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Authors highlight four connected issues that seem particularly relevant to any discussion on the impact of new technology on corporate governance and business regulation, more generally.
First, contemporary technological change – the on-going digital transformation – is characterized by “amplification effects” as multiple technologies “accelerate” each other. Whereas previous technological revolutions were sequential (new technology following new technology), the “Digital Revolution” involves multiple simultaneous technological developments that impact each other in unexpected and essential ways. The resulting exponential growth of new technologies makes it increasingly difficult for regulators to keep pace with the speed of technological and economic developments. Traditional “reactive” approaches to law-making seem ill-suited to the new world.
Second, these technological changes are disrupting the “old corporate world” of centralized authorities, hierarchical organizations, and “proper” procedures and processes. How businesses organize themselves is changing, as a result of technology. Crucially, the emerging “new world” is characterized by the “decentralization” and “disintermediation” of business organizations as traditional hierarchical organizational forms are disrupted. Since existing regulatory models have been designed to maintain the interests of those at the top of the hierarchy, it remains unclear whether they will still be relevant in the emerging new world.
Third, “retrofitting” – simply adding digital solutions to older systems or models in the belief that this will "future proof" an organization – may work in some contexts but needs to be treated with caution, particularly when looking for medium- to long-term solutions. More radical approaches are often required, most obviously when new technology is genuinely disruptive of existing ways of thinking and working. The risk for regulators is that retrofitting – simply adding new regulations on top of existing frameworks – creates the risk of confusion or (even worse) an unhealthy disconnect between the business needs of firms and regulatory requirements.
Finally, new technologies facilitate more dispersed forms of business organization – what they call “community-driven corporate organization and governance.” In particular, systems of organizational governance are being developed in which decisions are reached by a community of users in the absence of a centrally designated authority that makes and enforces those decisions. Again, in such circumstances it is prudent for regulators to embrace more creative and experimental regulatory approaches rather than persist with existing hierarchical forms.