Annual Review of Sociology
Vol. 31: 143-162 (Volume publication date August 2005)
(doi:10.1146/annurev.soc.31.041304.122249)
First published online as a Review in Advance on March 11, 2005
NEW DIRECTIONS IN CORPORATE GOVERNANCE
Gerald F. Davis-
University of Michigan Business School, Ann Arbor, Michigan 48109-1234; email: gfdavis@umich.edu
Corporate governance describes the structures, processes, and institutions within and around organizations that allocate power and resource control among participants. Law and economics scholars have developed a view of the public corporation as a nexus-of-contracts whose structure is driven by the requirements of financial markets, and thus features of the corporation and its surrounding institutions are theorized in terms of their function in directing corporations toward share price as a criterion of value. Working from this base, more recent research has studied historical and cross-national variation in governance institutions, producing highly varied interpretations of their sources and function. Sociological work, particularly within organization theory, has critiqued this functionalist view and provided alternative interpretations based on networks, power, and culture. The most promising contemporary work seeks to analyze governance in terms of the dynamics of institutionswhere they originate, how they operate, how they change, and how they spread beyond their original purposes.
