The Shareholder Value Principle: The Governance and Control of Corporations in the United States

In recent decades, maximization of shareholder value has been a dominant business principle in the United States. This article reviews sociological accounts about the emergence, diffusion, and reality of the shareholder value principle. Although mainstream research in law and economics on corporate governance embraces the shareholder value principle and provides theoretical justifications for it, sociologists consider the shareholder value principle to be a product of specific economic, political, and ideological environments. Based on sociological research that reveals normative and political foundations of the shareholder value principle, I argue that the shareholder value principle is far from hegemonic in the contemporary United States. Indeed, faced with shareholder primacy, corporations and top executives have adopted various strategies, such as perfunctory conformity and symbolic acquiescence. The result is a highly volatile and contested system of corporate governance today.     

Governing Global Supply Chain Sustainability through the Ethical Audit Regime

Over the past two decades multinational corporations have been expanding ‘ethical’ audit programs with the stated aim of reducing the risk of sourcing from suppliers with poor practices. A wave of government regulation—such as the California Transparency in Supply Chains Act (2012) and the UK Modern Slavery Act (2015)—has enhanced the legitimacy of auditing as a tool to govern labor and environmental standards in global supply chains, backed by a broad range of civil society actors championing audits as a way of promoting corporate accountability. The growing adoption of auditing as a governance tool is a puzzling trend, given two decades of evidence that audit programs generally fail to detect or correct labor and environmental problems in global supply chains. Drawing on original field research, this article shows that in spite of its growing legitimacy and traction among government and civil society actors, the audit regime continues to respond to and protect industry commercial interests. Conceptually, the article challenges prevailing characterizations of the audit regime as a technical, neutral, and benign tool of supply chain governance, and highlights its embeddedness in struggles over the legitimacy and effectiveness of the industry-led privatization of global governance.     

Corporations and the State in the Global Era: The Case of Seaboard Farms and Texas*

Abstract Employing the case of the expansion and regulation of hog confined animal feeding operations (CAFO) in Texas combined with the actions of the transnational agri‐food corporation Seaboard Farms, Inc., this paper probes the relationship between the state and corporations in the global era. It specifically investigates the ability of the state to control agri‐food corporations in a context in which the hyper‐mobility of capital has increasingly allowed corporations to by‐pass state regulations and requirements. Salient literature is reviewed by grouping it into three camps: the first views the state as largely controlled by corporations; the second stresses the powers left to the state and the fact that corporations need state assistance to successfully operate in the current global economy; and the third acknowledges the crisis of the nation‐state under globalization but maintains that the state has retained some ability to resist globalization forces. The case study documents the expansion of Seaboard Farms' hog operations in the Panhandle Region of Texas and nearby states and its interaction with local and state governments and agencies. The article indicates that the relationship between transnational corporations and the state is contradictory. Its source rests on the fracture between varying postures maintained by the state and the relatively homogenous behavior of the CAFO corporations. The case also reveals that the state's limited control of corporate actions is facilitated by state strategies; that corporate actions are successful if corporations enlist the cooperation of the state; and the state is able to control resistance and legitimize its actions to its constituencies. These conditions, however, do not prevent the emergence of anti‐corporate resistance at local and state levels. In the search for new forms of socioeconomic development, local residents and their leaders should be aware of corporations' ability to affect state action, state postures that favor corporate designs, and the fact that successful opposition to corporate designs can be, and is, carried out.     

The clash between legal and business logic: business groups in the new Israeli corporate law

Planned institutional change presents an uncommon opportunity for institutional entrepreneurs to advance their innovations. The dispute of why the new Israeli corporate law, enacted at the end of 1990s, does not refer to business groups, which form a salient part of Israeli big business, opens a window through which the conflict between two different and competing types of logic may be viewed. The carriers of legal-professional logic were legal academics and state officials, who opposed the inclusion of a special chapter or any other reference to business groups within the new corporate law based on US legal ideas, and especially on the ‘Law and Economics’ perspective. In contrast, the carriers of business logic were interest groups and professional associations that sought to appropriate the legal and economic advantages resulting from organizing business in the form of business groups within the new law, without protecting the rights of minority shareholders and, more importantly, without enabling state agencies to intervene in the governance of their businesses.     

Transformation des deutschen Unternehmenskontroll-Systems?

This study contributes empirically to the corporate governance debate that has been revived since Mannesmann was taken over by Vodafone Airtouch. Whereas the German corporate governance system has long been described as a network arrangement of mutually interlinked large companies and banks, its British counterpart is a market for corporate control. Against this background, Mannesmann can be either regarded as an anomaly that contradicts previous evidence, or as an indicator of a major systemic shift. Examination of these two hypotheses on the micro and meso level reveals that the German corporate governance-system is in a hybrid state: while most large German companies are seemingly not affected by institutional changes since the mid 1990s, a few, highly internationalized corporations can be said to be exposed to conditions similar to that of the British market for corporate control. In 1999 Mannesmann was one of them. Thus, there has been a segmentation of large German companies with respect to corporate governance on the aggregate level. However, an active market for corporate control — such as the British one — is not in sight.     

The role of private corporations in regional planning and development: Opportunities and challenges for the governance of housing and land use

There is a broad consensus that the corporate sector has an active role in facilitating community development through corporate-community investment. However, there remains uncertainty as to how much the sector should invest without taking on responsibilities and influencing decisions which are traditionally within the realm of the state. This paper explores the contemporary role of mining companies in regional governance through a case study of housing and residential land use planning and supply within the Bowen Basin coal mining and coal seam gas extraction region in Queensland, Australia. Mining companies were found to have a broad role in planning and development with far-reaching implications for land use and the wider regional community. These arrangements have emerged in response to corporate sensibilities, some recent policy requirements and most importantly, in pragmatic response to the institutional void apparent in many regional communities. In the absence of an effective regional framework with a clear and defined role for governments and corporations, powerful corporate interests risk effectively ‘capturing’ the regional development agenda within a framework that works on short-term paternalism rather than long-term regional partnerships. This also has implications for the efficiency of governance. Stronger institutional arrangements need to be developed to strengthen the capacity of the state to oversee these relationships. Regional governance and planning theory also needs to address this deficit.     

Das deutsche System der Corporate Governance zwischen Persistenz und Konvergenz

We discuss the development of German corporate governance in light of the hostile takeover of Mannesmann by Vodafone. The paper criticizes the stability hypothesis of Thomas Heinze in KZFSS 4/2001 and demonstrates the deep changes within German corporate governance, which we describe as hybrid convergence. Given trade-offs between corporate growth and profitability, the preferences of German management have changed towards greater emphasis on shareholder returns. This change is evident in the implementation of new profitability targets, end of cross-subsidization and concentration on core competences. Through incremental changes throughout the 1990s, the importance of market mechanisms has increased and been internalized within corporations. German corporate governance is moving toward a U.S. market model through hybrid processes of institutional layering and conversion.     

Corporate-governmental networks in the Netherlands

Corporate networks studies have been restricted mainly to the private or business sectors. Network analyses involving both corporations and state or government agencies have been extremely rare. In this paper, the intercorporate network of interlocking directorates in the Netherlands, based on 86 large corporations and financial institutions, is studied in terms of a bipartite corporate—governmental network which arises from the interlocking memberships linking these corporations with major committees, agencies and similar centers of decision in the public sector or central state mechanisms in the Netherlands. The corporations, representing 27 industrial sectors, have been related to government and state agencies in 28 policy sectors. In this exploratory analysis the two heavy industries, metal/shipbuilding and chemicals/oil stand out clearly. With respect to the 17 central firms the results demonstrate consistent correspondence between their central position in the Dutch corporate network and the degree of their interlocks with policy sectors in the state. The results also show that the interlocks are overwhelmingly linked with the two policy sectors “economic affairs” and “education and sciences”. Hence a more detailed analysis of the interlocks with these two policy sectors is reported.     

THE TRANSFORMATION FROM MULTIDIVISIONAL FORM TO CORPORATE GROUPS OF SUBSIDIARIES IN THE 1980s:

In the 1980s, the corporate form shifted from multidivisional forms to corporate groups of subsidiaries. Although many aspects of corporate change during the 1980s have been examined, the magnitude and nature of changes in corporate form have received relatively little attention. Moreover, this transformation of corporate form has been inadequately explained by the dominant theoretical perspectives on corporate form—managerialism, institutionalism, and agency theory. A new theory that incorporates dimensions of the existing perspectives is presented. This perspective maintains that corporate change occurs as a dialectical process, which in the 1980s involved a shift of corporate control from managers to owners, resulting from a crisis in the accumulation of capital in the corporation. After gaining control through institutional investments, owners insisted on greater return on their investments. Mergers and acquisitions transferred corporate capital from corporations, controlled by managers, to shareholders. The relative utility of this perspective compared to existing perspectives for explaining the transformation of corporate form in the 1980s is demonstrated, and hypotheses for understanding changes in corporate form in the 1990s are proposed.     

Transnational business feminism: Exporting feminism in the global economy

Business feminism is a brand of feminism that privileges women's advancement in the corporate hierarchy and centres corporations as the ultimate purveyors of gender equity. While scholars have critiqued this formulation, little empirical research has analysed the processes that guide the dissemination and translation of business feminism in organizational settings within global corporate networks. This article advances scholarship on the global processes that drive the export of business feminism logics. We analyse the process of dissemination of business feminism from the headquarters of multinational corporations to corporate hubs located in Hungary. This process relies on women executives who are charged with translating policies and practices originating in the headquarters of western corporations. In‐depth interviews with women executives charged with implementing corporate policies reveal the ways in which business feminism is interpreted, modified and/or resisted by actors within organizational settings.     

Sewing Responsibility: Media Discourse,Corporate Deviance,and the Rana Plaza Collapse

On the morning of April 24, 2013, Rana Plaza, an eight-story building housing five garment factories collapsed killing 1,129 workers and injuring 2,500. It quickly emerged that U.S.- and European-based retailers were sourcing items produced at Rana Plaza. This paper takes the Rana Plaza collapse as a case study of how media discourse constructs ideas about corporate deviance, responsibility, and risk management in the global supply chain. Guided by the crime news frame and global risk governance, newspaper articles from the U.S. and Bangladesh are used for a content analysis. This paper expands the literature of corporate crime and global risk governance to include the fast fashion industry. We find little evidence that either country discusses Rana Plaza as corporate deviance or the criminal condemnation of corporations. We find evidence that global risk governance is nationalized, as U.S. papers shift blame away from U.S. corporations and onto Bangladesh.     

Corporate Transformation to the Multilayered Subsidiary Form: Changing Economic Conditions and State Business Policy

Despite the prevalence of corporate change in the last decade, researchers have not examined whether a change occurred in the corporate form. The analysis here presents a historical case study of a large U.S. corporation and quantitative data on the largest 100 U.S. industrial corporations. The case study examines the effects of changing economic conditions and state business policy on the corporate form. This study demonstrates that the corporation changed to a multilayered subsidiary form (MLSF): a corporation with a hierarchy of two or more levels of subsidiary corporations with a parent company at the top of the hierarchy operating as a management company. Whereas rising debt and increasing competition in the 1970s and 1980s undermined corporations' capacity to accumulate capital, changes in state business policy in the mid-1980s provided the political-legal structure for corporations to restructure their assets as subsidiary corporations tax free. Changes in state business policy also provided a means for corporations to merge, acquire, and spin-off subsidiary corporations tax free. Quantitative data on the 100 largest U.S. industrial corporations show that while the multidivisional form decreased, the MLSF increased between 1981 and 1993. Findings support a capital dependence framework. The MLSF constructs liability firewalls among corporate entities and creates internal capital markets, reducing dependence on external capital markets.     

CORPORATE TAX LAWS, CORPORATE RESTRUCTURING, AND SUBSIDIARIZATION OF CORPORATE FORM, 1981–1995

Between 1981 and 1995 the dominant form of Fortune 500 firms changed from the multidivisional form to the multisubsidiary form (Zey and Camp 1996). The explanation for the movement toward subsidiarization originates in changes during the late 1970s and 1980s in the political economy, the relationship between corporations and capital, and the regulation of corporations. As a result of the declining capital accumulation of the 1970s, the federal government instituted two measures of corporate welfare, the Tax Reform Act of 1986 (TRA86) and the Revenue Act of 1987 (RA87), that provided corporations with nontaxable ways to restructure their acquisitions and divisions as subsidiaries. Thus, by the process of subsidiarization, corporations were able to continue capital flows. We examine the increase in subsidiarization from 1981–1995 as a means of assessing the utility of four theoretical perspectives to explain change in corporate form. A one-way random effects panel analysis demonstrates how corporate financial conditions, national business laws, and organizational characteristics combine to affect the rate of subsidiarization of U.S. corporations. Separate panel models for 1981–1985 (pre- TRA86) and 1986–1995 (post- TRA86) reveal that changes in corporate tax laws affect capital accumulation and result in significant change in corporate form. This analysis supports the structural political economy contingency theory arguing that change in capital accumulation, brought about by macro changes in political legal conditions of corporations, leads to the transformation of corporate form.     

New Modes of Governance in the External Dimension of EU Migration Policy

Against the background of the limited “hard” law measures in place on external migration, the EU institutions are attempting to use a more differentiated approach to migration. This is evidenced by both the Stockholm Programme and the Global Approach to Migration (2005) which rely less on binding instruments and more on flexible, coordinated measures to meet their goals. This article discusses whether these measures can be understood as “new modes of governance” (NMG), which have only rarely been discussed insofar as the external sphere of EU governance is concerned. The article will also investigate the extent to which the initiatives are already in place, contextualising them in the broader debates on new governance and the conduct of the internal and external dimensions of the EU's system of governance. The article concludes that new modes of governance are indeed present in the external dimension of EU migration policy and that understanding them as such helps towards a better understanding of the contemporary state of policymaking at EU level.     

Motives of corporate political donations: industry regulation,subjective judgement and the origins of pragmatic and ideological corporations

What motivates corporate political action? Are corporations motivated by their own narrow economic self‐interest; are they committed to pursuing larger class interests; or are corporations instruments for status groups to pursue their own agendas? Sociologists have been divided over this question for much of the last century. This paper introduces a novel case – that of Australia – and an extensive dataset of over 1,500 corporations and 7,500 directors. The paper attempts to understand the motives of corporate political action by examining patterns of corporate political donations. Using statistical modelling, supported by qualitative evidence, the paper argues that, in the Australian case, corporate political action is largely motivated by the narrow economic self‐interest of individual corporations. Firms’ interests are, consistent with regulatory environment theory, defined by the nature of government regulation in their industry: those in highly regulated industries (such as banking) and those dependent on government support (such as defence) tend to adopt a strategy of hedging their political support, and make bipartisan donations (to both major parties). In contrast, firms facing hostile regulation (such as timber or mining), and those without strong dependence on state support (such as small companies) tend to adopt a strategy of conservative partisanship, and make conservative‐only donations. This paper argues that regulatory environment theory needs to be modified to incorporate greater emphasis on the subjective political judgements of corporations facing hostile regulation: a corporation's adoption of conservative partisanship or hedging is not just a product of the objective regulation they face, but also whether corporate leaders judge such regulation as politically inevitable or something that can be resisted. Such a judgement is highly subjective, introducing a dynamic and unpredictable dimension to corporate political action.     

中东地区的防核扩散治理机制建设探析

本文以机制建设为分析视角,讨论中东地区的防核扩散治理机制建设。本文认为,中东国家若以地区安全论坛为对话平台,通过在争议较小的非传统安全领域开展的合作治理行动增进信任,在防核扩散问题上引入“分步走”的治理措施,将更有可能在防扩散治理机制建设方面取得进展。     

Perceptions of Justice in the Making: Rescaling of Customary Law in Post-Suharto Maluku,Indonesia

This article questions how successful neo-traditional law has been in providing access to justice to Kei Islanders of Maluku, Eastern Indonesia during recent political transitions. It describes the prevailing model of justice in which traditional law draws some of its authority from the state but provides its own normative framework for addressing community disputes. After the fall of Suharto's New Order regime, people began to apply neo-traditional law to ethnic and resource conflicts, arguing that it took precedence over state law in these emerging domains. Although the neo-traditionalist revival affirmed the autonomy of traditional legal institutions, actual legal procedures and outcomes depended on the response of state authorities and national publics to newly activated traditional normative frameworks. The politics of legality in post-Suharto Indonesia have produced increasingly state-oriented models of justice, but legal outcomes still determine the choice between different normative frameworks.     

Gender Equality and Corporate Governance: Policy Strategies in Norway and New Zealand

Advancing gender equality in the labour market continues to be a policy objective in many OECD countries. Wide national variations are evident in strategies and accomplishments towards improving gender equality at all levels of the labour market, including senior management and corporate governance roles. This article compares policy strategies in Norway and New Zealand directed towards achieving gender equality in the governance of corporate institutions. A principal feature of the New Zealand strategy has been a soft regulation approach in the form of advocacy and encouragement of equal employment opportunity policies, awareness‐raising and benchmarking. For Norway the use of legislation in the form of quotas and affirmative action programmes has been the predominant strategy. Using empirical data collected in 2004–2005 on women's perceptions and experiences of corporate governance participation, this article critically examines these different policy strategies.     

THE IMPORTANCE OF LEGAL FORM OF ORGANIZATION ON SMALL CORPORATION EXTERNAL FINANCING

This article quantitatively evaluates the impact of legal form of organization (LFO) choices, C versus S corporation, on small business external financing. A treatment effect model is formulated and estimated to examine the relationship between corporate types and chances of obtaining external financing. The estimation takes into account self‐selection bias associated with LFO choices. This article finds that LFO choices mainly affect small corporations' access to external equity capital, but have no significant impact on loan financing. Specifically, when a small corporation selects the C corporate legal form, the probability of obtaining new external equity is eight times higher compared to when it selects the S corporate legal form. Furthermore, the results suggest that better access to external equity investments, loosening business capital constraints, leads to better growth prospects for small C corporations. These empirical results have important macro‐economic implications on corporate financial and fiscal policies. (JEL G32, G38)