Hostname: page-component-76fb5796d-dfsvx Total loading time: 0 Render date: 2024-04-29T21:43:47.153Z Has data issue: false hasContentIssue false
  • English
  • Français

Medieval corporations, membership and the common good: rethinking the critique of shareholder primacy

Published online by Cambridge University Press:  09 July 2019

Samuel F. Mansell  and
Alejo José G. Sison
Samuel F. Mansell*
Affiliation:
School of Management, University of St Andrews, St Andrews, UK
Alejo José G. Sison
Affiliation:
School of Economics and Business, Universidad de Navarra, Pamplona, Spain
*
*Corresponding author. Email: sfm5@st-andrews.ac.uk
Get access Rights & Permissions [Opens in a new window]

Abstract

The notion that business corporations should be managed for the exclusive benefit of shareholders has been widely challenged. In particular, critics have argued that directors are authorised to serve the interests of the corporation: a legal entity that is completely separate from its shareholders. However, the premise that shareholders have sole legitimate claim to ‘membership’ has rarely been questioned. This article explores medieval thought on ownership, authority and participation in guilds, churches, towns and universities, and shows that membership can be understood as participation in, and shared responsibility for, a group's distinct collaborative activity over time. Our theory suggests that ‘membership’ in the modern corporation extends to non-shareholding stakeholders, but with the implication that ownership and authority are vested in the members as a body and not in a separate entity.

Keywords

History of legal and political thoughtbusiness ethicscorporate governance reforminstitutional theories of the firm
Type
Symposium on Corporations
Information
Journal of Institutional Economics , Volume 16 , Issue 5 , October 2020 , pp. 579 - 595
Copyright
Copyright © Millennium Economics Ltd 2019

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Adelstein, R. (2010), ‘Firms as Social Actors’, Journal of Institutional Economics, 6(3): 329–349.CrossRefGoogle Scholar
Alchian, A. and Demsetz, H. (1972), ‘Production, Information Costs and Economic Organization’, American Economic Review, 62(5): 777–795.Google Scholar
Argandoña, A. (1998), ‘The Stakeholder Theory and the Common Good’, Journal of Business Ethics, 17(9–10): 1093–1102.CrossRefGoogle Scholar
Aristotle, (1995), Politics, Barker, E. (trans.), Stalley, R. (revised), Oxford: Oxford University Press.Google Scholar
Aquinas, T. (1981), Summa Theologica, Fathers of the English Dominican Province (trans.), London: Christian Classics.Google Scholar
Aquinas, T. (2002), Political Writings, Dyson, R. (ed.), Cambridge: Cambridge University Press.Google Scholar
Augustine, . (1972), City of God, Knowles, D. (ed.) and Bettenson, H. (trans.). Harmondsworth: Penguin.Google Scholar
Bernstein, A. (1978), ‘Magisterium and License: Corporate Autonomy against Papal Authority in the Medieval University of Paris’, Viator, 9: 291–307. Available at https://doi.org/10.1484/J.VIATOR.2.301551.CrossRefGoogle Scholar
Black, A. (1992), Political Thought in Europe 1250–1450, Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Black, A. (2003), Guild & State: European Political Thought from the Twelfth Century to the Present (revised edn), New Brunswick: Transaction Publishers.Google Scholar
Blair, M. and Stout, L. (1999), ‘A Team Production Theory of Corporate Law’, Virginia Law Review, 85(2): 247–328.CrossRefGoogle Scholar
Boatright, J. (1994), ‘Fiduciary Duties and the Shareholder–Management Relation: Or, What's So Special about Shareholders?’ Business Ethics Quarterly, 4(4): 393–407.CrossRefGoogle Scholar
Boatright, J. (2006), ‘What's Wrong – and What's Right – with Stakeholder Management’, Journal of Private Enterprise, 21(2): 106–130.Google Scholar
Brett, A. (2005), ‘Notes on the Translation’, in Brett, A. (ed. and trans.), Marsilius of Padua: The Defender of the Peace, Cambridge: Cambridge University Press, pp. xl–li.Google Scholar
Canning, J. (1988), ‘Law, Sovereignty and Corporation Theory, 1300–1450’, in Burns, J. (ed.), The Cambridge History of Medieval Political Thought c.350-c.1450, Cambridge: Cambridge University Press.Google Scholar
Chassagnon, V. and Hollandts, X. (2014), ‘Who are the Owners of the Firm: Shareholders, Employees or No One?’ Journal of Institutional Economics, 10(1): 47–69.CrossRefGoogle Scholar
Ciepley, D. (2013), ‘Beyond Public and Private: Toward a Political Theory of the Corporation’, American Political Science Review, 107(1): 139–158.CrossRefGoogle Scholar
Ciepley, D. (2015), ‘Will and Responsibility in Member Corporations, Property Corporations, and Firms’, presented to the St Andrews Conference on Corporate Agency and Shared Responsibility, 2–3 November.Google Scholar
Ciepley, D. (2017), ‘Member Corporations, Property Corporations, and Constitutional Rights’, Law & Ethics of Human Rights, 11(1): 31–59.CrossRefGoogle Scholar
Deakin, S. (2012), ‘The Corporation as Commons: Rethinking Property Rights, Governance and Sustainability in the Business Enterprise’, Queen's Law Journal, 37(2): 339–381.Google Scholar
Deeming, N. and Glasman, M., Hayes, M. G., Longley, C., and Moore, G. A. (2016), Written Evidence from the Durham Company Law Project (CGV0029). Project Report. House of Commons Select Committee.Google Scholar
Digest of Justinian, The (1904 [533]), Monro, C. (trans.), London: Cambridge University Press.Google Scholar
Fama, E. and Jensen, M. (1983), ‘Separation of Ownership and Control’, Journal of Law and Economics, 26(2): 301–325.CrossRefGoogle Scholar
Freund, E. (1897), The Legal Nature of Corporations, Chicago: University of Chicago Press.Google Scholar
Friedman, M. (1970, 13 September), ‘The Social Responsibility of Business is to Increase its Profits’, New York Times Magazine, pp. 122–126.Google Scholar
Gibbons, R. and Henderson, R. (2012), ‘Relational Contracts and Organizational Capabilities’, Organization Science, 23(5): 1350–1364.CrossRefGoogle Scholar
Gierke, O. (1990), Community in Historical Perspective, Black, A. (ed.) and Fischer, M. (trans.), Cambridge: Cambridge University Press.Google Scholar
Gindis, D. (2009), ‘From Fictions and Aggregates to Real Entities in the Theory of the Firm’, Journal of Institutional Economics, 5(1): 25–46.CrossRefGoogle Scholar
Gindis, D. (2016), ‘Legal Personhood and the Firm: Avoiding Anthropomorphism and Equivocation’, Journal of Institutional Economics, 12(3): 499–513.CrossRefGoogle Scholar
Goyder, G. (1961), The Responsible Company, Oxford: Blackwell.Google Scholar
Hansmann, H. (1996), The Ownership of Enterprise, Cambridge, MA: Harvard University Press.Google Scholar
Ireland, P. (1999), ‘Company Law and the Myth of Shareholder Ownership’, Modern Law Review, 62(1): 32–57.CrossRefGoogle Scholar
Ireland, P. (2003), ‘Property and Contract in Contemporary Corporate Theory’, Legal Studies, 23(3): 453–509.CrossRefGoogle Scholar
Jensen, M. and Meckling, W. (1976), ‘Theory of the Firm: Managerial Behaviour, Agency Costs and Ownership Structure’, Journal of Financial Economics, 3(4): 305–360.CrossRefGoogle Scholar
John of Paris ([1302] 1971), On Royal and Papal Power, Toronto: Pontifical Institute of Medieaval Studies.Google Scholar
Kaler, J. (2006), ‘Evaluating Stakeholder Theory’, Journal of Business Ethics, 69(3): 249–268.CrossRefGoogle Scholar
Kantorowicz, E. (1957), The King's Two Bodies: A Study in Medieval Political Theology, Princeton, New Jersey: Princeton University Press.Google Scholar
Kay, J. (2012), ‘The Kay Review of UK Equity Markets and Long-Term Decision Making: Final Report’, available at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/253454/bis-12-917-kay-review-of-equity-markets-final-report.pdf (accessed 27 March 2019).Google Scholar
Kempshall, M. (1999), The Common Good in Late Medieval Political Thought, Oxford: Clarendon Press.CrossRefGoogle Scholar
Leff, G. (1968), Paris and Oxford Universities in the Thirteenth and Fourteenth Centuries: An Institutional and Intellectual History, New York: John Wiley.Google Scholar
Mayer, C. (2013), Firm Commitment: Why the Corporation is Failing Us and How to Restore Trust in it, Oxford: Oxford University Press.Google Scholar
Mansell, S. (2013), ‘Shareholder Theory and Kant's ‘Duty of Beneficence’, Journal of Business Ethics, 117(3): 583–599.CrossRefGoogle Scholar
Monks, R., Miller J., A. and Cook, (2004), ‘Shareholder Activism on Environmental Issues: A Study of Proposals at Large US Corporations (2000–2003), Natural Resources Forum, 28: 317–330.CrossRefGoogle Scholar
North, D., Wallis, J. and Weingast, B. (2009), Violence and Social Orders: A Conceptual Framework for Interpreting Recorded Human History, Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Oakeshott, M. (1975), On Human Conduct, Oxford: Clarendon Press.Google Scholar
Phillips, R. (2003), Stakeholder Theory and Organizational Ethics, San Francisco: Berrett-Koehler Publishers.Google Scholar
Pocock, J. (2009), Political Thought and History: Essays on Theory and Method, Cambridge: Cambridge University Press.Google Scholar
Post, G. (1934), ‘Parisian Masters as a Corporation, 1200–1246’, Speculum, 9(4): 421–445.CrossRefGoogle Scholar
Richardson, G. (2001), ‘A Tale of Two Theories: Monopolies and Craft Guilds in Medieval England and Modern Imagination’, Journal of the History of Economic Thought, 23(2): 217–242.CrossRefGoogle Scholar
Richardson, G. (2004), ‘Guilds, Laws, and Markets for Manufactured Merchandise in Late-Medieval England’, Explorations in Economic History, 41: 1–25.CrossRefGoogle Scholar
Richardson, G. (2005), ‘Craft Guilds and Christianity in Late-Medieval England: A Rational Choice Analysis’, Rationality and Society, 17(2): 139–189.CrossRefGoogle Scholar
Robé, J. (2011), ‘The Legal Structure of the Firm’, Accounting, Economics, and Law, 1(1): 1–86.Google Scholar
Ryan, M. (2011), Corporation Theory, in Lagerlund, H. (ed.), Encyclopedia of Medieval Philosophy, Dordrecht: Springer, pp. 236–240.Google Scholar
Scruton, R. (1989), ‘I – Roger Scruton’, in ‘Corporate Persons’, Proceedings of the Aristotelian Society, in R. Scruton, and J. Finnis, ‘Corporate Persons’, Proceedings of the Aristotelian Society, etc.’, 63: 239–274.Google Scholar
Sikka, P. and Stittle, J. (2017), ‘Debunking the Myth of Shareholder Ownership of Companies: Some Implications for Corporate Governance and Financial Reporting’, Critical Perspectives on Accounting. Available online at https://doi.org/10.1016/j.cpa.2017.03.011 (accessed 6 April 2019).CrossRefGoogle Scholar
Sison, A. and Fontrodona, J. (2012), ‘The Common Good of the Firm in the Aristotelian-Thomistic Tradition’, Business Ethics Quarterly, 22(2): 211–246.CrossRefGoogle Scholar
Sison, A. and Fontrodona, J. (2013), ‘Participating in the Common Good of the Firm’, Journal of Business Ethics, 113(4): 611–625.CrossRefGoogle Scholar
Sternberg, E. (2000), Just Business: Business Ethics in Action (2nd edn), Oxford: Oxford University Press.Google Scholar
Stout, L. (2012), The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and the Public, San Francisco, CA: Berrett-Koehler Publishers.Google Scholar
Stout, L. (2015), ‘The Corporation as a Time Machine: Intergenerational Equity, Intergenerational Efficiency, and the Corporate Form’, Seattle University Law Review, 38(2): 685–723.Google Scholar
Sundaram, A. and Inkpen, A. (2004), ‘The Corporate Objective Revisited’, Organization Science, 15(3): 350–363.CrossRefGoogle Scholar
Tierney, B. (1955), Foundations of the Conciliar Theory: The Contribution of the Medieval Canonists from Gratian to the Great Schism, Cambridge: Cambridge University Press.Google Scholar
Tierney, B. (1982), Religion, law, and the growth of constitutional thought 1150–1650, Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Ullmann, W. (1966/2010), Principles of Government and Politics in the Middle Ages, New York: Routledge.Google Scholar
Vanberg, V. (1992), ‘Organizations as Constitutional Systems’, Constitutional Political Economy, 3(2): 223–253.CrossRefGoogle Scholar
Vulgate Bible: Volume VI: The New Testament: Douay–Rheims translation (2013), Kinney, A. (ed.), Cambridge: Harvard University Press.Google Scholar
Westlake, H. (1919), The Parish Gilds of Mediaeval England, London and New York: Society for Promoting Christian Knowledge and Macmillan Company.Google Scholar