Chapter

Transforming the Debates on Corporate Governance

Mary O'Sullivan

in Contests for Corporate Control

Published in print June 2001 | ISBN: 9780199244867
Published online November 2003 | e-ISBN: 9780191596735 | DOI: http://dx.doi.org/10.1093/0199244863.003.0003
 Transforming the Debates on Corporate Governance

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The Anglo‐American debates on corporate governance that have taken place over the last two decades have been largely confined to shareholder theory, which is the dominant perspective, and stakeholder theory, which is its main challenger. The shareholder theory of corporate governance is discussed in Sect. 2.2 of the chapter, which argues that the theory precludes an understanding of the nature of corporate governance required for innovation as a result of its failure to incorporate a systematic analysis of innovation, and more generally, of production, in its conceptual framework. Rather, taking its lead from neoclassical economics (as discussed in Sect. 2.3), it regards economic activity as synonymous with exchange and, as a result, conceives of resource allocation as a transaction that is reversible, individual, and optimal. In the academic arena, one of the most sophisticated proponents of the stakeholder argument is Margaret Blair, an economist at the Brookings Institution, and her arguments are addressed in the discussion of the stakeholder theory of corporate governance in Section 2.3. The last main section of the chapter, Sect. 2.4, discusses organizational control theory––its logic, the theory in relation to innovation, and its institutional foundations.

Keywords: corporate governance; innovation; institutions; organizational control theory; production; shareholder theory; stakeholder theory

Chapter.  15046 words. 

Subjects: Microeconomics

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