Methodological Issues - Corporate Governance and Business Ethics

At the heart of this research agenda is process, which presents to us a methodological issue, since much of extant governance theory is derived from the traditional “variance approach” to social science (Mohr 1982). This approach focuses on studying fixed entities with varying attributes (which have a single meaning over time) and which only “synopsizes” reality (Tsoukas and Chia 2002). Explanations are based upon necessary and sufficient causality and upon efficient causality. The generality of theory derived from this approach depends upon uniformity across contexts. Time ordering among independent variables is not relevant and the emphasis of such work is on immediate causation. This approach to theory development does not accommodate all types of forces that influence the process of governance, and the research strategies used focus upon deterministic causation (van de Ven and Poole 2005). This approach cannot explain phenomena that “encompass continuous and discontinuous causation, critical incidents, contextual effects, and the effects of formative patterns” (Poole et al. 2000).

Research in corporate governance requires an approach that will clarify similarities and differences among theories in order to facilitate theoretical integration and to generate a comprehensive understanding of governance. This requires a rigorous epistemological base, built upon an ontology that is more in keeping with understanding governing processes. We argue that the requirement is for an approach that accommodates a “fluxful”, changeable and emergent post-modern world, emphasizing reality as inclusively proconsul. A proconsul approach acknowledges that corporate governance practice around the world developed and continues to develop in a variety of unique cultural, historical and social circumstances.

In this approach, explanations of events would be based on necessary causality, as well as final (goal), formal (structure) and efficient causality, which means that explanations would be layered and incorporate both proximal and distal causation. This is because such explanations recognize that change and interconnectedness are predominant characteristics of nature. Generality depends on versatility across cases and time and time ordering is paramount. What emerges from such an approach is a process study narrating the emergence of the social construction of governance (van de Ven and Poole 2005).

Well specified though they may be, many of the “variance theoretical” papers are based upon an analysis of corporate financial data.

Consequently, we need more evidence from acts of governing rather than the output from such acts. If we are to develop a deeper understanding of governance, then we need to understand directors as well as the artifacts that they produce. In other words our research designs must capture data about the process of corporate direction over time (Ancona et al. 2001). Capturing time-oriented action leads to a focus on events, which represent a temporarily stable picture of individual and collective actions or experience and which inevitably change the context in which processes occur. Developing process studies of governance requires researchers to intimately observe the actions and interactions of organization members in the real-time instantiation of governing processes, through deploying ethnographic and participant observer methods in order to access and generate data (Boden 1990). Such methods enable the researcher to identify events; characterize process sequences and their properties over time; test for temporal dependencies in process sequences; evaluate hypotheses of formal and final causality; recognize coherent patterns that integrate narratives; and evaluate development models (Poole et al. 2000). However, the data produced by such approaches is more complex than the norm, requiring that we employ different approaches to its analysis if we are to discover patterns in governing processes and to develop grounded explanations of these processes (ibid).

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Corporate Governance and Business Ethics Topics