261. "A Communitarian Note on Stakeholder Theory," Business Ethics Quarterly, Vol. 8, Issue 4, (October 1998), pp. 679-691.


Several powerful arguments have been advanced for a shift from a shareholder approach to a stakeholder approach towards corporate governance. These include the pioneering work by R. Edward Freeman,(2) the important analysis based on contract theory by Thomas Donaldson and Thomas Dunfee,(3) as well as L.E. Preston,(4) Max Clarkson,(5) the insights of Margaret Blair,(6) and most recently the notions of fairness by Robert A. Phillips.(7) Other fine writings include those by Steven Wallman and others in the Stetson Law Review.(8) It should also be noted that Tony Blair recently stated his support for the stakeholder model.(9) Reference here is limited to the literature that focuses on the normative issues raised by the stakeholder approach; there is a larger body of writing that deals with pragmatic merits of taking into account the needs and values of various non-shareholder constituencies out of utilitarian consequentalist considerations. Nell Minow makes the distinction clear in legal terms when she points to the difference between allowing corporate executives to take into account the needs of constituents other than the shareholders (e.g. giving money to charity) and legally entitling groups other than the shareholders to have a say in the management of the corporation.(10) This pragmatic literature is not discussed here, as my interest is limited to adding a normative note to the existing literature that justifies the chartering of stakeholders.

My note is based on the communitarian thinking I have elaborated elsewhere.(11) It points to the idea that all those involved in the corporation are potentially members of one community; while they clearly have significantly divergent interests, needs, and values, they also have some significant shared goals and bonds.

While my main purpose is to help explore whether the claims stakeholder theory lays are morally defensible, I will also briefly respond to the argument that even if the theory is justified, it could not be implemented. I should note from the onset that while many consider the stakeholder theory at best a visionary idea, if not outlandish or damaging, I will show that there are several important precedents that indicate it is merely a very significant extension of developments already in hand.

I. "Private Property" and "Incorporation" as Social Constructs

My starting point is the elementary observation that the concepts of "private property" and "incorporation" (the legal and social basis of corporations) are social constructs, that is, concepts that reflect the particular values, interests and needs of the society in which these concepts are recognized in a given historical period. They are not an expression of some kind of "natural", self-evident, absolute, uncontestable right. Specifically, there is no a priori reason to argue that the current model of property relations and of governance by shareholders is more natural than any other. In this context, it is worth reminding, as Berle and Means pointed out long ago, that the notion that shareholders govern the corporation is largely a fiction; typically, executives have the main power, although shareholders have a measure of influence.(12) Thus, the question is if the executives should (and can) be made responsive, to some extent, to groups other than the shareholders.

Most important, as the legitimacy of both private property and the way corporations are owned and managed is conditioned by the society to begin with, society is free and able to change these social arrangements; society giveth these licenses and it can take them away or modify them. As Edward S. Mason has pointed out, "[T]he corporation is an evolving entity, and the end of its evolution is by no means in sight. There is every reason to believe that the business corporation a century hence will be a rather different institution from the one we now behold."(13)

To begin, the claim that private property rights are "natural" and hence uncontestable, or that those who do contest them are challenging a sanctified law, flies in the face of a wealth of historical and sociological evidence and experience. The evidence shows unmistakably that property, as has often been observed, is not an object nor an innate attribute, but a relationship of one or more persons to specified objects.(14) And the nature of this relationship is determined by the legal system and moral beliefs of the society that defines property. Thus, in some countries individuals cannot own land, oil, or beaches because these are construed to be exclusively public properties. Before the 1980's, many Mexican industries were not allowed to be privately owned. And I know from personal observation that in the early Kibbutzim, not only the means of production but also the items of consumption, including the shirt on one's back, were considered communal property.

Moreover, all societies set some limits on the extent to which owners can control and benefit from "their" property, and on the specific ways they must go about using it--even for those items a society characterizes as the private property of a given individual. Some societies greatly restrict the extent to which ownership can be transferred from generation to generation (for instance by imposing hefty estate taxes); others have few such restrictions. Jewish law calls for letting the land lie fallow every seven years. American law imposes numerous restrictions on what one may do with what people consider "their" private property. For instance, if it is declared as an historical trust, owners cannot modify its appearance without prior permission.(15) They cannot use their property in ways that may produce many kinds of pollution, noise above a given amplitude, or erect what the community considers eye sores, cause erosion of the soil or flooding or the seeping of chemicals into the water, or threaten endangered species, and so on. Moreover, property laws have been greatly changed over the years as societal values, interests, and needs have evolved.(16) In short, voluminous historical and sociological experience suggests that changing property rights is far from unprecedented, indeed rather common.

All these statements apply with even greater force to the corporation. While the beginning of the notions of private property are shrouded in the mysteries of early history, and most likely pre-history, the corporation is a relatively recent legal and social invention. The permission to incorporate was, to begin with, granted by the state as a charter or license as a matter of privilege, not of right, to some members of society under conditions the state determined. Typically, in their petition for incorporation, the organizers of the first manufacturing company in Massachusetts in 1789 asked "to be incorporated 'with such immunities and favors' as the legislators should think necessary..."(17) And, as limited liability was introduced as a corporate feature, it granted shareholders an extra privilege of great value. It stands out when shareholders are compared to partners in a business, the main form of amassing capital prior to the existence of corporations. Partners must keep close tabs over their business because if it fails, they may have to sacrifice their personal assets to satisfy those who have claims against the business. This, in turn, limits the extent to which a partnership can grow. In contrast, shareholders' "liability" is limited to the share price, enabling them to invest while they are preoccupied elsewhere, without extensive scrutiny of the enterprise they are "involved" in, and enabling the corporation to amass large amounts of capital.

In short, the comparison of pre-capitalist partnerships to modern corporations highlights two points already made: corporations are a societal creation; and society grants shareholders a valuable privilege in exchange for which the society can seek some specific consideration.

II. Corporations are the Property of ALL Who Invest in Them

While society has legitimate and legal authority to determine who will own, control, and benefit from the corporations it created, it needs to justify the reason it grants this authority to some groups and/or to others. The discussion here focuses on one idea, namely that the right to participate in the governance of a corporation should be shared by all stakeholder groups rather than only by shareholders. The discussion deliberately focuses on the question of whether a compelling case can be made for a right to participate rather than a privilege voluntarily granted by the shareholders should they be so inclined or find it beneficial. That is, the arguments advanced are held to a much higher level of scrutiny because the claim of a right is much stronger than an expression of a desire to be indulged.

The affirmative response to this question is based on the same basic notion that has compelled many to recognize that the corporation should be treated as the property of those who invest capital in it, the shareholders. Or, as it is sometimes put, the corporation "belongs" to the shareholders because they invested their money in it; it is an extension of their private property.(18)

The stakeholder argument, as I see it, accepts the moral legitimacy of the claim that shareholders have the said rights and entitlements, but argues that the same basic claim should be extended to all those who invest in the corporation. This often includes employees (especially those who worked for a corporation for many years and loyally; the community (to the extent it provides special investments to a corporation; for instance, if it builds an access road at its own cost, as distinct from providing an environment that is generally favorable to business); creditors (especially large, long term ones) and, under some conditions, clients. I proceed by briefly discussing what the concept of investment entails, as a moral (and legal) claim rather then merely as an economic concept, before I discuss how one establishes such a claim as a legitimate one.

Investment is defined as the outlay of money for profit. Investment thus differs from a donation or act of charity, in which one gives up the resources one commands without expectations of a specific return. At the same time, investment differs from a sale of one's assets in that investment forms a relationship between investors and that in which they invest--a relationship that has a futuristic element because the consummation of the investment relationship presumes continuity, while a sale is typically a discrete transaction, complete in and of itself. The underlying difference is that while in the case of a sale, the full compensation is typically collected at the time of the transaction or close to it (or a full commitment is made to provide a specific return at specific dates) and above all, the compensation is considered to complete the transaction, in the case of investment, the return constitutes a future stream of yield which is typically far from secure or specified and which may rise or fall, or even be wholly lost, depending on the ways the investment is used. While sellers typically give up their rights to benefit in the future of the sold property and to have a say in the ways it is used, the opposite is true of investors. They give up some immediate benefits and voice in order to seek a better return in the future. Investors, so to speak, not only have yet to be compensated for their investment, but grant their investment on the condition that they will be able to participate to some extent, and even if indirectly via directors of pension funds and mutual funds, in the decisions that affect what their return may be in the future. Margaret Blair has emphasized the legitimate interest shareholders have in limiting the risk to which their investment is put.(19) Their interest in enhancing the upside is akin to their interest in minimizing the downside, so to speak. In effect, the fact that they invest in shares rather than in bonds reflects their interest in accepting a less secure return for a possibly higher one. Hence, they are keenly interested not merely in minimizing the risks (avoiding bankruptcies or declines in the size of dividends paid and the price of the shares) but also in increasing the upside potential of higher dividends and share prices. Most important for the discussion that follows, the fact that investors draw some benefits in the short run from their investments (typically in the form of dividends) is not and should not be considered a full compensation for the use of their assets and an abdication of their right to participate in the governance of the corporation.

In addition, when one sells an item, unless specific conditions are attached a priori, no future restrictions on its use can be legitimately imposed by the seller. In the case of investment, as one's relationship to the assets continues, one may seek to ensure it is not used for certain purposes, for instance, to make nuclear weapons or to harm the environment, or, in the past, to invest in South Africa. That is, shareholders participate in the decisions concerning the social usages of the resources they invest.

The preceding statements are widely accepted, indeed considered uncontestable to the point they are rarely even mentioned when the rights of shareholders are discussed. The fact that shareholders receive a flow of dividends (when this is the case) does not preempt their right to participate in the governance of the corporation. This is traditionally explained by saying that shareholders should monitor the corporation because it is their money that is being managed. However, as we already indicated, ownership of corporations, like other laws, is defined by people and societal influences, and both have the power to change the definition. Edward S. Mason puts it this way: "most of the elements that are emphasized as essential attributes of the modern business corporation are the product of social invention and have not been characteristic of business corporations from their beginning."(20) As I see it, shareholders' rights are ultimately based on a conception of fairness: society recognizes that shareholders are provided with no compensation for the use of their assets at the point of investment; that their compensation lies in a future flow of dividends and appreciation of share prices which are expected but explicitly not guaranteed. Hence, the investors have a right to ensure that the tree they helped plant will be properly cultivated so it will bare fruit, hopefully increasing its value.

My main argument is that from a moral viewpoint this concept of fairness applies to all stakeholders and not merely to shareholders. While this view may seem visionary, I will show that it is already reflected, albeit in a rather limited extent, in various laws and corporate practices. I proceed to support these two claims, by focusing first on employees.

The employees' investment in the corporation, often referred to as human or social capital, is very different in appearance from that of the shareholders but similar in principle. They invest years, sometimes a lifetime, of their labor in the corporation. While an economist may argue that the employees "sell" their labor and are compensated for their work and hence no longer have any rights to the products of their labor, there can be little doubt that a significant part of the employees' compensation lies in the future, in the expectation of being employed and paid in the future. Moreover, workers anticipate, and are often encouraged to believe, that if they work harder and with more dedication and loyalty, the corporation will fare better than it would otherwise. And, they are also encouraged to expect to share in future gains, both in continued flow of wages and in higher wages. Thus, employees have a keen interest in ensuring the future flow of benefits (an issue that often arises in the discussion of job security), the level of benefits the corporation will be able to afford and allot to them in the future (comparable to shareholders' concerns with the size of dividends), and the viability of the corporation (an issue that arises most sharply when corporations are teetering, and most especially when workers are expected to accept cuts in wages and other benefits to help ensure the corporation's future). Like shareholders, the employees' investment in the corporation is endangered when the corporation is managed recklessly or in violation of the law. And, employees, like shareholders, have a social interest in participating in the decisions concerning the asocial and antisocial use of assets they help create by their investment.

The notion that employees have some rights akin to shareholders' is far from fanciful. Several theorists have suggested that workers be assigned a fundamental property right to their jobs.(21) John Locke wrote, "[E]very man has a property in his own person; this nobody has any right to but himself. The labor of his body and the work of his hands, we may say, are properly his. Whatsoever then he removes out of the State that Nature has provided and left it in, he has mixed his labor with, and joined to it something that is his own, and thereby makes it his property."(22) A fair number of court decisions recognize an employee's right to employment by the corporation for which he has been working, based on good faith implied by longevity of satisfactory service.(23) This right may be seen as a precursor or a rather primitive treatment of employees as stakeholders.

Also, in some instances, employees have been granted representation in the governance of the corporations. For example, German companies use codetermination--the requirement to include voting employee representatives on corporate policy-making boards. German workers also have the right to influence decisions at the shop floor level. The popularity of Quality of Life circles in the USA shows that giving the workers a role in corporate decision making, albeit on a low level, far from damages its traditional goals.

Communities also invest in corporations through such means as building special access roads at public costs, providing free land, offering loans at below the interest rates, and suspending or granting exemptions from various rules and regulations that apply to others, from pollution controls to noise abatement, from zoning regulations to traffic requirements, among others. Reference is to specific investments on the behest of specific corporations rather than to general investments in an area, to make it attractive for all corporations (for instance, improving the local schools and public safety).

Communities are rarely, if ever, compensated for their investments at the point of investment. Thus, clearly the economic acts at issue do not constitute a sale. Nor do they constitute charity for the corporations. Communities invest in corporations with the implicit understanding that they will benefit from the business in the future--by job creation, tax collection, or other benefits. Hence, communities have a similar interest to others who invest in the corporations to ensure both the future viability of the corporations they have invested in and that the corporations be managed in ways that will increase rather than diminish their contributions to the community. The notion that a corporation has some obligation to the community is recognized already, albeit to a very limited extent and indirectly, in laws that require corporations to notify communities before they close a local plant or move out of the community in order to allow the communities time to react.

Creditors invest in corporations by providing start-up, working, and expansion capital, not infrequently in amounts that match or exceed that capital provided by shareholders. Creditors especially extend themselves when they provide capital to the corporation when it is at high risk or provide the capital below market rates. The right of large credit investors to participate in the management of corporations they invest in is widely recognized by law in Western Europe. In the USA, the 1933 Glass-Steagall Act mandated the separation of the banking and securities industries. However, recently several pieces of legislation have been advanced in Congress to reduce the strictures imposed by the Glass-Steagall Act, reflecting the fact that allowing creditors a voice in corporate governance is not considered particularly visionary or far-fetched.

Finally, clients invest in corporations when they continue to purchase a businesses' products even when they could either obtain more advantageous terms or products of better quality elsewhere out of loyalty to their source of supply. (Reference is not to brand loyalty by retail consumers but by wholesale clients.) True, in each case an argument can be made that the continued commitment relies on some narrow self-serving grounds. The fact, though, is that such calculations are often difficult to make with any degree of precision. (For instance, if a defect is found in a product, the question whether to seek the product elsewhere or stick with the source will be affected by how long it will take to fix the problem, which is often rather difficult to establish before the repair takes place. Here, loyalty of the client, often a large scale one, to the supplier, will influence the decision of whether or not the client will choose to invest in the corporation by sticking it out rather than withdrawing orders.) More generally, by staying with one source especially, but not only during down times, instead of constantly searching for other sources, large scale clients invest in the corporation.

For all these stakeholders, the longer the relationship, the larger the investment. A worker's investment over a life time is much larger than for one who worked for a given corporation for a few months. A client who remains loyal for decades invests more than one who stayed loyal for a year. Even capital investors who did not pull their share out with every down quarter, but kept their investments for years, invest "more" in this sense.

III. Mechanisms of Representation: Employees

Among those who favor a wider concept of ownership than the shareholder concept, a secondary but important issue arises. It concerns the ways and means of representation of the various stakeholders in the governance of the corporation (as distinct from sharing in the benefits it generates). It has been repeatedly asked how the various constituencies can be represented. The answer for shareholders is obvious, but how may other stakeholders participate in corporate governance?

Before I review the ways various corporate constituencies can be represented, it should be noted that in general, for all groups, the scope of their representation should parallel the scope of their investment. Thus, just as a shareholder who invests larger amounts of capital will typically have more power than one who invests less (by virtue of holding more shares and hence more votes,(24) so an employee who worked many years for the company should have more of a say than one who was recently hired because the long-time employee invested more in the company in terms of what workers invest (sweat equity, as it is sometimes put), whose measure is approximated by counting years at work. Similarly, a community that invested a great deal in a given corporation should have more of a say than one that invested little.

I already listed various mechanisms that are in place that provide for some, albeit rather limited, representation of various stakeholders. These mechanisms vary a great deal in the extent to which they are institutionalized or exist on an ad hoc basis; the extent of the voice granted (it is much higher in codetermination than in Quality of Life circles) and the extent to which participation is ensconced in law or a privilege the corporation may extend or withdraw at will. Twenty-eight states have passed laws that "allow" shareholders to open the doors of their boards and other parts of corporate control to other constituencies, but it is a right shareholders control.(25) By and large, these mechanisms in the USA highlight that stakeholder participation might be possible, but provide rather limited measures of it and on a rather tenuous basis.

A mechanism that would come closer to what is envisioned here would be one in which employees would be accorded a specific number of votes, and these votes would be allotted among the employees according to the years they served in the corporation. It might at first seem peculiar that many workers will have more than one vote, but this is, of course, also true of the shareholders and raises no principled issue. The importance of the suggested distribution of votes is that it would keep a correlation between the extent of investment in the corporation and the voice of a given person.

IV. Representation of Other Constituents

As previously mentioned, creditors in other industrial societies are more often represented on corporate boards than they are in the USA. While so far there is no formal, necessary correlation between the amount of credit extended by a given creditor and the number of representatives that creditor has on the corporate board, there seems to be a vague, implicit notion that very substantial creditors will have more of a voice than small ones. The stronger this correlation becomes, the closer we move to a stakeholder model because it seeks to accord representation in line with one's "investments" in the corporation.

Opportunities for and methods of representation of communities are much less worked out than those for creditors. Corporations often remove their plants or headquarters from communities that have invested in them, without according any compensation to the community or affording them a voice in this matter or in any other corporate policies, including those that directly affect the community. Moreover, corporations often leave behind burdens on communities they abandoned, in the form of waste, disfigured sights, sudden surges in unemployment, and residents who can no longer afford much of what local shops have to offer.

While there is no principled reason for communities to refrain from seeking to encourage corporations to grant them some voice in exchange for specific investments the communities made in these corporations, the main difficulty is that communities compete with one another over the placement of these corporations. The more conditions a community imposes, the less likely it is to attract the desired corporations. Hence, as long as there is no federal legislation that ensures that communities can have a voice in exchange for specific investments in a given corporation, such community representation is unlikely to come about. Granting communities a voice in rough proportion to the size of their investments would also solve the problem of which community is accorded greater decision-making powers, because if two or more communities invest in a given corporation, their "votes" would be divided among themselves in line with the size and duration of their respective investment.

A case can be made that on numerous issues facing the corporation, communities would not want to take sides or have a voice, or should not, because these matters do not affect them directly. One can envision a system in which community representatives would merely serve as observers on some issues, while they would have a vote on others.

Client representation is the most challenging of all. While the investment of employees, main creditors, and contributing communities in a given corporation can be identified, most clients do not invest in a corporation from which they make their purchase and hence should not be entitled to a voice. To put it differently, most clients have no relationship to the corporation whose product they are buying; their typical relationship is not a long-term investment, but a series of sales transactions. Exceptions are large-scale clients, for instance a chain of department stores or the Pentagon, especially those that continue to purchase from a corporation when it runs into one kind of difficulties or another. If and how these should be represented, and how the size of their investment might be calculated, remain open questions.

A neoclassical economist may argue that given the market discipline, corporations that would accord their employees higher wages or benefits than they would gain otherwise (due, for instance, to employee representation on the board), would be driven out of business by corporations that heed the market. Similarly, such an economist may argue that the level of dividends is set by the market; corporations that set a lower rate will not attract the capital they need and those that set a higher rate will lose out to the competition. In short, active participation in the governance of the corporation is either meaningless for the various stakeholders or dangerous for the corporation. But these claims hold at best in some simplified models in the theoretical world of perfect competition. Real economies have considerable "slack," that is allotted accordingly to cultural factors (for example, American corporations grant more charity than Japanese ones, and not all of it is recaptured in the form of good will that helps the bottom line); political considerations (for instance, the timing of closing of plants is affected by local elections); and others (e.g. executives' demands for bonuses and golden parachutes are affected by whom they consider their reference groups. For instance, other executives in their industry or, say, the Fortune 500 executives). Some of this slack can be absorbed by accommodating various stakeholders. Last but not least, even if the resulting allocation is not the most efficient one by some theoretical model, it might be the fairest distribution which is the issue this article focuses on.

V. Stakeholders and the Common Good

An argument can be made that while all stakeholders and not only shareholders have fair claims to a voice in corporate governance, recognizing such claims may be damaging to the well-being of the economy, and hence injurious to the common good. Such considerations should outweigh the fairness claim. For instance, it might be argued that workers would seek to maximize their wages and thus damage the ability of the corporation to invest for the long run; that creditors would be more inclined to favor a conservative course, and so on. To examine the effects of granting some measure of representation on the corporate governance to all stakeholder groups, which make the corporation much more of a community and democratize its government, would take us into a highly speculative direction as no such corporations exist. However, several preliminary observations can be made. First of all, there is no systematic evidence that in those corporations in which non-shareholders have been given some rights of representation (for instance, creditors gained membership on the board or codetermination), have been less successful than others. Moreover, many corporations have increasingly learned to take the needs and demands of non-shareholders into account in their decision making for various pragmatic considerations (e.g. labor peace, good credit rating). The only change suggested here is to make such participation a right rather than a privilege granted by the sufferance of the executives and/or the shareholders. Last but not least, the myopic tendency of shareholders and executives has often been criticized as damaging to corporations. Workers, whose future is often much more closely tied to a specific corporation than that of shareholders (who can exit with one phone call and very readily find a new investment), may serve as a force to ensure longer run perspectives. Creditors may balance adventurous executives; communities may curb antisocial interests of shareholders. In short, while groups other than shareholders may tilt the corporation into a different course than it would follow if it was responding only to shareholders, it is by no means a foregone conclusion that this course would be less compatible with the common good, even if this good is defined only in narrow economic terms, and even less likely to be injurious if other social considerations are taken into account (for instance, concern for the environment and social peace).

1. I am indebted to Michael Bocian for research assistance and to Margaret Blair for comments on a previous draft.

2. R. Edward Freeman, Strategic Management: A Stakeholder Approach (Boston: Pittman, 1984); R. Edward Freeman, "The Politics of Stakeholder Theory: Some Future Directions," Business Ethics Quarterly 4, no. 4.

3. Thomas Donaldson and T.W. Dunfee, "Towards a Unified Conception of Business Ethics: Integrative Social Contracts Theory," Academy of Management Review 19, 1994, pp. 252-284.

4. Thomas Donaldson and L.E. Preston, "The Stakeholder Theory of the Corporation: Concepts, Evidence, and Implications," Academy of Management Review 20, 1995, pp. 65-91.

5. Max B.E. Clarkson, "A Stakeholder Framework for Analysing and Evaluating Corporate Social Performance," Academy of Management Review 20, 1995, pp. 92-117.

6. Margaret M. Blair, Ownership and Control: Rethinking Corporate Governance for the Twenty-First Century (Washington, DC: Brookings, 1995).

7. Robert A. Phillips, "Stakeholder Theory and a Principle of Fairness," Business Ethics Quarterly 7, no. 1, 1997, pp. 51-66.

8. Steven M.H. Wallman, "The Proper Interpretation of Corporate Constituency Statutes and Formulation of Director Duties," Stetson Law Review 21, no. 1, Fall 1991, pp. 163-196.

9. Irwin M. Stelzer, "The Stakeholder Cometh," Weekly Standard, February 5, 1996, 16-17.

10. Nell Minow, "Shareholders, Stakeholders, and Boards of Directors," Stetson Law Review 21, no. 1, Fall 1991, pp. 197-243.

11. Amitai Etzioni, The New Golden Rule: Community and Morality in a Democratic Society (New York: BasicBooks, 1996).

12. Adolfe A. Berle and Gardiner C. Means, The Modern Corporation and Private Property (New York: Macmillan, 1932).

13. Edward S. Mason, "Corporation," in David L. Sills, ed., International Encyclopedia of Social Sciences (New York: Macmillan, 1968), p. 397.

14. William Chambliss and Robert Seidman, Law, Order, and Power (Reading, Mass: Addison-Wesley, 1982), pp. 88-92.

15. Ronald E. Voogt, "'Taking': Real Estate Owners, Rights and Responsibilities," The Responsive Community 2, no. 2, pp. 7-10.

16. For example American property law changed during the 19th century from a "natural use" conception of property which favored agrarian uses to a "reasonable use" conception which favored industrial uses. William Chambliss and Robert Seidman, Law, Order, and Power (Reading, Mass: Addison-Wesley, 1982), p. 89-90.

17. E. Merrick Dodd, "The Evolution of Limited Liability in American Industry: Massachusetts," Harvard Law Review, Vol. LXI, No. 8 (September, 1948), p. 1361.

18. Marleen A. O'Connor, "Restructuring the Corporation's Nexus of Contracts: Recognizing a Fiduciary Duty," North Carolina Law Review 60 (June, 1991).

19. Margaret M. Blair, Ownership and Control: Rethinking Corporate Governance for the Twenty-First Century (Washington, DC: Brookings, 1995).

20. Edward S. Mason, "Corporation," International Encyclopedia of the Social Sciences (New York: Macmillan, 1968), p. 396.

21. See Rick Molz, "Employee Job Rights: Foundation Considerations," Journal of Business Ethics 6 (1987), pp. 449-458.

22. John Locke, The Second Treatise of Government, Thomas P. Peardon, ed. (New York: Bobbs-Merrill, 1952), p. 17.

23. For example, see Clear v. American Airlines, Inc. (1980), Pugh v. See's Candies (1981), and Monge v. Beebe Rubber Co. (1974).

24. I write typically because non-voting shares are an exception.

25. Steven M.H. Wallman, "The Proper Interpretation of Corporate Constituency Statutes and Formulation of Director Duties," Stetson Law Review XXI, no. 1 (Fall 1991), p. 163.

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