What do you think when you hear the words corporate governance?  Several years ago, corporate scandals and financial crises would be the first things to come to mind.  Increasingly, however, corporate governance is being defined by market development, competitiveness, and value creation rather than corporate failures. 
 
The transformation taking place in the sphere of corporate governance is hard to ignore.  The concept is no longer the prerogative of developed countries – it is making its way into emerging economies in all corners of the world.
 
However, a troubling trend is emerging.  There are some countries moving in the direction of embracing corporate governance.  While the road is not without setbacks and barriers to overcome, in the places where corporate governance is taking root companies and economies are becoming players in the global economy as well as in the domestic marketplace.  They are realizing benefits from trade and investment.
 
There are also countries where corporate governance remains an abstract concept.  In those cases, companies are being left out of the global system.  Inability to comply with rules of the global economy leaves them with few opportunities to compete in the marketplace and attract investment.
 
The division between those companies and countries that accept corporate governance and work to institutionalize the values of transparency, responsibility, fairness, and accountability and those that do not is not straightforward.  It is not just developed vs. developing countries, some industries vs. others, or big companies vs. smaller ones.  This makes it hard to take a bird’s eye view of corporate governance and figure out what it is all about. 
 
Last week, the Colombian Confederation of Chambers of Commerce (Confecámaras), the Chamber of Commerce of Bogotá, the Political Science Institute (ICP), and CIPE held a “Fifth Forum on Corporate Governance” in Bogotá, Colombia.  More than 250 businesspeople and government officials came together to discuss the applicability of corporate governance in the private sector; alternative dispute resolution strategies; and initiatives to promote cooperation between regulators, industrial organizations, and businesses in Colombia. 
 
During the event, the Colombian national petroleum company Ecopetrol S.A. announced that it is going to implement a corporate governance program developed by Confecámaras.  Earlier, Confecámaras helped Ecopetrol to put in place a corporate governance code, which addresses a number of key governance issues, including treatment of shareholders, board responsibilities, and conflict of interest.
 
Earlier in the week, the Brazilian Institute of Corporate Governance (IBGC) released the initial findings of its work with family-owned firms, which show that family-owned firms with effective corporate governance mechanisms in place outperform their competitors. 

In China, some state-owned companies are looking to implement Transparency International’s Business Principles for Countering Bribery, which will help them to put in place mechanisms of accountability and transparency to combat corruption, which is certainly one of the plagues of the Chinese economy.  This also underscores the important role that good governance can play in reducing opportunities for corruption by making bribery unsustainable.

These are just some of the many examples of good corporate governance penetrating areas that some would have deemed impossible just a decade ago.  The fact that family- and state-owned firms, as well as small and medium enterprises, are turning to good governance to remain competitive speaks volumes.
 
At the same time, we must recognize that challenges remain.  There are companies for which favorable regulations and government support still act as strong incentives to oppose corporate governance reform. 

The competitive pressures being generated in world markets mean that those countries that hide behind non-transparent business practices will surely fail to attract the kind of investment needed to sustain economic growth and social development. 

Ultimately, corporate governance – a transparent relationship between the state and the private sector – must become the new social contract of our time.  In Colombia, a public-private partnership is forming to include the securities regulators, Confecámaras, and other private actors to revise their corporate governance system in exactly that fashion.