This paper makes an attempt to integrate, using a heterodox approach, the capabilities perspective that raises the role of the manager's competences and the incomplete contract perspective that raises the role of agency problems, to describe how the Corporate Governance (CG) relationships work in highly competitive and complex environments. It provides a redefinition and reassessment of CG theoretical models according to the changing nature of the firm. This paper tries to describe the CG relationships through the interaction between authority, as the most valuable source of incentive for the manager for firm-specific investment, and responsibility, as a mechanism to avoid opportunistic behaviors. The interaction between them allows managers to solve hold-up problems before and after moral hazard problems. These two factors balance the incentive problem with the need of a constraint on the manager's activities and explain the way to encourage innovation and managerial creativity so as to achieve success for the firm and support the value creation processes.

The performance of a firm is strongly influenced by managerial decisions as to which markets to enter, what products to manufacture, how to price goods, how to respond to competitors' actions, and so on. The quality of these decisions depends not only on the ability of the managers but also on the incentives managers have that influence them to make choices that create value for stockholders. Assessing how mangers behave requires an understanding of the relationships between managers and stockholders—or, more specifically, understanding where the incentives of managers and stockholders may diverge—and understanding the effectiveness of various governance mechanisms in aligning those interests.

Nowadays, this topic has become more relevant to the changed nature of the firm (Rajan and Zingales, 2000b); the role of human capital, as an inalienable resource (Hart and Moore, 1994), has become very important in managing the firm in those environments where the source of competitive advantage is strongly based on knowledge and intangible resources (Nahapiet and Ghoshal, 1998).