Combining The Effect of Corporate Governance and Different Leadership Styles in Building the Trust within The Firms
Fahrul Riza
Universitas Bunda Mulia
Abstract
Purpose: Good corporate governance improves the trust among stake holder and improve firms profitability, obtains financing and reduces costs of capital and eventually foster dynamic economic growth for the countries. However, not all firms are able to build and maintain this capabilities in the long run. There is an urgent need to find out how governance mechanisms can impact the sustainability of the firms competitive advantage Design/methodology/approach: This study undertakes a synthesis of classic and contemporary insights into governance and trust in Resource Based Theory literature to assist the development of several research propositions. Findings – By by classifying trust as calculative and relational trust on the relationship between governance as firm capability, this conceptual paper suggest that one of the strategic skills a leader needs to have is the ability to improve the trust among stake holder in order to sustain the competitive advantage of the firms. Research limitations/implications – Through the development of the research propositions the paper helps to clarify terminology and provide several suggestions for future research. The resulting model still needs to be empirically tested at the practical level Originality/value – The output and mechanism of good corporate governance are still vague among practitioners. This research narrows it by proposing trust as mediation to achieve sustainable competitive advantage
Keywords: Corporate Governance, Trust, Competitive Advantage, Leadership
Topic: Manajemen Strategi