Journal of Business Ethics 126 (2):1-15 (2015)

Abstract
Under conditions of growing interconnectedness of the global economy, more and more stakeholders are exposed to risks and costs resulting from business activities that are neither regulated nor compensated for by means of national governance. The changing distribution of risks poses a threat to the legitimacy of business firms that normally derive their legitimacy from operating in compliance with the legal rules of democratic nation states. However, during the process of globalization, the regulatory power of nation states has been weakened and many production processes have been shifted to states with weak regulatory frameworks where businesses operate outside the reach of the democratic nation state. As a result, business firms have to address the various legitimacy challenges of their operations directly and cannot rely upon the legitimacy of their regulatory environment. These developments challenge the dominant approach to corporate governance that regards shareholders as the only stakeholder group in need of special protection due to risks not covered by contracts and legal regulations. On the basis of these considerations, we argue for a democratization of corporate governance structures in order to compensate for the governance deficits in their regulatory environment and to cope with the changing allocation of risks and costs. By way of democratic involvement of various stakeholders, business firms may be able to mitigate the redistribution of individual risk and address the resulting legitimacy deficits even when operating under conditions of regulatory gaps and governance failure
Keywords Corporate democracy  Corporate governance  Globalization  Legitimacy  Risk
Categories (categorize this paper)
Reprint years 2015
ISBN(s)
DOI 10.1007/s10551-013-1943-4
Options
Edit this record
Mark as duplicate
Export citation
Find it on Scholar
Request removal from index
Revision history

Download options

PhilArchive copy


Upload a copy of this paper     Check publisher's policy     Papers currently archived: 71,464
External links

Setup an account with your affiliations in order to access resources via your University's proxy server
Configure custom proxy (use this if your affiliation does not provide a proxy)
Through your library

References found in this work BETA

Risk Society: Towards a New Modernity.Ulrich Beck, Mark Ritter & Jennifer Brown - 1993 - Environmental Values 2 (4):367-368.

View all 31 references / Add more references

Citations of this work BETA

A Deliberative Case for Democracy in Firms.Andrea Felicetti - 2018 - Journal of Business Ethics 150 (3):803-814.

Add more citations

Similar books and articles

Corporate Governance and Trust in Business: A Matter of Balance.G. J. Rossouw - 2005 - African Journal of Business Ethics 1 (1):1.
Theorising South Africa’s Corporate Governance.Andrew West - 2006 - Journal of Business Ethics 68 (4):433 - 448.
Corporate Governance in Brazil.Flávio M. Rabelo & Flávio C. Vasconcelos - 2002 - Journal of Business Ethics 37 (3):321 - 335.
Corporate Governance in South Africa.G. J. Rossouw, A. Van der Watt & D. P. Malan - 2002 - Journal of Business Ethics 37 (3):289 - 302.
Corporate Governance in South Africa.G. J. Rossouw, A. van der Watt & D. P. Malan Rossouw - 2002 - Journal of Business Ethics 37 (3):289 - 302.
Ethics, Corporations, and Governance.Wesley Cragg & Dirk Matten - 2011 - Journal of Business Ethics 102 (S1):1-4.
Corporate Governance in Mexico.Bryan W. Husted & Carlos Serrano - 2002 - Journal of Business Ethics 37 (3):337 - 348.

Analytics

Added to PP index
2013-11-22

Total views
22 ( #515,864 of 2,520,750 )

Recent downloads (6 months)
2 ( #270,555 of 2,520,750 )

How can I increase my downloads?

Downloads

My notes