Corporate Charters with Competitive Advantages

Abstract

Corporate charters, which vest power in a network of control centres, can offer advantages for directors, shareholders and other stakeholders. The author describes how he reduced the cost of capital through the establishment of a "Senate" as a watchdog board to improve investor and director protection. A cybernetic analysis is used to indicate how the involvement of customers, employees, and suppliers in corporate governance, as found in Europe and Japan, can provide competitive advantages and improve self-regulation. A theory of firms, and organizations, based on economizing information processing by individuals is introduced to provide a common foundation for other theories. Cybernetic laws of requisite variety are presented as a basis for designing self-governing social institutions with operating advantages to minimize the role and cost of government while improving the quality of democracy.

JEL Classification: D29, D89, G3, K29, L29, M19