Relationships between Governance Structure and Corporate Risks: Implications for Risk Management in Business Networks

Few researches on business networks have focused on risk management and stakeholders’ risk exposure (Hutter and Power 2005; Miller, Kurunmäki and O’Leary 2006). The paper deals with the relationship between the governance structures of “networked” entities and corporate risks. The research reflects on: i. how the participation of enterprises to networks and corporate groups affects corporate risk determinants; ii. how stakeholders’ attitudes to risk change when they have a double economic interest (e.g. as stockholders and as suppliers) in the firms involved in networks. The essay aims to demonstrate that governance structures and mechanisms selected for making networks work influence: i. enterprises’ risk exposure; ii. shareholders’ and other stakeholders’ claims and residual reward rights. The assertions start from drawing up an “analysis model” of risks in network organizations and they are supported by case studies about industrial and financial enterprises engaged in networks. The final part of the paper suggests directions for further researches on management of risk in hybrid organizations.