Key Findings from EGADE Business School Study
According to the study “Transforming Corporate Governance in Mexico: Perspectives and Challenges for Boards,” published by EGADE Business School of Tecnológico de Monterrey, Mexican boards face various challenges to remain competitive and relevant.
Four Main Challenges Identified
- Strategic Direction: Boards need to dedicate more time to strategic business matters, currently only allocating 30% of their time, while 70% is spent on operational or low-relevance topics.
- Succession: Family membership in board presidencies restricts institutionalization and professionalization, limits openness to diverse thinking, and hinders succession and diversity in executive bodies.
- Diversity: Only 13% of Mexican board members are women, and a mere 3% are independent, indicating a lack of diversity that limits strategic decision quality and hampers competitiveness in the global market.
- Sustainability: While corporate purpose extends beyond economic contribution to social and environmental impacts, small and medium-sized enterprises (SMEs) require assistance to professionalize their sustainability practices.
Strategic Direction: The Need for More Focus on Long-Term Vision
The study emphasizes that corporate governance should prioritize strategic matters, guiding board meetings towards developing a long-term vision and direction by analyzing macroeconomic, technological, and social trends impacting the industry’s present and future.
Succession: Ensuring Business Continuity
In Mexico, family membership in board presidencies restricts institutionalization and professionalization, limits openness to diverse thinking, and hinders succession and diversity in executive bodies. This challenge remains central to ensuring business continuity in both family and non-family businesses.
Diversity: More Strategic Boards
According to a study by the Instituto Mexicano para la Competitividad (IMCO), only 13% of board members are women, and a mere 3% are independent. This lack of diversity not only limits strategic decision quality but also hampers competitiveness in the global market.
“Corporate board diversity is not just an equity issue but a strategic factor impacting competitiveness and value creation,” highlights María Ariza, General Director of BIVA (Bolsa Institucional de Valores).
More diverse boards tend to make more balanced and sustainable decisions.
Sustainability: Crucial for Growth
Beyond economic contribution, companies have a social and environmental impact. As more organizations understand this, listed companies increasingly integrate ESG (Environmental, Social, and Governance) criteria. However, SMEs require assistance to professionalize their sustainability practices.
The study highlighted the impact of implementing ESG criteria on access to capital, with BIVA as an example. It has facilitated capital raising for various companies and expanded access to equity financing, with specific impacts on mid-sized and growing enterprises.
Ricardo Murcio, leader of the Corporate Governance Initiative at EGADE Business School, stresses that evolving corporate governance towards a strategic, diverse, and sustainable vision is essential for business resilience and growth.
Key Questions and Answers
- Q: What are the main challenges faced by Mexican boards? A: The four primary challenges are strategic direction, succession, diversity, and sustainability.
- Q: Why is strategic direction crucial for boards? A: Boards must prioritize strategic matters to guide long-term vision and direction, analyzing trends impacting the industry.
- Q: How does succession affect Mexican boards? A: Family membership in board presidencies restricts institutionalization, professionalization, and diversity.
- Q: Why is board diversity important? A: Diverse boards make better decisions and enhance competitiveness in the global market.
- Q: How does sustainability impact businesses? A: Sustainability is crucial for growth, with ESG criteria helping companies access capital and thrive.
