Manuscript Type: Perspective
Research Question/Issue: This paper promotes the furtherance of global governance theory with sufficient universal applicability to open up an entirely new area of corporate governance research, both in theoretical effectiveness and in competing practices stimulated by theory.
Research Findings/Insights: This paper does not arise from a research study, but from the argument that board governance suffers from lack of a theoretical base despite its crucial instruction and accountability function between owners and operators. Therefore, this paper is not to report research results, but to introduce a perspective on the need for conceptual coherence in the board's role, practices, and relationships – a perspective worthy of being called a global theory of governance.
Theoretical/Academic Implications: The central theme of this paper is that a global theory of corporate governance is needed, can be highly practical, and has already begun. The case is made that global governance theory will not arise from research into the elements of current board practices, but by studied attention to: (1) the purpose of boards; (2) the irreducible minimum elements of accountability among varied governance venues; and (3) the concepts and principles that would enable those universal characteristics to be optimized. The case is made that isolating the relatively few essential components of responsible governance yields a foundation that enables all other elements to vary based on cultural, legal, and idiosyncratic variables for each board.
Practitioner/Policy Implications: Any development of governance theory necessarily changes the light in which practices are viewed: board relationships with shareholders and with management; director discipline and training required to fulfill theory-based obligations; roles of chair and committees; advisability of combination directors/executives; distinction of directly board-controlled decisions versus those allowed to vary as management sees fit; nature and content of reporting and CEO evaluation; and a host of other issues of board practices and expressions of leadership.