From balanced enterprise to hostile takeover: how the law forgot about management

We show that professional management began to emerge in UK companies during the first half of the twentieth century, a development which was widely theorised and accepted. However, the managerially-led enterprise was accommodated rather than protected by company law, making it vulnerable to changes in the law. The Cohen Report of 1945 paid no attention to these developments, and led to the introduction, in the Companies Act 1948, of important, but previously little appreciated, changes in the name of enhancing the accountability of directors to shareholders. The shareholders’ statutory right to remove the directors by simple majority overturned existing structures overnight and was an important driver of the hostile takeover, which emerged shortly afterwards. This deprived management of the necessary autonomy to balance the competing interests at stake in the enterprise and to foster innovation. The emergence of the current system of shareholder primacy can be traced back to these developments

The separation of directors and managers: a historical examination of the status of managers

Purpose The purpose of this paper is to contrast the historical rise of the managerial function and its reception in law. It thus contributes to the debates on the separation of ownership and control, by showing that managers were never recognized in law. As a result, the managerial function was not protected in law. Design/methodology/approach This paper brings together management history and the history of UK company law to study the emergence of management in the early twentieth century and the law’s response. The authors bring new historical evidence to bear on the company law reforms of the second half of the twentieth century and, in particular, on the changes inspired by the Cohen Committee report of 1945. Findings Scientific progress and innovation were important rationales for the emergence of managerial authority. They implied new economic models, new competencies and wider social responsibilities. The analysis of this paper shows that these rationales have been overlooked by company law. The lack of conceptualization of the management in law allowed reforms after 1945 that gave shareholders greater influence over corporate strategy, reducing managerial discretion and the scope for innovation. Research limitations/implications This paper focuses on the UK. Further research is needed to confirm whether other countries followed a similar path, both in terms of the emergence of management and in terms of the law’s approach. Originality/value This paper is the first, to the authors’ knowledge, to examine the law’s historical approach to management. It calls for a reappraisal of the status of managers and the way corporate governance organizes the separation of ownership and control

Protecting Long-term Commitment: Legal and Organizational Means

International audienc

Corporate governance for sustainability : Statement

The current model of corporate governance needs reform. There is mounting evidence that the practices of shareholder primacy drive company directors and executives to adopt the same short time horizon as financial markets. Pressure to meet the demands of the financial markets drives stock buybacks, excessive dividends and a failure to invest in productive capabilities. The result is a ‘tragedy of the horizon’, with corporations and their shareholders failing to consider environmental, social or even their own, long-term, economic sustainability. With less than a decade left to address the threat of climate change, and with consensus emerging that businesses need to be held accountable for their contribution, it is time to act and reform corporate governance in the EU. The statement puts forward specific recommendations to clarify the obligations of company boards and directors and make corporate governance practice significantly more sustainable and focused on the long term

Towards a new logic for Front End management: From drug discovery to drug design in Pharmaceutical R&D

Under pressure to innovate and be cost-effective at the same time, R&D departments are being challenged to develop new organizations and processes for Front End activities. This is especially true in the pharmaceutical industry. As drug development becomes more risky and costly, the discovery departments of pharmaceutical companies are increasingly being compelled to provide strong drug candidates for efficient development processes and quick market launches. It is argued that the Fuzzy Front End consists less of the discovery or recognition of opportunities than of the building of expanded concepts: the notion of concept generation is revisited, suggesting the need for a new logic for organizing Front End activities in order to support sustainable innovative product development. Based on an in-depth empirical study at a European pharmaceutical company, this paper contributes to improved understanding of the actual management practices used in the Front End. Using a design reasoning model (the C-K model), it also adds to the growing body of literature on the management of Front End activities in new product development processes