A Case for Global Governance Theory: Practitioners Avoid It, Academics Narrow It, the World Needs It

• Author: John Carver
• Date: 01 March 2010
• Published date: 01 March 2010
• DOI: http://doi.org/10.1111/j.1467-8683.2010.00785.x

A Case for Global Governance Theory:

Practitioners Avoid It, Academics Narrow It,

the World Needs Itcorg_785149..157

John Carver*

ABSTRACT

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 varyas management sees f‌it; nature and content of reporting and

CEO evaluation; and a host of other issues of board practices and expressions of leadership.

Keywords: Corporate Governance, Board Governance, Governance Theory, Board-Management Relationship

INTRODUCTION

The elephant in the room – the board room – is a lack of

interest in governance theory and even failure to recog-

nize that sound governance theory would be a boon to the

f‌ield, and an authoritative guide to practice.

The phenomenon of boards is found worldwide: a group

of individuals, usually on behalf of other people, that exer-

cises authority over an enterprise and are therefore account-

able for that enterprise. That phenomenon is found in equity

corporations, NGOs, and many governmental organiza-

tions. Governance theory – meaning specif‌ically board gover-

nance theory – should be a carefully crafted and integrated

set of concepts and principles applicable to all instances of

the board phenomenon. In explication of that assertion, it is

my intent in this paper to make several points:

1. The board of directors, while clearly only one entity

among many that affect corporate realities, is suff‌iciently

pivotal to deserve our specif‌ic attention at the level of

theory.

2. Without a strong theory to identify and preserve the core

practices of board governance, a number of factors

threaten to lead to intrusive micromanagement. These

*Address for correspondence: Carver Governance Design, P. O. Box 13007, Atlanta,

GA 30324, USA. Tel: 1-404-728-9444; Fax: 1-404-728-0060; E-mail johncarver@

carvergovernance.com; Website http://www.carvergovernance.com

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Corporate Governance: An International Review, 2010, 18(2): 149–157

© 2010 Blackwell Publishing Ltd

doi:10.1111/j.1467-8683.2010.00785.x