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Regulating for corporate sustainability: Why the public-private divide misses the point
chapterposted on 2023-01-30, 02:32 authored by Beate Sjafjell
Public or Private? Not the Important Question The debate on whether the company is a public or private entity is intellectually interesting. The answer to the question may influence the approach one takes to regulating the company. Those seeing it as a public entity may be prepared, to a greater extent, to require it to act for the good of society than those who see it as a private entity. Conversely, those that see it not only as a private entity but even, mistakenly, as the property of the shareholders, may resist the very notion of anything besides returns to shareholders as being the legitimate purpose of the company. However, we risk that this interesting academic debate - where there will always be different opinions - may serve as a deflection device, keeping bright academic minds occupied with discussing the nature of the company. The positions in the public vs. private debate will tend to be fuelled by political positions as well as theoretical or academic starting points. In a similar way as debates such as the (revealingly or misleadingly named) shareholder vs. stakeholder debate, this may push the contributors into opposing trenches where winning the discussion, or more academically, formulating the best argument becomes paramount. Indeed, while we may say that the stakeholder position has informed the corporate social responsibility (CSR) movement and the shareholder position has led to the still dominant and mainstream corporate governance debate, the public/private debate may perhaps be said to underpin the stakeholder vs. shareholder debate or be the more academic, theoretical variant thereof. The public/private debate is somewhat more academic in its approach in that determining whether the company is a public or private entity does not necessarily begin from a specific view. This stands in contrast to the shareholder versus stakeholder debate, much of the CSR movement, and of course the corporate governance trend.