Corporate Governance, Agility, and Survival

Kenneth Lehn

International Journal of the Economics of Business, 2018, vol. 25, issue 1, 65-72

Abstract: Most corporate research has focused on (i) dimensions of governance that are relatively easy to measure (e.g., ownership structure, boards of directors, and executive compensation) and (ii) the role that governance arrangements play in mitigating agency costs. This paper takes an evolutionary perspective to corporate governance in which the concept of corporate agility, i.e., the ease with which firms adapt to changes in their respective environments, plays a prominent role. I argue that decentralization, which is understudied in the literature, promotes agility and predict that it is directly related to corporate performance and survival during periods of rapidly changing environments. The paper also discusses how some governance features that often are viewed through the lens of either mitigating or exacerbating agency costs are cast in a different light when their effects on corporate agility are considered.

Date: 2018
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DOI: 10.1080/13571516.2017.1396661

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