AoM Electronic submission ID 15732

Opening Governance to Co-designed Co-determination

– for Economic Democracy

ABSTRACT

We explore ‘governance’ in relation to five meanings of ‘open’: (1) by exploring co-

determination under German law (Mitbestimmung) and by analysing the method of design

thinking with its emphasis on empathy to the user experience, we investigate ‘open’ as more

democratically shared power, information and responsibility ; (2) in using the genealogical

method of historical investigation we express ‘open’ as exposing something that is covered;

(3) by initiating this discussion with the academic community, we invite frank ‘open’

discussion; (4) in not positing a final thesis, we leave the conclusion unsettled and ‘open’ for

further debate and analysis; (5) yet, we do hope this discussion will lead to new approaches to

governance, thereby establishing or ‘opening’ ‘co-designed open governance’ as a new

enterprise.

Keywords: governance, Mitbestimmung, power, organization theory, design thinking

OPENING THE MEANING OF “OPEN GOVERNANCE”

We explore some implications of ‘opening governance’ as a project of co-design. A limited

view of the concept might consider open governance a matter of providing the current

leadership with better (as in more or richer) data, for better-informed decision-making.

Opening access to better intelligence can reinforce performances or consolidate direction, just

as a pilot might acquire more instrumental data to better manoeuvre an aircraft. Bacon and

Hobbs’ aphorism scientia potentia est ‘knowledge is power’ would further suggest that open

access to such data reinforces the power of the status quo. The term governance with its

etymological roots in the Ancient Greek kubernan (to steer) generally indicates rule, control,

command, regulating authority and hegemony. Pairing the terms open and governance,

therefore, would suggest greater control.

Paradoxically, however, on its own, the term ‘open’ suggests liberating possibilities. In

addition to free access, ‘open’ can refer to frank communication, exposing something that is

covered, leaving something (such as an idea or decision) unsettled, or formally establishing a

new enterprise. Hence, pairing the terms open and governance can also open up a world of

liberating possibility. That is, governance ‘open’ to other voices, views, opinions and needs;

that engages and empowers other actors to actively enrol their ideas and creativity; and

accepts shared responsibility and decisional power with them, or is at least open to being

influenced by their different priorities and interests. These alternative meanings of open

governance lead to learning opportunities through exploring new models of action, new

standards of judgement.

Power is a theoretical lens that consents to compare and contrast the concrete implications of

‘opening governance’ (as various meanings) (Clegg 1989; Clegg 2013 [1975]; Clegg &

Haugaard 2009; Haugaard 2002). Taking into account different conceptions of power (power

over, power to, power with) (Haugaard 2012) and considering both agency based and

structural forms of power, it is possible to reflect on the intrinsic tensions that are underlying

the central problem of establishing how much opening of governance is possible and desirable

in principle and or a given context.

The former Soviet Union demonstrated the limitations of a secretive society, closed behind an

‘iron curtain’ of censorship, oppressive state control, dysfunctional bureaucracy and

persecution of dissidents – all in the interests of governing for the people in a socialist

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republic (Deroy & Clegg 2015). While Gorbachev’s policy of glasnost or openness saw

Russia open up to increased transparency, freedom of information and movement and

restrictions on the abuse of power – the hope of Russia’s transition to democratic governance

with a free press, as well as an independent legislature and judiciary has only been partially

realised.

Balancing the tensions of openness and closedness in governance is not restricted to

transitioning regimes. Recent ISIS inspired lone wolf attacks on free citizens in open

democratic societies, such as the 17 hostages taken on a recent morning in a Sydney café,

highlights the need for both openness and closedness even in such an open and free society as

Australia. Once the siege concluded with the death of two innocent members of the public, as

well as the gunman, people questioned why this gunman was free despite his past criminal

record and history of extremism. Harmonizing the desire to be ‘open’ (facilitating more

information, voices etc.) while also maintaining a degree of ‘closure’ to avoid the entropic

consequences of eliminating filters and barriers remains a challenge for democratic

governance, with significant ethical and practical consequences. In the spirit of the theme of

openness, this is not a question that we seek to solve and thereby close in this paper. Rather

we feel it is always best left ‘open’ to exploration and critique.

We will explore opportunities and tensions for opening governance by considering two

different ‘life-worlds’ as case studies of ‘opening governance’. The first case is offered by the

experience of Mitbestimmung (Codetermination) in Germany. The historical roots of the

phenomenon are considered to explore the antecedents and the conditions that enable opening

governance to the ‘volk’, along with considering the implications and possibilities of these

models. Our foray into history will not seek to uncover the origin of concepts in a primal state

of pristine purity. Rather, in the spirit of the genealogical methods of Foucault (1984, 1985),

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we will explore the multifarious power relations that gave rise to conditions for the emergence

of values, objects, and circumstances in workplace governance. Historical interrogation of the

murky origins of taken for granted values and assumptions often reveals a clear disassociation

between origin and outcome. More importantly for our analysis, however, frank discussion

questioning historical conventions ‘opens’ space for new analysis, debate, and insight. As

expressed by Brown (1998, p. 37) genealogy casts history “as a field of openings – faults,

fractures and fissures” that “is deployed to incite possible futures” in open spaces of

possibility. Hence, it is appropriate that we employ historical analysis of workplace

governance to inform future possibilities for ‘open governance’ which we then further unpack

by employing insights from design led innovation.

Our second case focuses on a more recent yet completely different (in terms of lineage and

application context) phenomenon of design led innovation (Bucolo, Wrigley, & Matthews

2012; Wrigley & Bucolo 2011) or design thinking (Brown 2008a; Ogilvie & Liedtka 2011) as

it is more commonly known. The ‘human focus’ of the design thinking movement, with its

emphasis on empathy and persona is considered as an unrelated but not too dissimilar

declination of an ‘opening of governance’, wherein the overall needs, attitudes, emotions and

‘journeys’ of individuals are considered in order to design ‘better business’. Whereas design

methodologies are generally employed for exploring new possibilities for product innovation,

we seek to innovate the application of design methodology by applying it to considering the

possibilities of open governance. For, the successful application of this method is generally

found in organisations that apply so-called post-bureaucratic approaches. As compared to

bureaucracy, ‘openness’ is a characteristic of post-bureaucracy involving: flat or heterarchical

structure (as opposed to bureaucratic hierarchy), open cross-disciplinary communication

networks (rather than one way divisional communication silos), HR practices that focus on

recruiting, training, developing and promoting highly valued professionals (as opposed to

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expendable labourers), a focus on dynamic teams and groups (as opposed to individuals), and

empowerment of employees to make important operational decisions (as opposed to

command and control decision making from the top of the organisation) (Josserand, Teo, &

Clegg 2006; McKenna, Garcia-Lorenzo, & Bridgman 2010). It is important to acknowledge

that no organisation is purely post-bureaucratic. Hence, organisations adopting so-called post-

bureaucratic approaches might best be described as organizational hybrids (Clegg &

Courpasson 2004; Courpasson & Clegg 2001).

For exploring the possibilities of opening governance, neither the case of the German

Mitbestimmung or of design lead innovation is free from problematic implications, nor

untainted by ethical quandaries. However they suggest possibilities of opening the idea of

governance that transcend a mere expansion of ‘governance capabilities’, focusing on issue of

stewardship, sustainability, and responsibility towards multiple stakeholders. Expanding the

traditional ‘financial’ understanding of corporate governance, understood as a problem of

guaranteeing a return on investment (Shleifer & Vishny 1997), we propose a broadening,

‘multi-layered’ model of governance that can be used to direct further empirical research.

In sum, the structure of this paper is as follows: initially we explore open governance in

relation to the historical genealogical emergence of co-determination in the German

Mitbestimmung. Having opened possibilities through this analysis we next explore open

governance in relation to ideas of design led innovation. Finally, in the discussion-conclusion

section we pose a series of questions in relation to the multiple meanings of ‘opening’

governance and we propose a model that problematizes the conventional approaches.

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CODETERMINATION AS ECONOMIC DEMOCRACY

“Germany has offered a great gift to humanity – the dream of economic democracy

(…) codetermination is the most democratic form of governance ever” (Hill 2010, pp.

53-54)

One alternative (to the conventional, US-centric) approach to the opening of corporate

governance we explore focuses on the distinctive German experience of co-determination

(Mitbestimmung). Understanding this experience calls for recognising the unique situations

faced by Germany during the late eighteenth and nineteenth centuries. Without that context

what emerges in co-determination will make little sense. Unlike America and unlike England

for example Germany was not only a disunited dispersed nation but was also deeply socially

and economically exposed – potentially and seriously dysfunctional. In the wake of the social

uprising that was the French Revolution of 1789 the leading discourse among the rulers and

princes of the Holy Roman Empire of Germany was considering ways to avert a similar revolt

against the aristocracy. Equally, Germany was still a largely agrarian society living and

trading through hundreds of villages and hometowns (Walker 1971).

The Industrial Revolution of England had not arrived, with the result that German industry

was still predominantly confined to guilds with little to no investment in essential

infrastructure. The impetus for what would result in codetermination came ironically from the

Imperial Chancellor, the decided antisocialist Bismarck, who in the 1880s recognised the need

to both quell the prospect of social revolt while enabling a rapid uptake of industrial

development. Bismarck’s solution was the forerunner to what we call the welfare state – viz

the introduction of employment insurance for workers. This move became central to the

ongoing discourse in Germany of state-led social reform inspired by what was called the

“social question” – the spectre of an emerging industrial proletariat (Lehmbruch 2001, p. 39).

During this period of crisis major institutional innovations were introduced, some of which

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became important building blocks for the Social Market Economy of the postwar era

(Lehmbruch 2001). The contrast of these German measures with the US and England

contexts around the end of the nineteenth century could not be greater. In both the US and the

UK for example the ambitions were well established, viz expanding trade and industry on

massive scale – locally and internationally. Concerns for the “social question” were confined

(at least in the UK) to the Poor Laws, where the incentives were for workers to find work, and

thus stay out of the houses for the destitute.

A number of readers might now be asking: “So what? Why are we being lectured about 19 th

century European history?” The issue is that we argue that the type of challenges that the 21 st

century globalised society and economy is facing are not so very different from those faced by

Germany in the 19th century, while they are profoundly divergent with those typical of the

contemporary US society. In the latter case the focus went on the opportunities that

technological and social innovation was offering to individuals, who could direct their

energies towards a physical and ideological ‘frontier’, an area of unlimited natural resources

and absolute freedom, where – in coherence with a Puritan ideology – all the responsibility

for success or failure rested on the agency of the individual. Conversely, early 19th century

middle Europe was a close knit, agrarian society who needed to be ‘ferried’ across the

industrial revolution maintaining social cohesion, to avoid the risk of social and political

turmoil. In these two largely different contexts contrasting models of governance needed to

evolve; one based on regulating the transactions of individual agents, the other concerned

with the creation of societal harmony and cohesion in face of profound transformations and

challenges.

As a consequence, German experiences hold the promise of providing to contemporary

management scholars interested in the broadening of conventional corporate practices and

frameworks, a ‘natural experiment’ in a form of governance based on the involvement of a

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number of different stakeholders having contested perspectives (rather than the simplified,

binary model exclusively based on owner-agent relationship). The main fruit of this historical

experiment in producing socially and morally sustainable economic growth is the German

experience of co-determination (Mitbestimmung).

We will argue that co-determination presents a historically, politically, economically and

philosophically grounded subject for addressing the above concerns in ways that we hope will

stimulate similarly informed options in opening ideas of governance and in open governance

in particular. We focus on German codetermination - as a stakeholder form of open

governance where employees are represented (i) in enterprise based Work Councils and (ii)

through their representatives participate in parity with directors at supervisory board level in

overseeing management (Du Plessis, Bagaric, Hargovan, & Harris 2015, p. 428). We do not

include in our remit mutuals, cooperatives and economic associations – distinguished by

Birchall (2011) as member-owned businesses as opposed to investor-owned businesses (see

also (Mintzberg 2015). Mutual benefits are fundamental to our purpose, but mutual in the

sense of shared responsibilities for sustainable futures, assumed through deliberate and

equitable arrangements. In that regard we quickly acknowledge the asymmetry of power

mechanisms to champion new, more “open” and equitable forms of governance.

In sketching our view on codetermination as an example of open governance we draw on a

broad range of historical, social and political connections. We start with German history as it

related to the “volk” (the people – sometimes connoted as the working population, but usually

as a nation) and “the volksgeist” (the spirit of those people as a whole community or nation).

In that historical context we consider possible implications for open governance reflected

through efforts by German lawyers in the formative post Holy Roman Empire – especially,

but not only, in the Romantic sixteenth and seventeenth centuries (Whitman 1990). These

German lawyers sought to craft justice in terms that reflected a professorial and popular

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reverence for Roman law – expressed variously as peace, equity and dignity – and, crucially

for our purposes, localised not codified nationally. While their ambitions failed to be realised

at the close of the nineteenth century the relevance of their efforts for opening (inter alia)

humanist ideas and values becomes more apparent in this paper. The connections are

nevertheless conceptual and constructed.

The architectural design behind this construction however is shaped by commitment (as both

means and ends) to a suite of perceived shared values – each oriented to meeting the moral

virtue of equity (Aristotle’s epieikeia) – thus embracing the Romantic period and German

Idealism to situate our philosophical frames for this option of open governance1. What each of

these perspectives shared was an opposition to means of not just historicism, but also

naturalism, positivism and materialism (Beiser 2013, p. 2) characteristic frames that arguably

continue to dominate business, economic and political affairs for more than a century (Locke

& Spender 2011).

While there are a number of outstanding works on the economic, legal and political merits of

codetermination (Addison 2009; Du Plessis et al. 2015; Silvia 2013) we believe there is more

to be gained for open governance in understanding the roots of codetermination. We see those

roots in historical settings – i.e. the issues, questions, motivations behind the philosophical

ideas of German Idealism (Beiser 1992, p. viii), and Romanist lawyers (Whitman 1990). In

other words we seek to make sense of codetermination through reflections on the political and

philosophical influences in Germany that can be broadly sketched from the sixteenth to the

nineteenth centuries. We see that historical context serving as essential foreground for what

we might learn is behind the success of economic and social wellbeing in Germany from mid

to late twentieth and early twenty-first centuries – i.e. foundational ideas that have served

1 According to Fredrick Beiser (2013, p. vii & p.1) the commonplace belief that German Idealism began with Kant in 1781, proceeded though Fichte and Schelling and ended with Hegel in 1831 is a shallow depiction and plainly wrong. For Beiser, German Idealism should be periodized into three phases: the classical phase from Kant to Hegel (1781-1831); the late, mature phase (1831-1881); and the final neo-Kantian phase (1881-1945).

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Germany well for the last sixty years – and in ways that offer ideas for broader and deeper

sustainable futures.

We do not aim however to make a case for transplanting Mitbestimmung from Germany to

anywhere else. Such an endeavour would not do justice to the unique historical,

constitutional, economic and educational contexts that are relevant for any notions of transfer,

issues that have been addressed elsewhere (Logue, Jarvis, Clegg, & Hermens Forthcoming).

And yet we argue here that much can be learned through deeper exploration of the complex

and contested matters involved. This is a massive canvas of course but it is the licence we

believe that needs to be taken in order to sketch new ideas for governance.

In making those interdisciplinary connections we conclude by suggesting that human rights

represents a contemporary suite of concepts that goes some distance to meet the aspirations of

both historical and current practitioners for equity (epieikeia) and codetermination in

management and governance. In the case of corporate governance we see both shop-floor and

board-level co-determination as distinctive manifestations of the ethics of human rights

(Monteiro 2014) in enterprise governance (as is the case in German law – see Schulz &

Wasmeier 2012, p. 68)– and in ways that reflect and respond to inevitable and essential

criticism – especially from those with an Anglo-US background (Schulz & Wasmeier 2012;

Silvia 2013).

What is codetermination?

Addison describes the goal of codetermination (Mitbestimmung) as the resolution of conflict

through dialogue rather than force. Codetermination seeks to guarantee employee

involvement in the regulation of working conditions as well as in economic planning and

decision making (including plant investments, closures and restructuring, etc.).

Mitbestimmung is based on notions of equality of capital and labour, considerations of

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industrial democracy, and the need for stability through social development, and

coresponsibility (Addison 2009, p. 5).

There are two levels applicable under the Law of Codetermination – Enterprise based Works

Councils and the Supervisory Board, the latter overseeing the lower Management Board.

Depending on the issue at hand, “codetermination gives German employees rights ranging

from information and consultation to a veto over certain workplace decisions” (Silvia, 2013,

p. 43). All companies employing at least five people are required to establish a works council

(Du Plessis et al. 2007, p. 153). The dual engagement of Works Councils and Board

representation has made the post-war German industrial relations regime especially resilient

and stable (Thelen 1991). A modest form of employee representation on supervisory boards

was first introduced in the Weimer Republic in 1922, where works councils were entitled to

put council members on the supervisory board (one for small firms, two for larger firms). The

Nazis eliminated codetermination from 1934 so it wasn’t until post World War II that

pressures built to reintroduce legislation. Du Plessis claims that the main impetus for

supervisory codetermination by employees came when British occupying authorities and

German trade unionists were determined to ensure that the German nation should never again

fall into the dictatorial patterns of the Third Reich. The specific measure “invented” was to

make it compulsory for labour and management to work together at the level of supervisory

board (Du Plessis et al. 2007). At first this was confined to the iron and steel sector and later

to all other sectors, with representation varying with each piece of legislation from the early

1950s - from one third in smaller organisations (from 500 up to 2000 employees) to parity in

larger organisations.

That brief description however says nothing about the success of codetermination, nor the

opposition it faced. Suffice to say that codetermination continues to enjoy strong public

support (not least following the Global Financial Crisis) – and despite a series of concerted

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campaigns to water down these provisions all have failed, while efforts since the early 1950s

to expand codetermination have all succeeded (Silvia 2013, p. 81). To a large extent this

success is due to a defining feature of post-war industrial relations – that of “conflictual

partnership”. For Silvia this term “captures the relationship between German business and

labour well because the two parties regularly engage in serious conflict but they share an

acceptance of each other as legitimate partners, and a commitment to follow the rule of law”

(Silvia 2013, p. 51). The same attitude towards unions and labour (and the rule of law) do not

apply in other industrial relations jurisdictions. How, where and when then did such

partnering attitudes between labour and management emerge? We turn next to a brief account

of that formation through the influence of German Idealism and Roman law, firstly during the

closing stages of the Holy Roman Empire and then the Weimer Republic. It is however not

till after the Second World War that concerted efforts to rebuild German society draws out the

major, if not the most influential factors.

The “social question” is the key to Codetermination

The influence of Roman law on the formation of German society is profound. For our

purposes it is evidenced in attempts by German lawyers in the nineteenth century to revive the

culture of Rome, with one in particular among the most influential leaders, Friedrich Carl von

Savigny (1779 -1861) – deemed the founder of the Historical School. Ancient Roman law

remained the basis of the legal order in Germany from the sixteenth down until the end of the

nineteenth century (Whitman 1990, p. x). This was accomplished via a distinctive and highly

influential group of Roman-law professors – who focused on classical scholarship and

antiquarian constitutionalism (Whitman 1990, p. xii). Indeed, according to Whitman’s

account, Germany became “the only region in the West to build its law on academic treatises”

(Whitman 1990, p. xiv).

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As the national revolutionary armies of the French were driven off at the close of 1814

Savigny drew on Phillip Melanchthon to invoke a glorious name from the Reformation. For

Whitman, many Germans at the time were persuaded that Luther’s reformation had been their

own great German revolution, that their own national consciousness had been formed in the

sixteenth century decades of religious upheaval, and so a break with the papacy meant that

they could draw again on Melanchthon, under whose leadership Roman law had penetrated

Germany.

That Roman law scholarship was aimed at ensuring a break from Absolute rule – i.e. the rule

of the German princes and the papacy, deemed a fundamental move to restoring justice for the

citizens of Germany – the volk. In the judgement of these professors however, the German

volk were not ready for the task of lawmaking, so the jurists must act as “vicars of the Volk”

(Whitman 1990, p. 109). And yet, the volk Savigny looked to were the common people of

village life (Whitman 1990, p. 124), who were often guided less by law than by custom (also

referred to as the Volksgeist, the spirit of the people). And still, Savigny and his followers

shared a conviction that German society could be remade on the model of Rome. As we will

see next Roman law was distinctive and formative for constitutional purposes, but more from

asking different questions than even Savigny posed.

Deeper constitutional foundations to codetermination help to appreciate the distinctive

characteristics of codetermination. Early evidence of those foundations can be traced from the

sixteenth through to the early nineteenth centuries via the Historical School of law – from

Chladenius, Moder, Herder, Humboldt and as above, especially Frederick Savigny (1779-

1861) (see Beiser 2011). However it’s not until we take into account the social dimension of

nation building in Germany that we begin to see some distinctive influences that shape the

development of codetermination. It can be glimpsed with Bismarck’s social insurance as a

means to integrating the new German Empire. Something of a similar national spirit

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(volksgeist) propelled social reform for example in the US with Roosevelt’s New Deal

response to the Great Depression and the creation of the British “welfare state” in the

immediate aftermath of World War II (Leisering 2013, p. 1). This demonstrates that, despite

the profound differences between these historical and cultural contexts, in the right

circumstances it is possible to gain insights that stimulate the creation of new forms of social

governance that apparently belong to a different lineage.

However, in order to achieve such results it is essential to become acquainted with the

philosophical ‘heart of the matter’: the issue of the non-separation of familiar binaries agency-

structure, private and public, society and state. Fredrick Hegel (1770-1831) diagnosed the

disintegration of the ancient and early modern idea of a unitary, politically integrated society

into two heterogeneous spheres, “state” versus “society” or “public” versus “private”

(Leisering 2013, p. 2). As Kaufman points out it was here (in Hegel’s philosophy) “that the

social and political appeared for the first time as two separate spheres dominated by different

legal principles, and the relationships between them subsequently became the fundamental

issue of ‘social policy’ (Kaufmann 2013, p. 29, emphasis in the original). For Hegel and his

followers (including Marx) the problem was that “society”, mainly the economy, was a source

of uncontrollable dynamics and social problems. While Marx proposed communism as the

fusion between the social and the political, Von Stein proposed the welfare state2. This

distinction between “state” and “society” and the analysis of their precarious relationship

shaped the German tradition of thinking and the state and social policy ever since (Luhmann,

1987, cit. in Zacher 2013, p. 3).

For Zacher “the social is in a very special way part of Germany’s national identity” (Zacher

2013, p. 315). In a recent translation of major works on German Social Policy Zacher calls the

“Social” the Guiding Concept of Politics and Law. What then is meant by “social”? Social

means social conditions as well as the individual state of being (Selznick 2008). It thus calls 2 In Germany the term “social state” is preferred to “welfare state”.

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for judgments about the existing societal conditions and individual states of being and their

development. Here Zacher offers a defining direction: “Social has something to do with

equality and inequality … it negates a certain measure of inequality … it is a mandate to

distinguish unreasonable inequalities from reasonable or at least tolerable ones and to

eliminate, compensate for, or at least distinguish the unreasonable ones” (Zacher 2013, p. 24

emphasis added).

Crucial to understanding codetermination (and much else under social policy) Zacher defines

(perhaps discerns and then constructs) “the social” by a “basic formula” – which depict work

and family as the primary sources of providing for human needs, with the law enabling,

securing and compensating the operation of work and family (Leisering 2013, p. 5). The

nature of that work in Zacher’s basic formula, and its connection to social policy, will be

pivotal to what, until recently3, has been largely absent in English analysis of codetermination,

viz its economic foundations– for workers, industry and society more broadly. We turn next

then to the meaning of Zacher’s notion of work in “the social”.

Perhaps it’s the richness of the German language but there is an essential distinctiveness in

what follows in “the social” of work. Here we also will see what “open” calls for in

codetermination – in both theoretical and practical terms. In Zacher’s succinct terms “Work in

the sense of this basic formula is gainful employment – with dependent gainful employment in

the foreground” (Zacher 2013, p. 27). The first responsibility of society and the polity is to

make the realization of this dimension possible – by making the organization of dependent

gainful work through private law and through administrative law (especially labour law) by

providing the necessary conditions. The individual is responsible to earn sufficient income

through work to meet the basic needs and provide for essential maintenance – and if that work

3 Leisering, L. (Ed) German Social Policy, 2013, 5 volumes published in English by Springer, Berlin. We draw on 3 volumes in this paper: Vol. 1: Kaufmann, F-X. (a), Thinking About Social Policy – The German Tradition; Vol. 3: Zacher, H.F., Social Policy in the Federal Republic of Germany – The Constitution of the Social; Vol. 5: Kaufman, F.-X.(b), Variations of the Welfare State – Great Britain, Sweden, France and Germany Between Capitalism and Socialism. Lutz Leisering (Editor) provides a common introduction to each volume.

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is not realized it becomes a “burden” – a duty whose fulfillment cannot be compelled, but

which cannot remain unfulfilled without disadvantage. The special status then of dependent

gainful employment is the responsibility of society and the polity for the socially appropriate

realization of the basic formula. The individual who realizes this responsibility enjoys

extensive protection against the dangers of losing that employment. And given that status and

vulnerability it triggers the critique of inequality. In the early days of capitalism it was the

misery of workers that turned this “workers question” into the “social question”. The social

response to gaining dependent gainful employment was and is a mix measures – a guarantee

of employment, of equality, and of security in labour relations – especially through the

institution of workplace-based, enterprise-based participation (Zacher 2013, p. 28 emphasis

added). In other words equality equates to a right to participate in ensuring conditions for

dependent gainful employment. What follows for employees and employers alike is

legislative support to organize collectively in order to create and negotiate those conditions –

through trade unions, works councils and employer associations. Codetermination then is a

fundamental legislative and practical response that has emerged historically to the social

question, the “workers question” – a response that is based on the right to equality, a right

enshrined in the 1949 Constitution of the Federal Republic as the governing principle –

Article 1.1: that human dignity is inviolable. Social policy is constitutionally based on

equality of dignity. Indeed, dignity as base to social rights was reinforced in a major 1977

opinion by the Constitutional Court4:

It is contrary to human dignity to make the individual the mere tool of the state. The

principle that “each person must always be an end in himself” applies unreservedly to

all areas of the law: the intrinsic dignity of the person consists in acknowledging him

as an independent identity (Currie 1994, p. 314).

4 Echoing Kant’s humanity formulation of his Categorical Imperative – see Groundwork for a Metaphysics of Morals – Kant, 1785, 5:429

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This emphasis on concern for individual human dignity was raised many decades earlier in

relating the social question to constitutional issues. We turn next to those issues.

From Economic Constitution to Economic Democracy – as a human right.

One of the most influential sources relating the social question to constitutional issues

emerged in the Weimar period through Hugo Sinzheimer. As a legal scholar and practitioner

Sinzheimer was responsible in no small part for the preparatory work of analyzing

employment relations and inventing appropriate legal concepts (Dukes 2014). Private law

concepts at the time did not reflect the economic and social reality of employment relations,

or of justly regulating those relationships. In effect the employment relationship at the time

was one of a formal legal contract, a form of dictatorship of the economically strong employer

over economically weak employee.

Sinzheimer developed the idea of an “economic constitution” in the wake of the November

Revolution of 1918 – at the time when the constitution of the new Weimar Republic was

being contested. In effect, Sinzheimer’s economic constitution referred to the various laws

that allowed for the participation of labour, together with other economic actors, in the

regulation of the economy. Dukes highlights that “use of the term ‘constitution’ was intended

to emphasize that democratic function that Sinzheimer believed such laws fulfilled. Time and

again, he emphasized that the economy was a public and not a private matter: a sphere of

activity that requited to be regulated in furthering the common interest” (Dukes 2014, pp. 17-

18).

Sinzheimer conceived of labour law as a corrective to private law. In this he was especially

influenced by Otto von Gierke, who, writing at the end of the nineteenth century, argued in

favour of the creation of a body of law to be known as social law which would address the

inequities between the formal separation of private and public law embodied in the German

Civil Code. For Giereke social law was a means of creating a balance in private law

17

transactions by tempering the power of the economically stronger party. For Sinzheimer that

meant that workers should “be free from employer efforts to dictate the social and economic

conditions of their existence and, at the same to participate in the formation of those

conditions … it had also to provide a means for worker participation in government

(governance) of the workplace and the economy as a whole” (Dukes 2014, p. 18).

These ideas on an economic constitution, on rebalancing inequities between private and

public law through worker participation progressively manifested in the Weimar republic but

most especially in the massive economic, social and political recovery efforts after the

debacle of the National Socialists and the Second World War. The combination of private and

public economic concerns were most conspicuous in what West Germany’s Economics

Minister Ludwig Erhard (and others) succeeded in naming as the Social Market Economy.

That combination can now be seen as reflecting the social question as embedded within the

regulation of a market economy. One of the concrete outcomes of that combination was the

Codetermination legislation of 1951 in which Chancellor Adenauer agreed with the leader of

the German trade union organization for equal worker participation on the supervisory boards

of companies in the mining, iron and steel industries. There was sustained, intense opposition

to this move at first, with industry predictably concerned that Codetermination merely

represented the thin edge of a wedge into socialism across three aspects – parity

representation, union power and the scope of codetermination. Employers justified their

opposition to these three aspects by arguing that they would be fundamentally incompatible

with the rights of capital owners (Paster 2012, p. 139). That history of opposition continued

through subsequent legislation down to and beyond 1976 and resulted in a somewhat

fragmented system, with three different levels of codetermination: full parity (1951), quasi-

party (1976) and one-third parity (1952). Nevertheless, Paster’s analysis of contemporary

codetermination highlights that “there has not been a fundamental reorientation of business

18

policies away from the profit motive” as was argued by industrialists from the outset. Instead,

“the unions have come to accept that codetermination operates within the constraints of a

market economy – (that is) codetermination is a goal in itself, rather than a means to

socialism. In reality, labour representatives see themselves as representatives of the economic

interests of the firm’s workforce … In short, the practice of codetermination has made labour

more pragmatic.” (Paster 2012, p. 156).

And yet nothing of this scale could be expected had it not been for the achievements

embodied in the new postwar constitution of May 23, 1949, The Basic Law for the Federal

Republic of Germany. It is in the drafting and final agreement that “the social question” is

seen as fundamental to all that follows. Indeed the social question that has been central to our

discussion is explicit in the 1949 constitutional architecture, where immediately following the

Preamble, a suite of Basic Rights are articulated, premised by Article 1 as follows:

Article 1 “Protection of human dignity”:

(1) Human dignity is inviolable. To respect and protect it is the duty of all state authority.

(2) The German people therefore acknowledge inviolable and inalienable human rights as

the basis of every community, of peace and of justice in the world.

This brief cross-disciplinary excursus has enabled us to reflect on the antecedents and some of

the consequence of a model of corporate governance which is not preoccupied exclusively

with management power and control or with ownership rights and expectations but which

seeks to achieve a stronger dynamic equilibrium based on the recognition of shared interests

and joint responsibilities. This is a model that enabled Germany to survive unscathed to the

GFC, especially thanks to a long tradition of workplace agreement (an exemplary case is

represented by Volkswagen) based on mutual commitment of State, shareholders,

management and employees, to competitiveness and social responsibility (Reisenbichler &

Morgan 2012).

19

OPENING GOVERNANCE BY DESIGN

A burgeoning literature promotes Design Thinking as a new paradigm for management

(Boland, Collopy, Lyytinen, & Yoo 2008; Brown 2008b, 2014; Cross 2006, 2011; Martin

2009). The idea has been advanced as a promising model to innovate traditional approaches to

management education (Dunne & Martin 2006; Martin 2007), and as such it has been

embraced as a source of strategic inspiration by several business schools around the world

(Agarwal, Green, & Hall 2012; Lancione & Clegg 2013, 2014).

Design Thinking can be defined as an approach where “innovation is powered by a thorough

understanding, through direct observation, of what people want and need” (Brown 2008b, p.

86). The idea that there are ways of thinking typical of designers (Archer 1984) is not new.

The intuition that business, similarly to medicine, education, and architecture, is primarily

concerned with the process of design, was advanced by Simon (1969/1996), but only at the

beginning of the 21st century the concept of “managing as designing” (Boland & Collopy

2004) has gained currency in the management discourse.

The idea is to apply the same thinking and work patterns that characterize successful and

innovative ‘design shops’ to traditional firms (Dunne & Martin 2006). The traditional

foundations of management in mathematics, economics and psychology are replaced to new

assumptions based on architecture, design and anthropology (Jones 2008). Proponents of the

‘managing as design’ paradigm argue that organizations can boost innovation capacity by

applying design principles (Brown 2008b). A summary review of the literature on applying

design to management reveals four main recurrent themes (see Table 1):

20

1. The supremacy of a divergent, experimental approach, where creativity drives decisions and,

instead of settling for the first suitable alternative from those available, managers seek to expand

their range of options to uncover great solutions;

2. The importance of tangible and embodied aspects, where rather than remaining tied to abstract

conceptualizations, designer-managers visualize, prototype and tinker with projects and

experiences, thereby developing a repository of re-usable ideas for further experimentation;

3. Keeping people at the centre, as staff members must be provided with the conditions to facilitate

the expression their creative and potential in producing innovative projects designed to fulfil a

defined end-users’ practical needs;

4. Innovation and creativity are paired with rigorous evidence based techniques to justify practices.

21

Table 1 - Recurrent themes on how to apply Design Thinking to management

Themes Examples from the literature

Focus on

divergence and

experimentation

Tinker and experiment to develop ideal solutions (Schön 1983)

Use abductive logic, the logic of what might be (Dunne & Martin 2006).

Approach problem solving considering problems and constraints as elements

that should be deconstructed and reframed, taking a systemic view and a

holistic approach (Cross 2011)

Expand possibilities and explore multiple options providing seed funding

(Ogilvie & Liedtka 2011)

Focus on divergence, expanding the range of options (Brown 2014)

Embrace

practical,

embodied and

material aspects

Accumulate a reusable repertoire of solutions, practices and design objects

(Schön 1983)

Focus on doing instead of planning and find solutions via iterations (Ogilvie

& Liedtka 2011)

Make ideas visual, tangible and testable early by producing prototypes and

assemble a portfolio recording the development of ideas (Brown 2014)

Assume a

human centred

approach

Develop empathy with customers’ needs (Ogilvie & Liedtka 2011)

Develop commitment, courage and risk acceptance (Cross 2011)

Constantly look for talent, build internal collaboration networks and allow

people to stay with a project for its entire cycle (Brown 2014)

Share

knowledge

Centrality of collaboration with peers (Dunne & Martin 2006)

Use of knowledge brokering techniques (such as technology brokering or

analogical thinking) to promote innovation (Chen & Venkatesh 2013)

Centrality of teams and of free flow of knowledge (Brown 2014)

Combine

creative freedom

and data-driven

rigor

Combine ‘designerly’ and managerial approaches (Dunne & Martin 2006)

Use work methods alternating intense activity and reflective contemplation

(Cross 2011)

Use agile budgeting approaches (Brown 2014)

This simplified summary suggests a high degree of coherence in the approach but the debate

around what ‘thinking as a designer’ means is rather multifarious. For instance Johansson-

22

Sköldberg, Woodilla, and Çetinkaya (2013) have identified five different five parallel

discourses of ‘designerly thinking’ (descriptions of the practices of professional designers) in

the design literature, and have noticed that these ideas, when imported in the management

discourse, tend to assume a more superficial and less scientific character. Indeed, despite the

enthusiasm for design inspired management approaches, there remains a lack of rigorous

empirical analysis of the actual consequences and implications of applying design thinking

within the management context (Kimbell 2011). A handful of recent empirical studies on the

application of design thinking to foster innovation (Leifer & Meinel 2012a, 2012b, 2013) is

not sufficient in filling this gap, since such studies only look at how specific technologies or

practices can support design thinking and innovation. Still under-investigated are the

conditions that enable the application of this approach in an organizational setting, and the

exam of the social and political impacts of the application of design to management.

If the focus is merely on the instrumental value of design as a driver for product or process

innovation the epistemic potential of reframing organization studies as a ‘science for design’

is lost. Assuming a design perspective means overcoming the traditional emphasis on

structure and control, deriving from an attempt to imitate natural sciences, embracing an idea

of organization as both a natural emergent phenomenon and a socially constructed artefact

(Jelinek, Georges, Romme, & Boland 2008). As such, it brings about a non-reductionist

epistemology, since in a design perspective parts gain their meaning from the networks in

which they are embedded. The act of organizing is therefore not a merely ‘technical’ action,

obeying to absolute rational principle, and becomes important to question who is designing

what, and drawing on which kind of goals and criteria (Jelinek et al. 2008).

A reflection on the political implication of assuming a design-inspired epistemology leads to

exploring the potential of such approach on modes of governance. While the issue of

23

governance is never explicitly tackled by the ‘managing as designing’ literature, several

design thinking principles can be used to reframe and expand the concept of governance,

bringing about new radical ways to ‘open’ it. In the first place, the adoption of a ‘human

centric’ approach, either by rethinking business system around the ‘persona’ of key customer

or by enabling personnel to fulfil their creative potential implies an opening of governance to

include the desires and requirements of a larger number of stakeholders. It forces decision

makers to accept, even embrace the idea that the viewpoints, objectives and interpretations of

‘others’ can become a fecund innovation driver, rather than a source the uncertainty to be

controlled and buffered against.

Incorporating alternative voices in the definition of business strategies and practices is likely

to meet resistances, since it implies altering current power relations. In order to reap

innovation opportunities while avoiding to challenge the establishment, the redesigning

activity is often corralled in clearly delimited times and spaces. It becomes a boardroom

activity, typically taking place in a workshop setting, where the organizational leadership,

interacting with design consultants, reconsiders corporate strategy. While customers’ and

staff members’ individual needs and characteristics are duly investigated, these subjects are

included in the debate in the form of tamed abstractions. Such an approach timidly expands

the strategic discourse to include new possibilities but fails to reach the innovative potential

that could be offered by a more radical ‘opening of governance’, legitimizing the inclusion of

other stakeholders’ perspectives in the definition of organizational goals and means.

The classic principle of governance as a hierarchical practice performed by a small leading

elite is typically paired with a concept of governance as efficient ordering and control. Design

thinking seems to challenge also this traditional view, by introducing the idea that innovations

are not only technological but can imply transformation of the meaning of objects or

24

relationships (Verganti 2009). ‘Re-engineering’ the meaning of the relation of production can

have liberating connotations, for instance suggesting that is possible to create and capture

value in absence of direct exchanges of discrete goods for money, as the success of Web 2.0

economy shows (Levy 2011), or to create complex collaboration structures without resorting

to traditional hierarchies (Shirky 2008; Silverman 2012). On the other hand, this production

of new meaning can have oppressive implications, when it is subject to a hegemonic

managerialist discourse. In this case, the meaning of the workplace is transformed from a

place of contractually regulated exchanges into a total institution regulating employees’

identities and foisting itself as the central source of meaning for their lives (Alvesson &

Willmott 2002; Coupland 2007; Kuhn 2006). Regardless their objectives, all forms of

redefinition of meaning contribute to ‘open’ governance by reshaping the sensemaking

patterns and outcomes, thus producing new decision making circuits and giving access to new

strategic opportunities. Since sensemaking, considered as the process of scanning, interpreting

and giving meaning, and acting accordingly (Weick 1995) is central to governance processes

(Fassin & Van Rossem 2009) a conceptual framework that explicitly induces corporate

leadership to reflect on the meaning attributed to products, roles, processes of their

organizations can have a true transformative potential in terms of modes of governance.

A third tenet of design thinking approaches, knowledge sharing, offers another lever to ‘pry-

open’ traditional governance practices. The idea of freely distributing information in order to

solicit ideas and extend the opportunities of meaningful feedback and participation of the

entire workforce to decision making inverts the traditional top-down approach according to

which only the minimum necessary amount of information is trickled down to lower

hierarchical level. In the belief that legitimate decisional authority resides only in the C-suite

or among majority shareholders, employees do not appear to have any use for data that go

beyond the minimum indispensable to carry own the tasks delegated to them. In addition, the

25

Baconian motto “knowledge is power” seems to discourage any voluntary surrender of useful

data. Breaking with this tradition, design approaches outline a model of governance that

emphasize the importance of collaboration and learning over command and control, thus

accepting that multiple stakeholders can contribute to the creation of value by self-organizing

and by providing useful ideas and feedback (Dunne & Martin 2006).

Finally, a further way in which a design-inspired approach can reform the exercise of

governance is by expanding the decision-making capabilities through a redefinition of the

very nature and purpose of the problem solving efforts of organizational leaders. In a

positivist, technical rationality informed perspective, solving complex problems is merely a

matter of acquiring, processing and analysing a sufficiently rich amount of data (on

implications, consequences, constraints etc.). However, managers often have to face ‘wicked’

problems (Rittel & Webber 1973) for which it is impossible to provide a definitive

formulation, since their interpretation can be disputed and their solutions cannot be tested:

there is no ‘stopping rule’ allowing to decide that the problem has been ‘solved’ (Coyne

2005). Many issues derived from social interaction assume this form: a classic example is the

“tragedy of the commons” (Hardin 1968), the fact rational individuals who independently act

according to their self-interest risk ending up behaving contrary to the whole group's long-

term best interests by depleting common resources. This condition cannot have a ‘technical’

resolution, and it is often ignored by the managerialist discourse, which disentangles it by

denying the legitimacy of the claims of multiple stakeholders, and considering shareholders’

one as the only legitimate interest. Paradoxically, the tragedy of the commons is ‘resolved’ by

privatizing the common.

Design thinking, in line with a pragmatist epistemology (Buchanan 1992), promises a less

simplistic, more comprehensive way of tackling these intractable challenges. Rather than

26

trying to create a conceptual model of reality and use it to generate definitive solutions, design

approaches cope with complexity by ‘tinkering’ with possibilities, and concretely

experimenting models. This also requires celebrating, instead of suppressing, conflicts

between different views, harnessing the destabilizing potential of the new discourse to

generate new possibilities of organizing (McClellan 2011). This pragmatic approach to

governance allows overcoming the intrinsic limitation of attempts of grasping the complexity

of reality by building simulations based on pure ‘data crunching’ capabilities. Such

simulations incur in the “Bonini paradox”, the trade-off between a model’s parsimony and its

validity: a model that is as complete as the complex system that it wishes to emulate will be as

difficult to understand as the reality that tries to simulate (Bonini 1963). Instead of creating

impossibly complex representation of reality aimed at solving problems, design thinking

embraces the incompleteness of the solution and tackle with it by using a flexible, adaptive

approach, reducing risks by prototyping and experimenting (rather than trying to predict and

control all possible scenarios). It also recognizes that simple designs as more resilient than

complicated arrangements, considering that “when organizing becomes increasingly

complicated and dynamic, organization design should become simpler and easier to modify”

(Jelinek et al. 2008, p. 322).

In sum design thinking, can contribute to the ‘opening of governance’ in several ways:

stimulating the inclusion of multiple voices; proposing expansion of the system of meaning

making underlying governance systems; encouraging information sharing among and

diffusion of decision making; and pragmatically redefining the approach to ‘wicked’

problems. To do so, however, needs to be deployed in its full potential, not as a mere

technique to foster creative strategizing, but as a pragmatist-phenomenological epistemology

that acknowledges the contextual, embodied and emergent nature of organizations, accepting

the irreducible complexity of many organizational governance problems.

27

IMPLICATIONS FOR OPENING GOVERNANCE: AN ‘OPEN

CLOSING’

Corporate scandals and of a Global Financial Crisis have put in discussion corporate

governance practices founded on a financial perspective informed by an agency theoretical

framework, favouring the emergence of a broader view of governance, which included

concepts of stewardship and the inclusion of multiple stakeholders (Tihanyi, Graffin, &

George 2014). Overcoming the dualism shareholders / managers, who are traditionally

considered the only legitimate actors in the governance process, can actually bring about a

strengthening of governance capabilities. World economy is becoming increasingly volatile

and unpredictable, and daunting challenges are posed by environmental threats and ‘low

intensity’ conflicts. In this turbulent scenario, value creation cannot be simply achieved by a

‘correct’ implementation, on the part of a ‘body’ of employees of the principles devised by a

managerial ‘brain’ who is acting on behalf of the company’s shareholders. Value creation

happens at multiple levels (individual, organizational and societal), and entails also value

capture, a separate process which involves power relationships among multiple stakeholders

(Lepak, Smith, & Taylor 2007).

If the governance problem is to achieve a viable model of value creation-capture, the purpose

of governance mechanisms cannot be restricted “to align the interests of managers with those

of owners” (Tihanyi et al. 2014, p. 1536). Both the value creating abilities and the value

capturing interests of multiple stakeholders (employees, unions, customers, local

communities, etc.) must be considered, mobilized and engaged. At the same time, the

increasing ‘wickedness’ of the challenges that corporations face make necessary to adopt

flexible and recursive models of governance, whereas the main focus is not on command and

control but on the issue of learning and experimentation. In this sense the recently emerged

28

notion of Experimentalist Governance, a model of public governance based on a recursive

process of provisional goal-setting and revision, based on a dynamic relationship between

local and central agencies (Sabel & Zeitlin 2012) can provide an inspiration for ‘more open’

models of corporate governance, and has strong similarities with the prototyping, ‘people-

centric’ approach suggested by design thinking.

When considered in this framework, the two totally unrelated (historically, ideologically and

even geographically) socio-organizational experiments that are presented in this paper,

Mitbestimmung (codetermination) and design thinking, can be important sources for inspiring

a radical opening of the notion of organizational governance, suggesting novel research

questions, ranging from the creative potential of codetermination systems, to the long term

sustainability of current value capture models. In order to properly frame such questions it is

however necessary to critically reflect on the notion of ‘opening’ of governance.

The call for the Annual Meeting of the Academy of Management is exemplary of the tension

between a traditional and an innovative notion of what ‘opening governance’ entails:

“Opening governance involves revisiting [governance] practices especially in

light of big data, crowdsourcing, and other emerging digital technologies that

expand the information and expertise available to organizational leaders. How and

when should managers open governance practices to involvement by engaged

stakeholders? What advances and problems arise from transparency in decision

making?” (McGahan 2014)

The first part of the statement points to a conservative view of governance, consistent with the

idea that corporate governance is a ‘top-down game’ where the only legitimate decision

makers are managers and shareholders, and that ‘opening’ equates to obtaining additional

sources of knowledge, to make these all-powerful ‘intelligent designers’ also all-knowing.

The second part, however, pushes a very different, much more innovative agenda, inviting to

29

consider the implication of an opening that is connected with transparency, accessibility and a

reshuffling of power relationships. We suggest that it is important to keep these different

levels of ‘opening’ conceptually separate, to avoid mistaking what is a ‘strengthening’ of

governance (in the sense of reinforcing the established structures of domination) with a

‘strengthening of governance’, understood as an increased capability to cope with the

challenges of creating and capturing value in a way which is socially, environmentally and

economically sustainable in the long term.

For this reason we suggest that different forms of opening of corporate governance should be

separately considered and subjected to empirical enquiry, seeing each of them as a different

‘quantum level of opening’. Each of these levels has profoundly different implications and

presents different challenges and opportunities. While not mutually exclusive, these different

forms of opening do not share any border: for instance a level 2 opening of governance is not

the consequence of a ‘full’ level 1 opening but represents a qualitatively different approach to

governance.

Level 1 (technical) opening refers to an opening in the sense of an expansion of the

information and expertise used to model, simulate and control reality. Such expansion

happens within a stable structure of power relationship, without putting in discussion the

notion that the responsibility (and authority) of corporate governance resides uniquely on

shareholders’ appointed boards of directors. The purpose of governance mechanisms is to

ensure that investors receive an adequate return on their investment, considering the

separation of ownership and control that characterizes contemporary corporations (Tihanyi et

al. 2014). Even when the concept of governance is considered in a more inclusive manner,

comprising leadership systems, managerial control protocols, property rights, decision rights,

and other practices that give organizations their authority and mandates for action (McGahan

30

2014), the emphasis is on expanding the capacity to control by means of practices that make

agents’ behaviours predictable. As a consequence relations with other stakeholders (in

particular employees) are seen as intrinsically conflictual, since there is an irreducible

difference in interests. Value is created by designing value chains and mechanisms are put in

place so that it can be entirely captured for the benefit of the owners and their agents.

Moreover externalities, consequences of the activity that are experienced by third parties, are

not considered, since other stakeholders have no legitimate voice in the arena of governance.

Intelligence about the assets controlled by these agents will be collected in an ‘open

governance’ perspective but only with the purpose of controlling or curtailing their

resistances.

Level 2 (political) opening refers – by contrast – to models of broadening governance by

including new stakeholders and acknowledging a legitimate right to manifest their interests

and aspirations. The political arena becomes more complex, overcoming the dualism owners-

managers, to include other voices, such as employees and their representatives. Negotiation

becomes an intrinsic component of decision making and the issue of how to develop a system

that can guarantee a sustainable level of value capture across different stakeholders is a

central governance issue. This form of opening (of which co-determination is a typical

example) can be interpreted as the idiosyncratic result of a specific set of historical and

cultural circumstances; the genealogy of Mitbestimmung seems to be solidly anchored to the

notion of labour as a social value, something quite alien to the US experience. Nevertheless it

presents a number of opportunities for corporations operating in the contemporary volatile,

complex environment. Extending the number of legitimate decision makers might involve

costs and rigidities, but it also enables a sharing of responsibility and a collective commitment

that would be unthinkable in another context. For instance, the forms of collective salary

sacrifice implemented in order to overcome temporary crisis while avoiding mass

31

retrenchments made possible by systems of industrial democracy achieve more than a

preservation of social peace. They guarantee that a wealth of tacit and embodied knowledge

and know how is not lost as a consequence of downsizing. The sustained technological

primacy of German manufacturing can possible find an explanation, or at least a determining

factor, in the system of co-determination.

Level 3 (phronetic) opening is here outlined as a promising opportunity, rather than a currently

existing empirical category. In this case governance opens in two dimensions: by expanding the

number of stakeholders that can be legitimately included, to comprise all those groups whose lives are

affected, positively or negatively, by corporate choices; and by considering the plurality of meaning

that can be attributed to corporate outcomes, which are subject to a constant process of reconstruction

and redefinition. This ‘radical’ opening leads to the consideration that governance is not just about

controlling and maintaining consensus but also involves a constant experimentation and ‘tinkering’

with provisional solutions to intractable problems. As such it require a reflexive understanding of the

consequences and implications of decisions for other stakeholders, acknowledging and taking

responsibility for trade-offs, thus questioning taken for granted establishments and power structures.

The concept of ‘phronetic social science’ put forward by Flyvbjerg (1998, 2001; Flyvbjerg 2006;

Flyvbjerg, Landman, & Schram 2012b) offers an effective label for such an approach to governance.

A phronetic approach is problem-driven and context bound, and aims to support deliberation,

judgment and praxis, linking action and theory in a bottom up, contextual and action oriented manner

(Flyvbjerg, Landman, & Schram 2012a). A phronetic approach to governance is therefore one that

accept incompleteness and experimentalism as central tenets, and that is driven by four essential

questions: “Where are we going? Who gains and who loses, and by which mechanisms of power? Is

this development desirable? What, if anything, should we do about it?” (Flyvbjerg 2004, p. 405). The

idea of the ‘governor’ goes back full circle to its original, etymological meaning of helmsman: not an

absolute, uncontested ruler, but someone who needs to act in concert with a diverse crew, and who

accepts that has only a partial control on the elements.

32

Different conceptions of governance thus underlie different ideas of ‘opening’ of governance. By

examining the antecedents and consequences of these alternative paradigms it is possible to truly

expand our understanding of governance, problematizing taken for granted assumptions on current

structures of power and therefore enabling new organizing possibilities.

33

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