The Difference Between Management & Governance
The difference between Management and Governance:
Analysis in the context of Small and Medium Enterprises –SMEs. By Callixte NYILINDEKWE I. Introduction:
Traditionally, corporate governance has evolved around the contract theory and agency problem based on separation of ownership and management (Dube, 2011). The benefits of this separation derive from the monitoring by the board of the CEO activity in the interest of shareholders, and generally in the interest of all stakeholders. There is a need here to first know what the agency theory is.
Agency theory relative to corporate governance assumes a two-tier form of firm control: managers and owners. Agency theory holds that there will be some friction and mistrust between these two groups. The basic structure of the corporation, therefore, is the web of contractual relations among different interest groups with a stake in the company (Johnson, 2011).
It is generally recognized that most of Small and Medium Enterprises are characterized by lack of separation between ownership and management. The present paper will investigate the issue of corporate governance in SMEs. Specifically we will try to find out how SMEs would implement good corporate governance principles.
II. What is Management?
Management has been defined by different authors in a number of ways. Some call it a process of managing. Some call it a coordination of resources, some call it body of personnel challenged in the task of managing while others call it as an organized distinct discipline (Sharmaa, 2011).
From different author’s definitions, it derives that the “management” is a technique of extracting work from others in an integrated and co-ordinated manner for realizing the specific objectives through productive use of material resources. Mobilizing the physical, human and financial resources and planning their utilization for business operations in such a manner as to reach the defined goals can be referred to as
Analysis in the context of Small and Medium Enterprises –SMEs. By Callixte NYILINDEKWE I. Introduction:
Traditionally, corporate governance has evolved around the contract theory and agency problem based on separation of ownership and management (Dube, 2011). The benefits of this separation derive from the monitoring by the board of the CEO activity in the interest of shareholders, and generally in the interest of all stakeholders. There is a need here to first know what the agency theory is.
Agency theory relative to corporate governance assumes a two-tier form of firm control: managers and owners. Agency theory holds that there will be some friction and mistrust between these two groups. The basic structure of the corporation, therefore, is the web of contractual relations among different interest groups with a stake in the company (Johnson, 2011).
It is generally recognized that most of Small and Medium Enterprises are characterized by lack of separation between ownership and management. The present paper will investigate the issue of corporate governance in SMEs. Specifically we will try to find out how SMEs would implement good corporate governance principles.
II. What is Management?
Management has been defined by different authors in a number of ways. Some call it a process of managing. Some call it a coordination of resources, some call it body of personnel challenged in the task of managing while others call it as an organized distinct discipline (Sharmaa, 2011).
From different author’s definitions, it derives that the “management” is a technique of extracting work from others in an integrated and co-ordinated manner for realizing the specific objectives through productive use of material resources. Mobilizing the physical, human and financial resources and planning their utilization for business operations in such a manner as to reach the defined goals can be referred to as
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