The End of 'Corporate' Governance: Hello 'Platform' Governance

Lex Research Topics in Corporate Law & Economics Working Paper No. 2018-5

European Corporate Governance Institute (ECGI) - Law Working Paper No. 430/2018

34 Pages Posted: 25 Aug 2018 Last revised: 20 Dec 2018

See all articles by Mark Fenwick

Mark Fenwick

Kyushu University - Graduate School of Law

Joseph A. McCahery

Tilburg University - School of Law; European Banking Center (EBC); Tilburg Law and Economics Center (TILEC); European Corporate Governance Institute (ECGI)

Erik P. M. Vermeulen

Tilburg University - Department of Business Law; Signify (formerly known as Philips Lighting) - Legal Department; Tilburg Law and Economics Center (TILEC); European Corporate Governance Institute (ECGI); Kyushu University - Graduate School of Law

Date Written: August 16, 2018

Abstract

In a technology-driven, digital world, many of the largest and most successful businesses now operate as “platforms.” Such firms leverage networked technologies to facilitate economic exchange, transfer information, connect people, and make predictions. Platform companies are already disrupting multiple industries, including retail, hotels, taxis, etc., and are aggressively moving into new sectors, such as financial services. This paper examines the distinctive features of this new business model and its implications for regulation, notably corporate governance. In particular, the paper suggests that a tension exists between the incentives created by modern corporate governance and the business needs of today’s platforms. The current regulatory framework promotes an unhealthy “corporate” attitude that is failing platforms, and a new direction (what we term “platform governance”) is urgently required. In identifying this new regulatory direction, the paper considers how firms might develop as successful platforms. Although there is no “one-size-fits-all” solution, the paper describes three interconnected strategies: (i) leveraging current and near-future digital technologies to create more “community-driven” forms of organization; (ii) building an “open and accessible platform culture,” and (iii) facilitating the creation, curation, and consumption of meaningful “content.” The paper concludes that jurisdictions that are most successful in designing new style “platform governance” based on the promotion of these strategies will be the primary beneficiaries of the digital transformation.

Keywords: Artificial Intelligence, Blockchain, Corporate Governance, Decentralization, Digital Transformation, Disclosure, Finance, Organizations, Platforms, Technology, Transparency

JEL Classification: D20, D24, D26, D85, G30, G34, J20, K20, K22, L17, L26, O16, O30, O31

Suggested Citation

Fenwick, Mark and McCahery, Joseph A. and Vermeulen, Erik P.M., The End of 'Corporate' Governance: Hello 'Platform' Governance (August 16, 2018). Lex Research Topics in Corporate Law & Economics Working Paper No. 2018-5, European Corporate Governance Institute (ECGI) - Law Working Paper No. 430/2018, Available at SSRN: https://ssrn.com/abstract=3232663 or http://dx.doi.org/10.2139/ssrn.3232663

Mark Fenwick

Kyushu University - Graduate School of Law ( email )

744 Motooka, Nishi-ku,
Fukuoka, Fukuoka 819-0395
Japan

Joseph A. McCahery

Tilburg University - School of Law; European Banking Center (EBC) ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands
+31-(0)13-466-2306 (Phone)
+31-(0)13-466-2323 (Fax)

Tilburg Law and Economics Center (TILEC)

Warandelaan 2
Tilburg, 5000 LE
Netherlands

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Erik P.M. Vermeulen (Contact Author)

Tilburg University - Department of Business Law ( email )

Signify (formerly known as Philips Lighting) - Legal Department ( email )

Amstelplein 2
Amsterdam
Netherlands

Tilburg Law and Economics Center (TILEC)

Warandelaan 2
Tilburg, 5000 LE
Netherlands

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Kyushu University - Graduate School of Law ( email )

6-19-1, Hakozaki, Higashiku
Fukuoka, Fukuoka 812-8581
Japan

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