Abstract

This paper evaluates the validity of three theoretical paradigms in corporate governance: shareholder theory, stakeholder theory and stewardship theory. It assesses the philosophical basis of each using elements of engineering control theory, cybernetics and the political science literature. I conclude that neither shareholder nor stakeholder theory offers an effective basis for corporate governance, but that stewardship is the direction in which corporate governance practice should evolve, if organisations are to deliver benefits to both their owners and other beneficiaries whilst not significantly harming the interests of other groups.