The Impact of Theory U on Corporate Governance as an Essential Risk Management and Performance Improvement Tool

Abstract

This paper established the effectiveness of Theory U as a risk management and performance management tool, thereby enhancing an efficient corporate governance system in organizations. The authors provided insights into how organizations can solve corporate governance problems and ascertain a risk management culture that, in turn, optimizes opportunities and minimizes threats to the business. Theory U offers a transformative approach to corporate governance and drive performance improvements. This is attained by fostering a culture of collaboration, innovation, and adaptability, which enhances the effectiveness of governance mechanisms. While implementation may pose challenges, companies that embrace Theory U as an essential risk management and performance improvement tool stand to reap significant benefits, including enhanced resilience, sustainable value creation, and long-term success. The authors outlined the benefits of Theory U and several examples of empirical case studies of organizations that have benefited from this model. Adopting the positivism paradigm of research, this paper has provided examples of how organizations utilized this model. Three hypotheses were tested to validate the data results. In sum, the authors emphasized that critical corporate governance issues can be overcome by adopting this innovative approach, thus enabling organizations to demonstrate enhanced organizational resilience and thrive in today's rapidly changing business environment.