Authors: David Weitzner Theo Peridis
Publish Date: 2012/01/10
Volume: 102, Issue: 1, Pages: 33-42
Abstract
Managers are most likely to turn to the board of directors for guidance during a period of crisis But can good corporate governance prevent an organization from reaching that critical point in the first place In light of the recent global financial crisis this question has become all the more pressing and so to prevent future crises we argue that corporate boards of directors need to be keenly aware of the potential social harms that might arise from the valuecreating activities of the firm they are tasked with monitoring Boards of directors must be vigilant in understanding the firm’s value proposition perceiving the potential harms that managers tend to overlook and inserting themselves into the strategymaking process We offer a typology of scenarios involving potential social harm and benefit and analyze when boards of directors must take a more active role in shaping firm strategy despite resistance from management
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