The phenomenal growth in the U.S. economy greatly depended on international confidence in the American business model, which the U.S. urged everyone else to adopt at the risk of losing out in the ‘new economy.’ Recently, this model has taken a severe beating with the revelation of corporate scandal after corporate scandal on an enormous scale not seen since the Asian economic crisis or the bursting of similar bubbles in Europe and Latin America.
Indeed, every business/economic model has its flaws and the true test is how quickly institutions can recover and remedy the problems. In this regard, the self-regulatory, finance-focused management regime enhancing the power of the CEO in the U.S. has prevailed since the 1980s and is now under revision. The true test of the model is not that it remains unchanged amidst turbulent conditions, but how quickly and flexibly it adjusts to the current marketplace, which demands further transparency in order to instill trust. However, timing is critical and the next few months will be very important in understanding how resilient U.S. institutions really are. In the meantime, the rest of the world is watching.
This issue of the GBR offers some insight and some hope in the midst of this maelstrom. First we will devote our Conversation feature to the memory of a truly inspiring person, George L. Graziadio, who passed away on June 6, at the age of 82. Mr. Graziadio, benefactor of the Graziadio School and co-founder of Imperial Bank, left an enormous legacy in the form of his business achievements, his community involvement, and his deep commitment to his wife and family.
It’s fitting that this issue addresses topics like ethics and leadership that were characteristic of George Graziadio. First, Steve Ferraro and Linnea McCord look at the role of ethics in corporate governance in their article, Who’s Driving American Firms? Directors facing new responsibilities. Then, Charles Kerns takes a timely look at the key characteristics of exceptional managerial leaders in his article, Managerial Leadership at Twelve O’Clock. Do you know what belongs in your Twelve O’Clock Box?
Another very timely is topic is how best to manage investments in a sagging market burdened by corporate scandal and investor anxiety. John Paglia looks at how investors can allocation their assets to manage risk and maximize returns for a given time horizon.
Then, Charles Hunt looks at mediation and arbitration as effective alternatives to the courtroom, and Jack Green offers his experience running business simulations to those who wish to use such tools in their organizations. Finally, Larry Bumgardner brings us up to date with recent Supreme Court rulings that particularly impact business, while The LOOP looks for gum underneath the nation’s highest bench. Which leads me to our Supreme Court Quiz where you can test your knowledge of the high court without fear of a contempt citation.
And don’t give up on the U.S. economy. The sky’s not falling. We’re just experiencing a little financial and moral correction.
