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     companies

This page considers corporations, in particular commercial companies.

It covers -

• introduction
• theories of the company
• MNCs, SOEs and SWFs
• regulation
• privatisation and nationalisation
• studies.

     theories of the company

Given the centrality of corporations to a range of political debates and lawmaking (from tax collection and environmental protection to consumer safety and a search for deep pockets when commercial relationships crumble or accidents happen) it is unsurprising that the past 150 years have seen development of competing theories of the company. Those theories embody assumptions about who owns companies, who controls them and the rationale for their existence.

Broadly there are three major theories -

• contractualist - companies as an embodiment of agreements between private individuals (eg managers, shareholders, employees, third parties), with the state's involvement largely being restricted to correcting market failures
• communitaire - companies as a product of the state, existing to further the community's political and economic interests rather than as an expression of private ownership and profit
• concessionary - companies as a privilege provided by the state, which is entitled to regulate them in the public interest and which seeks to balance rights of shareholders, managers and third parties such as suppliers, employees and creditors.

     MNCs, SOEs and SWFs

Multinational corporations (MNCs) - a term often conflated with transnational corporations (TNCs) - have attracted particular opprobrium and praise. One writer commented that -

From a mere three thousand in 1990 the number of multinationals has grown to over 63,000 today. Along with their 821,000 subsidiaries spread all over the world, these multinational corporations directly employ 90 million people (of whom some 20 million in the developing countries) and produce 25 per cent of the world's gross product. The top 1,000 of these multinationals account for 80 percent of the world's industrial output. With its US$210 billion in revenues, ExxonMobil is ranked number 21 among the world's 100 largest economies, just behind Sweden and above Turkey.

Contrary to much popular belief (for example myths about the 'seven sisters' of oil refining, in contrast to the reality that most oil production now involves state entities such as Aramco), many of the largest and most powerful enterprises are government owned. Those state owned enterprises (SOEs) have traditionally included transport and utility networks, telephone networks, banks, mining and smelting groups and other corporations that embodied the "commanding heights" of a national economy or operated on a privileged basis providing services in the community interest, often on a 'less than commercial' basis.

Sovereign wealth funds (SWFs) are in vogue since the late 1990s. They are government-owned investment vehicles, typically funded through natural resource revenue (eg income from a state-owned oil company or from a tax on mineral extraction) or privatisation proceeds) that take stakes in commercial enterprises and in infrastructure.

They are discussed in a more detailed note elsewhere on this site, including statistics, pointers to major literature and profiles of particular funds.

     privatisation and nationalisation

A note on privatisation and nationalisation is here.

     studies

Introductions include John Micklethwait & Adrian Wooldridge's succinct The Company: A Short History of a Revolutionary Idea (New York: Random 2003).

Mira Wilkins & Harm Schroter edited The Free Standing Company in the World Economy, 1830-1996 (Oxford: Oxford Uni Press 1998), building on Wilkins' 1988 'The Free-Standing Company, 1870-1914: An Important Type of British Foreign Direct Investment' in 41 Economic History Review 2. It is complemented by James Taylor's Creating Capitalism: Joint-Stock Enterprise in British Politics and Culture, 1800-1870 (Woodbridge: Royal Historical Society & Boydell Press 2006) and Conceiving Companies: Joint-Stock Politics in Victorian England (New York: Routledge 1998) by Timothy Alborn. Work by Coase and Chandler, for example Coase's influential 1937 'The Nature of the Firm', is identified elsewhere on this site.

For governance see in particular Dine's The Governance of Corporate Groups (Cambridge: Cambridge Uni Press 2000).

Pointers to literature on the lex mercatoria are provided elsewhere on this site.









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