Justice and Corporate Governance: New Insights from Rawlsian Social Contract and Sen’s Capabilities Approach

By considering what we identify as a problem inherent in the ‘nature of the firm’—the risk of abuse of authority—we propound the conception of a social contract theory of the firm which is truly Rawlsian in its inspiration. Hence, we link the social contract theory of the firm (justice at firm’s level) with the general theory of justice (justice at society’s level). Through this path, we enter the debate about whether firms can be part of Rawlsian theory of justice showing that corporate governance principles enter the “basic structure.” Finally, we concur with Sen’s aim to broaden the realm of social justice beyond what he calls the ‘transcendental institutional perfectionism’ of Rawls’ theory. We maintain the contractarian approach to justice but introduce Sen’s capability concept as an element of the constitutional and post-constitutional contract model of institutions with special reference to corporate governance. Accordingly, rights over primary goods and capabilities are (constitutionally) granted by the basic institutions of society, but many capabilities have to be turned into the functionings of many stakeholders through the operation of firms understood as post-constitutional institutional domains. The constitutional contract on the distribution of primary goods and capabilities should then shape the principles of corporate governance so that at post-constitutional level anyone may achieve her/his functionings in the corporate domain by exercising such capabilities. In the absence of such a condition, post-constitutional contracts would distort the process that descends from constitutional rights and capabilities toward social outcomes

Political Schemas and Corporate Political Activities During Foreign Market Entry: A Micro-process Perspective

The paper analyses how multinational enterprises (MNEs) manage their interactions with host governments during the market entry process. A qualitative multiple case study collected data through in-depth interviews with multiple participants in six New Zealand MNEs. The analysis identifies two distinct political schemas which represent MNE managers’ assumptions and heuristics regarding how to approach interactions with foreign governments, systematic and episodic, which lead to the enactment of distinct patterns of political activities, each supported by certain political resources and capabilities. We then identify several sources of the variations in these two political schemas at the managerial, firm, industry, and country levels of analysis. Our study deepens understanding of the micro-processes of corporate political activity (CPA) and the processes and activities through which political resources and capabilities are developed, deployed and leveraged by MNE actors in managing their interactions with host governments during the market entry process. In doing so, we highlight the role of international experience in influencing the process of political capability development, and also the role of managerial actions in shaping this evolutionary process