Digitally Enabled Business Models: A Challenging Agenda for Corporate Governance Research

Abstract Corporate governance has long been shaped by agency theory, which views firms as contractual relationships between shareholders and managers with divergent interests. Traditionally, this perspective emphasized constraining managerial discretion to prevent inefficiencies such as wasteful investments. Over time, governance research expanded to consider legitimacy, strategic alignment, and the value-adding role of boards. Yet tensions persist, with many approaches still privileging monitoring and compliance over empowerment and adaptive oversight. The rise of digitally enabled business models intensifies these challenges. Technologies such as datafication, artificial intelligence, and interconnected platforms have transformed how firms create, deliver, and capture value. These models are not merely extensions of traditional strategies but new architectures of interdependent activities, often spanning multiple firms and ecosystems. While they enable efficiency, scale, and innovation, they also introduce novel forms of systemic risk that strain conventional governance frameworks. Three categories of risk are especially salient. Synchronization risk refers to simultaneous failures across tightly coupled digital, physical, and human systems. What appears as seamless integration may mask fragile alignments, where disruption in one layer can reverberate across the whole. Propagation risk captures the rapid spread of disruptions through digitally connected ecosystems. Unlike buffered supply chains, real-time data exchanges and shared platforms allow failures to cascade laterally across boundaries with little visibility or control. Nesting risk describes latent vulnerabilities embedded in algorithms, code, and digital infrastructures. These accumulate through opaque assumptions and untested interactions, surfacing only under certain conditions and often defying clear attribution. Together, these risks expose the fragility of digital interdependence and the inadequacy of governance models rooted in linear causality and isolated control points. To address these challenges, the business model perspective offers a valuable lens. By emphasizing granularity—the detailed mapping of activity configurations—and interdependence—the relationships among those activities—it enables governance actors to identify vulnerabilities, monitor systemic dependencies, and design adaptive oversight mechanisms. This approach complements existing theories by grounding governance in the actual architecture of value creation rather than abstract principles of control alone. Adopting such a perspective requires significant shifts in governance practice. Boards must deploy real-time monitoring tools, scenario-based simulations, and algorithmic audits, moving beyond firm-centric frameworks toward ecosystem-aware oversight. Yet governance must also confront ethical dilemmas, power asymmetries, and regulatory volatility that the business model lens alone cannot resolve. In sum, digitally enabled business models reshape both opportunities and risks. They demand a reframing of corporate governance that combines the analytical strengths of the business model perspective with broader institutional, ethical, and regulatory insights. Only through such integration can governance remain effective and legitimate in an era defined by digital interdependence and systemic complexity.