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date: 29 October 2020

(p. vii) Preface

(p. vii) Preface

This work has a long and distinguished genesis, beginning with the definitive analysis of the continuing dilemmas of the corporate form evolving from the epochal book by Berle and Means, Modern Corporation and Private Property (1932). The debate on the purpose of the corporation was continued by Edward Mason, the Dean of the forerunner of the Harvard University Kennedy School, who noted in The Corporation in Modern Society (1959: 19) that “the rise of the large corporation and attending circumstances have confronted us with a long series of questions concerning rights and duties, privileges and immunities, responsibility and authority, that political and legal philosophy have not yet assimilated.” Meanwhile there was a multiplying array of competing theoretical perspectives on the nature of the firm, the substantial works of authorities such as Schumpeter, Galbraith, Chandler, and Penrose were drafted and rediscovered, and new more integrative theoretical approaches explored in defiance to the intellectual hegemony of agency theory imposed on the theory of the firm from the 1980s onwards in the revival of neoclassical economics. The lineage of critical anthologies on the corporation continued with Carl Kaysen’s (1996) The American Corporation Today: Examining the Questions of Power and Efficiency at the Century’s End. Just as Berle and Means’ work reconceived the corporation for the twentieth century, the aspiration of this Oxford Handbook of the Corporation is to redefine the roles and responsibilities of the corporation in its many forms in the twenty-first century.

Many hands have contributed to this endeavor. The Adolf A. Berle, Jr. Center on Corporations, Law and Society at Seattle University Law School has conducted a series of ten Berle Symposia focusing on transforming theories of the firm, capital markets, corporate law, governance, and accountability, commencing in 2010. From this series, conceptions of the future of the corporation and the possibilities of social enterprise have emerged. At the Centre for Law, Markets and Regulation at UNSW Sydney, Australia, a parallel series of symposia took place examining corporate structure and regulation, market conduct, prudential regulation, and commercial law. At the Trust Project, research on trust in corporations, corporate law, and accountability has continued. The Centre for Corporate Governance at UTS Sydney conducted research on the changing roles and responsibilities of company boards and directors, the regulation of small corporations, and diversity and contingency in international comparative corporate governance and compounding inequality, and most importantly, governance and sustainability.

We have engaged with, and learned from, wide networks of academics and practitioners interested in the changing nature of the corporation. This engagement began with (p. viii) the Royal Society of Arts’ Tomorrow’s Company inquiry (1992–5), investigating the sources of sustainable business success with a network of twenty-five international corporations (Clarke and Monkhouse 1994). This research contributed to the thinking of the Modern Company Law Review (1998–2001) (Company Law Review Steering Group 2001), that considered shareholder primacy and stakeholder orientations of the corporation, resulting in the new Section 172 of the UK Companies Act 2006 (UK Government 2006) which outlines the wider responsibilities of company directors. On an international scale the interest in responsible investment in corporations for the long term was developed through the International Corporate Governance Network (ICGN) body of large global institutional investors. In the United States, Bill Lazonick has worked assiduously to secure wider public recognition of the impact of shareholder primacy on the investment horizons of corporations, including research with the Institute for New Economic Thinking on the impact of share buy-backs and dividend payments on long-term investment in business innovation. The Critical Corporation Project (2012–18) at the Cass Business School at City University, London, has investigated the contemporary corporation from a critical perspective, and the Frank Bold international law firm is conducting the Purpose of the Corporation Project. Most recently, the British Academy Future of the Corporation (2018–20) project seeks to examine the contemporary purpose of corporations, and redefine law and regulation to enable a new model of business with wider purposes and accomplishments (Mayer 2013).

The academic discourse on the corporation has resonated widely in the political arena in recent times in practical proposals for legislative change. Just as the work of Berle and Means informed many of the reforms of Roosevelt’s New Deal in America in the 1930s and remained influential through to the Kennedy era of the early 1960s, so today the academic critique of the corporations has impacted on political deliberations. In the US Congress there has occurred a sequence of attempts to transform corporate legislation—including by Elizabeth Warren and John McCain in the Senate in 2017 to introduce a 21st Century Glass–Steagall Bill (US Senate 2017) intended to reintroduce the separation of retail and investment banking to reduce the possibility of further financial crises; and in 2018 the Reward Work Bill by Senator Tammy Baldwin to rein in the hundreds of billions of dollars of share buy-backs by corporations that benefit their executives, and to introduce the election of one third of company boards by their employees (US Senate 2018).

At the European Commission radical proposals to advance sustainable investment are aimed at ensuring disclosure of investors and asset managers in order to integrate environmental, social, and governance processes into their risk-management processes, including benchmarks for low-carbon and positive carbon impact (European Commission 2018). The French government has proposed a policy L’entreprise, objet d’intérêt collectif (République Français 2018) proposing the formulation of a raison d’être by French companies to manage the company in its own interests while considering its social mission and environmental obligations. Finally, in the UK a parliamentary inquiry into corporate governance failings highlighted problems with executive pay, directors’ duties, and the gender balance and worker representation on corporate boards (p. ix) (BEISC 2017). This prompted a radical report subtitled Democratising Corporations for their Long-Term Success (Sikka et al. 2018) commissioned by the UK Labour Party, which returned with conviction to the concept of worker directors after a hiatus of over forty years since the publication of the UK Bullock Report (Bullock 1977) that considered the prospects of industrial democracy.

Of all the many friends and companions that have accompanied us in this search for more accountable and responsible business corporations, none has proved more resolute than Professor Lynn Stout of Cornell University Law School. Lynn’s work on team production theory with Margaret Blair of Vanderbilt University (Blair and Stout 1999) has inspired a generation of colleagues. Lynn was brilliant, fearless, and intellectually formidable. She contributed a chapter to this Oxford Handbook of the Corporation, but did not live to see it published, and we respectfully dedicate this work to her memory.

Thomas Clarke

Justin O’Brien

Charles R. T. O’Kelley

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