The (Un)Predictable Impact of Technology on Corporate Governance

65 Pages Posted: 31 Jul 2020 Last revised: 21 Sep 2020

See all articles by Chiara Picciau

Chiara Picciau

Bocconi University - Department of Law

Date Written: July 4, 2020


Technological developments have dramatically changed the way enterprises do business, with far-reaching consequences in many fields. From an organizational perspective, the broad question is whether and how new technologies — such as big-data extraction and analytics, algorithms, artificial intelligence, the block-chain, and smart contracts — will impact and eventually improve corporate organizations and governance. While the answer depends, at least to some extent, on the time frame chosen and on the specific technology considered, this paper shows that one of the most significant and immediate effects of new technologies on corporations concerns the distribution of competences and responsibilities among corporate bodies. The paper identifies five primary determinants of the current balance of powers in corporate organizations:

(i) the speed and frequency of the decisions;

(ii) the information necessary to decide and who has access to it;

(iii) the costs of assigning decision-making responsibilities to a collegial body;

(iv) the decision-makers’ incentives and interests; and

(v) their competence and skills.

Looking at whether and how these five dimensions are altered by technological innovation is the essential, and yet unexamined, analytical tool to reliably and accurately predict the impact of technology on corporate governance. While, in some cases, technological innovations may simply require managers to possess or acquire new competences and skills or may strengthen existing corporate roles, providing those who already make decisions with new tools to operate more efficiently, in other cases technology may shift the balance on who is the best decision-maker within the corporation. Technology may reduce some of the transaction costs that make collective decision-making burdensome for some corporate actors, suggesting, for example, that decisions that have been traditionally reserved for the board of directors may be made by shareholders. Similarly, competences that have commonly been delegated to executive officers and managers because of the need of particular operating expertise may shift back to the board of directors due to the informational decision-making support provided by technological tools. The result may not seem revolutionary at first glance, but it has potentially disruptive consequences for existing corporate governance models and demands renewed attention to ad hoc contractual solutions.

Keywords: Big Data, Algorithms, Artificial Intelligence, Block-Chain, Smart Contracts, Technology, Corporate Governance, Corporate Roles

JEL Classification: K20, K22, G30, G34

Suggested Citation

Picciau, Chiara, The (Un)Predictable Impact of Technology on Corporate Governance (July 4, 2020). Bocconi Legal Studies Research Paper No. 3643500, Hastings Business Law Journal, Forthcoming, Available at SSRN: or

Chiara Picciau (Contact Author)

Bocconi University - Department of Law ( email )

Via Roentgen, 1
Milan, Milan 20136

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