Inequality in the 21st Century

The London School of Economics & Political Science

London, UK

July 02 - 04, 2015

The dominance of shareholder-oriented corporate governance has been in question for some time, both in academic and policy circles – even though the latter might still show signs of bias towards favoring shareholders over stakeholders in the governance of firms. Both in practice and in theory, a plurality of corporate governance orientations and arrangements is now widely acknowledged to exist – and, where not, to be desirable. The fact – and the necessity – are conceptualized in widely varying disciplinary terms, from the Williamsonian branch of neo-institutional economics to corporate law scholarship. In the empirical literature, particular attention has been paid to the variation of corporate governance arrangements across countries, along with a variation in the strength and power of different categories of stakeholders.

This session will, instead, focus on the plurality of corporate governance arrangements within (national) corporate governance systems. The papers presented here will address this issue from both an empirical and theoretical perspective, and with a specific focus on two countries: the United Kingdom and the Netherlands, where the shareholder-stakeholder divide is very salient.

The session will discuss, in particular, two key issues in the corporate governance debate, which are nevertheless not exhaustively treated by the literature. First, the session will investigate the extent to which alternative corporate governance orientations and arrangements co-exist within a single institutional framework, and what impact can such co-existence have over social and economic outcomes. This question builds on a well-established literature on the links between corporate governance and performance. The paper by Lambalk and de Graaf analyze the co-existence of mutual and joint-stock providers of insurance in the Netherlands; they show not only that the two corporate governance arrangements co-exist within the industry: these different arrangements, in particular with regard to board composition and function, produce different performance outcomes that influence the future of the industry itself. The paper by Lewis, on the other hand, shows the hybrid nature, or rather the tensions within a particular corporate governance arrangement in a particular firm, and how these tensions can be related to the travails undergone by this firm in the past few years.

The latter case raises the issue of whether the stakeholder vs. shareholder conceptualization of the corporate governance debate does adequately capture the current practice of corporate governance, and whether it is well suited to the present nature of many corporations. This is the second issue addressed in this session. The paper by Cranmer explores the multiple types of responsibilities involved in the very idea of the corporation. The paper by Nordberg and Katelouzou take the question addressed by Lewis further, by confronting existing academic debates and recent policy changes shaped by these debates, geared to favour the involvement of institutional investors in the governance of corporations, to the evolving nature of the corporations themselves. Is there, beyond the shareholder-stakeholder divide, an undefined alternative that corporate governance theories need to account for? How can one understand that particular “alternative within”?