Abstract
Much debate within corporate governance today centers on the proper role of corporate stakeholders, such as employees, customers, creditors, suppliers, and local communities. Scholars and reformers advocate for greater attention to stakeholder interests under a variety of banners, including ESG, sustainability, corporate social responsibility, and stakeholder governance. So far, that advocacy focuses almost entirely on arguing for an expanded understanding of corporate purpose. It argues that corporate governance should be for various stakeholders, not shareholders alone.
This Article examines and approves of that broadened understanding of corporate purpose. However, it argues that we should understand stakeholder governance as extending well beyond purpose to embracing governance by stakeholders. Purpose-based governance longingly hopes that either shareholders, or the directors elected by shareholders, will vigorously promote the interests of other stakeholders. But if we truly want companies to promote stakeholder interests, we should empower stakeholders within those companies. Such stakeholder governance would create some costs along with many benefits. However, we can structure stakeholder governance to emphasize the benefits while keeping the costs under control. Employees should be empowered via board representation, works councils, and/or unions. Other stakeholders can be less fully empowered through councils, advisory at first, and potentially given power to nominate or even elect directors.
Recommended Citation
Brett McDonnell, Stakeholder Governance as Governance by Stakeholders, 47 SEATTLE U. L. REV. 511 (2024).
Included in
Accounting Law Commons, Administrative Law Commons, Admiralty Commons, Agency Commons, Agriculture Law Commons, Air and Space Law Commons, Animal Law Commons, Antitrust and Trade Regulation Commons, Banking and Finance Law Commons, Bankruptcy Law Commons, Business Organizations Law Commons, Civil Law Commons, Civil Procedure Commons, Civil Rights and Discrimination Commons, Commercial Law Commons, Common Law Commons, Communications Law Commons, Comparative and Foreign Law Commons, Computer Law Commons, Conflict of Laws Commons, Constitutional Law Commons, Construction Law Commons, Consumer Protection Law Commons, Contracts Commons, Courts Commons, Criminal Law Commons, Criminal Procedure Commons, Cultural Heritage Law Commons, Disability Law Commons, Disaster Law Commons, Dispute Resolution and Arbitration Commons, Education Law Commons, Elder Law Commons, Election Law Commons, Energy and Utilities Law Commons, Entertainment, Arts, and Sports Law Commons, Environmental Law Commons, Estates and Trusts Commons, European Law Commons, Evidence Commons, Family Law Commons, First Amendment Commons, Food and Drug Law Commons, Fourteenth Amendment Commons, Fourth Amendment Commons, Gaming Law Commons, Government Contracts Commons, Health Law and Policy Commons, Housing Law Commons, Human Rights Law Commons, Immigration Law Commons, Indigenous, Indian, and Aboriginal Law Commons, Insurance Law Commons, Intellectual Property Law Commons, International Humanitarian Law Commons, International Law Commons, International Trade Law Commons, Internet Law Commons, Judges Commons, Jurisdiction Commons, Jurisprudence Commons, Juvenile Law Commons, Labor and Employment Law Commons, Land Use Law Commons, Law and Economics Commons, Law and Gender Commons, Law and Philosophy Commons, Law and Politics Commons, Law and Psychology Commons, Law and Race Commons, Law and Society Commons, Law Enforcement and Corrections Commons, Law of the Sea Commons, Legal Biography Commons, Legal Education Commons, Legal Ethics and Professional Responsibility Commons, Legal History Commons, Legal Profession Commons, Legal Remedies Commons, Legal Writing and Research Commons, Legislation Commons, Litigation Commons, Marketing Law Commons, Medical Jurisprudence Commons, Military, War, and Peace Commons, National Security Law Commons, Natural Law Commons, Natural Resources Law Commons, Nonprofit Organizations Law Commons, Oil, Gas, and Mineral Law Commons, Organizations Law Commons, Other Law Commons, President/Executive Department Commons, Privacy Law Commons, Property Law and Real Estate Commons, Public Law and Legal Theory Commons, Religion Law Commons, Retirement Security Law Commons, Rule of Law Commons, Science and Technology Law Commons, Second Amendment Commons, Secured Transactions Commons, Securities Law Commons, Sexuality and the Law Commons, Social Welfare Law Commons, State and Local Government Law Commons, Supreme Court of the United States Commons, Taxation-Federal Commons, Taxation-Federal Estate and Gift Commons, Taxation-State and Local Commons, Taxation-Transnational Commons, Tax Law Commons, Torts Commons, Transnational Law Commons, Transportation Law Commons, Water Law Commons, Workers' Compensation Law Commons
