Corporate Governance and Corporate Agility

Abstract

Most of the extensive literature on corporate governance during the past fifty years has approached the topic from the perspective of agency theory and it has focused on dimensions of governance that are relatively easy to measure (e.g., ownership structure, size and structure of boards, executive compensation). Although the literature has greatly enhanced our knowledge of corporate governance, this focus has likely blinded us to other dimensions of governance that are hard to measure, unrelated to agency costs, but important determinants of firm performance and survival. This paper suggests one such dimension, corporate agility, which refers to the speed with which firms adapt to changes in their environments and discusses the potential role that governance plays in promoting or impeding corporate agility.

Keywords: corporate governance, corporate agility, evolution, survival

JEL Classification: G3, K2, L2, M2