Downward Accountability

This chapter develops the case for including downward accountability as an essential component of corporate governance. Downward accountability refers to processes by which the senior managers of companies are held accountable to the people at lower levels. These are employees and, by extension, their families who are members of the communities within which the organizations operate. It contrasts with upward accountability through which senior managers are held accountable to higher-level boards of directors representing the interests of corporate principals. The shortcomings of upward accountability are seen to strengthen the case for incorporating downward accountability into corporate governance. The chapter identifies the potential benefits of downward accountability, examines practices through which it can be exercised, and reviews evidence on its performance impacts. While recognizing the limiting conditions and challenges to the successful implementation of downward accountability, these are not considered to be insurmountable.