The article in the url below makes some interesting points regarding the threat to an organization’s long term mission from the dilution of ownership caused by public listing, but is also a bit of a polemic:
“Stewardship means a sense of responsibility for that which you own and handle every day. It implies that the business should be around for generations, and that the owner is responsible for handing it on to the next generation in better shape than he or she inherited it.”
The author makes sizable assumptions about the motivations of executives, directors, and shareholders of public firms, as well as the consequences of these motivations for the long term health of the organization, which lead the reader to the position he is advocating:
“With the separation of ownership from control in the listed company, stewardship does not disappear, but it does erode. In US markets particularly, the chief executive is judged by shareholders on his or her dependability in “hitting the numbers” – or meeting quarterly earnings targets. There is little room for sentimentality about where the company has come from or whether it will still be around in its current form for the next generation.”
Rather than ownership (private, family owned businesses are just as likely to be managed inefficiently as public companies are likely to be focused on the short term), however, I think that the more important distinction in terms of a threat to the organization’s mission is between different kinds of shareholders (Figure 1.4: The Shareholder Shift—From Investor to Speculator, p14). While investors are more likely to take a longer term perspective, speculators/gamblers take a short term position on whether the share price will rise or fall, irrespective of whether or not it deserves to rise or fall.
Take care
Dave
Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
Essay: Ownership and sustainability – Are listed companies more responsible?
Owners used to be stewards of their company’s future, but this idea has faded in modern publicly-listed companies.
Mark Goyder
July 14, 2008
http://www.ethicalcorp.com/content.asp?ContentID=6004
