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The notion of corporate success lies at the heart of directors’ duties in many corporate laws. Freedom of incorporation conferred considerable discretion on companies to determine the nature of their success and create financial value for their investors, subject to conforming with laws and regulation. However, this increasingly came into conflict with the interests of other stakeholders, in particular employees, supply chains, the environment and societies, and addressing the problem through specific regulatory rules proved inadequate to the task. This raises questions about the nature of the financial incentives that drive and resource corporate activities, namely profits, and the need to align these with the role of business in solving not creating problems for others. In the absence of such an alignment then markets fail and competition can intensify rather diminish the failures. There are three aspects to addressing the problem. The first is the use of corporate law to require companies to consider the interests of stakeholders other than their shareholders. This is already a feature of many corporate laws. The second is corporate governance codes that promote corporate purposes of profiting from solving not causing problems for others. This too is already a feature of some countries’ corporate governance arrangements. The third is the adoption of international standards and firm specific measures of performance that promote accounting and reporting on corporate social and environmental benefits and detriments. These are in the process of being established but need to be more closely related to accounting for specific firm measures of performance that ensure profits derive from solving not creating problems for others.
This chapter argues that fundamental problems limit ESG’s potential benefits for society and can be traced back to ESG’s initial conceptualization in the early 2000s in the advent of the United Nation’s Global Compact initiative. ESG from the very beginning has been built, on the one hand, on the premise of promoting institutional investors’ interests at the expense of critical stakeholders’ concerns and, on the other hand, on quite idealistic assumptions about the proper functioning of markets and states. Drawing from the theory of deliberative democracy, this chapter develops suggestions of how ESG could become more beneficial to people and planet by making the ESG investing system, understood as an organized set of actors and procedures, more inclusive, argumentative, and consequential with a view on societal rather than investors’ benefits. The chapter proposes that incorporating deliberation in the governance structure of rating agencies specifically is one way to do so.
Chapter 6 addresses the critical challenge of succession in family-owned businesses, emphasizing the importance of planning and structured decision-making to ensure long-term stability. Drawing from both legal theory and real-world case studies, the chapter discusses how trusts, inheritance contracts, and carefully negotiated governance structures can facilitate smooth transitions of power. It highlights the complex interplay between family dynamics and business imperatives, illustrating how the failure to separate personal identity from leadership can jeopardize succession. Through comparative analysis, including insights from Shakespeare’s King Lear and the television series Succession, the chapter elucidates common pitfalls when leadership transitions are handled unilaterally or without sufficient stakeholder involvement. The case study of Sharp & Sharp Certified Seed exemplifies a pragmatic approach, demonstrating how early, inclusive planning and open communication between generations can overcome the challenges inherent in family business succession.
Chapter 6 will compare how shareholders in the three countries monitor management by voice from the perspective of the tradeoff between management autonomy and monitoring management. Japanese and Chinese corporate laws give shareholders wider decision-making power compared to the US corporate law. On the other hand, Japanese and Chinese corporate laws provide an ambiguous fiduciary duty of directors, which allows management to balance stakeholder interests, while the US law provides a strict fiduciary duty to shareholders. The three countries share similar disclosure regulations, both by corporate law and securities regulation. Institutionalization of stock ownership structure strengthened shareholder activism since the 1990s in the United States, and now Japan is catching up. In China, shareholder activism is historically nearly absent; however, the China Securities Investor Service Center (ISC) has raised a substantial number of shareholder activism cases and has become influential in Chinese corporate governance.
Small States in World Markets is about political efficacy and legitimation rather than scoring who is ahead in the economic sweepstakes. Its case for democratic corporatism rests on norms, particularly stability, rather than on narrow measures of economic efficiency. But stability, and the efficacious management of the economy and social problems requires a degree of technocracy that undermines the legitimacy of the management process itself by helping to produce populist revolts.
Alternative forms of political participation that place little emphasis on traditional representative forms of democracy are becoming more prevalent. Typifying the shift from government to governance, forest certification provides important opportunities for political participation with local, national, and global influence. Using Pippa Norris's three dimensions of political participation—agencies, repertoires, and targets—this article explores political participation within the practice of forest certification. The article highlights how traditional and alternative forms of political participation do not act as a dualism and instead occur simultaneously in practice due to historical, spatial, and practical influences.
In the article, we analyse the impact of changing policy environments on the development of the third sector in Europe. Based on the results of systematic comparative research in eight European countries (Austria, Croatia, France, Germany, the Netherlands, Poland, Spain and the UK), we identify commonalities and differences. In a three-step analysis, we examine policy changes, effects on the third sector and responses by third sector organizations (TSOs) in the social domain. Overall, the third sector in Europe has proven resilient. However, not only have public and private funding decreased, the process for acquiring such funding has become more demanding for TSOs, as have requirements to be accountable. There are signs of a proliferation of more market-based, hybrid organizations. Despite this general trend towards marketization, the impact of policy changes varies across Europe with TSOs being better equipped to adapt and survive in countries where collaborative ties between the state and the third sector have traditionally been strong.
As participatory governance approaches to local development get adopted also in transition countries, one of the key questions is how participation actually impacts local governance outcomes. This study examines the link between non-electoral participation and different public goods outcomes in rural Ukraine along with identifying the role of community-based organizations (CBOs). Using a unique survey data from Ukraine, I approach these questions empirically explicitly distinguishing between different public goods outcomes. I find that participation appears to be positively associated with local school and water supply outcomes. In addition, CBOs are found to be associated with better quality of water supply systems motivating a discussion about establishment of service cooperatives for water supply as a functional local governance arrangement.
The quest for a widely accepted definition of social enterprise (SE) has been a central issue in the last two decades. However, it only seems feasible today to identify a few criteria that were most debated: the specific role of individual social entrepreneurs, the place of social innovation, the search for market income and the issue of governance. The arena of conceptualization efforts should now be fed with more contributions starting from bottom-up approaches built upon a hypothesis that could be termed “the impossibility of a unified definition”. In this paper, we develop a theoretical framework combining principles of interest (mutual, general and capital interest) and resource mixes to identify institutional trajectories generating four major SE models. We then show that all four SE models may address the actual diversity of SE’s social missions. Finally, we suggest that such social missions may be enhanced differently depending on the respective governance mechanisms.
The paper proposes to discuss the issue of civicness in the governance of social services by analyzing policy changes relative to the regulation and governance of social services in Europe. The empirical analysis is structured around the concept of “governance regime.” The paper shows that modernization processes within the field of social services in Europe develop along two radically different regulative conceptions reflected into two different governance regimes: market-based or competitive governance vs civic-based or partnership governance. The governance of social services in Europe appears to take place within a mix between two ideal-typical governance regimes: the market-based and partnership-based governance regimes.
Non-profit organizations (NPOs) occupy a crucial place in society. This article studies the determinants of their managerial adaptations in relation to societal orientation, such as a focus on partners, an adaptation of relationships with volunteers, preventing neglect of the beneficiaries and members, and finally a redesign of internal organization. The survey of French NPOs 1 year after Covid-19 shows that boards have often lost their collective effectiveness and that the four adaptations associated with societal orientation were specifically explained by the access to key resources. The results demonstrate the importance of human resource dependency management and inform the decision-making process during the crisis. The contributions focus on the determinants of societal orientation, on the necessary individual and collective mobilization of human resources in non-profit governance and on the importance of a complex and paradoxical approach to decision-making. The original theoretical approach (the stakeholder resource-based theory) also offers perspectives for NPOs, in times of crisis but also in more stable circumstances.
This research analyzes the relationship between board composition and web transparency in nonprofit organizations (NPOs). The board is conceived as a governance mechanism that not only monitors management but also gives voice to all stakeholders and considers accountability—and, more specifically, web transparency—as a key instrument for the NPO’s legitimization. To conduct this study, we manually built a database from the CVs of 793 directors of 67 Spanish non-governmental development organizations and we use fuzzy set comparative qualitative analysis (fsQCA). Our results indicate that board composition (size, independence, gender diversity, and presence of directors with financial or NPOs’ expertise) influences transparency and that, depending on the organizational size and legal form, there are different board configurations that lead to high transparency. Generally, NPOs should include experts in nonprofit sector and more female members on their boards to increase transparency.
Integrated hybrid organizations, for instance social enterprises that pursue both social and economic goals through a single activity, are seen by many as promising vehicles to create social value while remaining economically sustainable. At the same time, they are said to run the risk of mission drift—losing sight of their social mission while navigating market and political pressures. While organizational governance mechanisms that ensure the overall direction, control and accountability of the organization are considered key to avoiding mission drift, scholars have argued that traditional governance mechanisms may not work in the context of social enterprises. Drawing on the legacy of old institutional theory, this article proposes a proactive approach to governance in social enterprises. We complement and go beyond control and compliance approaches and introduce a governance approach focused on purpose, commitment and coordinating around small wins. We propose that these three interlocking governance mechanisms allow social enterprises to mitigate the risk of mission drift in a proactive rather than reactive manner.
The paper serves as an introduction to a special issue discussing social enterprises historical development and functions against welfare regimes across six European countries (France, Germany, Italy, Poland, Scotland, Serbia). While discussing convergences and diversities among them, the introduction proposes a comparative analytical framework for understanding social enterprises and welfare state as contingent phenomena developed at different point in time, within a broader political-institutional framework regulating states-peoples’ relationships.
The literature on nonprofit management has embraced the concept of “accountability” to target urgent challenges related to NGO probity and integrity, and there have been attempts in the literature to use rational-choice-based governance approaches to solve them. Although the existing principal–agent frameworks provide important insights, they are limited to the analysis of financial relationships between NGOs and donors. We contribute to the literature in developing a comprehensive rational-choice-based governance approach to analyze all stakeholder relationships of NGOs. Applying the research program of ordonomics, we unpack two fundamental interaction problems: (a) the “stakeholder dilemma” between the NGO and a single accountability holder as a one-sided social dilemma and (b) the “competition dilemma” among rival NGOs as a many-sided social dilemma. We show that improving NGO accountability in relation to intended beneficiaries, peer organizations, and the general public also requires identifying the underlying governance problem as a competition dilemma focusing on collective self-regulation as a solution.
The discipline of political science ought to be reoriented to capture the realities of multi-level politics, to understand better the dispersion and complexity of political authority, and to ameliorate its tendency towards fragmentation into separate sub-fields. International/supranational arenas and arenas within states intertwine. The EU, for one, is not something that is separable from the nation state. This article calls into question the appropriateness of the traditional division into ‘national’ and ‘international’ in political science.
Most research on social entrepreneurship overemphasizes agency by presenting social enterprising as something that originates solely from the intrinsic motivations of individual entrepreneurs. Research that does regard the impact of state power is almost exclusively anchored in and geared toward neoliberal policy contexts. This article examines the dialectics between state power and entrepreneurial counterpower in the institutional context of the Netherlands. Moreover, since social entrepreneurs develop different tactics and strategies for responding to challenges, we use Gaventa’s power cube to distinguish forms of power and counterpower, which we then combine with the following inductively derived social entrepreneur typologies: successful hybrids, antagonistic organizers, and autonomous entrepreneurs. This offers insights into the development of theory in relation to the social entrepreneurial potential for change and civic participation.
Ian Shapiro identifies three traditions of democratic thought: aggregative, deliberative, and minimalist. All three are apparent in the Pacific Islands despite most commentators and donors assuming that the meaning of democracy is fixed. The focus in development studies on institutions and their capacity to deliver pro-poor growth has generated a fourth tradition that revolves around the now pervasive governance concept. Rather than focusing on the general will of a sovereign people, this perspective is predominately concerned with the legitimate use of violence as a precursor to any development-orientated democratic state. Having reviewed the literature on democracy in the Pacific to parse out these four meanings, this article concludes that paying greater attention to this ideational equivocality would extend discussions about the suitability and transferability of this type of regime.
Is the concept of “global civil society” a Sorelian-type myth that captures intuitively an emergent political project? Or is it, rather, a discursive political terrain open to many interpretations, not all of which might be progressive? A radical democratic content would be one way of filling out the “empty signifier, ” which “global civil society” is, but not the only one.
We examine the implementation of governance arrangements to extend ownership and control to employees and community stakeholders in social enterprises. Evidence from a sample of newly created public service social enterprises in England shows how the realisation of democratic ideals involves a gradual and often challenging process. Different outcomes are explained in terms of an interplay between the legal forms and representational mechanisms adopted and the enabling role of organisational culture. The paper contributes an analytic framework that captures the range of possible outcomes in terms of stakeholder versus stewardship forms of representation, and the cultural–psychological dimension of ownership. Organisations may find themselves at different stages in the journey towards the realisation of democratic ownership and governance. Conclusions are drawn for the field of social enterprise and non-profit research.