Who Should Control a Corporation? Toward a Contingency Stakeholder Model for Allocating Ownership Rights
David Bourget (Western Ontario)
David Chalmers (ANU, NYU)
Rafael De Clercq
Jack Alan Reynolds
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Journal of Business Ethics 103 (2):255-274 (2011)
A number of companies allocate ownership rights to stakeholders different from shareholders, despite the fact that the law attributes these rights to the equity holders. This article contributes to an understanding of this evidence by developing a contingency model for the allocation of ownership rights. The model sheds light on why companies, despite pressures from the law, vary in their allocation of ownership rights. The model is based on the assumption that corporations increase their chance to survive and prosper if the stakeholders supplying “critical contributions” receive the ownership rights. According to the model, “critical” contributions involve (1) contractual problems due to specific investments, long-term relationships, and low measurability; (2) the assumption of the uncertainty resting on the company; and (3) the supply of scarce and valuable resources. The model is dynamic because it also provides a basis for understanding why the allocation of ownership rights changes with time. Finally, the article presents the strategies companies can use to realize an efficient distribution of ownership rights among their stakeholders.
|Keywords||corporate governance ownership rights shareholder theory stakeholder theory|
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Citations of this work BETA
Caleb Bernacchio & Robert Couch (2015). The Virtue of Participatory Governance: A MacIntyrean Alternative to Shareholder Maximization. Business Ethics: A European Review 24 (S2):130-143.
Francesco Perrini, Angeloantonio Russo, Antonio Tencati & Clodia Vurro (2011). Deconstructing the Relationship Between Corporate Social and Financial Performance. Journal of Business Ethics 102 (S1):59-76.
Rae André (2012). Assessing the Accountability of the Benefit Corporation: Will This New Gray Sector Organization Enhance Corporate Social Responsibility? [REVIEW] Journal of Business Ethics 110 (1):133-150.
Christine Mallin, Giovanna Michelon & Davide Raggi (2013). Monitoring Intensity and Stakeholders' Orientation: How Does Governance Affect Social and Environmental Disclosure? [REVIEW] Journal of Business Ethics 114 (1):29-43.
John A. Parnell, Gregory J. Scott & Georgios Angelopoulos (2013). Benchmarking Tendencies in Managerial Mindsets: Prioritizing Stockholders and Stakeholders in Peru, South Africa, and the United States. Journal of Business Ethics 118 (3):589-605.
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