Reflections on the Corporation as a Social Invention

22 Pages Posted: 16 Dec 2003 Last revised: 18 May 2013

Michael C. Jensen

SSRN; Harvard Business School; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); Harvard University - Accounting & Control Unit

William H. Meckling

Simon School, University of Rochester (Deceased)

Date Written: September 30, 1983

Abstract

The corporation as an organizational form is an enormously productive social invention. Partly because of its success it is under increasing attack from various quarters, often under the guise of protecting investors from self-interested managers. Some of these attacks are successful simply because the corporation is a poorly understood entity. This paper discusses what the corporation is, what it is not, and how certain misconceptions about the corporate form are fostered by its critics as part of their attack.

Keywords: Social responsibility, survival, definition of corporation, corporate democracy, federal chartering, Corporate Democracy Act, corporate control, government involvement

Suggested Citation

Jensen, Michael C. and Meckling, William H., Reflections on the Corporation as a Social Invention (September 30, 1983). Midland Corporate Finance Journal, Vol. 1, No. 3, Autumn 1983; Harvard Business School NOM Unit Working Paper No. 1983. Available at SSRN: https://ssrn.com/abstract=244156 or http://dx.doi.org/10.2139/ssrn.244156

Michael C. Jensen (Contact Author)

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Harvard Business School ( email )

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European Corporate Governance Institute (ECGI) ( email )

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Harvard University - Accounting & Control Unit ( email )

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Boston, MA 02163
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William H. Meckling

Simon School, University of Rochester (Deceased)

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