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Closing the Legitimacy Gap in Corporate Governance: Governing the Multinational Corporation by Means of Democratic Decision Making


Schneider, Anselm (2010). Closing the Legitimacy Gap in Corporate Governance: Governing the Multinational Corporation by Means of Democratic Decision Making. In: 26th EGOS Colloquim 2010, Lisbon, Portugal, 28 June 2010 - 3 July 2010.

Abstract

Beyond national peculiarities, corporate governance practice is mainly centered on the protection of investors’ rights. However, this view neglects the fundamental changes of the operating conditions of business due to globalization and the weakening of regulatory frameworks. Weak or absent enforcement of contracts, increasingly unfettered negative externalities of corporate action, and involvement of private actors in the provision of public goods change the role of business in a fundamental way, rendering it a political actor in part. Resulting in the extension of corporate power these developments challenge the very assumptions of dominant corporate governance theory. Recurring misuse of this power poses a threat to organizational legitimacy as well as to the legitimacy of the system of market economy. Drawing on suggestions to restore organizational legitimacy by means of discursive processes, I argue that corporate governance needs to become open to such processes to contribute to the safeguarding of organizational legitimacy and therewith the legitimacy of the system of market economy in a globalized world. Based on these considerations, basic requirements as well as limits for an according modification of current corporate governance practice will be introduced.

Abstract

Beyond national peculiarities, corporate governance practice is mainly centered on the protection of investors’ rights. However, this view neglects the fundamental changes of the operating conditions of business due to globalization and the weakening of regulatory frameworks. Weak or absent enforcement of contracts, increasingly unfettered negative externalities of corporate action, and involvement of private actors in the provision of public goods change the role of business in a fundamental way, rendering it a political actor in part. Resulting in the extension of corporate power these developments challenge the very assumptions of dominant corporate governance theory. Recurring misuse of this power poses a threat to organizational legitimacy as well as to the legitimacy of the system of market economy. Drawing on suggestions to restore organizational legitimacy by means of discursive processes, I argue that corporate governance needs to become open to such processes to contribute to the safeguarding of organizational legitimacy and therewith the legitimacy of the system of market economy in a globalized world. Based on these considerations, basic requirements as well as limits for an according modification of current corporate governance practice will be introduced.

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Additional indexing

Item Type:Conference or Workshop Item (Paper), refereed, original work
Communities & Collections:03 Faculty of Economics > Center for Corporate Responsibility and Sustainability
Dewey Decimal Classification:330 Economics
Language:English
Event End Date:3 July 2010
Deposited On:19 Jan 2011 08:59
Last Modified:05 Apr 2017 17:41
Related URLs:http://www.ccrs.uzh.ch (Author)

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