Toward a Strategic Role for Employees in Corporate Governance
Strategic Change Journal, Vol. 20 (3-4): 127-138.
12 Pages Posted: 23 Jan 2009 Last revised: 18 Feb 2016
Date Written: January 19, 2009
As the economies are becoming knowledge intensive and industries are encountering hypercompetitive technology environments, and the markets undergoing large scale globalization with firms experiencing wild fluctuations in financial performance, firm governance structure and the functioning of corporate boards in particular are under serious scrutiny. Given the economic crisis, the spate of scandals and corporate failures due to irregularities, systemic corruption, and complaints on managerial whims in recent years, there is a renewed emphasis on reforming the corporate boards to protect the interests of all stakeholders in addition to shareholders. This article accentuates the significance of employee representation in the corporate boards, as the employees’ knowledge has become a major competitive resource and the employees also have become the primary stakeholders. In this context, what role the employees are supposed to play in the corporate governance, and what responsibilities they need to assume for firm performance and shareholders’ wealth are becoming paramount to modern management and economics. We argue how codetermination, i.e., employee participation in corporate governance board, augments the organizational performance and productivity, how it limits the corporate excesses, and further highlight the significance of codetermination in the context of knowledge work and economy.
Keywords: Codetermination, Agency theory, Agency cost, Corporate governance, Intellectual capital, Human capital, Performance
JEL Classification: A14, A13, A20, B14, B15, B20, D23, D24, L21, L22 L23
Suggested Citation: Suggested Citation