Cultural Effects on Corporate Governance in Thailand: A Study Through the Three-Pillared Model

58 Pages Posted: 18 Oct 2006

Date Written: October 2006


This paper argues that balance of power is the core of all stable economic systems of which evidence can be found in European economic history. Also recent deductive studies on modern organizational economics have shown the necessity of balancing two interacting thrusts inside firms: to achieve firms' objectives and to keep their activities efficient. Both streams of evidence lead this paper to synthesize the balance of power as the core of corporate governance. This theoretical framework argues that a firm can be understood and conceptualized in several realms. Whereas the legal realm of the firm is commonly used in theoretical analysis, its narrowly characterized nexus-of-contract hinders scholars from understanding the complexity of the governance realm which can be construed as the balance of power driven by three interacting components, namely Authoritative capability, Control power and Cultural consensus. The balance of the first two components is presumably influenced by the third component. Therefore the role of Cultural consensus, consisting of trust, cultural values, social norms, social belief and ethics, is scrutinized in parallel with these components. Since a sizable portion of Thai listed companies are in practice controlled by majority shareholders and their families, these companies represent the ideal subjects for study through the lens of the Trimiti or 3Cs model. Selected proxies of the three governance components are tested against the performance indices of a sample of companies listed on the Stock Exchange of Thailand and significant relationships are found. The Trimiti model is proved to be an effective new tool of corporate governance study.

Keywords: Corporate culture, theory of the firm, internal audit, corporate governance, Thai public companies

JEL Classification: B52, D21, M14, M42, P16

Suggested Citation

Chaithanakij, Surasak, Cultural Effects on Corporate Governance in Thailand: A Study Through the Three-Pillared Model (October 2006). Available at SSRN: or

Surasak Chaithanakij (Contact Author)

affiliation not provided to SSRN ( email )

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