New development: Local corporate governance and the German Public Corporate Governance-Model Code for international support

Abstract

IMPACTThe author explains how practitioners in corporate governance and the managers of municipally owned enterprises (MOCs) will benefit from using Public Corporate Governance Codes (PCGCs) as practical guidelines. The ‘comply-or-explain’ principle allows flexibility, while tailoring governance to specific local needs. This article introduces the German Public Corporate Governance-Model Code (G-PCGM) as a point of reference for enhancing governance structures and practices. City economy strategies, also highlighted in the article, offer practical roadmaps for aligning strategy and business models for modern services of general interest. Practitioners can profit directly from both tools for their strategic work, improving governance, and increasing public value and public trust in MOCs.ABSTRACTIn view of the growing number of public shareholdings, the steering and management of municipally owned enterprises (MOCs) is becoming increasingly important. This article contributes to the academic discussion by highlighting the growing importance of public corporate governance and the potential of the German Public Corporate Governance-Model Code (G-PCGM) as a practical reference for improving governance structures and practices, particularly for municipalities regarding their MOCs. It underscores the benefits of using Public Corporate Governance Codes (PCGCs) and the ‘comply-or-explain’ principle, offering flexibility tailored to MOC needs. Additionally, this article highlights the importance of city economy strategies for public management and contributes to closing the gap of political decisions on the one hand and practical management on the other hand. Readers may transfer the lessons learned to other countries, regions and municipalities. Furthermore, the article promotes international collaboration, contributing to ongoing research and ultimately enhancing public trust and governance efficiency.KEYWORDS: Business modelscorporate governancecorporate investment managementmunicipally owned enterprise (MOC)participationpublic corporate governance codespublic managementstrategic management Disclosure statementNo potential conflict of interest was reported by the author(s).Additional informationNotes on contributorsKlaus-Michael AhrendKlaus-Michael Ahrend is CEO of HEAG Holding AG. He is a member of several supervisory boards of state-owned enterprises and he is Practice Chairman of the Expert Commission of the German Public Corporate Governance-Model Code (www.pcg-musterkodex.de).