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Contests for Corporate ControlCorporate Governance and Economic Performance in the United States and Germany$
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Mary O'Sullivan

Print publication date: 2001

Print ISBN-13: 9780199244867

Published to Oxford Scholarship Online: November 2003

DOI: 10.1093/0199244863.001.0001

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Transforming the Debates on Corporate Governance

Transforming the Debates on Corporate Governance

(p.41) 2 Transforming the Debates on Corporate Governance
Contests for Corporate Control

Mary O'Sullivan

Oxford University Press

The Anglo‐American debates on corporate governance that have taken place over the last two decades have been largely confined to shareholder theory, which is the dominant perspective, and stakeholder theory, which is its main challenger. The shareholder theory of corporate governance is discussed in Sect. 2.2 of the chapter, which argues that the theory precludes an understanding of the nature of corporate governance required for innovation as a result of its failure to incorporate a systematic analysis of innovation, and more generally, of production, in its conceptual framework. Rather, taking its lead from neoclassical economics (as discussed in Sect. 2.3), it regards economic activity as synonymous with exchange and, as a result, conceives of resource allocation as a transaction that is reversible, individual, and optimal. In the academic arena, one of the most sophisticated proponents of the stakeholder argument is Margaret Blair, an economist at the Brookings Institution, and her arguments are addressed in the discussion of the stakeholder theory of corporate governance in Section 2.3. The last main section of the chapter, Sect. 2.4, discusses organizational control theory––its logic, the theory in relation to innovation, and its institutional foundations.

Keywords:   corporate governance, innovation, institutions, organizational control theory, production, shareholder theory, stakeholder theory

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