What is one reason corporate governance is essential in responding to external changes?

Corporate governance is vital in responding to external changes primarily because it provides a structured framework that organizations use to achieve their objectives effectively. This framework is essential when navigating external factors such as economic shifts, regulatory updates, or changes in market demands.

When an organization adheres to strong corporate governance principles, it can respond proactively to these changes, ensuring alignment with its long-term goals and strategy. By having clear policies, procedures, and accountability structures in place, an organization is better equipped to adjust its operations and strategies in response to external pressures, thereby maintaining or enhancing its competitive position in the market.

The other options do not accurately capture the core essence of corporate governance in the context of responsiveness to external changes. For instance, while compliance with laws is important, it is just one aspect of corporate governance rather than a broader purpose of why governance is designed to respond effectively to external shifts. Reducing market share or focusing solely on internal affairs are contrary to the goals of corporate governance, which aims to enhance organizational performance and stakeholder trust in a dynamic environment.