Beyond Agency Theory, a Post‐Crisis View of Corporate Law

16 Pages Posted: 22 Aug 2011

See all articles by Blanche Segrestin

Blanche Segrestin

École Nationale Supérieure des Mines de Paris - Centre de Gestion Scientifique (CGS)

Armand Hatchuel

École Nationale Supérieure des Mines de Paris - Centre de Gestion Scientifique (CGS)

Date Written: September 2011

Abstract

For decades, managers' powers and their freedom to make strategic decisions were taken for granted in the field of corporate governance. The present crisis has revealed that their managerial latitude is in reality much weaker than thought. The growing influence of shareholders has undermined the historical and professional legitimacy of managers, who are now viewed as ‘agents’ controlled by ‘principals’. This paper makes two contributions. First, we hold that the crisis is not a purely economic or financial crisis but a fundamental crisis of management, with its function of regulating the relationship between the firm and society. Second, we show that this crisis is rooted in law, since corporate law does not actually protect the autonomy of management. Until now, management theory has underestimated the role of law in the evolutions of corporate governance; we argue that management research needs to open its boundaries and specifically to re‐examine corporate law. We suggest new governance rules to ensure managers have the latitude to organize collective creation processes in a way that is both efficient and legitimate. And we discuss some avenues for reflecting on a post‐crisis business law.

Suggested Citation

Segrestin, Blanche and Hatchuel, Armand, Beyond Agency Theory, a Post‐Crisis View of Corporate Law (September 2011). British Journal of Management, Vol. 22, Issue 3, pp. 484-499, 2011, Available at SSRN: https://ssrn.com/abstract=1913073 or http://dx.doi.org/10.1111/j.1467-8551.2011.00763.x

Blanche Segrestin (Contact Author)

École Nationale Supérieure des Mines de Paris - Centre de Gestion Scientifique (CGS) ( email )

60, boulevard Saint-Michel
Paris Cedex 06, 75272
France

Armand Hatchuel

École Nationale Supérieure des Mines de Paris - Centre de Gestion Scientifique (CGS) ( email )

60, boulevard Saint-Michel
Paris Cedex 06, 75272
France
+33 1 405 19 109 (Phone)
+33 1 404 60 301 (Fax)

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