How Do Multiple Boards Provide Operating Advantages?
International Institute for Self-Governance; Sustainable Money Working Group; New Garden City Alliance
February 28, 2011
Finance and Corporate Governance Conference 2011 Paper
Research Question/Issue: How do organisations with multiple boards provide operating advantages?
Research Findings/Insights: Multiple boards allow: (i) avoidance of absolute power to mitigate hubris and corruption of board members and the organisation; (ii) distributing power to allow and value contrary views to provide checks and balances; (iii) simplification of decision making-labour to reduce errors; (iv) integrating governance functions with management to spread participation and constructive involvement of stakeholders; (v) multiple sources of feed back information for increasing knowledge to improve: (a) the detection of errors in decision-making, communications and control and (b) the integrity of decision making, and (vi) adoption of nature’s self-regulating architecture to reduce litigation and the burden of government interventions;.
Theoretical/Academic Implications: Transaction Byte Analysis (TBA), unlike Transaction Cost Economics provides a way to empirically evaluate and compare differences in the communication and control architecture of organizations and living systems. TBA explains the competitive advantages of an ecological form of network governance found in nature and illustrated by multiple boards in Mondragon firms. TBA explains why evolution developed contrary behavior in humans to create “tensegrity” for sustaining their existence in uncertain environments on a self-regulating basis. Tensegrity is a feature of “holons” and “holarchy” illustrated in Mondragon and explicated by the science of governance. TBA is not inconsistent with other governance theories while providing answers to the research question.
Practitioner/Policy Implications: Provide lawmakers, regulators, executives, investors and/or other stakeholders, ways to improve operations of organisations and their regulators while reducing the size, cost and intrusiveness of government.
Number of Pages in PDF File: 27
Keywords: Corporate Governance, Ecological Governance, Multiple Boards, Tensegrity, Transaction Byte Analysis.
JEL Classification: B41, C81, D23, D70, D80, G30, K22
Date posted: December 1, 2010 ; Last revised: May 10, 2011