Authors: Clive Smallman
Addresses: Lincoln University, Commerce Division, PO Box 84, Canterbury, New Zealand
Abstract: This paper evaluates the validity of three theoretical paradigms in corporate governance: shareholder theory, stakeholder theory and stewardship theory. It assesses the philosophical basis of each using elements of engineering control theory, cybernetics and the political science literature. I conclude that neither shareholder nor stakeholder theory offers an effective basis for corporate governance, but that stewardship is the direction in which corporate governance practice should evolve, if organisations are to deliver benefits to both their owners and other beneficiaries whilst not significantly harming the interests of other groups.
Keywords: corporate governance; organisational performance; homeostatic control; collibrational control; balanced scorecard; shareholder theory; stakeholder theory; stewardship theory; control theory; cybernetics.
International Journal of Business Governance and Ethics, 2004 Vol.1 No.1, pp.78 - 94
Published online: 13 Jul 2004 *Full-text access for editors Access for subscribers Purchase this article Comment on this article