J. (Hans) van Oosterhout

Contracts to Communities: A Processual Model of Organizational Virtue

In the face of systemic challenges to corporate legitimacy, scholars and managers alike have been rethinking traditional answers to the question: What does it take to be a good company? We approach this question in two novel ways. We offer a normative answer, grounded in virtue ethics, by introducing a threefold typology of organizational forms. The moral goodness of each form depends on the congruence between its purpose and virtues. But we also offer a positive answer in the form of a processual model which traces corporate goodness to its empirical antecedents and consequences. The model defies a view of organizations as innately good or evil, but rather portrays virtue as the sediment of a value infusion process. We predict that if managers succeed in establishing in their organizations the kind of virtues necessary to support collective moral agency, they can expect to reap gains like enhanced effectiveness and legitimacy. However, when they neglect their moral responsibilities, the result will likely be organizational demise.

The Ethics of the Node Versus the Ethics of the Dyad? Reconciling Virtue Ethics and Contractualism

Some centers of gravity are finally emerging in the field of business ethics after a decades-long search for action-guiding theories. Among the foremost of these are contractualism and virtue ethics. The former focuses on the morals of economic exchange, the latter on the moral qualities of economic actors. We demonstrate that these dyadic and nodal ethics are not competing contenders to the throne of business ethics, but complementary approaches that are best used in tandem if we want to identify the generic normative core of the field. Specifically, virtue ethicists benefit from contractualists’ aptitude for highlighting the conditions that exchange relationships must meet in order to become vehicles for the pursuit of excellence. In turn, contractualists profit from virtue ethicists’ ability to identify the qualities actors must possess to efficaciously engage in exchange transactions.

Ties That Grind? Corroborating a Typology of Social Contracting Problems

Contractualism conceives of firm-stakeholder relations as cooperative schemes for mutual benefit. In essence, contractualism holds that these schemes, as well as the normative principles that guide and constrain them, are ultimately ratified by the consent and endorsement of those subject to them. This paper explores the empirical validity of a contractualist perspective on firm-stakeholder relations. It first develops a typology of firm-stakeholder contracting problems. It subsequently confronts this typology with empirical data collected in an interview study of concrete stakeholder management practices, involving in-depth research interviews with forty-four managers working in the Dutch financial services industry. The findings of this theory-building study suggest that there are limits to the applicability of the contract model in the context of stakeholder management, and that disregarding either the model or its limitations may lead to highly ineffective firm-stakeholder relations.

Authority and Democracy in Corporate Governance

Although McMahon offers a potentially valuable extension of Joseph Razs conceptualization of authority by distinguishing three different kinds of authority, this paper argues, first, that his account of the conditions and considerations that would justify managerial authority is problematic because it relies on a conception of reasons for action that excludes precisely the kind of rationality that plays an important role in the␣explanation and justification of authority in economic␣organization. This paper explains, second, why McMahons thesis of the justificatory similarity of authority in governments and nongovernmental organizations can also be seen to hold for corporate governance of publicly owned firms more specifically. Finally, this paper raises some critical objections against McMahons presumption of democratic governance in governments and NGOs alike. The thrust of these objections is that democratic corporate governance does not make sense in the publicly owned firms because: (1) it will not produce results that are fair or welfare maximizing, and (2) it will undermine the legitimacy of managerial authority in such firms.

Expressive Shareholder Democracy: A Multilevel Study of Shareholder Dissent in 15 Western European Countries

This study develops an expressive understanding of shareholder dissent. In this view, shareholder dissent is not only about the voting outcomes of proposals put to the vote, but also expresses an evaluation of the firms corporate governance set-up. We hypothesize that shareholder dissent expresses an agency theoretical evaluation of corporate governance, but that the degree to which the capitalist system of a country is a coordinated market economy (CME) leads shareholders to evaluate corporate governance more in team production terms. We test our theoretical model using multilevel techniques on a sample of 12,513 proposals voted on in 717 firms listed in 15 Western European countries and find support for our predictions. Our study not only contributes to a better understanding of the corporate governance role of shareholder dissent, but also shows that what shareholders express through dissent differs across national contexts.

Towards an integrated framework of professional partnership performance: The role of formal governance and strategic planning

Conventional wisdom identifies human capital and organizational reputation as the critical resources explaining professional partnership (PP) performance. PPs have increasingly adopted organizational practices like strategic planning and formal governance, however, which have long been alien in highly professionalized contexts. In order to test the influence of both these classic resources and the newly adopted practices on PP performance, as well as the mediating mechanisms— that is, client attraction and retention as well as organizational efficiency—through which this influence is channeled, we develop an integrated theoretical framework of PP performance. We test the resulting hypotheses using survey and objective data collected on 196 Dutch law firms. Our findings provide new insights into the drivers of PP performance and the complex interrelationships between PP resources and newly adopted practices.

Proxy advisors and shareholder dissent: A Cross-country comparative study

Proxy advisors are information intermediaries that enable shareholders to exercise their voting rights. While proxy advisors’ influence is documented in market-based corporate governance systems, we know little about the corporate governance role of proxy advice in relationship-based governance systems. Drawing on agency theory and the comparative corporate governance literature, we theorize that shareholders are sensitive to the costs and benefits of monitoring by considering internal monitoring capabilities. We also theorize that relative to market-based corporate governance systems, proxy advice is both less influential and has lower predictive quality in relationship-based governance systems. We test our multilevel model using 13,497 voting results from 613 firms in 16 Western European countries and generally find support for our predictions.