Stakeholder theory, corporate governance and public management: What can the history of state-run enterprises teach us in the post-enron era?
David Bourget (Western Ontario)
David Chalmers (ANU, NYU)
Rafael De Clercq
Jack Alan Reynolds
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Journal of Business Ethics 53 (3):247-265 (2004)
This paper raises a challenge for those who assume that corporate social responsibility and good corporate governance naturally go hand-in-hand. The recent spate of corporate scandals in the United States and elsewhere has dramatized, once again, the severity of the agency problems that may arise between managers and shareholders. These scandals remind us that even if we adopt an extremely narrow concept of managerial responsibility – such that we recognize no social responsibility beyond the obligation to maximize shareholder value – there may still be very serious difficulties associated with the effective institutionalization of this obligation. It also suggests that if we broaden managerial responsibility, in order to include extensive responsibilities to various other stakeholder groups, we may seriously exacerbate these agency problems, making it even more difficult to impose effective discipline upon managers. Hence, our central question: is a strong commitment to corporate social responsibility institutionally feasible? In searching for an answer, we revisit the history of public management, and in particular, the experience of social-democratic governments during the 1960s and 1970s, and their attempts to impose social responsibility upon the managers of nationalized industries. The results of this inquiry are less than encouraging for proponents of corporate social responsibility. In fact, the history of public-sector management presents a number of stark warnings, which we would do well to heed if we wish to reconcile robust social responsibility with effective corporate governance.
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Pierre-Yves Néron (2010). Business and the Polis: What Does It Mean to See Corporations as Political Actors? [REVIEW] Journal of Business Ethics 94 (3):333-352.
Wayne Norman (2011). Business Ethics as Self-Regulation: Why Principles That Ground Regulations Should Be Used to Ground Beyond-Compliance Norms as Well. [REVIEW] Journal of Business Ethics 102 (S1):43-57.
A. J. W. Bennett (2011). Learning to Be Job Ready: Strategies for Greater Social Inclusion in Public Sector Employment. [REVIEW] Journal of Business Ethics 104 (3):347-359.
Joseph Heath (2011). Business Ethics and the 'End of History' in Corporate Law. Journal of Business Ethics 102 (S1):5-20.
Yuval Deutsch & Mike Valente (2013). Compensating Outside Directors with Stock: The Impact on Non-Primary Stakeholders. [REVIEW] Journal of Business Ethics 116 (1):67-85.
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