The Shareholder Value Mess (And How to Clean it Up)

Robé, Jean-Philippe

doi:10.1515/ael-2019-0039

Cited by 9 publications

(8 citation statements)

References 17 publications

(3 reference statements)

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“…Although corporate power should be treated as any other form of power , with a duty to consider the various interests affected by the firm's operations, corporate prerogatives are treated as a property with no other purpose than the satisfaction of the ‘owner’. Our species may not survive this ‘mandate’ built on a mistake induced by the scientific use of words in their ‘everyday meaning’ (Robé, 2019).…”

Section: Day-to-day Language Can Be An Impediment To Scientific Under...mentioning

confidence: 99%

Firms versus corporations: a rebuttal of Simon Deakin, David Gindis, and Geoffrey M. Hodgson

Robé

2021

Journal of Institutional Economics

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I share the view expressed by Simon Deakin, David Gindis, and Geoffrey Hodgson (‘DGH’) that social scientists need to consider the constitutive role of law in their disciplines. This is particularly the case for economists working on the theory of the firm and on institutions more generally. Their analyses are often built on assumptions about the legal system which do not correspond to reality. One major issue is the generalized confusion between the concepts of ‘corporation’ and ‘firm’. In day-to-day parlance, the two words are synonyms. But, when the constitutive role of law is considered, the word corporation corresponds to a specific legal device which should be clearly differentiated from a less-specific concept which can be called a ‘firm’ or an ‘enterprise’. The notion of firm usually corresponds to the economic organization of various resources via contracts to produce goods or services. The corporation is a legal institution with peculiar characteristics, including a potentially eternal legal personality, an asset partitioning effect, and several layers of separations of ownership and control. Corporations are often used to legally structure large firms because they are very efficient legal devices to concentrate capital. But, firms are practically and conceptually different from the corporation(s) used to structure them. DGH consider that the understanding of what a firm is should not go against general, day-to-day understanding. In their view, although not all firms are corporations, all corporations are firms. I disagree. Only by clearly explaining that corporations are not firms can lawyers help social scientists consider the constitutive role of the law of corporations in the structuring of our present-day economy.

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Section: Day-to-day Language Can Be An Impediment To Scientific Under...mentioning

confidence: 99%

Firms versus corporations: a rebuttal of Simon Deakin, David Gindis, and Geoffrey M. Hodgson

Robé

2021

Journal of Institutional Economics

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“…In addition to studies that have restricted the relevance of institutional demands and legitimacy within the borders of national contexts (Busenitz et al, 2000; Kostova and Roth, 2002; Kostova and Zaheer, 1999; Lu, 2002; Peng et al, 2009; Phillips et al, 2009), our study shows that the institutional demands of cultural rationalization, as well as local institutional demands, construct organizations as global actors with a specific degree of global identity. In this sense, our study points to the relevance of the theoretical distinction between organizations as self‐effective global actors and the extension of corporate structures and business activities across national borders (King et al, 2010; Lan and Heracleous, 2010; Robé, 2020). [ 13 ]…”

Section: Discussionmentioning

confidence: 59%

The Global Orientation of Organizations: An Analysis of the Effects of Global Cultural Rationalization and National Institutional Traditions

Goldenstein

Poschmann

Hunoldt

2022

J Management Studies

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Most institutional studies have conceptualized institutions within the borders of national contexts as relevant to the global orientation of organizations. The world society approach in institutional theory, however, highlights the existence of a global institutional realm (i.e., driven by a process of cultural rationalization) and proposes that as a consequence of both global and national institutional demands, organizations are constructed as actors with global identities – the orientation of an organization towards the world or away from it. We argue that the global identity of organizations varies with the national institutional traditions within which organizations originate, the exposure of organizations to various instantiations of cultural rationalization within national contexts, and the extent to which organizations are governed by traditional forms of authority (i.e., family, nation state). We tested our hypotheses empirically, using data from 366 corporations listed in major stock indices in 22 countries around the globe. The empirical results support our argument.

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“…Shareholder‐oriented governance, a mode of governance theoretically justified and normatively promoted by agency theory's vision of the firm, is being denounced in all academic communities (Anderson, 2015; Bower & Paine, 2017; Favereau, 2016; Robé, 2019; Zingales, 2019). Its many failures—unsteady long‐term sustainability, lack of innovation, capital accumulation to the detriment of productive investment, and corporate scandals—are increasingly associated to a “conceptual crisis in the theory of the business firm” (Zollo & Freeman, 2010, p. 191), prompting scholars to question the economic theories of the firm.…”

Section: Introductionmentioning

confidence: 99%

The deontic basis of the firm—Implications for corporate governance

Lopes

2022

European Management Review

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The paper presents a conception of firms' efficiency that breaks with the agency theory of the firm, which sees the efficiency of firms as no different in nature from that of markets. We argue that firms are efficient relative to markets, thanks to two kinds of social interaction, namely, interpersonal interactions and compliance with authority; these interactions take place among workers engaged in a collective productive venture and could not develop in markets. Two kinds of norm emerge from these interactions that create the rights and obligations needed for horizontal and vertical cooperation; the functioning of firms and their specific efficiency thus have a deontic basis. Just as shareholder-oriented governance is normatively derived from agency theory's vision of the firm, which has succeeded in powerfully influencing corporate law and corporate governance since the 1980s, participatory governance is the governance mode that normatively derives from our understanding of the firm.

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The Shareholder Value Mess (And How to Clean it Up)

Abstract: Shareholder Value is not only a myth, as forcefully demonstrated by Lynn Stout. It has also led to a mess under the form of extensive negative externalities and growing inequalities. A different measure of value creation is urgently required.

Cited by 9 publications

References 17 publications

Firms versus corporations: a rebuttal of Simon Deakin, David Gindis, and Geoffrey M. Hodgson

Firms versus corporations: a rebuttal of Simon Deakin, David Gindis, and Geoffrey M. Hodgson

The Global Orientation of Organizations: An Analysis of the Effects of Global Cultural Rationalization and National Institutional Traditions

The deontic basis of the firm—Implications for corporate governance

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