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3 - The productive coalition model

from PART 1 - Theories of corporate governance

Published online by Cambridge University Press:  04 August 2010

Andrew Johnston
Andrew Johnston
Affiliation:
University of Queensland
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Summary

Introduction

‘One of the marks of a truly dominant intellectual paradigm is the difficulty people have in even imagining any alternative view.’

Although ‘the end of history for corporate law’ was glimpsed around the turn of the century, it appears to have been postponed following the arrival of fresh corporate governance and financial crises. As this book demonstrates, in Europe at least, the shareholder value model of corporate governance has not yet triumphed completely over the stakeholder model, either in law or in the realms of economic theory. After a brief discussion of political stakeholder theory and its legal manifestations, this chapter discusses the productive coalition model of corporate governance in detail. It then examines whether, and if so, how, the law can assist companies to operate as productive coalitions.

Political stakeholding

As long as demands that companies pursue shareholder value were based on a logic of property, they were generally opposed by a political stakeholding model, which emphasises the responsibility of companies to their employees, and sometimes to a broader range of stakeholders, including consumers, the environment, ‘the immediate community, and indeed, the general society’. Broader formulations of stakeholder theory have been heavily criticised in both legal and economic scholarship for indeterminacy, and for being of little use either in assessing management performance or in grounding concrete law reform proposals. While this is a fascinating debate from the perspective of the role of corporations in society, it is not directly relevant to our discussion.

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EC Regulation of Corporate Governance , pp. 59 - 104
Publisher: Cambridge University Press
Print publication year: 2009

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