Does Managerial Capitalism Matter?
Sociology University of Essex Colchester, United Kingdom
The concept of managerial capitalism describes the separation of ownership and control in modern companies, whereby managers assumed control over the company ? but do not own it ? and shareholders own the company ? but do not control it. Since the 1930s, discussions have focussed on the financial and legal implications of the concept. Except for the case of the USA the findings are mixed; a problem of collective action amongst minority shareholders may occur and managers may appear as an elite. This paper addresses the question of whether it really matters if there is separation ? shareholders can assemble enough power to influence corporate strategies, managers evolve as an elite through interlocking directorships and high amounts of social capital, or not. Drawing on theoretical arguments from social network analysis, the paper argues that the board of directors is a ?bottle neck? of information flow in both negative and positive ways. The organisational structure of modern companies renders the management board the ultimate instance for deciding how corporate strategies are translated in the bottom level units and which operational information reach shareholders. All information from either direction must pass through the management board due to its position between the company and the shareholders. Instead of focussing on the number and size of shareholdings, this paper has the management?s domination over information, and finally resources, at its centre. This paper attempts to take discussion on this subject into new directions.