Online Discussion of ISSS paper 2002-095,"Analysis of Corporate Governance Systems and Corporate Governance Information Systems", LIN Runhui and LI Weian

Below is an archive of the comments contributed by members of the International Society for the Systems Sciences (ISSS), prior to discussion within the Special Integration Group (SIG) on Systems Applications in Business and Industry (SABI). For more information on the discussion which occurred in person during the meeting, please contact someone who attended the session!

(7/7/02 2:14:54 pm)
LIN LI 2002-095 Analysis of Corporate Governance Systems and



Corporate governance has gained more and more attention both in theory and practice as a world wide research topic. It is very necessary and urgent to study corporate governance today with the globalization of economy and the development of information and network technology. In this paper we study corporate governance as a system, a system of mutual function process among the parties involved in corporate governance. The concept and characteristics of CGS are analyzed. Good governance relies on the scientific decision making mechanisms and the premise is timely, accurate and complete information. But in CGS the information bottle-neck obstructs the information flow among the stakeholders. To solve the above problem and find good approaches to guarantee the effectiveness and efficiency of CGS in new economy, we adopt information and network technology into CG and present the concept of CGIS. The meaning and characters of CGIS and the approaches the CGIS how to break the information bottle-neck are analyzed. Then the relation between CGIS and CGS is discussed and the support of CGIS to CGS is studied. The different functions and sub-systems of CGIS are also given in the final part of the paper. With the development of information and network technology and the ever-changing environment of enterprises, information is getting more and more important to guarantee effective and efficient CG. The adoption, construction and application of CGIS are necessary and operational to good governance.

(7/27/02 6:17:51 pm)
Re: LIN LI 2002-095 Analysis of Corporate Governance Systems

Key insights I got from the paper:
Given the Internet technologies available today, shareholders can be more involved in setting directions and boundaries in companies.

How might I apply these concepts:
We can apply the learnings from voting systems, such as those applied by the Democratic Party of the United States in 2000, towards directing companies.

Additional ideas I might suggest to the author.
* Focus on business operations versus business financials?
The recent economic turmoil in company governance (e.g. Enron and Arthur Andersen) has motivated a lot of recent articles and research into "transparency". This would seem to be a good direction, in terms of auditing -- after-the-fact checking that good business practices are being followed. However, will we move from a phase where we don't get enough information to one where there is too much information? Will we move from ignorance (i.e. I don't know) towards information overload which reveals apathy (i.e. I don't care)? Do the majority of shareholders really sufficiently care about business operations over business financials, or are the summaries of financial analysts -- where data and information are transformed into intelligence -- more relevant?

This idea is reflected in a discussion of "quick democracy", "strong democracy" and "thin democracy" in Joachim Åström, "Should democracy online be quick, strong, or thin?", Communications of the ACM, Volume 44 , Issue 1, January 2001, pp. 49-51.

* How real-time should reporting be?
With a greater action-orientation application of this information (as opposed to be audit-orientation), is there a risk that the reporting could be used by competitors -- who can easily also become shareholders of a business?


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