Corporate governance is traditionally one of the major challenges of co-operatives and Social Economy (SE) companies. As democratic member-based organisations, they have specific models of governance, but also specific problems.
In recent decades, social pressure and market demands on corporate management and governance structures are increasingly pressing as regards both introducing efficient strategies (economic, financial, negotiating and management) and functioning in an ethically friendly manner (socially responsible business operations).
Strategies and structures are closely linked in the upper echelons of governance, particularly in the relationships between top management, boards of directors and key owner groups (as well as stakeholders such as employees and local government). Various factors diminish the efficiency of governance systems, however. Prominent among these are conflicts of interest between owners (shareholders) and controllers/executives (board of directors and managers) (Berle and Means, 1932). This problem highlights the magnitude of certain real failures of corporate governance. The greatest theoretical and business challenge is to conceive and implement optimum institutional models for these corporate governance relationships, in the form of new governance regulations, codes of conduct or good governance and internal institutional changes.