Showing papers on "Corporate governance published in 1989"

Pawns or Potentates: The Reality of America's Corporate Boards

Abstract: In My View Jay W. Lorsch is senior associate dean and director of research at the Harvard Business School. A long time researcher on organizational behavior, he has written numerous articles and fifteen books, one of which, Organization and Environment, with Paul R. Lawrence, was a landmark work on the organizational characteristics that led to effective performance. His most recent research, a study of American corporate governance, has produced a new book-the subject of this interview. In it Lorsch argues that many boards of directors now lack the power and sense of common purpose to effectively fulfill their roles as overseers of the companies they serve. In the current competitive environment from abroad, leveraged buyouts, and corporate restructuring, directors are being forced to consider a much more active role in the management of a company than in the past, sometimes bringing them directly into conflict with the chief executive officer. The study revealed that in 85 percent of United States public companies, the chairman and CEO are one and the same. Directors, Lorsch concludes, are no match for the power of the chairman/CEO. In Pawns or Potentates, Lorsch offers controversial solutions to begin to rectify the inbalance of power. He argues that directors should have the responsibility-and be given the power-to prevent fires, rather than just putting them out.

Inertia And Creeping Rationality In Strategic Decision Processes

Abstract: In two earlier studies, comprehensiveness, a characteristic of rational strategic decision-making processes, exhibited a positive relationship with organizational performance in a stable environmen...

“Active Investors, LBOs, and the Privatization of Bankruptcy*”

Abstract: In this testimony to the House Ways and Means Committee on February 1, 1989 (when LBOs and other highly leveraged transactions were under fierce attack by politicians and the media), the author identified “LBO associations” such as KKR and Forstmann Little as a valuable innovation in organizational form—a new model of management and governance that was competing directly with the headquarters of large public corporations, especially conglomerates. In the author's words, LBOs “substitute incentives provided by compensation and ownership plans for the direct monitoring and often centralized decision-making in the typical corporate bureaucracy.” In illustrating his point, the author noted that whereas the CEOs of U.S. companies during the '70s and '80s saw their personal wealth go up by only about $3 for every $1,000 increase in firm value, the average CEO in an LBO experienced a change of $64 per $1,000—and for the partners of the LBO firm, the closest equivalent to a conglomerate CEO, the change was about $200 per $1,000. Based on the performance of the first wave of LBOs to return to public ownership, such dramatic concentrations of equity ownership appear to have produced large gains in operating efficiency. (And since the author's testimony, these findings have been confirmed by subsequent studies of later periods and in other countries.) The heavy debt loads in these transactions, besides making possible the concentration of equity ownership, also perform an important control function, intensifying the search for efficiencies and discouraging reinvestment in low-return projects. For those LBOs that have trouble servicing their debt loads, the author argues that the costs of insolvency should turn out to be significantly lower than for traditional public companies because LBOs provide strong incentives to keep the process of reorganizing troubled companies out of the bankruptcy court (a prediction that, although proving wrong in the early‘90s, has turned out to be true of the most recent wave of private equity deals).

Business Ethics: Readings and Cases in Corporate Morality

Abstract: * indicates new reading General Introduction: Ethical Frameworks for Application in Business PART 1: ETHICS AND BUSINESS: FROM THEORY TO PRACTICE (1) Theories of Economic Justice John Rawls, Justice as Fairness Robert Nozick, Distributive Justice *J.J.C. Smart, Distributive Justice and Utilitarianism *James Q. Wilson, Capitalism and Morality Kai Neilsen, A Moral Case for Socialism (2) Ethics and Business Decision Making Michael Josephson, Teaching Ethical Decision Making and Principled Reasoning Craig Dreilinger and Dan Rice, Ethical Decision Making in Business James A. Waters and Frederick Bird, Attending to Ethics in Management Steve Kelman, Cost Benefit Analysis: An Ethical Critique Herman B. Leonard and Richard J. Zeckhauser, Cost-Benefit Analysis Defended MINI-CASES FOR PART 1 *Parable of the Sadhu, by Bowen H. McCoy Dorrence Corporation Trade-Offs, by Hans A. Wolf. A Diaglogue Between a Socialist and a Capitalist, by Robert E. Frederick *Framework for Ethical Decision-Making, by Coopers & Lybrand L.L.P. *Why Should My Conscience Bother Me?, by Kermit Vandiver Less Cost, More Risk, by Michael Kinsley PART 2: THE NATURE OF THE CORPORATION (3) Agency, Legitimacy, and Responsibility *Kenneth E. Goodpaster, and John B. Matthews, Jr. Can a Corporation Have a Conscience? Milton Friedman, The Social Responsibility of Business is to Increase Its Profits Christopher D. Stone, Why Shouldn't Corporations be Socially Responsible? William M. Evan and R. Edward Freeman, A Stakeholder Theory of the Modern Corporation: Kantian Capitalism George G. Brenkert, Private Corporations and Public Welfare *Norman Bowie, New Directions in Corporate Social Responsibility (4) Governance and Self-Regulation Ralph Nader, Mark Green, and Joel Seligman, Who Rules the Corporation? Irving S. Shapiro, Power and Accountability: The Changing Role of the Corporate Board of Directors Henry Mintzberg, Who Should Control the Corporation? *Mark S. Schwartz, Dove Izraeli, and Joseph Murphy, What Can We Learn from the U.S. Federal Sentencing Guidelines for Organizational Ethics? MINI-CASES FOR PART 2 *Not a Fool, Not a Saint, by Thomas Teal Tennessee Coal and Iron, by John B. Matthews, Jr. *Report of the Compensation Committee of the Board of Directors, from General Electric Company *Words of Warning: Ruling Makes Directors Accountable for Compliance, by Dominic Bencivenga PART 3: WORK IN THE CORPORATION (5) Employee Rights and Duties *Ronald Duska, Employee Rights *Tibor R. Machan, Human Rights, Workers' Rights, and the 'Right'to Occupational Safety *Laura Pincus Hartman, The Rights and Wrongs of Workplace Snooping Joseph R. Des Jardins and Ronald Duska, Drug Testing in Employment Michael Waldholz, Drug Testing in the Workplace: Whose Rights Take Precedence? *Richard T. DeGeorge, Whistle Blowing *Gene G. James, Whistle Blowing: Its Moral Justification (6) The Modern Workplace: Transition to Equality and Diversity Louis P. Pojman, The Moral Status of Affirmative Action Edwin C. Hettinger, What is Wrong With Reverse Discrimination? Ellen Bravo and Ellen Cassedy, Sexual Harassment in the Workplace *Domenec Mele, Organization of Work in the Company and Family Rights of the Employees *Al Gini, Women in the Workplace MINI-CASES FOR PART 3 *BankBoston's Layoffs Program: 'Death with Dignity,' from Ethikos Lanscape by Ernest Kallman and John Grillo *United States v. General Electric, from United States District Court, Ohio *Texaco: The Jelly Bean Diversity Fiasco, by Marianne M. Jennings The Case of the Mismanaged Ms., by Sally Seymour PART 4: THE CORPORATION IN SOCIETY (7) The Consumer John Kenneth Galbraith, The Dependence Effect F.A. von Hayek, The Non Sequitur of the 'Dependence Effect' *George Brenkert, Marketing to Inner-City Blacks: PowerMaster and Moral Responsibility David M. Holley, A Moral Evaluation of Sales Practices *Manuel Velasquez, The Ethics of Consumer Production and Marketing (8) The Environment. Norman Bowie, Morality, Money, and Motor Cars W. Michael Hoffman, Business and Environmental Ethics Larry E. Ruff, The Economic Common Sense of Pollution Karen Blumenfeld, Dilemmas of Disclosure: Ethical Issues in Environmental Auditing (9) INTERNATIONAL BUSINESS Richard T. DeGeorge, Ethical Dilemmas for Multinational Enterprise: A Philosophical Overview Manuel Velasquez, International Business, Morality, and The Common Good Thomas Donaldson, Values in Tension: Ethics Away from Home Scott Turow, What's Wrong with Bribery *S. Prakash Sethi, Codes of Conduct for Global Business: Prospects and Challenges of Implementation MINI-CASES FOR PART 4 The Ford Pinto, by W. Michael Hoffman *The Ethics of Marketing: Nestle's Infant Formula, by James E. Post *Toy Wars, by Manuel Velasquez Forests of the North Coast: The Owls, the Trees, and the Conflicts, by Lisa Newton and Catherine Dillingham U.S. And Mexico Confront Toxic Legacy, by Colum Lynch The Project at Moza Island, by John A. Seeger and Balachandran Manyadath PART 5: THE FUTURE CORPORATE ETHOS *(10) Emerging Ethical Issues *Robert E. Frederick and W. Michael Hoffman, The Individual Investor in Securities Markets: An Ethical Analysis *Carol J. Loomis, Lies, Damned Lies, and Managed Earnings *Leonard H. Friedman and Grant t. Savage, Can Ethical Management and Managed Care Coexist? *Richard T. DeGeorge, Business Ethics and the Information Age *Lynn Sharp Paine, Corporate Policy and Ethics of Competitor Intelligence Gathering (11) Reflections on the Moral Corporation *Dawn-Marie Driscoll and W. Michael Hoffman, Gaining the Ethical Edge: Procedures for Delivering Values-driven Management Andrew W. Singer, Can A Company Be Too Ethical? *Jon Entine, Rainforest Chic *Joanne B. Ciulla, The Importance of Leadership in Shaping Business Values MINI-CASES FOR PART 5 From Volumes to Three Words: Texas Instruments, by Dawn-Marie Driscoll and W. Michael Hoffman *Levi Strauss & Co. and China, by Timothy Perkins, Colleen O'Connelll, Carin Orosco, Mark Rickey, and Matthew Scoble *The Fun of Being a Multinational, by The Economist *The Case of the Contested Firearms, by George Brenkert Bibliography

A Stakeholder Approach to Corporate Governance: Managing in a Dynamic Environment

Abstract: Preface Business Development Corporate Governance and the Changing Environment Business Trends Forms of Business Organization Corporate Governance Corporate Governance Models The Traditional Model The Effectiveness of the Board of Directors Board Liability Reform of Corporate Governance The European Model The Stakeholder's Model The Implications of Corporate Governance Corporate Social Responsibility Business Ethics: The Ideological Background The Foreign Corrupt Practices Act Business-Government Relationships Closing the Gap The Restructuring of U.S. Companies Mergers and Takeovers The Buyout Management Buyouts Employee Stock Ownership Plans International Acquisitions Corporate Governance and Strategic Management Strategic Management Select Bibliography Index

Board members, corporate social responsiveness and profitability: Are tradeoffs necessary?

Abstract: The relationship between corporate social responsiveness and profitability is investigated in a sample of corporate directors. The findings show there is no relationship between the level of director social responsiveness and corporate profitability. The implications of these results are discussed, especially as they relate to concerns about corporate governance.

The New Economic Theory of the Firm: Critical Perspectives from History

Abstract: Theories of the firm inform and undergird corporate law,' but they only intermittently appear as principal points in corporate law discourse. They stayed in the background during the half century ending in 1980, while a conception of the firm as a management power structure prevailed unchallenged in legal theory.2 The situation changed around 1980, when a new theory of the firm3 appeared, imported from economics. This "new economic theory of the firm" asserted a contractual conception. The firm, said its leading text, is a legal fiction that serves as a nexus for a set of contractual relationships among individual factors of production.4 According to the theory, corporate relationships and structures could be explained in terms of contracting parties and transaction costs. Law and economics writers restated corporate law in the new theory's terms5 and successfully reoriented legal discourse on corporations.6 The new theory already has sunk into the

Metropolitan Organization and Governance: A Local Public Economy Approach

Abstract: New conceptualizations are needed to encompass cumulating research findings that complex, multijurisdictional, multilevel organization is a productive arrangement for metropolitan areas. A local public economy approach recognizes (I) the distinction between provision and production, and the different considerations that bear on each; (2) the distinction between governance and government, and the multiple levels of governance; (3) the difference between metropolitan fragmentation and complex metropolitan organization, and the prevalence of the complex organization over fragmentation; and (4) the necessity for citizen choice and public entrepreneurship in crafting productive organizational and governance arrangements. It may contribute to a rethinking with respect to governance structures adapted to the diversity characteristic of American metropolitan areas.

Business ethics, Corporate Good Citizenship and the Corporate Social Policy Process: A view from the United States

Abstract: Within the American context, the term Corporate Good Citizenship, a rather vague and somewhat dated notion, bears little relationship to the concept of Business Ethics Whereas the latter refers to systematic reflection on the moral significance of the institutions, policies and behavior of business actors in the normal course of their business operations, the former is a subset of the broader notion of Corporate Social Responsibility and denotes, generally, discretionary, possibly altruistic, “non-business” relationships between business organizations and diverse community stakeholders A newer concept, the Corporate Social Policy Process, which focuses on the institutionalization within business organizations of processes facilitating individual and organizational reflection and choice regarding the moral significance of personal and organizational action together with a consideration of the likely consequences of such action, provides analytical linkages between Business Ethics and Corporate Good Citizenship which can be useful to business scholars and operating managers alike Specific aspects of Corporate Good Citizenship, including corporate community involvements, are examined and particular attention is paid to current trends in corporate donations, including an increasing emphasis on “strategic philanthropy” which explicitly mixes practical and benevolent motives in company giving policies and practices

Responses to corporate versus individual wrongdoing

Abstract: For many years, researchers assumed that the public was indifferent to corporate wrongdoing, but recent surveys have discovered evidence to the contrary. Taking insights from these data a step further, this study employed an experimental design to examine whether people responded differently to corporate versus individual wrongdoers. We varied the identity of the central actor in a scenario involving harm to workers. Half the respondents were informed that a corporation caused the harm; the remainder were told that an individual did so. Respondents applied a higher standard of responsibility to the corporate actor. For identical actions, the corporation was judged as more reckless and more morally wrong than the individual. Respondents' judgments of the greater recklessness of the corporation led them to recommend higher civil and criminal penalties against the corporation.

The Structure of Venture Capital Governance: An Organizational Economic Analysis of Relations Between Venture Capital Firms and New Ventures.

Abstract: Drawing on concepts from organizational economics, a theory explaining the level of monitoring and control built into the relationship between venture capital firms and new ventures is developed. I...

The Contractual Theory of the Corporation

Abstract: The modem corporation is one of the most successful inventions in history, as evidenced by its widespread adoption and survival as a primary vehicle of capitalism over the past century. Economists, however, have only recently begun to understand the economic nature of the corporation. In the last fifteen years, the economic theory of the firm has advanced from a struggle with the identification of the economic conditions that lead to the formation of firms to a discourse on sophisticated issues concerning intrafirm relationships. As a consequence of these developments, economists have come to view the firm as a "nexus of contracts" among participants in the organization. When applied to the corporate form of organization, the theory of the firm is often referred to as the contractual theory of the corporation.This paper offers a summary of the contractual theory of the corporation and considers some of its general implications for corporate law. Section I sets the stage for the discussion by presenting a summary of the traditional legal view of the modem corporation. Section II presents a summary of the theory of the firm as it relates to corporate organization. Section III describes the market and contractual constraints that force managers of large, dispersed-owner corporations to act in their shareholders' best interests. Section IV considers the implications of the contractual theory of the corporation for private ordering of corporate governance issues. Section V offers some concluding comments.

Limiting Contractual Freedom in Corporate Law: The Desirable Constraints on Charter Amendments

Abstract: This paper takes issue with the increasingly influential view that companies should be completely free to opt out of corporate law rules by adopting appropriate charter provisions. I argue that the contractual view of the corporation, on which supporters of free opting out rely, offers substantial reasons for placing limits on opting out. The analysis focuses on opting out done by charter amendment, after a company has been formed, and highlight the differences between opting out by charter amendment and opting out in the initial charter. Analyzing the informational and collective action problems involved in the charter amendment process, I conclude that the case for placing limits on opt-out amendments is so compelling that even strong believers in free markets should recognize the need for such limits. I also provide criteria for determining the issues with respect to which, and the circumstances under which, opting out by charter amendment should be prohibited or restricted.

Changes in Quality among Public Universities.

Abstract: At a time when decentralized management is gaining favor in the business world, many public institutions of higher education and state governments are examining the wisdom of current oversight practices. To what extent should organizational authority be decentralized, and what are the appropriate mechanisms of accountability and control? These questions have become important issues in the 1980s and are under active review by corporations, governments, and multicampus systems alike. Contemporary organizational theory stresses the important role of the organization's environment [1, 13, 25]. If public universities are viewed as complex, loosely coupled organizations, their regulatory relationships with state governments form an important feature of the external climate within which these institutions pursue their goals. The Carnegie Commission on Higher Education, in its 1973 report on Governance of Higher Education, concluded that campus autonomy had declined substantially since the end of World War II [6]. In 1976 the Carnegie Foundation for the Advancement of Teaching published a report on The States and Higher Education which identified five major concerns two of them were the increasingly centralized control of public higher education and the erosion of campus autonomy.

Local Government Constitutions: A Different View of Metropolitan Governance

Abstract: Metropolitan governance in most metropolitan areas of the United States can best be understood by reference to the concept of a "local government constitution." A local government constitution is f...

Corporate Culture and Strategic Change

Abstract: In recent years, management theory has discovered a new buzz-word culture. In particular, 'corporate culture' has become the 'in' phrase not only for an army of professional management writers, but also for senior cxccutives, production managers, and finance people alike. This concept has becomc for the 1980s what 'strategic planning' was for the 1970s, as notions from anthropology such as rites, customs and values replace stars, cash cows and dogs as dominant expressions in corporate boardrooms and business seminars [2]. The concept of culture has become attractive because it offers a new panacea for corporate ills. Management journals document how cultural factors arc at the heart of best practice. Human resources experts see cultural norms as the key to the infrastructurc of informal organisation. This infrastructure is comprised of the ceremonies and rituals which give meaning to the work environment; it encompasses the core values which leaders and subordinates hold dear. Modern management texts tell managers to create corporate cultures which dovetail with effective corporate strategy. This integration is presented as the main reason for the successes of the 'Excellent' and Theory Z' companies [3]. The new axiom of administrative wisdom is that good strategy equals success only when we possess an appropriate culture. This interest in culture has turned rnanagcmcnt theory full circle. Like

Corporate ethical performance: Trends, forecasts and outlooks

Abstract: Executives, professionals, educators and labour leaders are requesting an update on corporate ethical trends This article presents an examination of why the interest in corporate ethics is growing both in society and in corporations An analysis follows of how corporations are responding to this interest, and of how that response might be enhanced through improved second-generation codes of ethical performance

The Debate on Contractual Freedom in Corporate Law

Abstract: The subject of this symposium issue - based on a conference sponsored by the Columbia Law School Center for Law and Economic Studies - is contractual freedom in corporate law. The resulting debate can be usefully divided, in my view, into two debates: one concerning contractual freedom in the charter amendment stage, and one concerning contractual freedom at the initial charter. Accordingly, Part II discusses and evaluates the debate on opting out by charter amendment, and Part III does the same for the initial charter stage. In discussing contractual freedom in corporate law, both deregulators, and the first critics of their position, focused on opting out in the initial charter - the natural context for thinking about contractual freedom. THE DEBATE ON CONTRACTUAL FREEDOM AT THE INITIAL CHARTER STAGE Also, Kornhauser discusses the possibility that some shareholder-manager arrangements have externalities with respect to bondholders. If the chosen arrangement is going to be mandatory, then efficiency would be indeed served by the officials' choosing A. Because opting out of the chosen arrangement will not be possible, the officials must assume that this arrangement will govern even if the alternative arrangement is actually the efficient one. Clearly, when a corporate law issue is to be governed by a mandatory rule, the quality of that rule - and thus the selection of the institution making that rule - is of greater significance.

School-Based Management.

Abstract: ABSTRACT This report is the fifth in a series on cultivating excellence in education for the purpose of training and retraining school leaders of the 1990s. The role of school administrators, and especially building Principals; the characteristic administrative functions; the step-by-step procedures for implementation; and the advantages and possible disadvantages of school-based management are discussed. Framing the discussion are two fundamental beliefs: (1) Those most closely affected by decisions should play a significant role in making those decisions; and (2) educational change will be most effective and long-lasting when carried out by people who feel a sense of ownership and responsibility for the process. (JAM)

New directions in hospital governance.

Abstract: This article suggests new directions for hospital governance to meet the demands of a rapidly changing health care environment. Board members must increasingly play roles as risk takers, strategic directors, experts, mentors, and evaluators. Lessons from other industries regarding risk taking, use of expertise, and streamlining decision making must be adapted to meet hospital needs. Recent data suggest that these needs may still differ by hospital ownership despite a convergence in investor-owned and not-for-profit corporate structures. The effectiveness of hospital boards in the future will depend on their ability to: (1) manage a diverse group of stakeholders; (2) involve physicians in the management and governance process; (3) meet the governance needs of multi-institutional systems and hospital restructuring; (4) meet the challenges of diversification and vertical integration; and (5) understand strategy formulation and implementation as interdependent and interrelated processes.

Governing boards and profound organizational change in hospitals.

Abstract: Over the past decade the importance of governing boards as policy-making setting and oversight units within organizations has increased dramatically. Although this is true for both corporate- and private-sector organizations (Bacon and Brown 1977; Gelman 1988), it is particularly relevant to the health sector. Hospital governing boards, long considered inconsequential in hospital management, have recently become subject to closer scrutiny. The role of governing boards in decisions affecting hospital strategy and hospital performance is once again a topic of some interest in boardrooms and hospital trade journals. Impressive evidence of the renewed interest in governance is provided by the funding of an instructional consortium by the S.K. Kellogg Foundation to help strengthen trusteeship and governing board decision making, and to improve education for health services managers in the area of governance. Members of the consortium include the Hospital Research and Educational Trust, the American Hospital Association, the American College of Healthcare Executives, and the Association for University Programs in Health Administration. Among the activities being undertaken by this consortium is the development of a self-assessment tool/methodology for boards, a bibliography and reference guide on effective governance for practicing trustees, research workshops for faculty in health administration programs, and a teaching guide on governance and trustee leadership. Despite this interest, the question with which we began this article persists. Do governing boards make a difference? In the course of our review of previous work on governance we found that, more often than not, that question has been transformed into: how do boards influence hospital performance? And very often that question has been further narrowed into: which board structure leads to better hospital performance? We have argued for a respecification of the initial question. Rather than pursuing a definition of the maximally performing governing board, we should perhaps shift our focus back to a fuller understanding of board structure and function, and its influence on hospital change. The model developed here combines four essential, and very basic, questions: 1. What are the basic dimensions that underlie structural variation in different types of governing boards? 2. How do these board types influence structural change in hospitals? 3. How is the effect of board influence on change itself likely to change over time as a function of the hospital's general pattern of growth, decline, stability, or instability?(ABSTRACT TRUNCATED AT 400 WORDS)

The new unionism : employee involvement in the changing corporation

Abstract: This important, provocative, and highly readable book defies most traditionial ideological pigeonholes. In it Charles Heckscher raises issues in such a way as to make both liberals and conservatives rethink what they believe about unions and their place in the American economic and social system. Heckscher's basic thesis is that the decline of American unions results in large part from New Deal labor law the Wagner Act and the logic of industrial unionism and contrived scarcity upon which it is based. He argues that the Wagner Act framework maintains a rigid, increasingly artificial boundary between workers and management. This boundary accounts for union commitment to adversarial tactics, the importance of the strike as a weapon in bilateral bargaining, and organized labor's insistence that benefits be based upon seniority rather than performance. Of course, this line can also be drawn by management, which is all too often willing to violate standards of fair dealing and tacit agreements for short-term gain and to make adjustments at labor's expense using layoffs to adapt to market fluctuations, increasing worker discipline, and cutting wages and benefits to meet increased price competition. Heckscher acknowledges that workers are capable of solidarity and even militance, of striking and picketing in the traditional fashion, when they are treated as an inferior mass. But he insists that given the choice, they gravitate to less adversarial, more participatory modes of interaction. Heckscher observes that managers have increasingly come to recognize the folly of treating employees as an inferior mass. To win their trust and cooperation and thereby to mobilize their intelligence and creativity, many firms now offer strong guarantees of fair treatment and employment security, and their top managers have established effective mechanisms for employee participation in the direction of the firm. Because such firms can generate an unusual degree of commitment from employees at all levels of the organization, they are often far more successful than their competitors in meeting the challenges of economic change. Heckscher concludes that unions are declining because they have failed to meet the challenge of management reform: to adapt to participatory modes of interaction in which workers share work and allocate their own tasks and in which there is close cooperation among all the members of the organization and a strong sense of team spirit. Unions have failed to adapt because of barriers to worker participation established by New Deal labor law; under the Wagner Act worker participation is not encouraged and may even be illegal. The paradox Heckscher sees in this development is that by displacing unions participatory modes of interaction have tended to concentrate power in the hands of management. Hence, the positive commitment, increased productivity, and higher real incomes that are the goals of management reform remain vulnerable to myopic abuse and deception. Heckscher notes, for example, that many managers are satisfied with the appearance of employee participation rather than the reality. Clearly, any ongoing cooperative endeavor requires a system of formal governance

Shareholder Activism and Share Values: The Causes and Consequences of Countersolicitations against Management Antitakeover Proposals

Abstract: VOTING is the fundamental mechanism whereby shareholders accept or reject incumbent directors' proposals about the structure, strategy, ownership, and management of the corporation. Efficient shareholder oversight has generally been held to imply that, faced with such choices, shareholders should vote so as to maximize the value of their holdings, and hence the value of the corporation.1 Voting should thus prevent incumbent management from proposing and securing changes in corporate structure, personnel, or strategy that further their interests at the expense of shareholders and, implicitly, of economic efficiency. For more than fifty years, however, there has been widespread agreement that this ideal is not met in practice. Rather, voting appears to be an imperfect and costly means of governance. Primary problems are rational ignorance on the part of dispersed shareholders, which occurs if per-shareholder infor-

Things Unions Do, Job Attributes, and Union Membership

Abstract: Implications of the governance and rent-seeking models of unionism for the job characteristics-union membership relationship are developed. Specific training and membership are found to be positively related, consistent with arguments that specific training governance. Membership is less likely on jobs requiring more general education—where incumbents typically see greater returns to individual mobility. Some support is found for job characteristics associated with efficiency gains to a collectivized employment relationship.