Corporate Governance, Organization and the Firm

Corporate Governance, Organization and the Firm

Co-operation and Outsourcing in the Global Economy

New Perspectives on the Modern Corporation series

Edited by Mario Morroni

In recent years, applied studies have shown widespread, profound and increasing heterogeneity across firms in terms of their strategy, organization arrangement and performance. This book investigates the diversity of business firms, offering a picture of the different organizational settings they adopt in their endeavour to cope with increasing competitive pressure.

Chapter 2: The Stakeholder Corporate Governance View Revisited

Mirella Damiani

Subjects: business and management, corporate governance, economics and finance, corporate governance, industrial organisation


1 Mirella Damiani INTRODUCTION 2.1 New theories of the firm suggest ‘an alternative view in which the relationships among the people who participate in the production activity of firms are at the heart of the definition of the firm itself’ (Blair 1995). Along similar lines, a broader definition of the firm as a nexus of specific physical and human capital investments has been recently proposed by Rajan and Zingales (1998, 2001). In this broader view the ownership of physical assets is not the only source of authority and an alternative mechanism to allocate power and to motivate specific human capital investments may be identified: access, that is, ‘the ability to use, or work with, a critical resource’ (Rajan and Zingales (1998, p. 388). But this novel view has not yet fully ‘crystallized’ in terms of an alternative definition of corporate governance. Even if the relevance of human capital is commonly accepted, only limited research systematically explores the related implications in terms of corporate governance institutions.2 This chapter is an attempt to examine the interplay of labour relations and corporate governance mechanisms prevailing in some varieties of capitalism around the world. This will be done by firstly reconsidering the role of the market for corporate control and, secondly, labour incentives, two main pillars of corporate governance. Both the perspectives will lead to examine the principal agent problem in an integrated framework where the position of labour as a stakeholder plays an increasing crucial role and...

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