Question: Describe what types of businesses benefit most from the implementation of each of the four models of governance. How does the implementation of these models define how decisions are made?

Expert answer

There are four models of governance that businesses can use to make decisions: hierarchical, market-based, stakeholder-oriented, and networked. Each model has its own strengths and weaknesses, and businesses should choose the model that best fits their needs.

Hierarchical governance is the most traditional model of decision-making, and it is often used by large organizations. In this model, decisions are made by a small group of people at the top of the organization, and these decisions are then carried out by the rest of the organization. This model is suitable for businesses that need to make quick decisions or that have a clear chain of command. However, this model can be inflexible and can lead to stagnation if decision-makers are not willing to listen to new ideas.

Market-based governance is similar to hierarchical governance, but decisions are made by the market instead of by a small group of people. In this model, businesses compete with each other to provide the best products and services, and customers choose which business they want to buy from. This model is suitable for businesses that need to be innovative and that need to respond quickly to changes in the market. However, this model can lead to cutthroat competition and can be difficult to regulate.

Stakeholder-oriented governance is a newer model of decision-making, and it focuses on the needs of all of the stakeholders involved in a business. In this model, businesses work together with their stakeholders to find solutions that benefit everyone. This model is suitable for businesses that need to build trust and relationships with their stakeholders. However, this model can be slow and can lead to conflict if stakeholders have different interests.

Networked governance is the most recent model of decision-making, and it focuses on collaboration between businesses. In this model, businesses work together to solve problems and to create new opportunities. This model is suitable for businesses that need to be agile and that need to share resources. However, this model can be difficult to coordinate, and it can lead to duplication of effort if businesses do not communicate well.