Corporate Governance in Dubai SME: Nine Pillars and Comparison with OECD Principles

This article discusses the nine pillars of corporate governance in Dubai SME and compares them with the OECD principles. It also provides a definition of micro, small and medium enterprises and recommends adherence to the pillars for better business growth.

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MBA: CORPORATE GOVERNANCE
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1. Introduction
Dubai SME, also known as Dubai Small and Medium Enterprises is one of the major
associations in the country of United Arab Emirates that combines the enterprises which falls
under the small and medium enterprises section. It contains all the organizations that are
under the aspects of small and medium industry in respect to employee headcount and total
turnover of the organization. It was created in 2002 under the integrated division of the
Department of Economic Development (DED). The main aim of Dubai SME was to provide
a source of support, information and outreach for the growing small and medium enterprise
sector in the province (Schilirò 2015). It helps the budding businessmen and the businesses to
flourish and establish their own business companies to earn a substantial amount of profit.
2. Definition of Micro, Small and Medium Enterprises
Micro Enterprises is defined as the business that is operating on a very small scale
with the help of the micro credit given to the company. The amount of employees involved in
the business is less than 10 or 12 with a very small employee turnover annually, generally of
AED 3 million. The concept of micro business or micro enterprises was pioneered in 1976
and holds an important part in the concept of business of a particular country (Jones et al.
2014).
Small Enterprises are organizations that employs a small number of employees and
have sales which are considerably less in terms of medium sized enterprises. The annual
turnover of the company stays in approximately AED 100 million with an approximate
employee headcount of 100 which makes it one of the most potential sectors to invest a small
amount of money (Liedholm and Mead 2013).
Medium sized enterprises are those organizations that have an employee count of 100-
1000 enterprises and have a decent amount of annual turnover of AED 250 million which is

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greater than the small scale enterprises but lesser than the large scale enterprises (Jasra et al.
2012).
3. Corporate Governance
Corporate Governance is the set of rules, practices, measures and ways through which
a firm is made to control and work. It is the process of promoting the work inside a firm and
involves the management of the various interest of the company in terms of stakeholders,
such as shareholders, management, customers, suppliers, financiers, government and the
community (Tricker and Tricker 2015). It also defines the relations and the processes that are
involved in the whole process and are also one of the major ways and means through which
the governance of the corporate world can be made.
4. Critical Evaluation of Nine Pillars of Dubai SME
There are Nine Pillars of Corporate Governance that can be implied for the Dubai
SME sector. The Nine Pillars of the Dubai SME are as follows
 Adopting a Formal Corporate Governance: The Dubai SME has adopted a
corporate governance plan for the better working of the enterprise that can benefit the
governance of the small and medium enterprises of the city. The formal corporate
structure of the Dubai SME help to make sure that the workings of the organizations
is done in a proper manner (Trong Tuan 2012).
 Conducting a Succession Planning Process: The planning process of the Dubai
SME is done in a manner that it can increase the business of the firm and make way
for the other benefits of the firm which will improve the overall sales and business for
the said process.
 Establishing a timely, open and transparent flow of information: A timely, open
and transparent flow of information is required in the Dubai SME which is being

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presently done to make sure that the information required by the business organization
for their conduction of business is proper and apt.
 Endeavouring to set up a good Board of Directors for the betterment of the
company: Generally the micro, small and medium enterprises do not have a set group
of Board of Directors who are engaged for the betterment of the company which
should be done in the Dubai SME to make sure that the organizations that fall under
the corporation have a clear setup.
 Establishing a clear mandate of the Board of Directors for the operations: A
clear mandate should be established by the Board of Directors for the operations of
the brand and should be conducted so that the operations of the said enterprises are
done in a timely and well mannered way. The Dubai SME makes sure that the
working of this aspect of Corporate Governance is done in a proper way adhering to
the rules.
 Maintenance of credible book of accounts: A credible book of accounts is being
maintained by the Dubai SME to look after all the expenses and other monetary
affairs of the companies engaged. This is the general feature of the big enterprises
which should be followed by the SME too.
 Setting up an Internal Control Framework: Internal Control Framework has also
been set up by Dubai SME to make sure that the control and operations for the
framework of business is done (Fernando 2012). Also, the internal control should be
done in a proper way so that the organization can have maximum benefits for the
same.
 Recognizing the need of Stakeholders: Stakeholders should be recognized in the
Dubai SME to make sure the persons who will be benefitted from the proposal and
also the stakeholders that are not to be affected by the changes that are occurring in

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the Dubai SME. The need of recognizing the stakeholders is one of the basic concepts
of the large industries which is also missing in the SME of the Dubai area.
 Formulating a framework setting out of family’s relationship in business:
Framework to formulate a family relationship in business is to be done in the large
business enterprises of the world but the Dubai SME have done it so in their sectors of
the small and medium enterprises. The family relationships are one of the basic
formulae to make sure that the SME is also given equal importance in the area like the
large ones.
5. Comparison with OECD Principles
The six basic principles of OECD are as follows:
 Ensuring the basis and level of an effective employment of corporate governance
framework.
 The sharing of the rights of shareholders in the organization and key ownership
functions.
 The equitable treatment and methods of shareholders.
 The role and right of stakeholders who are involved in corporate governance.
 Disclosure and transparency of the overall procedure.
 The responsibilities and effective behaviour of the board (Akhmouch and Correia
2016).
There are differences between pillars and principles in the sect of Corporate Governance.
The pillars are meant to provide more amount of accuracy and a better way to conduct the
ideals and objectives of Corporate Governance while the principles occupy more of the
subjective part of the theory. The theories of Corporate Governance assure that both the

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principles and pillars of the theory are of equal and pivotal importance in the genre. In case of
Nine Pillars of Dubai SME, the pillars set the objective of the corporate governance and tell
the importance of the need to imply the pillars in the same while in the OECD principles, the
subjective part of the corporate governance is being done in a widely manner.
The pillars and principles of the corporate governance are of adequate importance in
the overall theory portion of the same and they serve their own basic criteria assigned to
them. The pillars fulfil the objective part of the case while the principles fulfil the subjective
part of the case making the idea of corporate governance one of the basis of the business of
the Dubai SME. The idea of the nine pillars of Corporate Governance is to make sure that all
the objectives of the business arena of the country are being fulfilled while the principles of
OECD are meant to give a subjective touch and analytical view of the business of the
country.
Both the Nine pillars of Corporate Governance and the principles of OECD are meant
to give a boost to the business circuit of the Dubai business arena and are meant to provide
the business personals with the required motivation and help needed for the same.
The priority of the pillars as well as the principles are of equal importance in the
overall conduction of the theories and aspects of effective organizational governance. The
corporate governance sector is to be made aware of the all the terms of the same. The pillar
are apt for the conduction of effective corporate governance and there is no need for adding
an extra pillar to the same.
Effective theories and explanations with moderate analysis are missing in the
corporate governance of the organizations. The effective corporate governance of the whole
organization is missing which is one of the major drawbacks of the theories and explanations.

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6. Recommendations
The Dubai SME should develop more adherence to the pillars of effective corporate
governance and should be made used to the whole concept of the nine pillars in making the
theory and the concepts of the organization a success of the same. The Dubai SME should
make sure that the small and medium enterprises in the organization should get all the basic
requirements and profit so that the organizations are getting enough focus from the business
houses and the profit is there for the same.
7. Conclusion
In conclusion, it can be said the nine pillars of Corporate Governance is applicable for
the Dubai SME as it will help the small and medium enterprises of Dubai to get the desired
limelight to be in focus. In addition, it will help the organization to make sure that it gets the
desired amount of profit and limelight to get into the field of regular enterprises. A definition
of the concepts are given that will make sure that the whole things are under focus and with
immediate results.

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8. References
Akhmouch, A. and Correia, F.N., 2016. The 12 OECD principles on water governance–When
science meets policy. Utilities Policy, 43, pp.14-20.
Fernando, A.C., 2012. Corporate Governance: Principles, Polices and Practices, 2/e.
Pearson Education India.
Jasra, J.M., Hunjra, A.I., Rehman, A.U., Azam, R.I. and Khan, M.A., 2012. Determinants of
business success of small and medium enterprises.
Jones, P., Simmons, G., Packham, G., Beynon-Davies, P. and Pickernell, D., 2014. An
exploration of the attitudes and strategic responses of sole-proprietor micro-enterprises in
adopting information and communication technology. International Small Business
Journal, 32(3), pp.285-306.
Liedholm, C.E. and Mead, D.C., 2013. Small enterprises and economic development: the
dynamics of micro and small enterprises. Routledge.
Schilirò, D., 2015. Innovation in small and medium enterprises in the United Arab
Emirates. Int'l J. Soc. Sci. Stud., 3, p.148.
Tricker, R.B. and Tricker, R.I., 2015. Corporate governance: Principles, policies, and
practices. Oxford University Press, USA.
Trong Tuan, L., 2012. Corporate social responsibility, ethics, and corporate
governance. Social Responsibility Journal, 8(4), pp.547-560.