A Study On Customer Participation In Corporate Governance

In the current the overall pattern of today's world economy shifting from "shortage economy" to "surplus economy", replacement of "buyer's market" by "seller's market", bottlenecks in supply chain transferring from production processes to consumer link, decision of manufacturers to customers'hands, and customers becoming the decisive factors of survival and development of enterprises. Under the present economic situation this paper proposes a new proposition of "customer participation in corporate governance", and makes a further study on connotation, inevitability and feasibility, and system design of this new proposition.The connotation of customer participation in corporate governance was proposed .Customer participation in corporate governance is a system arrangement, which means that the company invites the representative of its most valuable customers to be the company director, that is, customer director, who is directly involved in the company's management and decision-making. Customers here refer to the end users who consume products of the company directly, including business users and individual consumers.The inevitable trend of customer participation in corporate governance was proposed .It is quite impossible for customer director to participate the corporate governance and strategic decision in a director-oriented system. However, through discussion about birth, development and historical vicissitude of governance structure of stock company, it can be discovered that there is a tendency of transformation from single ownership to multi-ownership and centralization of power in stockholder's hand to decentralization of power to interest-related subjects, which is the mutual affect of the need of economic development, profit-pursuing mechanism, efficiency principle and competition and choice of interest-related subjects. With coming of era of surplus economy and formation of buyer market, relative status between customers and enterprises change fundamentally. Relations between customers and enterprises are the source of value creation. Customers occupy the obvious superiority and the initiative position in competition with other subjects. Then, customer participation becomes an inevitable trend. The feasibility of customer participation in corporate governance was proposed .For customer equity management, TCP is a indispensable means, which effectively maximize customers'assets. And "customer participation in corporate governance" is the kernel of TCP.Customer participation in corporate governance is, in essence, a representative of one new type of strategic alliance, that is, governance power alliance, which assimilates advantages and strengths and overcomes inherent shortcomings and defects of the existing stockholder's rights alliance and contract alliance. Thus it can give full play to the role of strategic alliances and win effectively its interests. In addition, customer participation in corporate governance can improve corporate governance structure and mechanism, and enhance corporate performance, which is the necessary choice to ensure the sustained and healthy development of the company.Concerning system design, the author suggests that a customer board be set up under company's board of directors enabling customer directors to participate the design of corporate governance. And the author goes further into the specific systems and operational mechanisms from two aspects, that is, customers being individual consumers and customers being business users. Based on this, a frame of system design of customer director is advanced.