Toward a Strategic Role for Employees in Corporate Governance

Strategic Change Journal, Vol. 20 (3-4): 127-138.

12 Pages Posted: 23 Jan 2009 Last revised: 18 Feb 2016

See all articles by Senthil Kumar Muthusamy

Senthil Kumar Muthusamy

Middle Georgia State University

Pawel A. Bobinski

Independent

David Jawahar

Bharathidasan Institute of Management (BIM)

Date Written: January 19, 2009

Abstract

As the economies are becoming knowledge intensive and industries are encountering hypercompetitive technology environments, and the markets undergoing large scale globalization with firms experiencing wild fluctuations in financial performance, firm governance structure and the functioning of corporate boards in particular are under serious scrutiny. Given the economic crisis, the spate of scandals and corporate failures due to irregularities, systemic corruption, and complaints on managerial whims in recent years, there is a renewed emphasis on reforming the corporate boards to protect the interests of all stakeholders in addition to shareholders. This article accentuates the significance of employee representation in the corporate boards, as the employees’ knowledge has become a major competitive resource and the employees also have become the primary stakeholders. In this context, what role the employees are supposed to play in the corporate governance, and what responsibilities they need to assume for firm performance and shareholders’ wealth are becoming paramount to modern management and economics. We argue how codetermination, i.e., employee participation in corporate governance board, augments the organizational performance and productivity, how it limits the corporate excesses, and further highlight the significance of codetermination in the context of knowledge work and economy.

Keywords: Codetermination, Agency theory, Agency cost, Corporate governance, Intellectual capital, Human capital, Performance

JEL Classification: A14, A13, A20, B14, B15, B20, D23, D24, L21, L22 L23

Suggested Citation

Muthusamy, Senthil Kumar and Bobinski, Pawel A. and Jawahar, David, Toward a Strategic Role for Employees in Corporate Governance (January 19, 2009). Strategic Change Journal, Vol. 20 (3-4): 127-138. . Available at SSRN: https://ssrn.com/abstract=1330140 or http://dx.doi.org/10.2139/ssrn.1330140

Senthil Kumar Muthusamy (Contact Author)

Middle Georgia State University ( email )

100 University Park Avenue
Macon, GA 31210
United States

Pawel A. Bobinski

Independent

No Address Available

David Jawahar

Bharathidasan Institute of Management (BIM)

BHEL Complex, Trichy 14
Tiruchirapalli, Tamil Nadu
India

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