The following is a summary of Mattias Nordqvist's text on ownership and corporate governance in his PhD thesis.
Ownership and Corporate Governance
If ownership has received scarce interest in general strategy research, scholars of corporate governance have devoted more efforts to the topic. But here, too, explicit links between ownership and strategy are rare (Pettigrew, 1992a; Tricker, 1996; Davis and Useem, 2002), even if the long-term, strategic development often said to be the focal point of corporate governance (Carlsson, 1997; Neubauer and Lank, 1998; Monks and Minow, 2004). Today, corporate governance is often given a broad meaning as an umbrella term covering the relation and interaction between shareholders, the board of directors, the top management team and the CEO (Monks and Minow, 2004; Tricker, 1996)
The relation between ownership and management (e.g. Berle and Mean, 1932) is the origin of corporate governance (Collin, 1995) and has led most research in the field towards publicly listed firms, where ownership is assumed to be widely held and executive management taken care of by employed professional managers. This is implied by the word corporate (Daily et al., 2003). This dominance in the literature is not surprising, since large, publicly listed firms and their CEOs and boards tend to dominate media coverage and data on these corporations are often more easily accessible through public records, annual reports, and other secondary sources. Perhaps it is more surprising, given that the separation of ownership and management, and the rise of the ‘managerialist’ corporation that Berle and Mean (1932) documented, is actually quite rare worldwide (La Porta et al., 1999; Davis and Useem, 2002). In most countries, including Sweden (Glete, 1987; Ullenhag, 1993; LaPorta et al., 1999; Tson Söderström et al., 2003), many publicly listed and privately held firms are instead dominated by one or a few owners, making ownership a more natural attribute than previously assumed. This means that empirical research into the continuing linkages between ownership and management and their consequences for strategic processes deserves more attention (Goffee, 1996; Turnbull, 1997; Andersson and Reeb, 2003; Miller and Le Breton-Miller, 2003).
Another limitation of governance literature on ownership and its organizational and strategic consequences is the dominance of agency theory (e.g. Jensen and Meckling, 1976; Fama, 1980; Fama and Jensen, 1983), with its focus on self-interested, opportunistic and calculating behavior among organizational actors that is mediated by formal contracts (Pettigrew, 1992a; Greenwood, 2003). This has led to a limited understanding of ownership (Daily et al., 2003), geared attention towards legal, structural and control issues (Starkey, 1995) and fuelled a rational approach favoring cross-sectional studies using quantitative methods (Pettigrew, 1992; Wright and Chiplin, 1999)3. The dominant approach has clearly been useful to explain the structural, legal, and financial side of ownership and governance (Starkey, 1995). But social and cultural aspects of ownership and governance processes have not been considered (Starkey, 1995; Wright and Chiplin, 1999; Davis and Useem, 2002; Florin-Samuelsson, 2002; Greenwood, 2003). These processes can be assumed to have an impact on outcomes of strategizing (Whittington, 2001; Johnson et al., 2003) and be present in especially the micro-level processes of governance (Huse, 1998; Florin-Samuelsson, 2002). This leads me to conclude that there is a need for a better understanding of the role of ownership in strategic processes of most types of organizations and that it is relevant to draw on other theories than agency theory to capture important social and interpretive aspects of the phenomenon.
Source: Mattias Nordqvist (2005) - Understanding the role of ownership in strategizing