An Aristotelian Perspective
Chapter 4: Shareholders, Stakeholders and Citizens
Having studied in the previous chapter the ends proper to states and to ﬁrms, the next step in developing the analogy between the two institutions consists in examining the diﬀerent kinds of people that comprise each of them. This will provide us with a better understanding of the various parties involved in corporate governance and the role that each one is supposed to play. I WHO CONSTITUTES THE FIRM? FROM SHAREHOLDERS TO CORPORATE CITIZENS To the question of who constitutes the corporation, many would ﬁnd ‘shareholders’ a ﬁtting initial response. After all, without their money or ﬁnancial capital, the funds necessary to support any economic activity would be sorely lacking. Although there will always be ﬁrms managed by shareholder-owners – think of IKEA with Ingvar Kamprad, Virgin with Richard Branson and Benetton with Luciano Benetton, for example – among bigger corporations, however, this is more of an exception than the rule. The sheer size of the corporation requires that other people work for it, apart from the owner and the members of the owner’s family. And these people normally work in exchange for a salary or a wage. Hence, while shareholders receive interest on their capital, workers receive salaries for their labour. All those who work for a corporation without owning shares in it may be said to belong (broadly) to the professional or managerial class. The division between shareholders and managers has also been provoked, apart from company size, by the necessary specialization of tasks (Berle and Means, 1932). Increased...
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