Corporate Governance Charters with Competitive Advantages

Abstract

Corporate charters, which vest power in a network of control centres, can offer advantages for directors, shareholders, and other stakeholders. The author describes how he reduced the cost of capital through the establishment of a "Senate" as a watchdog board to improve investor and director protection. A cybernetic analysis is used to indicate how the involvement of customers, employees, and suppliers in corporate governance, as found in U.S., Europe, and Japan, can provide competitive advantages and improve self-regulation. A theory of firms, and organizations, based on economizing information processing by individuals are introduced to provide a common foundation for other theories. Cybernetic laws of requisite variety are presented as a basis for designing self-governing social institutions with operating advantages to minimize the role and cost of government while improving the quality of democracy.