Thomas Clarke


In this Article, the historical evolution of corporate governance is considered, highlighting the different eras of governance, the dominant theoretical and practical paradigms, and the reformulation of paradigms and counter paradigms. Two alternative and sharply contrasting theorizations, one collective and collaborative (the work of Berle and Means), the other individualistic and contractual (agency theory and shareholder value) are focused upon. The explanatory potential of Blair and Stout’s team production theory is elaborated, along with its conception of the complexity of business enterprise, with a mediating hierarch (the board of directors) securing a balance between the interests of different stakeholders. The potential for reform of corporate purpose, corporate governance, and directors’ duties is examined with reference to the U.K. Modern Company Law Review. The impact of the intensification of the financialization of corporations is analyzed, with the increased emphasis upon short-termism. The origins of the global financial crisis in shareholder value orientations are explored, as well as the continuing reverberations of the crisis. In light of the foregoing discussion, I argue it is imperative to advance sustainable enterprise, and elaborate on the critical changes this will necessitate in corporate purpose and directors’ duties.