Collective Rationality and Creative Synthesis in Corporate Governance

Abstract

In this article, we explain the potential benefits of implementing Hegelian notions of collective rationality and synthesis in corporate governance and suggest strategies for achieving this. Changes to corporate structures over the past fifty years—such as the declining importance of the dyadic principal-agent relationship and the increasing importance of networks—simultaneously raise the stakes in intra- and inter-firm conflicts and make these conflicts more difficult to resolve. Whereas corporate responses to conflicts have typically relied on individual rationality, we argue that Hegelian theory’s attunement to social organization offers greater promise. Of contemporary theories of corporate governance, our Hegelian theory most closely resembles paradox theory. It goes beyond paradox theory in elaborating two novel strategies for resolving apparent paradoxes: collective rationality and creative synthesis. After discussing the basis of our theory of corporate governance in Hegelian thought, set forth our strategies and contrast them with other approaches to corporate governance. Next, we illustrate how our strategies may be applied. Finally, we offer propositions and discuss opportunities for future research.