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Back to the Future –A Monastic Perspective on Corporate Governance

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Author Info

  • Emil Inauen
  • Katja Rost
  • Margit Osterloh
  • Bruno S. Frey

Abstract

The financial crisis is a crisis of governance as well. In search of answers and solutions many scholars and practitioners recommend improved output control, i.e. better external incentives or even stricter regulations. Monasteries demonstrate that alternative models may be more suitable to enhance sustainable governance quality and to reduce agency problems. In the long history of monasteries, some abbots and monks were known to line their own pockets and some monasteries were undisciplined. Monasteries developed special systems to combat these excesses thus ensuring their survival over centuries. We study these features from an economic perspective. Derived from an analysis of the Benedictine monastery of Engelberg we offer three improvements of applied governance designed to reduce agency problems. First, monastic governance emphasizes clan control rather than output control. Monasteries demonstrate that organizations can prevent agency problems by complementing external discipline with internal behavioral incentives, such as value systems and voice. Second, organization members making firm-specific investments are motivated by broad participation rights and co-determination. Third, the Benedictines are able to apply supportive external control mechanisms, which are not perceived as controlling.

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Bibliographic Info

Article provided by Rainer Hampp Verlag in its journal Management Revue - The international Review of Management Studies.

Volume (Year): 21 (2010)
Issue (Month): 1 ()
Pages: 38-59

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Handle: RePEc:rai:mamere:1861-9908_mrev_2010_1_inauen

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Related research

Keywords: corporate governance; financial crisis; psychological economics; monasteries; principal agency theory; Benedictine Order;

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Cited by:
  1. Peter Wirtz, 2013. "Gouvernance et efficacité missionnaire de la Compagnie de Jésus : les enseignements d'une théorie élargie de la gouvernance," Working Papers halshs-00862068, HAL.
  2. Peter Wirtz & Odile Paulus & Patrice Charlier, 2011. "Gouvernance et création de valeur cognitive : L'exemple de l'ordre des prêcheurs," Post-Print halshs-00642977, HAL.
  3. Peter Wirtz & Odile Paulus & Patrice Charlier, 2012. "La gouvernance des Dominicains au-delà des théories établies," Working Papers halshs-00691233, HAL.

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