Towards Humanistic Governance? How Network Governance Structures Can Support Better Decision Making and Risk Management

29 Pages Posted: 20 Sep 2010 Last revised: 2 Nov 2013

See all articles by Michael Pirson

Michael Pirson

Fordham University - Graduate School of Business Administration; Harvard University; Humanistic Management Network

Shann Turnbull

International Institute for Self-Governance; Sustainable Money Working Group; New Garden City Alliance

Date Written: September 19, 2010

Abstract

This paper suggests a reexamination of current governance structures, specifically those of unitary boards after the financial crisis of 2008. We suggest that the existing governance structures are based on an outdated paradigm of business, rooted in economics. We propose an alternative paradigm, a humanistic paradigm, which allows conceiving alternative, network oriented governance structures. As hierarchical firms grew larger and more complex, the risk of failure increased from biases, errors, and missing data in communication and control systems. These problems are exacerbated by information overload on senior managers, directors, and their respective regulators. In contrast to traditional corporate governance, network governance introduces a division of power via multiple boards checks and balances, and active stakeholder engagement (a humanistic alternative). We argue that those features could have prevented the stresses and failures of financial firms in 2008, since they were anticipated by both individuals within firms and external commentators. However, those exposed to risks possessed insufficient influence in either governing and/or regulating firms to take corrective action.

Keywords: Corporate Governance, Humanistic Governance, Humanism, economism, risk Management

Suggested Citation

Pirson, Michael and Turnbull, Shann, Towards Humanistic Governance? How Network Governance Structures Can Support Better Decision Making and Risk Management (September 19, 2010). Fordham University Schools of Business Research Paper No. 2010-008. Available at SSRN: https://ssrn.com/abstract=1679450 or http://dx.doi.org/10.2139/ssrn.1679450

Michael Pirson (Contact Author)

Fordham University - Graduate School of Business Administration ( email )

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Harvard University

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Humanistic Management Network ( email )

St. Gallen
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Shann Turnbull

International Institute for Self-Governance ( email )

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Australia
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HOME PAGE: http://independent.academia.edu/ShannTurnbull/CurriculumVitae
SKYPE: shann.turnbull

Sustainable Money Working Group ( email )

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New Garden City Alliance ( email )

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London, UK, hello@gardencities.org.uk SE1 3TA
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HOME PAGE: http://www.gardencities.org.uk

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