The place of managers in the corporate governance architecture

Abstract

This article discusses deficiencies in existing models of the company. It outlines three immutable layers of corporate ontology and argues for a mental model of the company based on general systems theory. The model reveals that each company has at its heart a managerial hierarchy which controls corporate actions through direct and indirect means. The most important participants in the everyday life of the company are its senior and middle managers. Consequently, greater emphasis needs to be placed upon managers’ corporate governance/compliance responsibilities. The legislature should provide for an obligation on companies to engage in risk-mapping and an obligation on managers to ensure, within their areas of responsibility, compliance with the law.