By Martin Vogel
An unrelated assortment of pieces could each have prompted a blog post. But since it’s been a busy week, I’ll note them in passing.
Corporate purpose and organisational form
John Kay, apropos the Co-op debacle, provides a timely back to basics primer on who should be held to account and how when things go wrong in organisations:
“The public company has become the dominant form of business organisation because it seems to offer clear answers to these questions. Shareholders put up the money and control the executives. True, the reality often falls short. Shareholders are often diffuse and disengaged. The cost of bad business decisions may fall instead on employees, creditors and taxpayers. But, on balance, the corporate form works tolerably well.”
But that’s not the end of the argument because John Kay makes the good point that there are many hybrid organisations – such as privatised utilities, hospitals and universities – that need to develop distinctive frameworks of control because they combine trading and social purposes.