NOTES * Assistant Professor, University of Michigan. Ph.D., Northwestern University, 1995; J.D. Northwestern University Law School, 1983; M.A., University of Notre Dame, 1984; B.A., University of Notre Dame, 1980. ** Professor, University of Michigan. J.D. 1982, University of Chicago; B.A. 1979, Michigan State University. *** Copyright © 2000, Timothy L. Fort & Cindy A. Schipani. All rights reserved. The authors gratefully acknowledge the permission granted by the Vanderbilt Journal of Transnational Law, in which this article is forthcoming, for granting permission for publication of this paper in this journal. The authors also gratefully acknowledge the International Law Section of the Academy of Legal Studies in Business for selecting this paper for the 2000 Ralph Bunche Award and to Prentice-Hall Business Publishing for sponsoring the Bunche Award. Finally, the authors would like to gratefully acknowledge the valuable research assistance of Brian Broughman and Rachel Tausend. 1. Vaclev Havel, Disturbing the Peace 14 (1987). 2. See e.g., The Battle in Seattle, Economist, Nov. 27, 1999, at 21; The New Radicals, NewsWeek, Dec. 13, 1999 at 36; David Postman, Resistance Takes Fast Track — Protesters Training Now For Sit-ins, Blockades, Seattle Times, Sept. 10, 1999, at A1; Lynda Gorov, The Varied Foes of WTO Unite in Seattle Protests, Boston Globe, Nov. 30, 1999, at A1. 3. See e.g., Jane Perlez, At Trade Forum, Clinton Pleads for the Poor, N.Y. Times, Jan. 30, 2000, §1, at 8; David Greising, Shades of Seattle Riot as Clinton Addresses Elite Economic Forum, Chicago Tribune, Jan. 30, 2000, at C13. 4. Amitai Etzioni, The New Golden Rule (1996); see also Antonin Wagner, Communitarianism: A New Paradigm of Socioeconomic Analysis, 24 J. Socio-Econ. 593, 598 (1995); Freedom and Community: The Politics of Restoration, Economist, Dec. 24, 1994, at 33. 5. For general background on the debate, see Michael Bradley, Cindy A. Schipani, James P. Walsh & Anant K. Sundaram, The Purposes and Accountability of the Corporation in Contemporary Society: Corporate Governance at a Crossroads, 62 Law & Contemp. Probs. 9, 33-45 (1999). For views on the corporation as a natural entity, see generally, David Millon, Theories of the Corporation, 1990 Duke L.J. 201 (1990); Thomas Lee Hazen, The Corporate Persona, Contract (and Market) Failure, and Moral Values, 69 N.C. L. Rev. 273 (1991); David Millon, New Directions in Corporate Law: Communitarians, Contractarians, and the Crisis in Corporate Law, 50 Wash & Lee L Rev. 1373 (1993). For arguments from the law and economics literature depicting the corporation as a nexus of contracts, see generally, Ronald Coase, The Nature of the Firm, 4 Economica 386 (1937) (emphasizing the nature of the firm as a center of contracts to reduce the transaction costs of business); Armen A. Alchian & Harold Demsetz, Production, Information Costs, and Economic Organization, 62 Am. Econ. Rev. 777 (1972); Michael C. Jensen & William H. Meckling, Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure, 3 J. Fin. Econ. 305 (1976). 6. See, e.g., Bradley et al., supra note 5, at 61. 7. Mark G. Robilotti, Codetermination, Stakeholder Rights, and Hostile Takeovers: A Re-evaluation of the Evidence from Abroad, 38 Harv. Int’l L.J. 536, 538 (1997); see also Steven M. H. Wallman, The Proper Interpretation of Corporate Constituency Statutes and Formulation of Director Duties, 21 Stetson L. Rev. 163, 169-170 (1991). 8. Bradley, et al., supra note 5. 9. See Organization for Economic Cooperation and Development, Organization for Economic Cooperation and Dev., OECD Economic Surveys: Germany 117 1995-5, [hereinafter OECD Germany], at 117. 10. See id. 11. See Mitsuhiro Fukao, Financial Integration, Corporate Governance, and the Performance of Multinational Corporations 70 (1995). 12. OECD Germany, supra note 9, at 104. 13. See generally, Bernard S. Black & Ronald J. Gilson, Venture Capital and the Structure of Capital Markets: Banks Versus Stock Markets, 47 J. Fin. Econ. 243 (1998). 14. See Curtis J. Milhaupt, The Market for Innovation in the United States and Japan: Venture Capital and the Comparative Corporate Governance Debate, 91 Nw. U. L. Rev. 865, 881-82 (1997). 15. See id. at 883. 16. U.S. Department of Labor, International Comparisons of Hourly Costs for Production Workers in Manufacturing, 1975-1996, Tbl. 2 (Bureau of Labor Statistics Office of Productivity and Technology, June 1997). 17. Id. 18. See generally, Organization for Economic Cooperation and Development, The OECD Jobs Study: Evidence and Explanations: Part 1: Labour Market Trends and Underlying Forces of Change (OECD, 1994). From 1980 through 1995, the unemployment rate in the U.S. decreased to 5.4% from 7.1%. During the same period, the unemployment rate increased to 6.5% from 2.0% in West Germany and to 3.4% from 2% in Japan. 1997 Statistical Abstract of the United States, U.S. Department of Commerce Bureau of Census, at 845. 19. Coase introduced the theory that firms consist of a nexus of contracts designed to minimize transaction costs. See generally Coase, supra note 5, at 386. 20. Of course, similar problems were even more dramatically evidenced by former (and current) socialist states. 21. The efficiencies of scale and thirst for power are inimical to individual meaning-making. Indeed, it is this problem that gives rise to Alasdair MacIntyre's repeated condemnation of bureaucracy as concealing critical assumptions about meaning. See generally Alasdair MacIntyre, After Virtue (1981); Alasdair MacIntyre, Whose Justice? Which Rationality (1988); Alasdair MacIntyre, Dependent Rational Animals: Why Human Beings Need Virtues (1999). 22. MacIntyre, After Virtue, supra note 21, at 24-26. 23. Id. at 103. 24. For example, see infra note 64 for a listing of over 40 states adopting statutes permitting corporate directors to consider the interests of non-shareholder constituencies in making various corporate decisions. 25. See Bradley et al., supra note 5, at 66-68. 26. The LGT Guide to World Equity Markets 1997, 500 (1997). 27. Id. 28. See OECD Germany, supra note 9, at 88, Tbl. 23. 29. See id. 30. For stock market data, see International Finance Corp., Emerging Stock Markets Factbook 17 (1998). For GDP data, see International Monetary Fund, International Financial Statistics 315, 397, 745 (July 1998). 31. The Merger Yearbook 1999, at 15, 22-23 (Securities Data Exchange). 32. See Stephen Prowse, Corporate Governance in an International Perspective: A Survey of Corporate Control Mechanisms Among Large Firms in the United States, the United Kingdom, Japan, and Germany, BIS Economic Papers No. 41 (Bank for International Settlements, July 1994), at 47. 33. Bradley et al., supra note 5, at 58; see also, A Texas Raider Rocks Club Japan, U.S. News & World Report, Apr. 17, 1989, at 15. 34. Rafael La Porta, Florencia Lopez-De-Silanes, & Andrei Shleifer, Corporate Ownership Around the World, Journal of Finance, Apr. 1, 1999. See also Roy C. Smith, Restructuring Japanese Financial Institutions, Wash. Qtrly, (1999), at 181, for a discussion of cross-shareholding and its effect on merger and acquisition activity. 35. See Prowse, supra note 32, at 47. 36. Between World War II and 1993, there were only four hostile takeovers in Germany. Julian Franks & Colin Mayer, German Capital Markets, Corporate Control, and Obstacles to Hostile Takeovers: Lessons from Three Case Studies, London Business School Working Paper (1993). 37. Bradley et al., supra note 5, at 55; see also, Prowse, supra note 32, at 46-54. 38. See Prowse, supra note 32, at Tbl. 5, 28-29 39. Id. 40. See Securities Exchange Act of 1934, ch. 404, 48 Stat. 881; 7 Louis Loss & Joel Seligman, Securities Regulation 3448-66 (1991). 41. See Fukao, supra note 11, at 119. 42. See id. 43. German tax laws generally explain this choice of accounting rules. See id. at 120-21. 44. Nancy Rivera Brooks, Advisory May Imperil Worker Stock Options, Los Angeles Times, Jan. 22, 2000. 45. NCEO Library: ESOPs, Stock Options, and 401(k) Plans Now Control 8.3% of Corporate Equity, http://www.nceo.org/library/control_eq/html, visited Mar. 3, 2000 at A1. 46. Id. 47. Adam Bryant, After 7 Years, Employees Win United Airlines, N.Y.Times., July 13, 1994, at A1. 48. See UAL; Company Profile, Hoover’s Online, http://www.hoovers.com/premium/profile.0/0,2147,11520,00.html, visited Mar. 3, 2000. See also United Airlines, DEF14A Proxy Statement, Mar. 23, 2000. 49. See Steven Greenhouse, The U.P.S. Walkout: News Analysis; High Stakes for 2 Titans, N.Y.Times., Aug. 5, 1997, at A1. 50. Nichole M. Christian, 3,400 Strike G.M. Plant; Assembly Put at Risk, N.Y.Times., June 6, 1998, at A7. 51. Business Headlines, The Dayton Daily News, Feb. 25, 2000, at E2. 52. No Country For Old Men, Economist, May 1, 1999, at 60. 53. See Stephen M. Banker, Climate for M&A in Japan Shifts, Country Appears to be Overcoming Its Traditional Cultural and Legal Barriers, N.Y. L.J., Nov. 15, 1999, at S4. 54. See Structural and Regulatory Developments in OECD Countries, Financial Market Trends, Nov. 1, 1998, at 17; see also Bruce Kelly, Corporate Governance is Key: Investors' Demands Lead to Increased Changes Worldwide, Pensions & Investments, December 14, 1998, at 16; Greg Steinmetz, German Shift On Cutbacks May Lift Stock, Wall Street Journal Europe, Jan. 13, 1997. 55. See OECD Germany, supra note 9, at 120. 56. See Fukao, supra note 11. 57. Michael J. Phillips, Corporate Moral Personhood and Three Conceptions of the Corporation, 2 Bus. Ethics Q. 435, 437 (1992) (citing John Marshall on 434 in Trustees of Dartmouth College v. Woodward, 17 U.S. (4 Wheat) 518 (1819)); see also Justice Brandeis’ dissent in Liggett v. Lee, 288 U.S. 517, 549 (1933) (observing that "there was a sense of some insidious menace in large aggregations of capital, particularly when held by corporations. So at first, the corporate privilege was granted sparingly; and only when the grant seemed necessary in order to procure for the community some specific benefit otherwise unattainable."); Millon, supra note 5, at 207. 58. Stephen B. Presser, Thwarting the Killing of the Corporation: Limited Liability, Democracy, and Economics, 87 Nw. U. L. Rev. 148, 156 (1992). 59. Id. 60. In 1919, the Michigan Supreme Court decided in favor of private accountability to the shareholders. Dodge v. Ford Motor Co., 170 N.W. 668, 684 (Mich. 1919). In the early 1930s, two highly respected legal theorists, Professor Adolf A. Berle of Columbia Law School and Professor E. Merrick Dodd of Harvard, took up the debate in their classic series of articles. See A. A. Berle, Jr., Corporate Powers as Powers in Trust, 44 Harv. L. Rev. 1049 (1931); E. Merrick Dodd, Jr., For Whom Are Corporate Managers Trustees?, 45 Harv. L. Rev. 1145 (1932); A. A. Berle, Jr., For Whom Corporate Managers Are Trustees: A Note, 45 Harv. L. Rev. 1365 (1932); E. Merrick Dodd, Jr., Is Effective Enforcement of the Fiduciary Duties of Corporate Managers Practicable?, 2 U. Chi. L. Rev. 194 (1935). For a more modern view of the debate, see A.A. Sommer, Jr., Whom Should the Corporation Serve?: The Berle-Dodd Debate Revisited Sixty Years Later, 16 Del. J. Corp. L. 33 (1991). 61. Delaware General Corporation Law § 102(a)(3). The Revised Model Business Corporation Act similarly provides that "every corporation incorporated under this Act has the purpose of engaging in any lawful business unless a more limited purpose is set forth in the articles of incorporation." Revised Model Business Corporation Act § 3.01. 62. Dodge v. Ford Motor Co., 170 N.W. 668, 684 (Mich. 1919). 63. American Law Institute, Principles of Corporate Governance: Analysis and Recommendations §2.01 (1994). 64. The following statutes permit directors to consider the interests of non-shareholder constituencies in any appropriate context: CONN. GEN. STAT. § 33-756(d) (1999) (mandating consideration of non-shareholder constituencies); FLA. STAT. ch. 607.0830(3) (Supp. 1999); GA. CODE ANN. § 14-2-202(b)(5) (Supp. 1998); HAW. REV. STAT. § 415-35(b) (1997); IDAHO CODE § 30-1702 (1999); 805 ILL. COMP. STAT. 5/8-85 (1999); IND. CODE § 23-1-35-1(d) (1999); ME. REV. STAT. ANN. tit. 13-A, § 716 (West Supp. 1999); MASS. GEN. LAWS ANN. ch. 156B, § 65 (West Supp. 1998); MINN. STAT. § 302A.251(5) (Supp. 1999); MISS. CODE ANN. § 79-4-8.30(d) (1998); NEV. REV. STAT. § 78.138(3) (1999); N.J. STAT. ANN. § 14A:6-1(2) (2000); N.M. STAT. ANN. § 53-11-35(D) (Michie 1997); N.Y. BUS. CORP. LAW § 717(b) (McKinney Supp. 1999); N.D. CENT. CODE § 10-19.1-50(6) (Supp. 1997); OHIO REV. CODE ANN. § 1701.59(E) (Anderson 1999); OR. REV. STAT. § 60.357(5) (Supp. 1996); 15 PA. CONS. STAT. § 515 (1995); WIS. STAT. § 180.0827 (West 1995); WYO. STAT. ANN. § 17-16-830(e) (Michie 1997). The following statutes permit directors to consider the interests of non-shareholder constituencies in the context of transactions for corporate control: ALA. CODE § 10-2B-11.03(c) (1994); ARIZ. REV. STAT. §§ 10-2702, 10-1202(c) (1996) (sale of assets); ARK. CODE ANN. § 4-27-1202(C) (Michie 1996) (sale of assets); COLO. REV. STAT. §§ 7-106-105(7) (reverse splitting of shares), 7-111-103(3), 7-114-102(3) (1998) (authorization of dissolution after issuance of shares); IOWA CODE § 491.101B (1999); KY. REV. STAT. ANN. §§ 271B.11-030(2)(b), 271B.12-020(3) (Banks-Baldwin 1989) (sale of assets); LA. REV. STAT. ANN. § 12:92(G) (West 1994); MO. ANN. STAT. § 351.347 (West 1991); MONT. CODE ANN. §§ 35-1-815(3), 35-1-823(3) (1997) (sale of assets); N.H. REV. STAT. ANN. §§ 293-A:11.03(c), 293-A:12.02(c) (Supp. 1996) (sale of assets); N.C. GEN. STAT. §§ 55-11-03(c), 55-12-02(c) (1990) (sale of assets); R.I. GEN. LAWS § 7-5.2-8 (1992); S.C. CODE ANN. §§ 33-11-103(c), 33-12-102(c) (Law. Co-op. 1990) (sale of assets); S.D. CODIFIED LAWS § 47-33-4 (Michie 1991); TENN. CODE ANN. § 48-103-204 (1995); TEX. BUS. CORP. ACT ANN. art. 5.03 (West Supp. 1999); UTAH CODE ANN. § 16-10a-1103(3) (1995); VT. STAT. ANN. tit. 11A, §§ 11.03(c), 12.02(c) (1997) (sale of assets); VA. CODE ANN. § 13.1-718(C) (Michie 1993); VA. CODE ANN. § 13.1-724(C) (Michie Supp. 1998) (sale of assets); WASH. REV. CODE §§ 23B.11.030(3), 23B.12.020(3) (1994) (sale of assets). The following states and territories do not have specific legislation regarding consideration of the interests of non-shareholder constituencies: Alaska, California, Delaware, District of Columbia, Kansas, Maryland, Michigan, Nebraska, Oklahoma, Puerto Rico, Virgin Islands, and West Virginia. 65. See Delaware Div. of Corps., DELAWARE: The Corporate Choice (last modified Feb. 1, 2000), http://www.state.de.us/corp/index.htm; E. Norman Veasey, An Economic Rationale for Judicial Decisionmaking in Corporate Law, 53 Bus. Law. 681 (May 1998). 66. See generally, Rima F. Hartman, Note, Situation-Specific Fiduciary Duties for Corporate Directors: Enforceable Obligations or Toothless Ideals?, 50 Wash. & Lee L. Rev. 1761 (1993); James J. Hanks Jr., Playing With Fire: Nonshareholder Constituency Statutes in the 1990s, 21 Stetson L. Rev. 97 (1991); William J. Carney, Does Defining Constituencies Matter?, 59 U. Cin. L. Rev. 385 (1990). 67. See Eric W. Orts, Beyond Shareholders: Interpreting Corporate Constituency Statutes, 61 Geo. Wash. L. Rev., Nov. 1992, at 14, 91-92 (1992). 68. Alejandro Reyes, Playing a New Tune, AsiaWeek, Nov. 19, 1999, at 64. 69. Bradley et al., supra note 5. 70. Yutaka Imai, Reinvigorating Business Dynamism in Japan, OECD Observer, Jan. 1999, at 6. But see Martin Lipton and Steven A. Rosenblum, A New System of Corporate Governance: The Quinquennial Election of Directors, 58 U. Chi. L. Rev. 187, 222 (asserting that the structure of stock ownership within Japanese corporations has aligned the interests of management and stockholders). 71. Bradley et al., supra note 5, at 51. 72. See Detlev F. Vagts, Reforming the "Modern" Corporation: Perspectives from the German, 80 Harv. L. Rev. 23, 40 (1966). 73. See id. at 41. 74. See Bradley et al., supra note 5, at 51. 75. See OECD Germany, supra note 9, at 84. See also Stefan Wagstyl, crumbs from the Table, Fin. Times, Sept. 25, 1996, at 15 (noting that the German language does not include a phrase for the words "shareholder value"). 76. See generally, Robert Nisbet, The Quest for Community (1991). 77. See Bureau of Census, U.S. Dep’t of Commerce, Statistical Abstract of the United States 524 tbl.808 (1997). 78. See Stephen L. Nesbitt, Long-Term Rewards from Shareholder Activism: A Study of the CalPERS Effect, J. Applied Corp. Fin., 75 (Winter 1994). 79. See OECD Germany supra note 9 at 88, tbl. 23. 80. See id. 81. Bradley et al., supra note 5, at 56; see generally E. Berglof & E. Perotti, The Governance Structure of the Japanese Financial Keiretsu, 36 J. Fin. Econ. 259 (1994); David Flath, Shareholdings in the Keiretsu, Japan's Financial Groups, Rev. Econ. & Stat. 249 (1993); Hesna Genay, Japan’s Corporate Groups, 15 Econ. Persp. 20 (1991); Ronald Gilson & Mark J. Roe, Understanding the Japanese Keiretsu: Overlaps Between Governance and Industrial Organization, 102 Yale L.J. 871, 894-95 (1993); W. Carl Kester, Japanese Takeovers: The Global Contest for Corporate Control (1991). 82. See Paul Sheard, The Main Bank System and Corporate Monitoring and Control in Japan, 11 J. Econ. Behav. & Org. 399, 402 (1989). 83. See Robert Lightfoot & W. Carl Kester, Note on Corporate Governance Systems: The United States, Japan, and Germany 69-74 (1991). 84. Mary Ann Maskery, Safety Net; Web of Ownership Between Banks, Auto Industry Keeps Companies Alive, Automotive News, Aug. 6, 1990, at 1. 85. See Richard Pascale & Thomas P. Rohlen, The Mazda Turnaround, 9 J. Japanese Stud. 219 (1983), at 233-57. 86. See id. 87. See, e.g., Brenton R. Schlender, Japan’s New Realism: Don’t Count this Superpower Out, Fortune, Oct. 31, 1994, at 117. 88. Auto Parts Sales to Japan Rise, Chicago Tribune, Jan. 22, 1995, at CN 11. 89. Id. 90. James B. Treece, Nissan Untethers Suppliers and Itself, Automotive News, April 12, 1999, at 26. 91. Japan Inc. Faces Radical Change, Banker, Oct, 1, 1999; see also Merge-or-Submerge Fever Spreads as Keiretsu Die Out, Daily Yomiuri (Tokyo), Dec. 21, 1999, at 9. 92. Japan Inc. Faces Radical Change, supra note 91. 93. Bradley et al., supra note 5, at 57. 94. Ronald J. Gilson & Mark J. Roe, Essay: Lifetime Employment: Labor Peace and the Evolution of Japanese Corporate Governance, 99 Colum. L. Rev. 508, 529 (1999). 95. Masahiko Aoki, The Japanese Firm as a System of Attributes: A Survey and Research Agenda, in The Japanese Firm: The Sources of Competitive Strength (Masahiko Aoki & Ronald Doe, eds. 1994), at 11, 18. 96. See Prowse, supra note 32, at 23, 26. 97. Id. at 24-26. 98. Smith, supra note 34, at 181. 99. Kathy Matsui, Mergermania — Premature Euphoria, Goldman Sachs Japan Economic Research Group, Jan. 25, 1999, cited in Smith, supra note 35, at 181. 100. See OECD Germany, supra note 9, at 88. 101. See Fukao, supra note 11, at 27. 102. See id. 103. See OECD Germany, supra note 9, at 120. 104. See Stakeholder Capitalism: Unhappy Families, Economist, Feb. 10, 1996, at 23, 25. 105. See Edward Carr, Survey, Business in Europe: Fortress Against Change, Economist, Nov. 23, 1996, at 12. 106. See Revised Model Business Corporation Act § 8.08; Delaware General Corporation Law §141(k). 107. See James Abbeglen & George Stalk Jr., Kaisha: The Japanese Corporation 183 (1985); Fukao, supra note 11, at 98. 108. See Prowse, supra note 32, at 42. 109. No Country For Old Men, supra note 52, at 60. 110. Id. 111. Id. 112. Id. 113. Almost 78% of japanese directors are promoted from among employees. See Fukao supra note 11. A recent article in The Economist opened by quoting a young Japanese politician exclaiming "(d)amn these old bastards," in reference to the aging Japanese company men who are thwarting the radical change sought by Japan’s younger businessmen and politicians. No Country For Old Men, supra note 52, at 52. 114. No Country For Old Men, supra note 52, at 60. 115. Id. 116. No Country For Old Men, supra note 52, at 60. 117. From Squares to Pyramids, Economist, Nov. 27, 1999. 118. No Country For Old Men, supra note 52. 119. Id. 120. Id. 121. Id. 122. Gilson & Roe, supra note 81, at 535. 123. Mark J. Roe, German Codetermination and German Securities Markets, 1998 Colum. Bus. L. Rev. 167, 171-173 (1998). 124. See OECD Germany, supra note 9, at 86. 125. Bradley et al., supra note 5, at 52. 126. See OECD Germany, supra note 9, at 86. In companies with fewer than 2,000 employees, the ratio of employee to non-employee representation is one-to-two. 127. See OECD Germany, supra note 9, at 86. For more details about German boards, see generally, Prowse, supra note 32, see also Alfred F. Conrad, Corporate Constituencies in Western Europe, 21 Stetson L. Rev. 73 (1991); Fukao, supra note 11, at 100-01; Jonathan R. Macey & Geoffrey Miller, Corporate Governance and Commercial Banking: A Comparative Examination of Germany, Japan, and the United States, 48 Stan. L. Rev. 73 (1995); Mark J. Roe, German "Populism" and the Large Public Corporation, 14 Int’l Rev. L. & Econ. 187 (1994); Mark J. Roe, Some Differences in Corporate Structure in Germany, Japan, and the United States, 102 Yale L.J. 1927 (1993); Vagts, supra note 72. 128. See Klaus J. Hopt, Labor Representation on Corporate Boards: Impacts and Problems for Corporate Governance and Economic Integration in Europe, 14 Int’l Rev. L. & Econ. 203, 205 (1994). 129. See Philip Glouchevitch, Juggernaut — The German Way of Doing Business 136 (1992); see also Lightfoot & Kester, supra note 83, at 10. 130. Bradley et al., supra note 5, at 52. 131. See generally, M. Aoki, Toward an Economic Model of the Japanese Firm, 28 J. Econ. Lit. 1 (1990); Gilson & Roe, supra note 81, at 510. 132. Wai Shun Wilson Leung, The Inadequacy of Shareholder Primacy: A Proposed Corporate Regime That Recognizes Non-Shareholder Interests, 30 Colum. J.L. & Soc. Probs. 587, 630 (1997). 133. Gilson & Roe, supra note 81, at 530. 134. See Fukao, supra note 11, at 59 135. Jennifer Reingold & Ronald Grover, Executive Pay, Business Week, Apr. 19, 1999, at 72. 136. Id. 137. Id. 138. Shirley Fung, How Should We Pay Them? Across the Board, June 1, 1999, at 36. 139. The Financial Executive Institute is an Arthur Anderson entity composed of 88% US and 12% Canadian companies. Id. 140. For example, out of a sample of 119 large Japanese firms, none used stock options for top executive compensation. In contrast, all of the111 large U.S. corporations included in the sample used stock options to compensate their top executives. See Steven N. Kaplan, Top Executive Rewards and Firm Performance: A Comparison of Japan and the United States, 102 J. Pol. Econ. 510, 534-536, tbl.4 (1994). 141. Who Wants to Be a Billionaire? Economist, May 8, 1999, at 56. 142. Id. 143. From Squares to Pyramids, supra note 117. 144. See Brian Bremner, The Stock-Option Comes to Japan, Business Week, Apr. 19, 1999, at 39. 145. See Jon Choy, Hashimoto Lights Fuse For "Big Bang" in Japan's Financial Sector, JEI Report, Nov. 22, 1996; Laying the Charge for the Big Bang, 147 Banker 108, July 1, 1997; Changing Japan: Whispering reform — Against all expectations, it looks as if Japan really is reforming its economy, Economist, Jan. 11, 1997, at 19. See generally A Survey of Japanese Finance, Economist, June 28, 1997, at 56. 146. See Structural and Regular Developments in OECD Countries, supra note 54, at 17. 147. See supra notes 53-56 and accompanying text. 148. See Carr, supra note 105, at 12. 149. This notion of ownership is akin to a property-like interest in one's work. The property notion, of course, has long been linked to work. John Locke, of course, "introduced the notion that the origin of material property lies in labor…[p]roperty comes into existence when an individual applies labor to objects belonging to no one." Richard Pipes, Property and Freedom: The Story of How Through the Centuries Private Ownership Has Promoted Liberty and the Rule of the Law, at 35-36 (1999). Locke held that the mixing of labor with property created a property interest in the resulting product and that the protection of property rights was the raison d'etre for government (Id. at 37). Abraham Lincoln concurred that labor is prior to, and independent of, capital. Capital is only the fruit of labor and thus could not without it. Labor is the superior of capital, and deserves the higher consideration. Capital has its rights, which are as worthy of protection as any other rights. Nor is it denied that there is, and probably always will be, a relation between capital and labor, producing mutual benefits. The error is in assuming that the whole labor of a community exists within that relation." Abraham Lincoln, Reply to a Committee from the Workmen’s Association of New York (Mar. 21, 1864) in The Collected Works of Abraham Lincoln (Roy P. Balser, ed. 1953). 150. James T. Burtchaell, Philemon’s Problem 101 (1973). 151. Thomas J. Andre, Jr., Some Reflections on German Corporate Governance: A Glimpse at German Supervisory Boards, 70 Tulane Law Review 1819 (1996). One of the more frequent criticisms of the German model is that the shareholder representative component of the supervisory boards of German companies tends to be dominated by representatives of a few large German banks, with a small number of other individuals, many of whom also have close business or professional relationships to the company on whose board they sit. The implicit suggestion in the criticism is that the interrelationships among these individuals may sometimes be too close to allow effective monitoring of corporate management. 152. Bradley et al., supra note 5, at 10. 153. See generally, Mitsuhior Umezu, Relational Ethics and the Context of Trust: Understanding the Ethical Basis of Paternalistic Japanese Business, at 4 (Presentation at Meeting of the Society of Business Ethics, 1999) (manuscript on file with authors). 154. Id. at 5. 155. Id. at 5. 156. Id. at 6 (following Japanese philosopher Watsuji). 157. Id. at 6. 158. Id. at 9. 159. Id. at 10-11 arguing that the west tends not to make distinctions between these three. 160. Timothy L. Fort, Ethics, Governance and Law: Business as Mediating Institution (forthcoming); Timothy L. Fort, Business as Mediating Institution, 6 Bus. Ethics Q. 149 (1996); Timothy L. Fort, The Corporation as a Mediating Institution: An Efficacious Synthesis of Stakeholder Theory and Corporate Constituency Statutes, 73 Notre Dame L. Rev. 173 (1997). 161. Id. 162. See generally, MacIntyre, supra note 21. 163. See generally, Robert Jackall, Moral Mazes: The World of Corporate Managers (1988). 164. Frederick B. Bird & James A. Waters, The Moral Muteness of Managers, 32 California Management Review (1989). 165. Id. 166. Richard B. Madden, The Larger Business Organization as Mediating Structure, in Democracy and Mediating Structures: A Theological Inquiry 110-11 (Michael Novak, ed. 1980). 167. Id. at 110-11. 168. Peter Berger & Richard J. Neuhaus, To Empower People: The Role of Mediating Structures in Public Policy 28 (1977). 169. Madden, supra note 166. 170. Michael Novak, Business as a Calling: Work and the Examined Life 139-45 (1996). 171. See generally, Larry Kramer, The Confidence of the People: Size, Representation, and the Constitutional Role of Political Parties, (Legal Theory Workshop Presentation at the University of Michigan Law School, Nov. 5, 1999) (manuscript on file with authors). 172. Id. at 27 (quoting New York Governor George Clinton).
Id. at 30-31 (omitting citations). 173. Id. at 35. 174. Id. at 62. 175. Id. at 76. 176. Id. at 85. 177. See generally, Steven G. Calabresi, Political Parties as Mediating Institutions, 61 U. Chi. L. Rev. 1479 (1994). 178. See generally, Michael Keeley, A "Matter of Opinion, What Tends to The General Welfare:" Governing the Workplace, 10 Bus. Ethics Quart. 243, 247 (2000). 179. Id. at 246. 180. Id. at 248. 181. Id. at 248.
Id. at 251. 182. Id. at 252. 183. Peter J. Richerson & Robert Boyd, Complex Societies: The Evolutionary Origins of a Crude Superorganism, 10 Human Nature 253, 272-73 (1999). 184. Id. Anthropologist Roy Rappaport calls this kind of institution a "cybernetic form." This denotes "a structure or form [providing] "negative feedback," such that deviations of the states of components of the loop from reference values initiate processes tend to return those states to their reference values." Roy A. Rappaport, Ecology, Meaning & Religion 76 (1979). 185. Id. 186. Salvador Minuchin & H. Charles Fishman, Family Therapy Techniques 13 (1981). 187. Id. at 14-15. 188. Gail G. Whitchurch & Larry L. Constantine, Systems Theory 325, in Sourcebook of Family Theories and Methods: A Contextual Approach (Pauline G. Boss, William J. Doherty, Ralph LaRossa, Walter R. Schumm, and Suzanne K. Steinmetz, eds.1993). 189. Id. at 331-34. 190. Benjamin Benson, Do You Keep Too Many Secrets, 402-403 in Ward reprinted from Nation's Bus., Aug. 1989. 191. Bernard Black & Reiner Kraakman, A Self-Enforcing Model of Corporate Law, 109 Harv. L. Rev. 1911, 1916 (1996). 192. Rob Goffee & Gareth Jones, What Holds the Modern Company Together, Harv. Bus. Rev. 113-134 (Nov.-Dec. 1996). 193. See, e.g., Robert Clark, Corporate Law § 1:2.4 at 21-22 (1986). 194. See e.g., Katherine Van Wezel Stone, Employees as Stakeholders under State Non-Shareholder Constituency Statutes, 21 Stetson L. Rev. 45, 54-55, 70-71 (1991). 195. See e.g., James J. Hanks, Jr., Playing with Fire: Non-Shareholder Constituency Statutes in the 1990s, 21 Stetson L. Rev. 97, 111 (1991). 196. William Frederick, Values, Nature, and Culture in the American Corporation (1995). 197. Id. at 30. 198. Id. at 57-78. 199. Id. at 134-67. 200. Michael Novak, The Spirit of Democratic Capitalism (1982). 201. Timothy L. Fort, How Relationality Shapes Business and Its Ethics, 160 Bus. Ethics 1381 (1997) (provides a rationale for how these naturalistic forces are present in corporate settings). 202. Frederick, supra note 196, at 30. 203. Roberta Romano, A Guide to Takeovers: Theory, Evidence, and Regulation, 9 Yale J. Reg. 119 (1992). 204. Pipes, supra note 149, at 80. 205. Id. 206. John Locke, Two Treatises of Government (Peter Laslette, ed. 1960). 207. Lincoln, supra note 149. 208. See Rushworth M. Kidder, How Good People Make Tough Choices: Resolving the Dilemmas of Ethical Living 90-92 (1995). 209. Kramer, supra note 171, at 30-31. 210. See Michael C. Keeley, A Social Contract Theory of Organizations 129 (1988). 211. See e.g., Edward Deming, Out of the Crisis 583-85 (1982). 212. See John S. Oakland, Total Quality Management 29-41 (1990). 213. See generally, supra note 44-46 and accompanying text. 214. Pipes, supra note 152, at 121-58. 215. See generally, Nisbet, supra note 76. 216. Id. 217. Richard Sennett, The Corrosion of Character (1998). 218. David Bollier, Aiming Higher 303 (1997). 219. Joshua Margolis, Psychological Pragmatism and the Imperative of Aims: A New Approach for Business Ethics, 8 Bus. Ethics Q. 409 (1998). 220. See, e.g., Oliver Williamson, Markets and Hierarchies: Analysis and Antitrust Implications (1975). 221. Id. at 41-56. 222. Gregory Johnson, Organizational Structure and Scalar Stress, in Theory and Explanation in Archaeology (C. Renfrew, M. J. Rowlands, & B. A. Segraves, eds. 1982). 223. Ethics and Agency Theory: An Introduction 6 (Norman E. Bowie & R. Edward Freeman, eds. 1992). 224. Id. at 392-98. 225. Id. at 392-98. 226. Lon Fuller, The Morality of Law 186 (1969). 227. Cass Sunstein, Beyond the Republican Revival 97 Yale L.J. 1539 (1988); Frank Michelman, Law's Republic, 97 Yale L.J. 1493 (1988). 228. Karen E. Mishra, Gretchen M. Spreitzer, & Aniel K. Mishara, Preserving Employee Morale During Downsizing, Sloan Mgmt. Rev. 86 (Winter 1998). 229. Id. 230. Id. at 86. 231. Id. at 87-88. 232. Id. at 89-91. 233. Id. at 92. 234. Id. at 92-94. 235. For a more skeptical view of the importance of corporate culture, see Charles M. Yablon, Mergers and Acquisitions: Corporate Culture in Takeovers, 19 Cardozo L. Rev. 553 (1997). Yablon compares corporate culture to arguments about God. To some, he says, God/culture is worthy of intense study; to "atheists," culture plays no role in takeovers. And to the agnostics, culture might well exist, but because of the difficulties associated with it, it is better to act under the assumption that it is not really there. Id. at 554-55. 236. See Alexis Detoqueville, Democracy in America 23 (1945). 237. See Robert E. Cole, Quality Circles, in Quality Management Handbook (Loren Walsh, Ralph Wurster, & Raymond Kimber, eds. 1986). 238. See supra notes 57-148 and accompanying text. 239. Charles Hampden-Turner, Creating Corporate Culture: From Harmony to Discord 58-59 (1990). 240. See supra notes 135-148 and accompanying text. 241. Richerson & Boyd, supra note 183, at 269. 242. Frederick, supra note 196, at 30-42. 243. Id. at 144. Frederick refers to the goal of homeostatic succession and notes that radical shifts diminish the supportive system of life's web. Of course, this is not to say that all changes must be smooth. There may be some starts and stops in the evolutionary process. The point, however, remains that radical change involves significant risk to the beings living in the midst of such change and that the techno-symbolic ability of human beings can be used, particularly in corporate life, to make those changes less rather than more painful. |
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