Corporate governance is best understood in the context of the broader institutional environment. 

​

The effects of corporate regulation vary depending on the institutional environment; where certain regulatory mechanisms effectively address governance concerns in one type of environment, the same mechanisms may be less relevant or ineffective in other circumstances. The quality of courts and agencies or the structure of corporate ownership can be relevant factors in this regard. It can be disingenuous, for example, to expect minority shareholder interests to be enforced through the courts, if the legal system is not geared to deal with corporate matters or if the risks related to legal action are significant.

Regulatory intervention is the outcome of political processes, where the ability of corporate constituencies to coordinate their interests varies. Regulatory outcomes can be expected to reflect the best interests of politically dominant constituencies - but are also affected by the institutional structure of the political processes. In the EU context, the agenda-setting powers of the Commission and the evolving political dynamic among EU institutions provide topical areas of research in this regard.

​

Corporate governance and other corporate regulation are highly significant for the competitiveness of corporate enterprise. It is therefore important to understand the dynamics of corporate governance, regulation and politics so that legal strategies are better tailored to the institutional environment.