paper endeavors to shed some light on need of reconstructing corporate governance framework of Sri Lankan companies with a special reference to collapse of Pramuka Savings and Development Bank Ltd. (PSDB) in Sri Lanka. Although corporate governance has been a long-standing issue, debate was given fresh impetus by a number of well-publicized corporate problems in late 1980s such as East Asian financial crisis, failure of Enron Incorporation, WorldCom and many other corporates. These failures involved creative accounting, spectacular business failures, apparent ease of unscrupulous directors in expropriating other stakeholders' funds, limited role of auditors, claimed weak link between executive compensation and company performance. As emphasized by these failures, subject of corporate governance is bound to be a prime candidate to generate key issues such as corporate influence vs. corporate blame, adequacy of institutional investors' demand from business entities, adequacy of controllers' knowledge to apply corporate governance practices, hiring head Executive agents (CEOs) on communal connections. Out of issues aforesaid, disparity between corporate influence and responsibility is selected as main issue of present research study.

As mentioned in 'Introduction', issue that corporate “influence” is disproportionate to “responsibility” is considered as main issue of this paper. In context of this selected issue, following theme inspired thought process of researcher in current study.

“Existing corporate governance systems should be geared up to requirements of corporate stakeholders in order to reduce disparity between corporate influence and corporate responsibility.”

aforesaid theme was examined by using following perspectives with a special reference to case of Pramuka Savings and Development Bank Ltd. (PSDB)

Agency Perspective

Stakeholder Perspective

Institutional Theory Perspective

rationale for selecting aforesaid perspectives for study is supported by international cases chosen by researcher from USA, Japan, and India. Those cases are presented in section of Literature Review.

Methodologically, research used case study approach and it is more of a theoretical paper supported by empirical evidence. researcher gathered primary data by conducting unstructured interviews with six business executives worked for Pramuka Savings and Development Bank. It was a befitting sample. secondary data were gathered mainly from sources of international business journals, previous research papers, and Internet websites on research in corporate governance, local publications and magazines on corporate governance, textbooks and annual reports of Sri Lankan company selected. From gathered data themes were extracted as specified in qualitative inquiry methods. For purpose of case analysis, following conceptual framework was used.

Figure 1. Study Framework



Corporate governance is popularly understood as system by which companies are directed and controlled. It can be conceived as a socially assembled force field of going by car and preventing forces that shape a firm's strategic demeanour (Lewin as cited in Carney and Gedajlovic, 2001, 337). A society's corporate governance system is a part of a wider institutional structure that regulates relationship between executives who control organization's resources and activities and those social & economic stakeholders that possess a legitimate vested interest in firm's activities (Pfeffer & Salancik as quoted in Carney and Gedajlovic, 2001, ...