New challenges in corporate governance
This text summarizes the introduction to the 2016 International Governance Conference ( CIG ) at the University of Montpellier: Governance and governmentality in the age of big data: what are the challenges for businesses?
Véronique Bessière, University of Montpellier and Eric Stéphany, University of Montpellier
The 15the The International Governance Conference (CIG 2016) organized by the AAIG (International Academic Association of Governance) held on May 17 and 18, 2016, at the IAE in Montpellier provided an opportunity to discuss new challenges in corporate governance. Governance researchers are at the crossroads of several management disciplines.
Originally, governance research was mainly based on agency theory (see Gérard Charreaux's summary) and focused on large managerial companies, where the more or less conflictual relationship between shareholders and managers is preeminent. These classic issues are not set in stone; they are regularly revisited and remain relevant, as evidenced by the range of topics addressed at the 2016 CIG, as well as recent events (Carlos Ghosn's salary, for example).
An increase in focal length
Research on governance therefore continues to focus on the role of the board of directors, the impact of auditing standards, executive compensation methods, and corporate fundraising issues, but also the company's relationships with its various partners, new forms of governance such as cooperatives, the specific characteristics of family businesses, and issues of diversity in governance (gender in particular). CSR is also very much present in current governance topics.
More generally, over the past several years, we have seen a shift in governance theories, which are gradually but very clearly moving away from a coercive or disciplinary approach toward a much more cognitive and behavioral approach. When discussing the impact of diversity on a company's board of directors, for example, the focus is on studying the role of the board in terms of its knowledge base rather than in terms of control. Governance research has thus evolved over time, notably by incorporating resource and knowledge functions and focusing on the dynamics of their deployment within the company.
The digitization of reality
This trajectory of governance work is now taking a new direction. A new object of governance has recently emerged, one that is complex to identify, arising from what could be called the "digitization of reality." Through big data (more or less big, for that matter), statistical processing (algorithms) is becoming a lever of governance: it predicts, guides action, and even makes decisions. It can do so in a quasi-autonomous manner through unsupervised learning. At the same time, a second effect of this digitalization is the massive sharing of information.
This new object—or these new objects—resulting from the digital transformation are all based on information. This is one of the reasons why governance research is particularly well-suited to conducting these reflections. Information is indeed the major issue in governance, because it is on the basis of information that decisions are made and power and action are exercised in companies and, more generally, in organizations.
Algorithms and knowledge
The vision proposed by agency theory helps explain and frame these issues. In simple terms, the agency relationship can be described using the example of the relationship between a patient and their doctor or between a driver and a mechanic. The patient delegates their health to their doctor because the doctor is more qualified and has the knowledge to make the right analysis and take the right decision. However, it is an entire sector that is being disrupted by the wave of big data and algorithms. This agency relationship, where delegation is based on knowledge, is being transformed by the power of big data and algorithms.
The example of the driver and his mechanic is also instructive. Here, it is the platforms that are disrupting the relationship, those that, like Uber, are becoming increasingly common in the skilled trades. The behavior of the agent (in this case, the mechanic) can now be observed and is subject to review and evaluation by all users.
But the production and control of this information raise many questions. The 2016 CIG focused its attention on these new governance issues by dedicating its plenary conference to: "Governance and governmentality in the age of big data: what are the challenges for businesses?" Two management researchers proposed a reflection on two themes: platforms and algorithms on the one hand, and blockchain.
Christophe Bénavent (University of Paris 10), in his presentation entitled "From the collaborative economy to algorithmic governance of platforms," questions the intermediary role of platforms and their algorithmic functioning, which resembles a "black box" (Frank Pasquale). These black boxes influence many activities: credit, health, insurance, security, agriculture, etc.
Jean-Fabrice Lebraty (Lyon 3 University) focuses the debate on the issue of organization, transparency, and information sharing. Blockchain technology enables decentralization and disintermediation, challenging the centralized logic of proprietary servers. Information governance then becomes shared, peer-to-peer, and authenticates transactions or diplomas, for example. J.F. Lebraty provides an update on this technology and its impact on corporate governance.
Véronique BessièreProfessor, Management Sciences, IAE Montpellier, University of Montpellier and Eric StéphanyDirector of IAE, Senior Lecturer, IAE Montpellier University of Montpellier
The original version of this article was published on The Conversation.