infonet-economy

Present-day discussions of corporate Governance is mainly centered on finance-related issues and the relation of shareholders and management. However, this view neglects the fundamental changes of the operating conditions of business due to globalization and the weakening of regulatory frameworks, not only changing the role of business, rendering it a political actor in part. Futhermore, the very assumptions of dominant corporate governance theory are challenged. These developments can be regarded as a potential threat for organizational legitimacy. Whereas in the traditional view, corporate governance safeguarded organizational legitimacy of the economic system as a whole, this congruence is not given in the situation of weak or even absent legal and regulatory frameworks. Drawing on suggestions to restore organizational legitimacy of the economic system as a whole, this congruence is not given in the situation of weak or even absent legal and regulatory frameworks. Drawing on suggestions to restore organizational legitimacy by means of discursive processes, I argue that corporate governance needs to become open to such processes to safeguard organizational legitimacy and therewith the legitimacy of the economic system in a globalized world. Based on these considerations, I will introduce basic requirements as well as limits for an according modification of current corporate governance practice.