Corporate Governance and Innovation - Venture Capital, Joint Ventures, and Family Businesses

Most of the literature on corporate governance focuses on listed companies. However, the majority of firms worldwide are non-listed. Given the importance of these firms for innovation and job creation, the absence of a robust debate on the best governance practices for these firms is perplexing. Corporate governance for non-listed companies, such as joint-ventures or venture-capital-backed start-ups and spin-offs, is concerned with ensuring that firms are run efficiently and protect the interests of business parties and investors. The article recounts the history of corporate governance from the development of the joint venture business form to the recent initiatives that help to foster the legal infrastructure to keep a modern economy in gear. We argue that the corporate governance debate for non-listed companies will proceed along three dimensions: (1) legal and institutional structures, (2) contractual arrangements, and (3) optional, best practice guidelines.