Politics of the Corporation

Abstract

The corporate form and its capacity for agency is recognized in political theory, but not adequately understood. As a result, important shifts in the relative position of the state and the corporate form are not addressed. Starting with a historical exploration of the theory of the corporation, I show that the corporate form relies on multiple theoretical backgrounds, which makes it inconsistent. An important part of this inconsistency is the dominance of a post-1970s theory of the corporate form, which formed the background for New Public Management. This theory supported a reduced status of the state and its regulatory powers and an increase of the relative power of the corporate form. I evaluate some consequences of this inconsistent theory for the contemporary debate with regard to the 'demise of the state'.

Doxa of Shareholders and Owners: On the Threshold of Financialization

“…Both the Racon Holding's purchase of Invik (the Stenbeck family) described in the prelude of the case as well as the Wallenberg's sale of their A-shares in Scania, discussed under the sub-heading To carry out a take-over, were perceived by institutional investors as a breach of this tradition and deemed as inappropriate in the Swedish context. Such behaviour would probably be more expected in a context more like the one described by agency theory (Alchain & Demsetz, 1972;Fama, 1980;Jensen & Meckling, 1976;Lazonick & O'Sullivan, 2000) based on the idea of maximizing (the shareholders' own) cash flow, the threat of opportunistic self-serving behaviours, and a separation of ownership and control (see Stout, 2012;Veldman, 2013;Weinstein, 2012). It appears that in these cases, the Swedish controlling shareholders have been inspired in their behaviour by a more financialized environment.…”

“…Increasingly, the perception of the shareholder as the 'owner' of the firm, a perception embedded in the mainstream ideology of corporate governance, is being questioned (see e. g. Biondi, 2013;Ireland, 1999;Lazonick & O'Sullivan, 2000;Veldman, 2013;Weinstein, 2012). Instead, alternative conceptions have been promoted that distinguish the enterprise as a production entity from its legal form and view the shareholder as 'merely' owners of shares.…”

Corporation: Reification of the Corporate Form

“…Subsequently, the use of all kinds of anthropomorphic imagery (Nace, 2003) resulted in a rapid increase in the attribution of agency, ownership, and rights (Bowman, 1996;Harris, 2006;Ireland, 1999;McLean, 2004) to this construct that was increasingly depicted as singular legal 'subject' in and by itself. By the end of the nineteenth century, this process had progressed to the extent that the corporate form allowed for one 'entity' holding ownership over another 'entity', which enabled the holding company and operations across jurisdictional borders (Veldman, 2013). As a result of such singularization and objectification, it became possible to imagine that the corporate form would also be attributable with contracting agency, and would contract as a 'legal subject', not just outside the corporation or on behalf of the corporation, but also with the individuals inside the corporation (Maitland, 2003).…”

“…What's more, the strong ontological program in law and economics as well as the unclear ontological and epistemological status of the corporate form spill over into adjacent academic domains, such as accounting, management, and politics, most particularly by informing the way other social constructs, such as individuals, organizations, and states are imagined, both by themselves, and in relation to each other (Bowman, 1996;Naffine, 2003;Lederman, 2000;Schrader, 1993;Veldman, 2013;Wilks, 2013). The epistemological outcome of the reified status of the corporate form is, therefore, that it 'minimizes the range of reflection and choice, automatizes conduct in the socially prescribed channels and fixates the taken-for-granted perception of the world ' (Berger and Pullberg, 1965: 208).…”

Danish Foundations and Cooperatives as Forms of Corporate Governance: Origins and Impacts on Firm Strategies and Societies

“…Even where such companies were established the legal duties associated with joint stock limited liability were often unclear. The question of whether the firm should be run in the sole interests of the shareholders or whether the firm had an identity of its own over which a variety of claims (including the claims of the shareholders) could be made, was contested (Veldman 2013;Ireland 2010;Ireland 1999). Not until the 1980s could it be said that the priority of the shareholders' claims had become an accepted part of the discourse about the nature of firms and even then this was initially mainly within the US-UK corporate governance system (Davis 2009b).…”