The article in the url below poses the question: “What sort of ownership do shareholders now provide, and how should managers respond?”
In suggesting an answer, the author makes the case for the negative effect of shareholders’ short term perspective on the ability of managers to implement a meaningful strategic vision of the firm (Figure 1.4: The Shareholder Shift—From Investor to Speculator, p14):
“Building and improving a business takes time. You cannot be judged hour by hour on your performance.”
The author argues that the implications of this divergence in interests between managers and investors extend to the definitions of the boundaries of the firm:
“"How can managers get back to being in control of the companies they manage?" … Perhaps this is a futile question, based on a nostalgic view of what companies should be. Maybe business has changed for good, and companies are now barely even semi-permanent organisations, with their own ethos and identity.”
This development also speaks to the importance of instituting a stakeholder perspective that enables firms to prioritize conflicting interests and meet the needs of those they deem to be most important:
“… today there are perhaps as many as seven different types of owners that businesses may have to reckon with, all of them laying claim to assets in different ways.”
The goal should be to focus on:
“… "intrinsic" shareholders, leaving traders and "mechanical" owners to the investor relations department. In short, do not waste management time on people who do not really understand you and will never make the effort to get to know you properly.”
Take care
Dave
Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
Short-term owners who leave the C-suite bitter
Stern, Stefan
920 words
24 June 2008
Financial Times
London Ed1
16
http://www.ft.com/cms/s/0/73110d3c-4185-11dd-9661-0000779fd2ac.html
