Do We Need: 'A New Model for Corporate Governance'?

Abstract

The motivation for this paper arose from BlackRock, the biggest investor in the world, wanting, “A new model for corporate governance” and that “companies must benefit all their stakeholders”. The idea of firms delivering value to all stakeholders was reinforced in 2019 by 180 other CEOs of the US Business Roundtable. Corporations who delivered benefits for all stakeholders become what Ostrom describes as Common Pool Resource (CPR). Corporate CPRs would then be able to promote common goods including countering tragedies of the Global commons. Ostrom described how competing interest for shared life sustaining resources become self-regulating by adopting a polycentric form of governance that contains many decision-making centres. Polycentric governance is illustrated by the bottom-up stakeholder-governed firms in the US, UK & Europe and also in sporting and civic organisations including two designed by the author. These examples are used, with the insights of system science, to reformat the Ostrom design principles for incorporated organisations. Self-funding tax incentives and other rewards are suggested to encourage corporations to introduce self-governance to best suit their specific operations while maintaining shareholder primacy. This new way to govern corporations reshapes and spreads both capitalism and democracy by providing citizens with benefits and voice from the bottom-up. These can provide contributions to a universal wellbeing income while enriching the quality of democracy. In addition, the size, cost and involvement of government can be reduced while enhancing the protection and promotion of other global common goods like the environment and the wellbeing of humanity.

Keywords: Competitive/cooperative, Existential risks, Polycentric governance, Stakeholder benefits, Self-governance, Tensegrity.

JEL Classification: D21, G32, G34, G38, K22, L25, M14