Governance

Companies exert considerable influence on the societies in which they operate. But how are they governed? Since the publication of The Modern Corporation and Private Property in 1932, the governance debate has focused on the exercise of power, but no consensus has yet emerged on two key questions. Who holds the ultimate decision-making power within the corporation? And whose interests does the company serve?
A seminal, even polemical work, The Modern Corporation and Private Property is first and foremost about the exercise and regulation of power. For Berle and Means, the problem of separating corporate ownership and control is one of economic governance. The responsible exercise of power requires the regulation of that power to ensure that the interests of the community as a whole are taken into account in the conduct of corporate affairs. These political considerations have too often been overlooked in favor of the simplification of the debate advocated by the 'Law and Economics' movement. However, it remains impossible to define how power is exercised within the company without first determining whose interests the company should serve. This determination can only be made within a historical, political and social context, which influences the development of economic laws and institutions. Hence the need to bring together the economic and the social.