Could Sociocracy be the Way to MSME Governance?

Abstract

Abstract In an earlier article, we addressed the question: Should the MSMEs, that is, the micro, small and medium enterprises, be governed the corporate way? Drawing on (a) the contribution of the MSMEs to the economic and social development in their respective settings, (b) systemic nature of their ailments, (c) institutional and organisational contingency theory of corporate governance and (d) the theory of articulation (upward delegation) of decision-making, we suggested a model of articulation of the MSME governance (Saxena & Jagota, 2015). In this article, we delve deeper into the issue of the MSME governance with reference to the emerging paradigm of dynamic governance that is known in Europe and other parts of the world as sociocracy. The word sociocracy is derived from the Latin and Greek words socius (companion) and kratein (to govern). It implies the rule by the ‘socios’, people who have a social relationship with each other—as opposed to the democracy rule by the ‘demos’, the general mass of people. As a system of governance, it relies on consent-based decision-making through active self-disclosure and feedback. It is stated to streamline decision-making, kindle creativity, innovation and entrepreneurial spirit and heighten productivity via individual engagement, commitment and empowerment. We posit that such a system of governance is particularly suitable for ethnic entrepreneurship, natural business clusters and the social and solidarity economy that many a country in Asia and Africa typify. In this article, we penetrate deeper into the functioning of representative clusters and communities and delineate principles and practices that could provide the edifice of the sociocratic architecture and dynamics of the MSME governance.