Team Production Theory Across the Waves

Abstract

Team production theory, which Margaret Blair developed in tandem with Lynn Stout, has had a major impact on corporate law scholarship. The team production model, however, has been applied sparingly outside the United States. This paper, given as part of a symposium honoring Margaret Blair’s scholarship, serves as a partial corrective by drawing on team production theory to assess corporate arrangements in the United Kingdom. Even though Blair and Stout are dismissive of “shareholder primacy” and the U.K. is thought of as a “shareholder-friendly” jurisdiction, deploying team production theory sheds light on key corporate law topics such as directors’ duties and the allocation of managerial authority. In particular, the case study offered here shows that board centrality – a key element of team production thinking -- features prominently in U.K. corporate governance despite Britain’s shareholder-oriented legal framework. The case study also draws attention to the heretofore neglected role that private ordering can play in the development of team production-friendly governance arrangements.

Keywords: team production, corporate law theory, board of directors, shareholder value, private ordering

JEL Classification: G30, K22, L21