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Assignment 3 Ethics and Governance

ethics and governance (Royal Melbourne Institute of Technology University Vietnam)

Studocu is not sponsored or endorsed by any college or university

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RESEARCH REPORT
Assessment Task 3 – Governance Research Essay

Lecturer: Phuc DG
Ethics and Governance – BUSM4403
Group 1 (9.00 A.M. Saturday)

Le Ngoc Anh – s3762228

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Table of Contents

I. Introduction............................................................................................................................2

II. Literature Review..................................................................................................................2

1. Corporate Social Responsibility (CSR)...........................................................................2

2. Corporate Governance (CG)............................................................................................3

3. Innovation and Sustainability...........................................................................................4

III. Methodology.......................................................................................................................5

IV. Discussion...........................................................................................................................5

1. The existing corporate governance model of Meta Inc..................................................5

 Ownership Structure.....................................................................................................6
 Board of Directors (BOD).............................................................................................7
 Board Committees.........................................................................................................9
 Remuneration...............................................................................................................10

2. Innovation and sustainability perspective.....................................................................12

 Implications of CG model...........................................................................................13

V. Recommendation.....................................................................................................................14

VI. Conclusion..............................................................................................................................16

VII. Reference..............................................................................................................................16

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I. Introduction

In the technology-driven economy, a large number of firms operate as platforms as the adaption
of the advanced technologies and the fast-moving consumer demand in this hyper-competitive
global market. This has put increasing pressure for all established firms to undergo this
transformation. However, the traditional corporate governance as the product of the hierarchy
corporate structure highlighting the primacy of shareholders is failing the platforms and making
less sense in the innovation-driven economy. Thus, there is a disconnection between the
requirements for being successful in the age of platforms and the current regulatory framework,
which raises the demand for platform governance. The purpose of this research report is to
analyze the current corporate governance model of Meta Inc, examine and suggest the model in
the way that facilitates innovation and sustainability. This paper comprises 3 main parts:
literature review, analysis and recommendation.

II. Literature Review

1. Corporate Social Responsibility (CSR)

In today's business environment, CSR is gaining more significance and plays an important role in
defining organizational ethics and responsibility for their impacts on environment and society
(Gyorgy et al. 2008, European Commission 2019). CSR practice is applied popularly in many
companies as a way to communicate to their stakeholders about the social performance, which
help firms build its positive organizational image (Douglas et al. 2004) and become policies that
go beyond the stakeholders’ concerns and the financial performance (Glavas & Aguinis 2017).
Supported by William & Seigal (2010), CSR is used as the strategy for enhancing the companies’
reputation, resulting in consumer loyalty and increased profitability. Although CSR is not
compulsory by which firms can contribute voluntarily to better environment and society
(European Communities Commission n.d.), CSR is argued to go beyond voluntary action and is
an aspect of the interface between society and organization, thus requiring regulations for
improving firm performance through CSR (Brammer et al. 2012). More importantly, there have
been different hypotheses of various scholars to CSR including the skeptical view toward CSR
and those adopting that theory to firm’s social responsibilities in a broader scope. Particularly,
Milton Friedman’s theory viewed CSR as an improper use of company resources resulting in

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unreasonable expenditure for the general societal interest (Thomas 1993, Edafe 2021). As
according to his perspective, the ultimate goal of the business is merely maximizing the profit,
thus CSR is referred as window dressing for businesses (Mauricio et al. 2019). Some have
agreed with Friedman that the underlying objective of companies that drives everything they do
is to maximize the interest of shareholders (Edafe 2021). By contrast, a large number of scholars
disagree with Friedman’s perspective as more and more corporations shifted their focus towards
activities that primarily create value to the society. Notably, the theory of Carroll emphasizes that
a corporation needs to have 4 main responsibilities including economic, legal, ethical,
philanthropic responsibilities to be socially responsible in a balanced way (Carroll 1979). Also,
Freeman’s theory or the stakeholder theory as the most famous one has argued for Friedman that
the companies have to include their stakeholders in the corporate activities as an effective and
constructive way for them to meet the expectations of society (Edafe 2021, Freeman &
Dmytriyev 2017). In his view, the stakeholders are the owners of the corporation as they can
affect and be affected by the achievement of the organization’s purpose (Freeman & Dmytriyev
2017). Conversely, shareholders are not the owners as there is only the contractual liability
between them and the corporate based on the nature of law. Therefore, conflicting with
Friedman’s theory, the stakeholder theory highlights the stakeholders’ engagement in the CSR
performance rather than the shareholders. However, a weakness from Freeman’s theory is that it
takes into account the large number of stakeholders with the limited resources of corporations,
which is not realistic and practical in real life. The research of Mitchell, Agle & Wood 1997
solved that gap and supported Freeman by helping identify the stakeholders of corporations by 3
attributes including Power, Legitimacy, and Urgency. The more attributes they have, the more
priority the company should put for this party.

2. Corporate Governance (CG)

The necessity of CG emerges in modern corporations due to the separation of ownership and
control issue as one of the corporate characteristics (Humera 2011). CG, in particular, is a
mechanism resolving the principal-agent problem as the conflict of interest between stakeholders
who own the business and directors and managers who run the business (OECD 1999). As there
is no single CG definition, it could be viewed from different perspectives. Therefore, different
theories were developed regarding CG to improve its model. Firstly, the Agency theory is

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concerned with the relationships between principals as shareholders and agents as the
management team (McColgan 2001). From that theory, the interests of shareholders must be
served and protected by the agents; also, due to the information asymmetries, the agents or
managers always have the opportunistic attitude which could lead to behaviors if not control
them (Jensen & Meckling 1976, McColgan 2001). Thus, the board must be designed to be a
strong independent one with more outsiders or independent non-executives, and a separate role
of CEO and Board chairman (Porta, Silanes & Shliefer 2002). However, the stewardship theory
claims that companies need to give managers more power and motivation rather than controlling,
monitoring them (Glinkowska & Kaczmarek 2015). As that theory considers managers as the
stewards or guardians of the company who help firms overcome the crisis or scandal and not just
work for the profits but for achievements or anything else. In that view, the board is designed in a
way that has more managers than outsiders and also the role duality (Oliver 1995). Moreover, the
Agency theory above is argued by the stakeholder theory that the interest of the whole
stakeholders must be included and cared for as they are genuine owners rather than only serving
for the interest of small groups as shareholders (Oliver 1995). Therefore, the board is designed in
the same way with the agency theory’s implication; however, the members of the board are
almost all stakeholders to reflect their interest in the board.

3. Innovation and Sustainability

In the digital era and technology-driven economy, the rapid technological growth and the fast-
moving demand of consumers have exerted strong pressure for all companies operating in the
highly competitive global marketplace to innovate, and the proliferation of platforms was seen as
the adaptation of this new environment (Fenwick et al. 2019). In the world of platform, all
companies must undergo this transformation, innovate and reinvent as platforms, specifically
upgrade capacity for disruptive innovation, which helps achieve sustainable development and
ensure to remain relevant in the long-term; otherwise, those firms are destroyed by the current
platforms which would continue scaling up into new industries and markets (Fenwick et al.
2019).

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III. Methodology

This paper uses different theories related to the topic of CSR and CG including the theory of
Friedman, Stakeholders, Agency and those of the internal means of CG. Also, a range of reliable
academic resources has been collected to further analyse and prove those theories of various
scholars. Furthermore, Analytical and Qualitative Research techniques are used in that paper for
better understanding the aspect of innovation and sustainability, its impact on the CG model,
evaluating and analyzing the current CG model of Meta Inc. Those approaches are proper and
well-served for deeply analyzing, evaluating the model of CG and suggesting recommendations
as the primary goal of the research report.

IV. Discussion

1. The existing corporate governance model of Meta Inc.

The company is implied to follow the Agency theory to design its CG model. As its established
governance mechanism focuses much on controlling, monitoring the Management team, it sets
clear legal sanctions of violating the rules while giving them incentives to buy their loyalty. Also,
with the total of about 23 board members constituted by a large number of independent non-
executive, this strong and independent board as having more outsiders to control is similar to the
implication of the Agency theory. However, the company did not follow the second implication
of the theories as still having the role duality when the position of CEO and chairman is held by
Mark Zuckerberg only. Based on the theory highlighting the oversight for the Management team,
the chairman would not control the CEO as being the same person, thus the CEO has full power
to control the business and he would operate free from restraint. The risk of role duality could
happen when the extremely powerful CEO having a strong influence on the board could abuse
the power, produce unethical behaviors and negatively affect the company. Generally, closely
applying Agency theory would help the company increase its CG’s effectiveness in controlling
and monitoring the Management team, preventing their opportunistic behaviors and the possible
conflict of interest, solving the issue of information asymmetries, improving their performance
and maximizing the benefits of the shareholders (Livia & Sardar 2005). However, following
strictly to that theory would render the firm just focus on maximizing the profits and ignoring the
negative impact to the customers and employees, which could result in unethical behaviors. The

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scandal of Enron as having unethical misconduct has been proved for the limitation of strictly
following that theory (Brian 2005).

 Ownership Structure

From the identified theory that Meta follows in designing, its existing CG model would be then
analyzed deeply with the internal means. Firstly, the company is recognized to have the
concentrated ownership structure. It can be seen from the data below that 2 stockholders of Meta
holding 7.30% and 5.12% respectively, are defined as the blockholders according to the law and
CG theories as holding more than 5% of share (CNN Business n.d.). With this concentrated
ownership structure, it helps the company reduce the principal-agent problem. The case study
conducted in 927 listed firms having that type of ownership has found that abusing the rights and
interest of shareholders or the opportunistic behaviors that could be done by the managers rarely
happen in almost all companies (Zhang 2004), as the blockholders who having large portion of
shares would try to control the company for their own interest and they do not let the agents or
managers run the business themselves. Like the case of Tesla, as the blockholder, Elon Musk not
just sits on the board to control the directors but he also becomes the senior manager to run the
business by himself. By trying to have a strong influence on the business, the issue of free rider
or agency problems could be eliminated, and prevent the managers from having opportunistic
behaviors. Also, the strong commitment of shareholders, high-level of their loyalty are found in
this type of ownership, and the long-term strategies are developed due to the alignment of
interest, as the blockholders would try their best to care for and protect the business (Zhang
2004). On the other hand, the issue of principal-principal or the conflict between small
shareholders and blockholders could be arised, as the big shareholders would try to maximize
their own interest when running the business and making the decisions. Therefore, small
shareholders who are affected much by the big shareholders' decisions would be extremely risky
as they would lose their interest and benefits.

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Figure 1: Top 10 Owners of Meta Platforms Inc.

 Board of Directors (BOD)

That big tech company as the public one has a large number of board members at around 23-24
people, the size would be periodically reviewed to increase or decrease and fixed by the board's
resolution (Meta 2020, Crunchbase n.d.). Particularly, that board is constituted by the majority of
the independent non-executive directors who are the group of experts in various fields, neither
run the business nor have any connections to the firm’s performance and the minority of
executive directors (Ethics & Board 2021). The model demonstrating the relationships between
key players of CG is presented below.

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Figure 2: Corporate Governance Model

While the circle represents the board as its members are in the same level and have the equal
rights to vote, the Management team is defined by the triangle as implying the hierarchy
structure or levels of managers. From the model, the small intersection part is a place for the
minority of executive directors being both members of the board and the top managers running
the business. Also, the largest part of the circle represents non-executive directors, specifically
the independent ones in the Meta's case with the annually appointed Lead Independent Director.
Different levels of managers not sitting in the board are in the rest of the triangle.

With the outsider-dominated board, that structure plays a key role in the oversight of the
management team, making and reviewing the important decisions, helping the firm balance free
speech. As its members are specialists from various cultures, professional backgrounds, which
would bring out different ideologies, perspectives and have a holistic view that significantly
reflects the diverse group of people (Meta n.d.). Also, it would make independent judgement and
recommendations in specific areas in the way of fairness. Overall, designing the board in the way
that maximizes outsiders reflects the modern corporation, which helps eliminate the issues that
always arise between people inside. However, the negative relationship between board
independence and firm performance is the limitation of that board type, which is reported to
happen in Australia (Grace et al. 1995), America (Baysinger & Butler 1985, Bhagat & Black
2002), and in the emerging market like Bangladesh (Afzalur 2018).

Furthermore, Meta is identified to have the Unitary or one-tier board structure as only having a
traditional board that comprise executive and independent non-executive directors rather than
stakeholders. The Unitary board allows to fasten the decision-making process, as exchanging,

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discussing information would be much easier, flexible and directly. The efficient information
flow enables monitoring and counseling, decisions would be made together when both types of
directors sit in the same table rather than the long decision-making process of 2 separated boards
in the dual structure that could lose several opportunities in the market. Moreover, when the non-
executive directors sit together with the Management team, they would understand deeply about
the current business situations, and that type also requires less administrative burden and could
save that cost. On the other hand, the top manager or CEO holding the chairman position could
mix the role of monitoring and running the business. The ineffective control CEO causes a
common issue in the U.S. that the CEO abuses the power and obscures unethical behaviors of the
management team. Also there could be a potential risk of forming a coalition between CEO and
outside directors that resist takeovers (David & Guler 2010).

As BOD is the mechanism of CG helping shareholders control directors and managers, facilitate
their interests. However, with the Unitary type of board, the issue of abusing the power and
producing unethical misconducts caused by top managers happens more frequently compared to
the Dual structure. Thus the solution of designing the committees inside the board is mainly
driven by that model which could facilitate the role of non-executives directors who find struggle
as not running the business to easily monitor the management team. This solution from many
scholars and practices were later regulated by the government due to its effectiveness; therefore,
several committees including Audit, Remuneration, and Nomination are requirements for the
public company’s board to effectively control the management team.

 Board Committees

In the case of Meta, the board currently has 3 standing committees namely Audit & Risk
Oversight Committee (A&ROC); Compensation, Nominating & Governance Committee
(CN&GC); Privacy Committee (Meta 2020). All these 3 committees are composed of only
independent non-executive director type to comply with the applicable legal, regulatory and
requirements of stock exchange. From the committees’ members, the role of independent non-
executive directors is implied to be extremely significant in the CG model of the modern
corporation; as not having any connections with the firm, allocating them in almost all

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committees could assist the board to perform the responsibilities of oversight and controlling the
managers in different functions with transparency.
Specifically, A&ROC plays a key role in monitoring the auditors who provide the financial
statement to the investors, the process of audit and financial reporting, the internal and external
audit functions, the firm's internal control and risk management systems, and compliance with
laws and regulations (Meta 2021). That required committee would avoid the abuse of the
executive directors, ensure that auditor and top managers would not have any under table deal,
recommend and make independent judgements in the particular field, and help the non-executive
directors understand the company’s present status. Besides, CN&GC is responsible for
compensation, nominating, and CG matters. Regarding the first issue, this committee’s duty is
reviewing the overall strategy of compensation or remuneration related to base salary, incentive
compensation, rewards, reviewing and controlling the salary, policy and compensation factors for
top managers, evaluating their performance, assessing all forms of compensation including cash
and equity-based, monitoring the compliance with regulatory requirement for compensation of
employees and directors (Meta 2020). In terms of nominating and governance issues, the
committee's role is to identify potential candidates for senior managers of the company, provide
the criteria, evaluate the performance of board’s members, control the selection process including
the appointment, election, recruiting, prevent the abuse of top managers, also develop a code of
conduct, ensure that the firm would run in the way that comply with the CG codes and the
company law of government (Meta 2020). Apart from that, the Privacy Committee assists the
board with privacy and data usage issues including periodical policy assessment related to risk
management and the privacy program, overseeing the compliance with the privacy program,
reviewing the privacy practice, etc.

 Remuneration

Overall, the company has focused much on the Agency theory when designing the remuneration
policy that has a strong connection with the firm's performance rather than taking care of them
by giving pensions and other benefits like health insurance. According to that theory, the
remuneration policy must be developed in a way that ensures the agents work and serve for the
best interest of the shareholders or the firm's profit meaning contribute to the good performance
of the business. Meta has mainly used remuneration measures linking to the contribution of the

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company's performance for the top managers including base salary, bonus, non-equity incentive,
stock award value, option award value, long term incentives (ExecPay n.d.). Particularly, these
remuneration packages would be analyzed with pros and cons.

Firstly, only the base salary is not related to the company's performance; however, this type is as
the basic right of employees and is binded by law, thus many companies try to minimize that
type to avoid the issue of receiving high payment even when the business goes down, which
happened in 2008 in the US. However, the company should give the appropriate amount of base
salary matching with different positions rather than offering too low amount, as it would help
guarantee and support the directors and employees' lives. Also, that type is the first criterion that
candidates are looking at, thus a good base salary would attract more potential employees to the
company's positions.

Secondly, applying the bonus would effectively improve the company’s short-term performance.
This package is a great encouragement that motivates employees to work harder and more
effectively, which would help firms increase their profitability. However, offering bonuses with
high targets would make them feel stressed, and they would seek out the cheating way, produce
unethical behaviors harming the corporate as reported in the Enron’s scandal. Bonus is not an
useful measure for contributing to the long-term performance, the sustainable development of the
firm and could result in many problems for the company if they mostly base on the bonus to
design the policy. Also, fierce competition among the company’s employees is another impact of
that type, which generally helps increase the firm’s profits while could be problematic sometimes
such as damaging the relationships among employees, etc.

Thirdly, giving the stock option or offering the shares for employees to buy when they contribute
to the good performance of the company would help improve significantly the long-term
performance. When they become the shareholders holding the shares of the company, they would
work harder to boost the performance and build the good image of the firm, and have high-level
of loyalty, they tend not to have any unethical behaviors as they could gain benefits from higher
share price if the performance goes up. Thus, this type of remuneration package would enhance
the sustainable development of the company, its image, and reputation in the long term.

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However, offering stock options when the business are small-sized and does not have high
performance or have difficulties, that type is not attractive for the employees and they would
prefer other types. As a small number of shares would not motivate them to contribute to the
long-term performance, they would rather transfer the share to someone in the stock market, the
issue of free rider could arise. On the other hand, when giving them a big proportion of share,
they would become big shareholders having too much power and also try to be the senior
managers running the business by themselves. Then it could lead to the conflict of interest
between big and small shareholders or principal-principal issue, the decisions of big shareholders
which aim to maximize their interest could be harmful for the benefits of small shareholders.

Lastly, even though offering the stock or stock grants is different with stock options in term of
form of remuneration policy, both of them help enhance the long-term performance of the firm
and share similar benefits as well as limitations with each other. Thus, the company should be
careful when putting those types in the policy as offering employees too much or too little shares
could be problematic. Other types including non-equity and long-term incentives would help the
business buy their loyalty, make them feel the sense of caring, and motivate them to work harder,
long-term engage with the company.

CN&GC would be incharge of designing the remuneration policy and taking into account 4 main
issues including legal, ethical, regulatory and competitive issue for designing. As mentioned
above, the majority of independent directors dominate that committee and are only given the
type of non-performance related including base salary and other benefits.

2. Innovation and sustainability perspective

In the technology-driven economy, a large number of today's successful businesses operate as

platforms which are characterized by the features of transaction facilitator and organizing for
innovation. Particularly, the platforms play a role as intermediaries promoting economic
transaction, information transformation, social connection through the utilization of networked
technologies. Platform companies generate profit by facilitating interactions between value
providers and extractors. More importantly, the model incorporates stakeholder’s feedback and
input to enhance user engagement and experience with platforms. Thus, the internal operations of

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sustainable platform companies are arranged in an open, flat and inclusive manner to facilitate
cooperation among various stakeholders, as such, continuous innovations are delivered in
platform’s capabilities as well as its goods and services. Almost all successful platforms disrupt
and decentralize their model, and enable direct peer-to-peer transactions between users and
service providers. Smart platforms, as a result, break from the typical closed, hierarchical, and
centralized corporate structure. The bureaucratized corporate culture caused by the hierarchical
structure renders established firms unable to respond rapidly and effectively to the challenges of
rapid changes in technology, consumer demand and market, thus struggling to survive in a
dynamic business environment.

 Implications of CG model

Being the adaptation of the traditional corporate structure, CG emphasizing on primacy of

shareholders makes less sense in an economy driven by innovation. As the platforms are
organized in the way of facilitating constant innovation, thus its governance focuses on building
a flat, open and inclusive corporate environment exploiting talents of all stakeholders from that
network (Fenwick et al. 2019). However, regulatory pressures from the traditional CG are about
maintaining hierarchy, centralized authority, control and monitoring for the purpose of
maximizing the shareholder values and protecting their interest, which disconnect with the needs
for a successful platform. Moreover, from the perspective of innovation and sustainability, the
existing regulatory framework which promotes a negative corporate attitude failing the platform
as explained below must be replaced by the platform governance.
Firstly, the primary goal of maximizing shareholder values builds the corporate environment
prioritizing short-term profit and formalistic compliance, which obscures the innovation matter
and has detrimental impact on the corporation's long-term prospects of remaining relevant, the
firm's sustainability (Fenwick et al. 2019). A large number of listed companies which focus
strictly on financial metrics are easily distracted from the vital task of finding strategies for
remaining relevant in the long term. Furthermore, the significance of generating profits for
shareholders as highlighted by the traditional governance drive executives to seek quick and easy
payoffs in the short-term, and the managers focusing on customer experience and innovation are
frequently excluded from the decision-making processes (Fenwick et al. 2019). Such attitudes do
nothing for the long-term prospect of the company. Also, following that shareholder primacy

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view could render company's practice being detrimental to the employees' interest. Particularly,
mass layoff was implemented by the companies to achieve great quarterly performance, maintain
the stock price level, which would generate the negative corporate culture (Fenwick et al. 2019).
The culture of distrust between managers and employees contributes to job dissatisfaction,
failure of encouraging employees, employees unhappiness which play a key role in customer
satisfaction, commercial success in the long-term and innovation.

The urgent requirement for changing traditional CG from the perspective of sustainability is
supported by the knowledge of CSR. Firstly, the shareholder primacy view shares some
similarities with the Agency theory. As the theory of Milton has emphasized the primary goal of
business as generating profit, put the shareholders in the core value, the interest of shareholders
as the company’s owner must be protected, respected, and served by the servants who work in
the business. Focusing on generating profit only encourages managers and employees to produce
unethical behavior or cheating the system for fast payoffs. Therefore, according to the
stakeholder theory, rather than only bringing benefits to a very narrow group of stakeholders as
finances and stakeholders, the company’s goal must focus on maximizing benefits for the
stakeholders at large for achieving sustainable development. From that view, the shareholders are
not the owner of the company as there is only the contractual liability between the shareholders
and the corporate under the law; instead, the stakeholders as the group of individuals who can
affect and are affected by the achievement of the organisation's purpose are the genuine owner of
the corporate. However, caring for and facilitating the interest of too large group of stakeholders
with the limited company’s resources is not realistic, which is a problem of stakeholder theory.
As a solution for this problem, based on the research of Michel, not only shareholders but also
employees, customers are dominant stakeholders that the company need to take care and
facilitate their interest, as all of them have power to influence the company, legitimacy as they
need to take care for product safety, salary, labour standards, need to bring the benefits for them.

V. Recommendation

Meta’s CG model which focuses on controlling, monitoring processes toward the Management
team and maintaining hierarchy structure is unlikely to facilitate sustainability and innovation.
As clarified above, due to the tension of the regulatory pressure of the existing regulatory

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framework of Meta and the needs for a sustainable platform, the firm would struggle to respond
to rapid change of technology and the fast-moving consumer demand. Thus, it raises the demand
for changing CG that should be well-suited in the world of platforms.
Firstly, the strategies crucial for establishing a successful platform must be considered, then
aligning the business needs of platforms for identifying a more effective and sustainable CG
model. In other words, CG model should be built on the idea of incentivizing companies to
embrace these strategies that help maximize the opportunities for innovation and achieve
sustainability. Firstly, the company should utilize new technologies for building community-
driven organizations. Digital technology has played a key role as the foundation and
infrastructure for building capacity for innovation, reinventing sustainable platforms and globally
expanding its model, also it provides peer-to-peer solutions. Secondly, the platforms must
establish an open and accessible corporate culture. The proper communication is a key for the
open platform culture. Thirdly, the platforms must deliver meaningful platform content to users.

To pursue those strategies, Meta should appoint a variety of technological experts who have
digital experience to BOD. Those experts could be in different functions and types of digital
technologies such as hardware, communication networks, algorithms, cloud-based storage, etc.
The engagement of different expertise and mindset for innovation is crucial for the objectives of
technology utilization and enhances the strong relationship between platforms and users. Also,
the perspective of innovation and sustainability should be emphasized and put in central in the
decision-making process. Moreover, the executives in the board who are best placed for
delivering innovation must be highly aware of, constantly anticipate, and plan for integrating the
future technologies to ensure remaining relevant in the future. The case study of The Walt Disney
Company is an example of the application of that recommendation. BOD of that company has
included experts from other social platforms such as Seryl Sandberg from Facebook and Jack
Dorsey from Twitter and Square to bring their digital experience to the company’s decision with
the aim of leveraging the latest technologies, advancing and scaling up the platform, improving
their customer relationships (Fenwick et al. 2019.

Moreover, the board members should be treated as feedback providers rather than the supervisors
who monitor and control the senior managers. As in the existing framework, their responsibilities

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as oversight toward the management team could lead to the strict concentration of formalistic
compliance, monitoring managerial misconducts, which distract from designing the initiatives
for contributing performance in the future. Thus, their role is no longer appropriate in facilitating
innovation, instead, the company should treat them in a way that works in collaboration and
cooperation with the managers and CEO of the company.

Also, the remuneration committee inside the board should reconsider the remuneration policy,
particularly, they should focus on the packages that are helpful for the long-term performance of
the business such as the stock-options and stock grants. They should not rely too much and set
the appropriate (not too high or too low) payment for the packages that are not related to the
performance such as base salary and just affect short-term performance like bonuses, which
could prevent focusing too much on making profits in short-term and avoid unethical behaviors
while still attract the high calibre executives and employees. Also, some benefits such as health
insurance, etc should be added to create the corporate culture that motivates employees and
achieve employees job satisfaction, their long-term engagement with the firms, employees
happiness which links directly to the customer happiness and promote innovation.

VI. Conclusion

In short, there is a disconnection between the current regulatory pressure and the needs for
successful platforms, which raises the requirement for platform governance. From analyzing the
existing CG model of Meta, the gap between Meta’s model and the one that facilitates innovation
and sustainability is identified. Based on the strategies for becoming successful platforms, the
platform governance is suggested to align and best incentivizing companies to adopt those
strategies.

VII. Reference

1. Afzalur, R 2018, Board independence and firm performance: Evidence from Bangladesh,
Future Business Journal, vol. 4, no.1, pp. 34-49.
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