The Curious Case of Stakeholder Ownership : Theoretical Insights into the Niche Persistence of the Cooperative and Mutual Form Across Advanced Economies

Stakeholder ideas of the late twentieth century challenged the doctrine that corporate managers work exclusively for the interests of equity owners. Yet markets have long been delivering alternative models where workers, customers or suppliers own the firm and run it in their interests. Stakeholder ownership in the form of customer, supplier or worker owned cooperatives and mutuals also incidentally addresses possible managerial conflict of interest in duties to multiple constituencies by establishing obligations to a single species of stakeholder. This article examines the development of such forms locating them within the stakeholder paradigm and within the modern economy. It provides theoretical insights into the persistence of stakeholder owned enterprises with transaction cost, capital and market analyses, noting additional behavioural factors working both for and against their persistence. The article finds that comparative organisational advantages of cooperative and mutual forms appear to exist in particular niche service and product lines involving longer term contracts and weaker market governance due to asymmetric information or where there is excessive market power of other entities in the supply chain. It also examines the trend to demutualisation postulating the operation of a market for organisational forms and imperfections in such market