Corporate Governance and Business Ethics “Nokia” a Corporate Governance and Business Ethics “Nokia” assignment

CORPORATE GOVERNANCE AND BUSINESS ETHICS “NOKIA” ASSIGNMENT
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(July 7, 2011)
Corporate Governance and Business Ethics “Nokia” a Corporate Governance and Business Ethics “Nokia” assignment ssignment
Theoretical Background
The case company that this easy critically analyse is the Nokia Company. Going with the definition of corporate governance, it has been defined by Thomas as the control and direction of companies by ownership, boards, incentives, company law, and other mechanisms” (Thomsen, 2008). As an effect, it can be seen as an appropriate control as well as a proper direction that if not applied in firms, the agency problem might occur. Though its, enhancement might not affect economic prospects, but it has a very significant role to play in shaping large companies.
Corporate governance in most companies has been a major concern because it is part and parcel of business infrastructure that underlay sound economic performance. Corporate governance in one way or the other correlates very well with better performance operation along with market valuation of companies. According to Capron & Swaminathan (1999), by protecting property rights, the company encourages innovation on top of long run investments in any form of physical capital, direct foreign ventures, not forgetting the intellectual property creation. Performance stimulation, high returns generations, on top of company profitability, all encourages productivity growth factor. Power abuse limitation by corporate performance, creates efficient mechanism for wealth transfer from one generation to the other.
Through accountability encouragement, leads to the protection of investors’ interest, which in the long-run enhances both foreign as well as domestic direct and portfolio investment. In large firms like Nokia, governance is much straight forward as there is a dominant consensual vision of what corporate governance ought to look like. Nokia Corporation is among the largest mobile phone manufacture in the world. It has four distinct business groups, namely “Mobile Phones, Multimedia, Enterprise Solutions, and Networks” (Baker, Roger, & Neil, 1998). As a result, the biggest corporate governance problem that Nokia faces involves persuasion of managers to start behaving fairly on investors, and even avoid discretional behaviours on manager’s side. In the process of dealing with such a problem has been granting managers a contingent, long term contracts to ensure that they have aligned their interests with the principals as stated by (Schleifer and Vishny, 1997). In addition, managerial corrections have taken different forms like corporate financial structures and board of directors, and have all been oriented towards monitoring and disciplining management in the shareholders and investors interest.
Business ethics is very much vital, as without it, individuals might go unethical. Both firms and c...