This chapter provides an introduction to the basic structure and themes of the book. We begin with a description of the basic features of a corporation. We then discuss the intellectual foundations of corporate governance, including an overview of the doctrine of shareholder primacy and the view that a corporation is merely a nexus of contracts. We begin to catalog some of the cracks in these foundations, focusing on the shortcomings of the long-standing arguments for the exclusive shareholder franchise. Next, we make clear that our the criticisms of shareholder primacy and the exclusive shareholder franchise do not question, but indeed make extensive use of, the basic principles of standard economics and social choice theory. In other words, both our critique and our positive theory come from within the very tradition that gave rise to the original arguments for shareholder control. We conclude the chapter with a detailed plan for the rest of the book.

This chapter sets out the second of two positive arguments for extending corporate voting rights to employees. Democratic participation theory provides a unique argument for extending governance rights to both shareholders and employees. The theory is derived from the uncontroversial propositions that governance rights should be tied to interest and that we must be able to assess that interest in a way that is both accurate and manageable. These notions largely spring out of political theory, but are also consistent with economic and social choice theory and their focus on preference fulfillment and the construction of incentive structures designed to promote good decision-making. And, like the theory of the firm, democratic participation theory generally counsels in favor of adding employees to the corporate electorate, but also tells us when we might be in one of those rare situations where governance rights should be extended to other stakeholders. That is, both aspects of the shared governance model of the corporation – the theory of the firm and the theory of democratic participation – have a flexibility that the arguments for the exclusive shareholder franchise seem to lack.

Lean thinking is hailed as one of the most influential management ideas of the last fifty years, with the renowned Toyota Production System (TPS) of Toyota Motor Corporation (TMC 2001) Japan widely acknowledged as its precursor (Stanton, Gough, Ballardie, Bartram, Bamber, and Sohal 2014). Despite some recent safety-related setbacks, Toyota continues to be the standard-bearer of lean thinking, and the Toyota Production System enjoys an almost cult-like status. The TPS/lean has contributed in recent years to the introduction of several management practices including job rotation, standardization, quality management, broadened responsibilities and the “Just-in-Time” system. Besides being extensively imitated by all other leading motor vehicle producers globally, lean’s current applications span several sectors, such as banking, call centers, health care, educational institutions, government agencies and other elements of the services sector (Bamber, Stanton, Bartram, and Ballardie 2014).

Lean development in France reflects in many ways the spread of lean all over the world, with some local specificities. France’s enduring national automotive industry had led very early pioneers to discover Toyota’s uniqueness and appreciate the transformative potential of the Toyota Production System (TPS) well before the term “lean” was coined. French companies then pursued the usual forms of lean, from “automotive” lean, to traditional consulting cost-saving programs disguised as lean, to genuine transformational efforts to understand and adapt the TPS in local conditions. Lean in France has also had some specific French offshoots, such as an obsession with “autonomous teams” and “liberated company” (Getz and Carney 2016), that can be traced to the socio-technical system approach of the Tavistock Institute. More recently, France stands out as the home of several CEOs that have adopted lean as their main business strategy, with very visible results in difficult market conditions and a high labor cost context. Lean and its application in French companies then seems to have become multifaceted, based on continuous and structured learning (Ballé et al. 2006), but also apprehended according to several theoretical frameworks to gradually lead to a richer understanding for researchers (Ballé et al. 2017). This chapter introduces the historical development of lean in France and, through an analysis of lean’s adoption, the three main “lean” perspectives of French companies.

This chapter sets out the first of two positive arguments for extending corporate voting rights to employees. The long-standing theory of the firm, in confronting the question why firms even exist, explains the separation of corporate insiders from outsiders in a way that allows firms to most efficiently carry out joint production. Those inside the corporation should have their preferences captured through more direct governance mechanisms such as voting, those outside the firm through processes like contract or regulation. Under this understanding of the firm, employees are, of course, the classic insiders, a conclusion that’s only reinforced by more recent work on the generation and flow of information within firms. The economic theory of the firm, then, provides a powerful argument for extending the corporate franchise to employees.

Up until three decades ago there existed a viable alternative to capitalism: the socialist regime in the Soviet Union and the neighbouring states of Eastern Europe persisted for over seventy years. These Communist Party-led states had the ability to foster industrial and scientific success, and to provide free high-quality education and free healthcare to its citizens. Yet, despite being capable of producing space rockets, it had notorious difficulties in assuring an even flow of mass production and manufacturing high-quality consumer goods. Although this regime ceased to exist in the early 1990s, the post-communist states in Europe have still not converged with the advanced industrial democracies in terms of their political systems. Nevertheless, the opening up of the new markets for foreign direct investment has played an important role in the diffusion of new management systems, including lean production.

This chapter lays out some of the basic aspects of how political institutions identify and aggregate the preferences of their constituents. Most democratic political systems use elections to aggregate preferences, and the contours of those political systems are mapped out in a number of voting rights. Voting rights, though, are not unidimensional: they cover everything from casting a ballot to ensuring that ballots are properly weighted to policing the very ability to place alternatives on a ballot in the first place. At the core of all these rights, though, is the recognition that voting should be tied in some way to a person's interest, or stake, in the outcome of an election. Because there are problems with relying upon self-reports of that interest, democratic institutions typically rely upon markers of that interest that allow them to identify and regulate those voting rights. Those markers, though, need to be both accurate descriptions of voter interest (not over- or underinclusive) and manageable.

The ideas that eventually became known as “lean production” were fully developed and implemented at Toyota in Japan by the late 1960s. And they were transferred to a few export-oriented manufacturing companies in Japan by this date as well. But their transfer to the USA awaited both a need and a means.

Because key building blocks of lean production have emerged from concepts native to industrial engineering, it is reasonable to assert that we industrial engineers (IEs) have served as primary caretakers of the lean production/lean management movement. For all that, however, a few concepts once widely admired and practiced by IEs (e.g., process layouts; economic order quantities) have been shown to be at odds with the dictates of lean and its closely linked predecessor, just-in-time production. But IEs adapt, casting off what are found to be dubious and readily adopting such later-arriving essentials of lean as cells and kanban.

The impact of lean systems on workers and unions was fully intertwined with the overall attention to the rise of lean production as an alternative to Fordist mass production in the late 1980s and 1990s. With “lean” as the name given to the Toyota Production System (TPS) by MIT’s International Motor Vehicle Program in The Machine That Changed the World (Womack, Jones, and Roos 1990), the link to the global automotive industry and specifically Toyota was clear. At that stage of the industry’s globalization, the transfer of TPS outside of Japan to “transplants” in the USA and elsewhere was riveting the attention of industry executives, plant managers, investment analysts, and academics alike. Transfer of TPS/lean in such a highly unionized industry immediately necessitated dealing with issues of worker and union acceptance or rejection of that transfer, particularly given striking institutional differences between Japan and the West.

This chapter critically examines the rise of board primacy as an alternative theory of firm governance. The chapter begins by categorizing such theorists as either “wise ruler” theorists or “long-term interest” theorists. In either case, board primacy theorists have responded to the revelation that shareholders, like other corporate constituents, have quite heterogeneous preferences not by extending voting rights to those constituents but by further distancing the shareholder electorate from real corporate decision-making. Their move conflates two different aspects of group decision-making processes: the responsiveness of the system and composition of the electorate. And by holding fast to exclusive shareholder voting, the theorists have just further detached their governance structures from the underlying preferences of corporate constituents without substituting anything in their place. We should instead investigate treating other constituents more like shareholders rather than the other way around.

Since the 1980s the concept of “lean production” has attracted much attention and sparked off considerable debate among social scientists on work and workplace restructuring. On the one hand, the MIT researchers, who coined and popularized the term lean production, have vaunted lean production as representing a fundamental, progressive break with Taylorism and Fordism that will lead to a more fulfilling workplace and empower workers (Womack, et al. 1990). On the other hand, critics have contended that rather than representing a qualitative break with the Fordist regime, lean production is essentially a modified form of Taylorism and Fordism (albeit leaner and more flexible) because assembly line, standardization, volume production, and capacity utilization remain central to the lean production paradigm (Berggren 1993; Babson 1995: 14; Price 1995). Ethnographic studies of the impact of lean on workers cast a more skeptical view on the “empowerment” claim, as researchers find lean production is often associated with the intensification of work and greater managerial control, without real empowerment of workers (Graham 1995; Parker and Slaughter 1995; Mehri 2005, 2006). With respect to its implementation, contrary to the claim of MIT researchers that the principles of lean production are “applicable anywhere by anyone” (Womack et al. 1990: 7), cross-national comparisons have shown wide variations as well as limits in the adoption of lean production in different national and local contexts (Kochan et al. 1997; Jürgens and Krzywdzinski 2016). While there has been growing interest in the spread and implementation of lean production in China, most of the existing literature has focused on the problems and effectiveness in implementing lean production by Chinese manufacturers from the perspectives of management and business consultancy (see, among others, Taj 2008; Chen and Meng 2010). To date we know relatively little about how lean production has affected the workplace and workers in the Chinese context.1

In the late 1970s, the landscape of the global automotive industry provided a stark contrast: Western car manufacturers were struggling in shrinking markets, closing dozens of plants, and laying off hundreds of thousands of workers; while the success of Japanese car manufacturers benefited from phenomenal export growth that seemed unlikely to stop. How can one explain such a reversal in the global fortunes of automotive production and how should nations and workers deal with it?

This chapter critically examines the argument for giving shareholders alone the right to vote based on their ownership of the corporate residual. The argument is that shareholders are only paid what's left over after all other contractual participants – employees, customers, creditors, and suppliers – have been satisfied. Because shareholders receive the marginal gains, they have the best incentives to exercise discretion on the part of the entire firm, and hence should be accorded ultimate control. Shareholders, though, are not the unidimensional profit maximizers used to get this argument up and running. Moreover, shareholders do not, by virtue of their relationship with the firm, have ready access to the information necessary to cast informed votes, and many shareholders – such as index fund shareholders – lack real incentives to seek out that information. Finally, this vision of shareholders as the sole owners of the residual is just descriptively wrong – employees, too, are invested in the long-term interest of the firm, cannot easily diversify that interest, and often possess firm-specific skills as well as contributions to the ongoing value of the business.