Common Sense and Sensibility: Seeking New Values for the Innovative Corporation

Abstract

We have got in the habit of thinking of corporate governance as a collection of rules and it is very easy to become seduced by this rule oriented approach. However, this mechanical approach should not distract us from the reality that a corporate governance regime should seek to address and realise some critical operational objectives. Stakeholder theory can help, but it cannot tell us with precision who are or should be stakeholders. The Johnson & Johnson Credo may be helpful because it set out a hierarchy of the company’s stake holding. While we should be careful not to build general theories on limited studies, the indication is that some of the assumptions we have made about the value stakeholders of the modern corporation, such as the relative value of its executives, may have been exaggerated. New opportunities are being presented to the innovative corporation to rethink the relative ranking of its corporate stakeholders.