Can the Modern Corporation Operate Sustainably?

Chapter 9 in Beate Sjåfjell, Carol Liao and Aikaterini Argyrou (eds), Innovating Business for Sustainability: Regulatory Approaches in the Anthropocene (Edward Elgar Publishing, 2022).

University of Oslo Faculty of Law Research Paper No. 2022-20

The University of Auckland Business School Research Paper

Posted: 14 Jan 2022 Last revised: 23 Sep 2022

See all articles by Susan Watson

Susan Watson

University of Auckland Business School; European Corporate Governance Institute ; University of Auckland - Faculty of Law

Date Written: January 13, 2022

Abstract

In the shareholder primacy model of the modern company, the primary role of corporate law is understood to be minimizing the agency problem between shareholders as owners and corporate management as their agents. The resulting focus on shareholder wealth maximization leaves little space for consideration of corporate sustainability. The shareholder primacy model focuses on the company from the perspective of its shareholders. It is however possible to consider the company from its own perspective as an entity operating in the world. Corporate value extends beyond financial value realised for shareholders to the value of the company operating as an entity in the world. How persona and the status of the corporation as a legal person relates to wider sociological and ecological concepts is considered. This chapter sets out an understanding of the modern company as an entity and explores whether the modern company understood through this new paradigm can operate sustainably.

Keywords: modern corporation; corporate legal history; shareholder primacy; entity theory; English East India Company; incorporation; sustainability

Suggested Citation

Watson, Susan Mary, Can the Modern Corporation Operate Sustainably? (January 13, 2022). Chapter 9 in Beate Sjåfjell, Carol Liao and Aikaterini Argyrou (eds), Innovating Business for Sustainability: Regulatory Approaches in the Anthropocene (Edward Elgar Publishing, 2022). , University of Oslo Faculty of Law Research Paper No. 2022-20, The University of Auckland Business School Research Paper, Available at SSRN: https://ssrn.com/abstract=4008054

Susan Mary Watson (Contact Author)

University of Auckland Business School ( email )

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European Corporate Governance Institute ( email )

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University of Auckland - Faculty of Law ( email )

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Auckland, 1142
New Zealand

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