The Future of Enterprise Organization

Abstract

This book review essay argues that Henry Hansmann's The Ownership of Enterprise and G.P. Stapledon's Institutional Shareholders and Corporate Governance reflect two directions in legal analysis. Hansmann's book illustrates a "microanalysis of institutions," and Stapledon's follows a "macroanalysis of society." Hansmann explains varying legal forms of enterprise in terms of the costs of contracting and ownership. The reviewer finds Hansmann's analysis persuasive for the most part, but argues that he does not fully account for the benefits of enterprise organization and the nature of legal ownership. Stapledon's macroanalysis traces the rise of institutional investors in Great Britain and Australia comparatively. The reviewer focuses on Stapledon's suggestion that Australia may offer a "hybrid" species of corporate governance between the Anglo-American and German/Japanese models. The review concludes with an account of the "uneasy case for investor ownership" that supports Hansmann's analysis and a normative argument in favor of the public corporation as the best form of large-scale enterprise for the future.

JEL Classification: G34