| I evaluate political and economic factors conditioning British corporate governance since 1989. Corporate governance concerns the relative power of managers, investors, and 'stakeholders' (chiefly employees & environmentalists) in publicly traded companies. I ask why reform of national governance structures has favored investors and managers rather than stakeholders during fifteen years of politicization and economic change. New regulatory institutions strengthened investor protection after corporate collapses during the early 1990s, but they did so at only marginal cost to managerial autonomy. Notwithstanding the European Union and the Labour Government's wide-ranging debate on company law between 1998--2001, stakeholders gained no more than token accountancy provisions. Instead, the Blair Government pursued a weak strategy of cajoling managers and promoting 'corporate social responsibility.' Ministers increased state regulatory oversight in governance following Enron/WorldCom in 2002, but again did not take aggressive action against managers. What explains these outcomes? Despite suggestions to the contrary, I argue that economic, private, and coalitional routes to stakeholding are not viable. Only decisive state action could transform companies and regulatory traditions protecting investors while preserving managerial flexibility. But while cabinet government is very strong, political-economic structures sustained by global capital markets make the costs of dramatic change extremely high. Institutional complementarities mean reform would be necessary across the economy. Moreover, pluralist coalitions between employees and investors will support only innocuous challenges to managers. Despite sharing the stakeholder critique of corporate governance, Labour ministers were unwilling to act decisively. I conclude with a brief discussion of stakeholding reform and liberal democracy. |
