Captains of Industry? Value Allocation and the Partnering Effect of Managerial Discretion

Abstract

Can value allocation be left to managerial discretion and does corporate law provide the basis for a balanced stakeholder management and a fair allocation of results? This question is central in an age of inequality. We argue that it can be reappraised by building upon the case of maritime law. Whereas in corporate law, the board is in charge of allocating the results, maritime law stipulates a clear ex ante rule according to which it allows a captain to sacrifice some goods to save the ship. This historical ‘rule of general averages' emerged in Antiquity. It compels the interested parties to jointly bear costs. This rule makes visible what we call a ‘partnering effect' of managerial authority and suggests that corporate law, as it currently stands, lacks a conceptualization of the impacts of managerial discretion and therefore limits the possibility of a fair allocation of results. While management scholars have sought to rethink management theory with a ‘view from law', we conclude that law could also be discussed with a view from management history.