Institutionalisation and Corporate Governance

Institutionalisation is understood as the ability of the company to fulfil its activities and management as a system. The roles and duties of each part of the system must be defined within the integrity of the system. With institutionalisation, it is ensured that an organisational structure is established in accordance with the objectives of the company, the job and job descriptions of each part are determined in writing, the internal regulations of the company are established for these purposes, and a professional management is achieved by distributing authorities and responsibilities. Unlike institutionalisation, corporate governance brings the concept of "ownership" to the forefront. In corporate governance, it is necessary to establish systems to protect the rights of shareholders who own shares in the company and to facilitate the exercise of these rights.

When the definitions of corporate governance and the definitions of corporate governance in the literature are evaluated together, it is seen that corporate governance is primarily used to indicate a system by which companies and institutions are managed and their activities are controlled. In a narrow sense, corporate governance is the recognition of shareholders' rights by the company and the management of companies by establishing systems that enable shareholders to exercise these rights effectively. The responsible body in companies in this regard is the board of directors. However, when the concept of corporate governance is broadly defined, corporate governance is not only seen as the activities performed by the board of directors.

In broad terms, corporate governance is a system that regulates the relations between the board of directors, shareholders and senior management. While evaluating the success of corporate governance practices implemented by companies, the framework of the relations between these three segments should be clearly defined. The board of directors is a body that establishes the relations between shareholders and senior management and has important responsibilities in the success of corporate governance. Therefore, the board of directors plays a very important role in the establishment and implementation of corporate governance, determination of corporate strategies and supervision of the implementation results, and taking important decisions such as mergers and acquisitions. The board of directors itself is responsible for any negative consequences that may arise in the company.