The Governance of Firms Controlled by More than One Board : Theory Development and Examples

The contribution of this thesis is to present a framework to analyse firms controlled by more than one board. The literature survey of Chapter 2 revealed that there is little recognition of this phenomenon and no accepted way to investigate firms governed by multiple control centres described as a quot;compound boardquot;. The framework is developed in Chapter 3. The historical emergence of compound boards is outlined in Chapter 4 with examples of their architecture described in Chapters 5 and 6. Chapter 7 shows how the framework provides insights not available from other theories of the firm and how selfyes governance can be furthered by utilising contrary human attributes of competition/co-operation, trust/suspicion and self-interest/altruism.The framework is described as transaction byte analysis (TBA) as it is based on the limited and inconsistent ability of humans to transact units of information described as quot;bytesquot;. TBA identifies cybernetic principles and strategies that can mitigate human limitations in processing bytes. These provide organisational design criteria for firms to obtain operating advantages. As information is a common element in varies theories of the firm, TBA relates and subsumes them while allowing any type of organisation to be analysed.Propositions are presented in Chapter 7 for illustrating how TBA provides insights into explaining: (i) why non-trivial employee owned industrial firms have more than one board; (ii) why self-regulation and self-governance of non-trivial firms cannot be assured without a compound board; (iii) how compound boards can simplify the role, knowledge, duties and liabilities of directors; (iv) the competitive advantages of appropriate compound boards in relation to unitary control systems; (v) how to compare and evaluate the relative advantages and disadvantages of firms with different ownership and control structures; (vi) how to compare the relative efficacy of hierarchical and non-hierarchical firms be they in the private or public sector