SMEs and Corporate governance: Politics, Resources and Trickle-down Effects

Abstract

This paper proceeds on the basis that SMEs are the forgotten stakeholders in the fair and efficient management of Australian corporate governance. This is principally because the 'corporate governance market' is essentially aimed at listed and other public companies. It is assumed that rules, norms and best practice will somehow magically trickle down to SMEs, but neither resources or practical guidance are offered for multi-tasking managers of SMEs. It is only be default that the system of corporate governance takes into account the interests of SMEs. The CLERPs, for example, have affected SMEs disproportionately as their key personnel are stretched to providing compliance and monitoring, in addition to maintaining the ongoing management of firms.The current approach is both politically unfair and economically inefficient. Legislators need to re-imagine the contemporary nature and architecture of SMEs; in this way, corporate governance can be refigured so as to better reflect the particularities of, and challenges faced by, Australia's huge array of SMEs.This paper is in five parts. First it briefly examines differing definitions of SMEs. It then considers three key matters that inform the architecture and operation of the corporate governance in Australia: politics, resources, and the so-called 'trickle-down' effects. The final part contains suggestions for re-examining Australian corporate governance so as to make it more relevant to, and appropriate for, SMEs.