Towards an operational model of corporate governance

Though the amount of research on corporate governance in the United States, Europe and Korea is enormous, most of them focus on the individual components of corporate governance, rather than the corporate governance as an organized system. This article, however, mainly focuses on the operational aspects of corporate governance, especially for operational innovation, which have often been ignored by most researchers. In this article, corporate activities such as governing activities, managing activities and investing activities are understood as an organized one, whether explicit or implicit, and these three types of activities are clearly distinguished from each other. Then, the existing systems of corporate governance are reexamined, and vague terms such as the board of directors, the management and the shareholders/stakeholders are replaced by the more appropriate terms of the governance structure, the management structure and the ownership structure. Using such terms, the circulatory system of corporate activities and three operating rules for this circulatory system are introduced. Hopefully, such efforts will eventually lead to developing an operational model of corporate governance for more practical governance innovations.