Module 12 The Rights and Wrongs of Corporate Governance
Overview
How can the public be confident that large and powerful corporations are complying with the law, adhering to their own professed ethical standards, or acting in ways that do not undermine the public good? What is the balance of responsibility for corporate governance between executives, board members, employees, shareholders, and stakeholders in the general public? In this module, we examine these questions and look for sound models for corporate governance.
Learning Objectives
Upon successful completion of this module, you will be able to:
Evaluate the meaning and viability of “marketplace morality.”
Debate the merits of and potential problems with employee representation and participation in internal corporate decision-making.
Investigate governmental regulation of industry via a detailed case study.
Key Concepts
This module focuses on the following major topics:
Moral analysis of a range of different models of corporate governance.
How strong should the voice of employees be, and what role should it play, in valid and viable models of corporate governance?
Read
All readings below that are listed with page numbers are in our Ciulla et al. reader.
Tom Dunfee, “Corporate Governance in a Market with Morality,” p. 492
Box, “Corporate-Governance Reform,” p. 486
John J. McCall, “Employee Voice in Corporate Governance: A Defense of Strong Participation Rights,” p. 510
Case 13.3: “Corporate Governance and Democracy,” p. 526
Introduction to Our Guest and Interview Questions
On behalf of the whole class, I’d like to extend a warm welcome to our guest for Module 12, Professor Patrick McCreesh. (Links to an external site.)
We’re very fortunate to have Professor McCreesh with us to discuss Module 12 of our course. The topic for this module is “The Rights & Wrongs of Corporate Governance.”
Some of the issues explored in the material assigned for this module include the following: How can the public be confident that large and powerful corporations are complying with the law, adhering to their own professed ethical standards, or acting in ways that do not undermine the public good? What is the balance of responsibility for corporate governance between executives, board members, employees, shareholders, and stakeholders in the general public? In this module, we examine these questions and look for sound models for corporate governance.
Professor McCreesh, before we jump into the material, I’d love to give you a chance to tell us a little more about your current research, work projects, teaching, or anything else that you’d like to share.
One of the primary assigned readings for this module, written by John J. McCall, has a title that speaks for itself: “Employee Voice in Corporate Governance: A Defense of Strong Participation Rights.” In it, McCall examines a big issue around our topic, namely whether honoring the equal dignity of employees requires inviting them to participate in decision-making in corporations. What’s at issue here is allowing workers to represent their own interests as well as share in the exercise of advisory power, or in codetermining policy, in the workplace. McCall observes that we spend upwards of half our adult lives at work, and argues that giving employees a voice in managing their own work environment fosters a number of important moral goods: among them fairness, autonomy, and self-respect. McCall defends a strong presumption favoring the right of employees to codetermine corporate policy. But, in doing so, he addresses the criticism that such an employee right violates corporate owners’ property rights. His response to this is that the basic moral values that support the right to private property are also, at the same time, precisely those which support an employee’s right to have a voice in corporate policy.
Professor McCreesh, has your experience in both the public and private sector given you any insight into this question about whether employees ought to have a prominent voice in corporate governance?
2. In an article we’ve read for this module entitled, “Corporate Governance in a Market with Morality,” Thomas W. Dunfee works with a basic distinction between two models of the true nature and purpose of the corporation. The first, which Dunfee calls “the monotonic view,” considers the maximization of shareholder wealth to be the supreme value that should guide corporate decision-making. The second, which he calls “the pluralistic view,” includes the needs and interests of stakeholders in the calculus of corporate governance. Stakeholders here include “bondholders, suppliers, distributors, creditors, local communities, consumers, users, state and federal governments, special interest groups,” and even the public interest, or the common good of society, itself.
Professor McCreesh, can you help us unpack this distinction? When might corporate decision-makers feel pressured to choose between these paradigms? In your experience, which of these two models has greater currency in the corporate world? And, finally, are there other models that go beyond this dichotomy?
