Governance and organisation design: A negotiation and network analytic approach

Abstract

This paper proposes a negotiation analytic approach to the design of corporate governance mechanisms. The main research questions addressed in the paper are: Which packages of governance mechanisms maximize the utility of firm representatives - CEO - and human resource providers? On which matters do interests converge and on which do they diverge? Which packages are Paretorankable and which are not? Where are there areas of preferences balancing and effective negotiation? The answers to those questions structure the "governance game", indicating what are the interesting and sensible values for each mechanism, and what are the most interesting (value adding) combinations among policies on each mechanism. The approach is applied to a database of preferences over a wide array of governance and organisational mechanisms, expressed by two samples of relevant actors (CEOs and high potential managers working in 315 firms - domestic or subsidiaries - located in Italy) and contributes both in method and in the substantive identification of solutions. Results indicate, that the governance game is less adversarial than suggested by 'shareholder views', but also less generically cooperative than suggested by 'stakeholder views'; and develops policy implications by identifying on which matters preferences converge or diverge, among themselves and with respect to the solutions applied in practice. The framework and the findings offer new propositions about the design of CG structures, different from those based on the extant conventional approaches to CG.