Faults at Corporate Governance. A Key Issue in World's Economical Crisis

The world is undergoing the greatest economic crisis of the past 80 years. The crisis began on Wall Street as financial, became economic then and now is humanitarian. The hungry people rose by 100 million in 2009, estimated 400.000 excess deaths of children from the effects of the crisis. The U.S. economy doubled its rate of unemployment at the end of 2007 to 2009, is 9,9%, and that means more than 15 million unemployed. The European unemployment rate exceeds 10%, and more than 25% of young people in various countries of the region are unemployed. Latin America was also affected rising numbers of poor in 9 million in 2009, to reach 190 million (35%), and has 7 million unemployed youth.

Among the main causes of the crisis was “wild” deregulation what the Nobel Joseph Stiglitz calls “market fundamentalism”, and weaknesses in the governance of large corporations. The vision of Milton Friedman who argued that companies should be accountable only to their owners, has been overtaken by the idea of corporate social responsibility (CSR). They are accountable to all involved in the results of their actions (stakeholders), workers, consumers, public opinion, the general community and should be with their specific objectives, contribute to fundamental social and ecological plans.

Are the current Corporate Governance Councils in a position to carry out the complex task of leadership that are asked? Several studies have shown strong shortcomings that should be addressed, as their failure to link the remuneration of senior executives, and company performance, gasps of transparency, weak participation of the mass of shareholders, and others.

In general, it is expected that good corporate governance take forward an active CSR policy that includes: advanced personnel policies, fair play to the consumer, active environment policies, integrity, community involvement, and consistency.

A key to promote a good corporate governance is the fundamental reform of how executives are currently preparing, framing the technical learning in a depth open and reflective training about what ethically responsible management means in practice.

In Latin America, there is a new interest in the subject at universities and it was created with support from UNDP and AECID, the Iberoamerican Network of Universities for integrating CSR (RED UNIRSE) currently composed by 158 universities of 20 countries, based at the National Centre for Social Business Responsibility of the Faculty of Economics Sciences of University of Buenos Aires (in Argentina).

It is a key question in the region and internationally to improve the quality of corporate governance and their level of ownership of the idea of CSR. This will mean learning from the crisis. On a continent with demanding and open economic and social challenges, this very important issue should be at the heart of the public agenda.

Key words: Social Accountability; Ethics; Managerial Capacity; Enterprises; Crisis Management; Economic Problem; Corporatism; International Context