Stakeholder Syndrome: Does Stakeholderism Derail Effective Protections for Weaker Constituencies?

100 North Carolina law Review 167 (2021)

71 Pages Posted: 1 Mar 2021 Last revised: 16 Feb 2022

See all articles by Matteo Gatti

Matteo Gatti

Rutgers, The State University of New Jersey - Rutgers Law School; European Corporate Governance Institute (ECGI)

Chrystin D. Ondersma

Rutgers University School of Law

Date Written: February 26, 2021

Abstract

We evaluate stakeholderism in the context of one constituency—workers—by exploring a few key known contributors to workers’ economic disadvantage: concentration and monopsony in labor markets, weak collective action protections for workers, a declining minimum wage, and the harsh reality of outsourced and gig work. After reviewing specific policy proposals in those areas, which we believe have the capacity to shift power and resources to workers, we then evaluate whether stakeholderism can help workers in any way, either by offering a feasible substitute to these policies or by providing a fertile landscape for worker advancement. Because available evidence suggests that corporations will seek to undermine any proposal that meaningfully shifts power and resources to workers, it is unlikely stakeholderism could provide equivalent protections that can actually improve workers’ position; assuming it could, its implementation would be no more feasible than direct regulation. Neither do we believe that stakeholderism can provide a fertile landscape for direct regulation, because corporations are likely to use stakeholderism as a pretext to wield greater political power and to shape the debate in their own favor, thus interfering with direct regulation. Ultimately, given the risks of allowing managers and directors wield stakeholderism in their own interests, political capital should be spent on achieving direct regulation rather than on a stakeholderist corporate governance reform.

Keywords: Stakeholders, Directors, Fiduciary Duties, Stakeholder Approach, Stakeholderism, Corporate Purpose, Corporate Law, Weaker Constituencies, Corporate Governance, Shareholder Primacy, Lobbying, Antitrust, Labor Market Institutions, Inequality, Unions, Minimum Wage, Monopsony, Fissured Workplace

JEL Classification: D21, G32, G34, G38, K22

Suggested Citation

Gatti, Matteo and Ondersma, Chrystin D., Stakeholder Syndrome: Does Stakeholderism Derail Effective Protections for Weaker Constituencies? (February 26, 2021). 100 North Carolina law Review 167 (2021), Available at SSRN: https://ssrn.com/abstract=3793732 or http://dx.doi.org/10.2139/ssrn.3793732

Matteo Gatti (Contact Author)

Rutgers, The State University of New Jersey - Rutgers Law School ( email )

Newark, NJ
United States

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Chrystin D. Ondersma

Rutgers University School of Law ( email )

180 University Avenue
Newark, NJ 07102
United States

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