A Political Perspective on Business Elites and Institutional Embeddedness in theUKCode‐Issuing Process

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AbstractManuscript TypePerspectiveResearch Question/IssueWhat is the role of institutional actors and business elites in the development ofUKcorporate governance codes? In the current paper, we explore theUKcode‐issuing process by focusing on theUKactors, their power and interplay.Research Findings/InsightsOur findings indicate, first, that the comply‐or‐explain principle, intertwined with the rich issuance of codes, reflects the diversity and permissiveness ofBritish society and its ability to absorb contested corporate practices in a way that manages to preserve the status quo. Second, theUKbusiness elites preserve their position in the corporate arena by using the principle of good governance, including the possibility to deviate from best practices, as an instrument of neutralizing institutional change. Third, theUKinstitutional and societal embeddedness givescarte blancheto elites to use corporate governance practices to serve their own interest.Theoretical/Academic ImplicationsBy emphasizing the strategic behavior of business elites embedded in theUKinstitutional configuration, we offer a political perspective on the national contextuality of the code‐issuing process. The worldwide diffusion of codes should not dissimulate their cross‐national contested nature. Codes reflect potential redistribution of power among institutional actors and business elites as well as the struggle over corporate resources between corporate actors (i.e., shareholders and managers) in maintaining their status quo.Practitioner/Policy ImplicationsPractitioners should perceive codes as having different meanings depending on national contexts and national political constituencies. Codes reflect constellations of actors such as managers, shareholders, regulators and others, whose approach to codes and strategic interests are at least as important to know and understand as the verbatim content of codes.