European Trade Union Institute, ETUI.

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Company Law: Corporate Governance and Board-Level Employee Representation

Corporate governance concerns the role of different groups in decision-making at the highest levels of the company. It is an interdisciplinary field which involves company law, financial market regulation and industrial relations. There is a major controversy between so-called ‘shareholder’ and ‘stakeholder’ approaches to corporate governance.

In the ‘shareholder’ conceptualization, the shareholder is clearly at the top of the hierarchy of groups involved in the firm. According to this approach, the primary responsibility of management is to increase the value of the firm for shareholders (‘shareholder value’).

The ‘stakeholder’ approach, by contrast, entails a pluralistic conception of the responsibilities of the company to a variety of groups that are dependent upon and contribute to the firm (workers, the community, suppliers and customers, etc.). Board-level employee representation is an important tool for institutionalizing worker ‘voice’ in decision-making at the top levels of companies. It is the stakeholder perspective that drives the concept elaborated by the ETUI's GoodCorp Network

In 2003 the European Commission published an Action Plan on Modernising Company Law and Enhancing Corporate Governance in the European Union. This plan has guided much of the European Commission’s activity in developing proposals for legislation at the European level and making recommendations to member states in this policy area.


Sigurt Vitols Associate Researcher

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