Post-traditional Corporate Governance

Abstract

Traditional definitions of corporate governance are narrow, focusing on legal relations between managers and shareholders. More recent definitions extend the boundaries of governance to consider the role that various stakeholders play in shaping the behaviour of firms. While stakeholder theory embraces a broader set of corporate constituencies, our argument in this paper is that even these definitions are too narrow—they lack the analytical capacity to account for the social embeddedness and legitimacy of corporate governance. More specifically, we argue that the spatial contexts of corporate governance are socially constitutive of their governance forms and effects. Different forms of corporate governance emerge in, and co-produce, variable operating contexts, as well as shape the roles and interests of their constituent actors. We distinguish between vertical and horizontal forms of governance in political and economic life, and outline several consequences for businesses of a shift to post-traditional corporate governance.