Self-Regulation

Abstract

Information technology reveals why self-regulation has not worked in many social institutions and how this can be corrected. Conditions precedent for self-regulation and self-governance are identified as being: a division of power within organisations, stakeholder participation, and requisite variety in their information and control architecture. Case studies provide evidence to support the hypotheses that: (1) the conditions for self-regulation create competitive advantages in firms, and operating advantages for other types of organisations; and (2) self-regulation provides advantages over government or market regulation. Information theory is used to identify the opportunities for partially privatising state regulation to reduce the role of markets and the size, scope, burden and cost of government to improve the quality of democracy.

Keywords: Control, Competitive advantages, Compound board, Corporations, Cybernetics, Firm, Government, Information theory, Institutions, Power, Self-governance, Self-regulation, Separation of powers, Shareholders, Stakeholders

JEL Classification: D21, G28, G38, L22, L51