The new challenges of corporate governance

This text summarizes the introduction to the 2016 CIG International Governance Conference at the University of Montpellier: Governance and governmentality in the age of big data: what are the challenges for companies?
Véronique Bessière, University of Montpellier and Éric Stéphany, University of Montpellier

La 15^e he International Governance Conference (IGC 2016) of the AAIG (Association Académique Internationale de Gouvernance) held on May 17 and 18, 2016 at the IAE de Montpellier was an opportunity to debate the new challenges of corporate governance. Governance researchers are at the crossroads of several management disciplines.
Originally, governance research was mainly based on agency theory (cf. Gérard Charreaux's summary) and focused on the large managerial-type company, where the more or less conflictual relationship between shareholders and managers is pre-eminent. These classic issues are not set in stone; they are regularly revisited and remain topical, as evidenced by the breadth of topics addressed at the 2016 IGC, but also by recent news (Carlos Ghosn's salaryfor example).

A wider focal length

Research into corporate governance therefore continues to focus on the role of the board of directors, the impact of auditing standards, executive remuneration and corporate fund-raising issues, as well as the relationship between the company and 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 well represented in current governance themes.
More generally, over the past few years, we have seen a gradual but clear shift in governance theories away from a more coercive or disciplinary approach towards a much more cognitive and behavioural one. For example, when discussing the impact of diversity on a company's board of directors, the role of the board is studied in terms of a repertoire of knowledge, not in terms of control. Governance research has thus evolved over time, integrating resource and knowledge functions and focusing on the dynamics of their deployment within the company.

Digitizing reality

This trajectory of work in governance is now taking a new direction. A new object of governance has recently appeared, complex to identify, stemming from what we might call the "digitalization of reality". Through big data (more or less big, by the way), statistical processing (thealgorithm) is becoming a lever of governance: it predicts, it guides action, even it decides. It can do this almost autonomously, through unsupervised learning. At the same time, a second effect of digitalization is the massive sharing of information.
This new object - or these new objects - resulting from digital transformation are all based on information. This is one of the reasons why governance research is particularly well-suited to address these issues. Information is the key issue in governance, because it is the basis on which decisions are made, and on which power and action are exercised in companies and organizations in general.

Algorithms and knowledge

The vision offered by agency theory helps to explain and frame these issues. In simple terms, the agency relationship can be described using the example of the relationship between a patient and his doctor, or between a motorist and his mechanic. The patient delegates his health care to his doctor, because he is better qualified and has the knowledge to make the right analysis and decision. But it's a whole sector that's being blown apart 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 motorist and his mechanic is also edifying. Here, it's the platforms that are energizing the relationship, those that, like Uber, are beginning to make inroads into the craft industry. The agent's (in this case, the mechanic's) behavior is now observable, reported and evaluated by all users.
But the production and control of this information raises many questions. IGC 2016 turned its attention to these new objects of governance, devoting its plenary conference to: "Governance and governmentality in the age of big data: what are the issues for companies?". Two management researchers proposed a reflection on two themes: platforms and algorithms on the one hand, and the blockchain.
Christophe Bénavent (Université Paris 10), in his talk entitled "De l'économie collaborative au gouvernement algorithmique des plateformes" (From the collaborative economy to the algorithmic government of platforms) questions the intermediation role of platforms and their algorithmic operation, which is akin to 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 question of organization, transparency and information sharing. Blockchain technology enables decentralization and disintermediation, overturning the centralized logic of the proprietary server. Information governance becomes shared, peer-to-peer, and authenticates transactions and diplomas, for example. J.F. Lebraty reviews this technology and its impact on corporate governance.
Véronique BessièreProfessor, Management Sciences, IAE Montpellier, University of Montpellier and Éric StéphanyDirector of IAE HDR Senior Lecturer, IAE Montpellier, University of Montpellier
Visit original version of this article was published on The Conversation.