Strategy, Structure, Knowledge

Strategy and governance are related. Governance has wondered since the time of Adam Smith how market dynamics is co-ordinated or how individual choices get pre-reconciled. From a firm’s perspective, strategy issues have considered how best to govern and mobilize competencies, resources and processes for one’s own advantage and to the exclusion of other firms. The regulator or legislator perspective, however, considers the firm’s strategy in terms of its effect on social welfare and adherence to or coherence with the other principal or minimal sets of social goals. There has thus been continual recognition that the strategic acts of firms maintain the market dynamics while the market responds by governing co-ordination amongst conflicting and incoherent demands. A closer look at this phenomenon led to the admission that the issue of governance was primary and perhaps more basic. The strategy of a firm governs such processes, as around authority, loyalty (Simon, 1991; Williamson, 1996) and agenda, which lead to distinctive traits of a firm and to the mobilization of resources by the firm. Similarly, social regulations or the prescriptive and normative boundaries set by principles of rationality and the rules of a game govern the strategic behaviours of the agents in a market. Governance, it appears, inheres through strategic considerations.