IDEAS home Printed from https://ideas.repec.org/a/kap/jbuset/v126y2015i2p309-323.html
   My bibliography  Save this article

Corporate Governance in a Risk Society

Author

Listed:
  • Anselm Schneider
  • Andreas Scherer

Abstract

Under conditions of growing interconnectedness of the global economy, more and more stakeholders are exposed to risks and costs resulting from business activities that are neither regulated nor compensated for by means of national governance. The changing distribution of risks poses a threat to the legitimacy of business firms that normally derive their legitimacy from operating in compliance with the legal rules of democratic nation states. However, during the process of globalization, the regulatory power of nation states has been weakened and many production processes have been shifted to states with weak regulatory frameworks where businesses operate outside the reach of the democratic nation state. As a result, business firms have to address the various legitimacy challenges of their operations directly and cannot rely upon the legitimacy of their regulatory environment. These developments challenge the dominant approach to corporate governance that regards shareholders as the only stakeholder group in need of special protection due to risks not covered by contracts and legal regulations. On the basis of these considerations, we argue for a democratization of corporate governance structures in order to compensate for the governance deficits in their regulatory environment and to cope with the changing allocation of risks and costs. By way of democratic involvement of various stakeholders, business firms may be able to mitigate the redistribution of individual risk and address the resulting legitimacy deficits even when operating under conditions of regulatory gaps and governance failure. Copyright Springer Science+Business Media Dordrecht 2015

Suggested Citation

  • Anselm Schneider & Andreas Scherer, 2015. "Corporate Governance in a Risk Society," Journal of Business Ethics, Springer, vol. 126(2), pages 309-323, January.
    • Handle: RePEc:kap:jbuset:v:126:y:2015:i:2:p:309-323
    DOI: 10.1007/s10551-013-1943-4
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s10551-013-1943-4
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10551-013-1943-4?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Michael C. Jensen, 2010. "Value Maximization, Stakeholder Theory, and the Corporate Objective Function," Journal of Applied Corporate Finance, Morgan Stanley, vol. 22(1), pages 32-42, January.
    2. Shleifer, Andrei & Vishny, Robert W, 1997. "A Survey of Corporate Governance," Journal of Finance, American Finance Association, vol. 52(2), pages 737-783, June.
    3. Anant K. Sundaram & Andrew C. Inkpen, 2004. "The Corporate Objective Revisited," Organization Science, INFORMS, vol. 15(3), pages 350-363, June.
    4. R. H. Coase, 2013. "The Problem of Social Cost," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 837-877.
    5. Jacob Rose, 2007. "Corporate Directors and Social Responsibility: Ethics versus Shareholder Value," Journal of Business Ethics, Springer, vol. 73(3), pages 319-331, July.
    6. Boatright, John R., 2004. "Employee Governance and the Ownership of the firm," Business Ethics Quarterly, Cambridge University Press, vol. 14(1), pages 1-21, January.
    7. Scherer, Andreas Georg & Palazzo, Guido & Baumann, Dorothée, 2006. "Global Rules and Private Actors: Toward a New Role of the Transnational Corporation in Global Governance," Business Ethics Quarterly, Cambridge University Press, vol. 16(4), pages 505-532, October.
    8. Tirole, Jean, 2001. "Corporate Governance," Econometrica, Econometric Society, vol. 69(1), pages 1-35, January.
    9. Pierre-Yves Gomez & Harry Korine, 2005. "Democracy and the Evolution of Corporate Governance," Post-Print hal-02311657, HAL.
    10. Muchlinski, Peter, 2012. "Implementing the New UN Corporate Human Rights Framework: Implications for Corporate Law, Governance, and Regulation," Business Ethics Quarterly, Cambridge University Press, vol. 22(1), pages 145-177, January.
    11. Dirk Matten, 2004. "The impact of the risk society thesis on environmental politics and management in a globalizing economy -- principles, proficiency, perspectives," Journal of Risk Research, Taylor & Francis Journals, vol. 7(4), pages 377-398, June.
    12. Margit Osterloh & Bruno Frey, 2006. "Shareholders Should Welcome Knowledge Workers as Directors," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 10(3), pages 325-345, September.
    13. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-795, December.
    14. Bhimani, Alnoor & Soonawalla, Kazbi, 2005. "From conformance to performance: The corporate responsibilities continuum," Journal of Accounting and Public Policy, Elsevier, vol. 24(3), pages 165-174.
    15. Elms, Heather & Phillips, Robert A., 2009. "Private Security Companies and Institutional Legitimacy: Corporate and Stakeholder Responsibility," Business Ethics Quarterly, Cambridge University Press, vol. 19(3), pages 403-432, July.
    16. Guido Palazzo & Andreas Scherer, 2006. "Corporate Legitimacy as Deliberation: A Communicative Framework," Journal of Business Ethics, Springer, vol. 66(1), pages 71-88, June.
    17. Pierre‐Yves Gomez & Harry Korine, 2005. "Democracy and the Evolution of Corporate Governance," Corporate Governance: An International Review, Wiley Blackwell, vol. 13(6), pages 739-752, November.
    18. Ciaran Driver & Grahame Thompson, 2002. "Corporate Governance and Democracy: The Stakeholder Debate Revisited," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 6(2), pages 111-130, May.
    19. A. Georges L. Romme & Gerard Endenburg, 2006. "Construction Principles and Design Rules in the Case of Circular Design," Organization Science, INFORMS, vol. 17(2), pages 287-297, April.
    20. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    21. J. Maurice Clark, 1916. "The Changing Basis of Economic Responsibility," Journal of Political Economy, University of Chicago Press, vol. 24(3), pages 209-209.
    22. Henry Hansmann & Reinier Kraakman, 2000. "The End Of History For Corporate Law," Yale School of Management Working Papers ysm136, Yale School of Management, revised 01 Feb 2001.
    23. Peter, Fabienne, 2004. "Choice, Consent, And The Legitimacy Of Market Transactions," Economics and Philosophy, Cambridge University Press, vol. 20(1), pages 1-18, April.
    24. Dryzek, John S. & Niemeyer, Simon, 2008. "Discursive Representation," American Political Science Review, Cambridge University Press, vol. 102(4), pages 481-493, November.
    25. Lex Donaldson & James H. Davis, 1991. "Stewardship Theory or Agency Theory: CEO Governance and Shareholder Returns," Australian Journal of Management, Australian School of Business, vol. 16(1), pages 49-64, June.
    26. Turnbull, Shann, 1994. "Stakeholder democracy: Redesigning the governance of firms and bureaucracies," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 23(3), pages 321-360.
    27. Sharon Kemp, 2011. "Corporate governance and corporate social responsibility: lessons from the land of OZ," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 15(4), pages 539-556, November.
    28. Dima Jamali & Asem M. Safieddine & Myriam Rabbath, 2008. "Corporate Governance and Corporate Social Responsibility Synergies and Interrelationships," Corporate Governance: An International Review, Wiley Blackwell, vol. 16(5), pages 443-459, September.
    29. Pierre-Yves Gomez & Harry Korine, 2008. "Entrepreneurs and democracy : A political theory of corporate governance," Post-Print hal-02298100, HAL.
    30. Parker,Christine, 2002. "The Open Corporation," Cambridge Books, Cambridge University Press, number 9780521818902, October.
    31. BOATRIGHT, John R., 2004. "Employee governance and the ownership of the firm," Economic and Social Journal (Economisch en Sociaal Tijdschrift), University of Antwerp, Faculty of Business and Economics, vol. 57(4), pages 423-449, Februari.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Keke Bai & Farid Ullah & Muhammad Arif & Sahar Erfanian & Saima Urooge, 2023. "Stakeholder-Centered Corporate Governance and Corporate Sustainable Development: Evidence from CSR Practices in the Top Companies by Market Capitalization at Shanghai Stock Exchange of China," Sustainability, MDPI, vol. 15(4), pages 1-25, February.
    2. Ibrahim Mohd Al Hamadsheh & Barjoyai Bin Bardai & Abdoul Rahman Mhd Al Jounaidi, 2020. "The Mediatory Effect of Voluntary Disclosure on the Relationship between Corporate Governance and Financial Performance: A Pilot Study," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 4(7), pages 325-331, July.
    3. Ibrahim Mohd Al Hamadsheh & Barjoyai Bin Bardai & Abdoul Rahman Mhd Al Jounaidi, 2020. "The Mediating Effect of Voluntary Disclosure on the Relationship between Corporate Governance and Financial Performance among Listed Jordanian Companies," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 7(7), pages 150-157, July.
    4. Andrea Felicetti, 2018. "A Deliberative Case for Democracy in Firms," Journal of Business Ethics, Springer, vol. 150(3), pages 803-814, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mahoney, Joseph T., 2012. "Towards a Stakeholder Theory of Strategic Management," Working Papers 12-0100, University of Illinois at Urbana-Champaign, College of Business.
    2. Alexander Brink, 2010. "Enlightened Corporate Governance: Specific Investments by Employees as Legitimation for Residual Claims," Journal of Business Ethics, Springer, vol. 93(4), pages 641-651, June.
    3. David Collison & Stuart Cross & John Ferguson & David Power & Lorna Stevenson, 2012. "Legal Determinants of External Finance Revisited: The Inverse Relationship Between Investor Protection and Societal Well-Being," Journal of Business Ethics, Springer, vol. 108(3), pages 393-410, July.
    4. Mahoney, Joseph & Asher, Cheryl Carleton & Mahoney, James, 2004. "Towards a Property Rights Foundation for a Stakeholder Theory of the Firm," Working Papers 04-0116, University of Illinois at Urbana-Champaign, College of Business.
    5. Dorothee Feils & Manzur Rahman & Florin Şabac, 2018. "Corporate Governance Systems Diversity: A Coasian Perspective on Stakeholder Rights," Journal of Business Ethics, Springer, vol. 150(2), pages 451-466, June.
    6. J. (Hans) van Oosterhout, 2007. "Authority and Democracy in Corporate Governance?," Journal of Business Ethics, Springer, vol. 71(4), pages 359-370, April.
    7. Ingo Pies & Philipp Schreck & Karl Homann, 2021. "Single-objective versus multi-objective theories of the firm: using a constitutional perspective to resolve an old debate," Review of Managerial Science, Springer, vol. 15(3), pages 779-811, April.
    8. Naeem Tabassum & Satwinder Singh, 2020. "Corporate Governance and Organisational Performance," Springer Books, Springer, number 978-3-030-48527-6, January.
    9. Jo, Hoje & Song, Moon H. & Tsang, Albert, 2016. "Corporate social responsibility and stakeholder governance around the world," Global Finance Journal, Elsevier, vol. 29(C), pages 42-69.
    10. Maria Goranova & Lori Verstegen Ryan, 2022. "The Corporate Objective Revisited: The Shareholder Perspective," Journal of Management Studies, Wiley Blackwell, vol. 59(2), pages 526-554, March.
    11. Mohammad Nurunnabi & Monirul Alam Hossain & Saad A. Al-Mosa, 2016. "Ceci n'est pas une pipe! Corporate Governance practices under two political regimes in Bangladesh: A political economy perspective," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 13(4), pages 329-363, November.
    12. Kevin Levillain & Blanche Segrestin, 2018. "From Primacy to Commitment: Revising corporate governance theories to account for recent legal innovations in the US," Post-Print hal-01777788, HAL.
    13. Hoje Jo & Maretno Harjoto, 2012. "The Causal Effect of Corporate Governance on Corporate Social Responsibility," Journal of Business Ethics, Springer, vol. 106(1), pages 53-72, March.
    14. Klein, Peter G. & Mahoney, Joseph T. & McGahan, Anita M. & Pitelis, Christos N., 2012. "Who Is in Charge? A Property Rights Perspective on Stakeholder Governance," Working Papers 12-0102, University of Illinois at Urbana-Champaign, College of Business.
    15. Kevin Levillain & Blanche Segrestin, 2018. "From Primacy to Commitment: Revising corporate governance theories to account for recent legal innovations in the US," Working Papers hal-01777788, HAL.
    16. Simon Learmount, 2002. "Theorizing Corporate Governance: New Organizational Alternatives," Working Papers wp237, Centre for Business Research, University of Cambridge.
    17. Alexander Radygin & Revold Entov & Marina Turuntseva & Alena Gontmakher & Harry Swain & Jeff Carruthers & Karen Minden & Cheryl Urban, 2002. "The problems of corporate governance in Russia and its regions," Published Papers 12, Gaidar Institute for Economic Policy, revised 2002.
    18. Sophie Bacq & Ruth V. Aguilera, 2022. "Stakeholder Governance for Responsible Innovation: A Theory of Value Creation, Appropriation, and Distribution," Journal of Management Studies, Wiley Blackwell, vol. 59(1), pages 29-60, January.
    19. Waheed Hussain & Jeffrey Moriarty, 2018. "Accountable to Whom? Rethinking the Role of Corporations in Political CSR," Journal of Business Ethics, Springer, vol. 149(3), pages 519-534, May.
    20. Blanche Segrestin & Kevin Levillain & Armand Hatchuel, 2016. "Purpose-driven corporations: how corporate law reorders the field of corporate governance," Post-Print hal-01323118, HAL.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jbuset:v:126:y:2015:i:2:p:309-323. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.