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A Sustainable Future for Corporate Governance Theory and Practice

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Corporate Governance

Abstract

This chapter shows how the natural “science of control and communications in the animal and the machine” identified by Wiener in 1948 can be applied to social organizations to establish a science of governance. The science of governance provides a sustainable future for corporate governance theory and practice. Good governance is defined as the ability of organizations in the private, public and non-profit sectors to achieve their purpose in the most efficacious manner while minimizing the need for laws, regulations, regulators, courts or codes of so called “best practices” to protect and further the interests of their stakeholders and society. Evidence is provided that current best practices: (a) did not prevent firms failing to create the 2008 financial crisis; (b) are not based on theory or conclusive empirical evidence; and (c) are inconsistent with common sense. Systemic problems arising from organizations governed by a single board are identified. These include the absolute power of directors to manage their own conflicts of interest to allow the corruption of themselves and the organization. Examples of organizations with over a hundred boards show how network governance provides: (a) division of powers; (b) checks and balances; (c) distributed intelligence; (d) decomposition in decision making labor; (e) cross checking communication and control channels from stakeholder engagement; (f) integration of management and governance to further self-regulation and self-governance with: (g) operating advantage and sustainability. The examples illustrate how an ecological form of network governance could reduce the size, scope, cost and intrusiveness of government and their regulators while improving economic efficiency, resiliency and enriching democracy with widespread citizen stakeholder engagement.

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Notes

  1. 1.

    The complexity of the MCC is parsimoniously summed up in the four columns and five rows of “Table 6.1, Holon typology of Mondragón” on page 221 of Turnbull (2001b). Table 6.1 allows the complexity of the MCC to be revealed as a consistent continuum of how the complexity of life is created and the universe emerges as shown in “Table 3.8, Holarchy: Hierarchy of Holons” on page 130. Table 6.1 also illustrates the point made by Simon (1962, p. 479): “the task of science is to make use of the world’s redundancy to describe that world simply.”

  2. 2.

    2nd Cambridge University Conference on ‘Regulation, Inspection & Improvement, Judge Business School Centre for Business Research, 12 September 2007.

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Authors and Affiliations

  1. International Institute for Self-governance, Sydney, Australia

    Shann Turnbull

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  1. Shann Turnbull
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Correspondence to Shann Turnbull .

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Editors and Affiliations

  1. , Dept. of Accounting Finance and Law, Champagne School of Management, Avenue Pierre Brossolette 217, Troyes Cedex, 10002, France

    Sabri Boubaker

  2. , Cambridge Judge Business School, University of Cambridge, Trumpington Street, Cambridge, CB2 1AG, United Kingdom

    Bang Dang Nguyen

  3. , Dept. of Finance & Information Systems, ISC Paris School of Management, Boulevard du Fort de Vaux 22, Paris, 75017, France

    Duc Khuong Nguyen

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Turnbull, S. (2012). A Sustainable Future for Corporate Governance Theory and Practice. In: Boubaker, S., Nguyen, B., Nguyen, D. (eds) Corporate Governance. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-31579-4_15

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