Starbuck, WH 2014, ‘Why corporate governance deserves serious and creative thought’, Academy of Management Perspectives, vol. 28, no. 1, pp. 15–21.
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The Academy of Management Perspectives
2014, Vol. 28, No. 1, 15–21.
WHY CORPORATE GOVERNANCE DESERVES SERIOUS AND
WILLIAM H. STARBUCK
University of Oregon
In their article, “Learning From Ancient Athens: Demarchy and Corporate Governance” (this issue), Zeitoun, Osterloh, and Frey contribute a useful summary of the debates about corporate governance and suggest a novel way to involve stakeholders in governance. Picking up from their discussion on corporate governance, this paper raises four issues. First, different kinds of corporations should have different kinds of governance policies. In particular, large global corporations are so important and so distinctive that they deserve special thought. Second, humanity must set priorities among goals. Governance policies that enable an individual corporation to operate effectively right now may cause long-term harm to humanity and the earth, and policies that benefit humanity and the earth may harm individual corporations. It is not clear who should set such priorities. Third, ideas about governance should consider technological and social changes that are propelling corporations toward entirely new forms. Much of the debate about corporate governance has focused on issues relating to 20th-century organizations and 20th-century societies, and significant changes in governance will take decades to take effect. Last, boards of directors exercise rather weak governance in comparison with governance by managerial hierarchies. Thus, it is more important to improve managerial governance. As commercially and politically neutral institutions that emphasize open, fact-based discussion, universities could usefully enhance the quality of governance by senior executives as well as outside stakeholders.
build on the reputations of colleges and universities as commercially and politically neutral institutions to improve current corporate governance through open, fact-based discussions by the people
who actually govern.
Indeed, history indicates that scholarly debates
exerted significant influence on today’s governmental and legal policies and actions regarding corporations (Starbuck, 2003). For example, during
the 1800s, proprietorships and partnerships were
much more prevalent than joint-stock companies
and corporations, and people appear to have seen
little distinction between these organizational
forms (Lamoreaux, 2004; Mark, 1987). Each business organization had to have a unique charter, and these charters did not limit the liabilities of owners.
It was scholarly debates, especially during the late
19th and early 20th centuries, that established the
differences between partnerships and corporations.
Zeitoun, Osterloh, and Frey make valuable contributions by reminding us that corporate governance has extremely important influence on the future of the world and by stimulating discussion
of governance by management scholars. Management scholars should be among the leaders of debates about desirable changes in corporate governance. Such an important task should not depend solely on judges and politicians. Although debates
about governance should involve many people
with a wide range of diverse ideas, scholars have
special responsibilities as both thought leaders...
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