COMBINING NETWORK THEORY WITH CORPORATE GOVERNANCE: CONVERGING MODELS FOR CONNECTED STAKEHOLDERS

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Abstract

Traditional corporate governance patterns are based on the interaction among composite stakeholders and the various forms of separation between ownership and control. Stakeholders cooperate around the Coasian firm represented by a nexus of increasingly complex contracts. These well-known occurrences have been deeply investigated by growing literature and nurtured by composite empirical evidence. Apparently, unrelated network theory is concerned with the study of graphs as a representation of (a)symmetric relations between discrete objects (nodes connected by links). Network theory is highly interdisciplinary, and its versatile nature is fully consistent with the complex interactions of (networked) stakeholders, even in terms of game-theoretic patterns. The connection between traditional corporate governance issues and network theory properties is, however, still under-investigated. Hence the importance of an innovative reinterpretation that brings to “network governance”. Innovation may, for instance, concern the principal-agent networked relationships and their conflicts of interest or the risk contagion and value drivers – three core governance issues. Networks and their applications (like blockchains, P2P platforms, game-theoretic interactions or digital supply chains) foster unmediated decentralization. In decentralized digital platforms stakeholders inclusively interact, promoting cooperation and sustainability. To the extent that network properties can be mathematically measured, governance issues may be quantified and traced with recursive patterns of expected occurrences.

Keywords: Adjacency Matrix, Big Data, Supply Chain, Digital Platform, Hub, Node, Artificial Intelligence, Blockchain, Decentralization, Game Theory, Theory of the Firm, Value Co creation, Social Media, Circular Economy, B2B, B2C, P2P

Authors’ individual contribution: The author is responsible for all the contributions to the paper according to CRediT (Contributor Roles Taxonomy) standards.

Acknowledgements: The author wishes to thank the participants to the AIDEA Conference in Turin, Italy (September 12, 2019) and the Virtus Interpress Conference in Naples, Italy (October 4, 2019) for their helpful comments on a preliminary version of this study. The usual disclaimer applies. A research grant from the Università Cattolica del Sacro Cuore is gratefully acknowledged.

JEL Classification: G32, K22, M13, M21, O31

Received: 21.09.2019
Accepted: 11.11.2019
Published online: 12.11.2019

How to cite this paper: Moro Visconti, R. (2019). Combining network theory with corporate governance: Converging models for connected stakeholders. Corporate Ownership & Control, 17(1), 125-139. https://doi.org/10.22495/cocv17i1art12