Progressive responses to recent failures in corporate ethical behavior advocate the complete separation of the chairman of the board and the CEO and the elevation of strategic planning, risk management, and financial certification to an independent board. Such proposals follow a linear path from the same agency logic that underpinned previously insufficient corporate governance reforms. After identifying problems associated with the agency logic, this article proposes its replacement with a new value logic, based on stakeholder theory, where empowerment of legitimate stakeholders and active board discourse become preferred mechanisms for a framework of ethical conduct within the firm.
Aspen Institute Initiative for Social Innovation Through Business. (2002). Where will they lead? MBA student attitudes toward business and society. Aspen, CO: Author.
2.
Berle, A., & Means, G. (1932). The modern corporation and private property. New Brunswick, NJ: Transaction Publishers.
3.
Bhagat, S., & Black, B. (1999). The uncertain relationship between board composition and firm performance, Business Lawyer, 54, 921-963.
4.
Bhagat, S., & Black, B. (2002). The non-correlation between board independence and long-term firm performance. Journal of Corporate Law, 27, 231-273.
5.
Bourdieu, P. (1990). The logic of practice. Stanford, CA: Stanford University Press.
6.
Bourdieu, P., & Passeron, J.- C. (1977). Reproduction in education, society and culture (R. Nice, Trans.). Beverly Hills, CA: Sage.
7.
Chandler, A.D. (1962). Strategy and structure: Chapters in the history of the American industrial enterprise. Cambridge, MA: The MIT Press.
8.
Clark, R.C. (2005). Corporate governance changes in the wake of the Sarbanes-Oxley Act: A morality tale for policymakers too. Unpublished working paper, Social Sciences Research Network.
9.
Clarke, T. (2004). Cycles of crisis and regulation: The enduring agency and stewardship problems of corporate governance. Corporate Governance: An International Review, 12(2), 153-161.
10.
Coase, R.H. (1937). The nature of the firm. In R. H. Coase (Ed.), The firm, the market, and the law (pp. 33-56). Chicago: University of Chicago Press.
11.
Collins, J., & Porras, J.I. (1994). Built to last: Successful habits of visionary companies. New York: HarperBusiness Essentials.
12.
The Conference Board. (2003). Commission on public trust and private enterprise: Findings and recommendations . Retrieved September 1, 2005, from http://www.sec.gov/pdf/confboardcptpe.pdf
13.
Dallas, L.L. (2002). Developments in US boards of directors and the multiple roles of corporate boards (University of San Diego School of Law, Public Law, and Legal Theory Research Paper 48). Retrieved, from May 22, 2005, www.ssrn.com
14.
Deutsch, M. (1975). Equity, equality and need: What determines which values will be used as the basis for distributive justice? Journal of Social Issues, 31(3), 137-149.
15.
Ferraro, F., Pfeffer, J., & Sutton, R.I. (2005). Economic language and assumptions: How theories can become self-fulfilling. Academy of Management Review, 30(1), 8-24.
16.
Fisch, J.E., & Gentile, C.M. (2003). The Qualified Legal Compliance Committee: Using the attorney conduct rules to restructure the board of directors. Duke Law Journal, 53, 101-192.
17.
Fligstein, N. (1990). The transformation of corporate control. Cambridge, MA: Harvard University Press.
18.
Freeman, R.E. (1984). Strategic management: A stakeholder approach. Boston: Pitman.
19.
Freeman, R.E. (1994). The politics of stakeholder theory: Some future directions. Business Ethics Quarterly, 4(4), 409-422.
20.
Friedland, R., & Alford, R.R. (1991). Bringing society back in: Symbols, practices and institutional contradictions. In W. W Powel & P. J. DiMaggio (Eds.), The new institutionalism in organizational analysis (pp. 232-266). Chicago: University of Chicago Press.
21.
Ghoshal, S. (2005). Bad management theories are destroying good management practices. Academy of Management Learning & Education , 4, 75-91.
22.
Greenberg, J. (1990). Organizational justice: Yesterday, today, and tomorrow. Journal of Management, 16(2), 339-432.
23.
Hilzenrath, D.S. (2003, June 16, 2003). How a distinguished roster of board members failed to detect company's problems. Washington Post Online. Available at www.washingtonpost.com
24.
Jensen, M.C., & Meckling, W.H. (1976). Theory of the firm: Managerial behavior, agency costs, and ownership structure. Journal of Financial Economics, 3, 305-350.
25.
Knight, F. (1921). Risk, uncertainty, and profit. Chicago: University of Chicago Press.
26.
Lin, N. (2001). Social capital: A theory of social structure and action. Cambridge, MA: Cambridge University Press.
27.
MacAvoy, P.W., & Millstein, I.M. (2003). The recurrent crisis in corporate governance. New York: Palgrave Macmillan.
28.
Phlllips, R. (2003). Stakeholder Theory and Organizational Ethics. San Francisco: Berrett-Koehler.
29.
Reiter, S.A., & Williams, P.F. (2004). The philosophy and rhetoric of auditor independence concepts. Business Ethics Quarterly , 14(3), 355-376.
30.
Sayles, L.R., & Smith, C.J. (2006). The rise of the rogue executive. Upper Saddle River, NJ: Pearson Education Publishing as Prentice Hall.
31.
Schultz, T.W. (1961). Investment in human capital. The American Economic Review, LI, 1-17.
32.
Schwartz, M.S., Dunfee, T.W., & Kline, M.J. (2005). Tone at the top: An ethics code for directors ? Journal of Business Ethics, 58, 79-100.
Sen, A.K. (1987). On ethics and economics. Oxford , UK: Basil Blackwell LTD.
35.
Siegel, A., & McGrath, S. (2003). Recognizing and addressing conflicts of interest . The CPA Journal, 73(4), 6, 8-11.
36.
Smith vs. Van Gorkom, 488 A.2d. 874 (1985).
37.
Smith, A. (1986a). An inquiry into the nature and causes of the wealth of nations. In R. L. Heilbronner (Ed.), The essential Adam Smith (pp. 149-320) New York: W.W. Norton and Company.
38.
Smith, A. (1986b). Theory of moral sentiments. In R. L. Heilbronner (Ed.), The essential Adam Smith (pp. 57-147) New York: W.W. Norton and Company.
39.
Useem, M. (1993). Executive defense: Shareholder power and corporate recognition. Cambridge, MA: Harvard University Press.
40.
Von Hayek, F.A. (1989). The pretence of knowledge (Nobel lecture). American Economic Review, 79(6), 3-7.
41.
Werhane, P.H. (1991). Adam Smith and his legacy for modern capitalism . Oxford, UK: Oxford University Press.
42.
Williamson, O.E. (1985). The economic institutions of capitalism. New York: The Free Press. Wind, Y. (2005). Rethinking the board. Directors & Boards, 4, 20-25.
43.
Young, B. (2003September/October). Corporate governance and firm performance: Is there a relationship?Ivey Business Journal , 1-4.
44.
Zajac, E.J., & Westphal, J.D. (1995). Accounting for the explanations of CEO compensation: Substance and symbolism, Administrative Sciences Quarterly, 40, 283-308.
45.
Zorn, D.M. (2004). Here a chief, there a chief: The rise of the CFO . American Sociological Review, 69(3), 345-364.
