Regulating organizations through codes of corporate governance

Although codes of corporate governance have come to be widely used as a mode of regulating corporations, our understanding of how they function is still rather limited. In this paper we describe the design of such code regimes and propose a theoretical framework for studying their effects. On the basis of an observation-theoretical approach, codes are conceptualized as schemas of observation that determine the way we evaluate corporations. On the one hand, the effect of a code depends on the extent to which it becomes integrated into recursive cycles of mutual observation between the corporation and the various actors in the field. On the other hand, it also depends on how the code relates to other observational schemas in the field. The paper concludes with some guidelines for empirical research on code regimes.