Captains of Industry? Value Allocation and the Partnering Effect of Managerial Discretion

Abstract

Can value allocation be left to managerial discretion and does corporate law provide the basis for a balanced stakeholder management and a fair allocation of results? This question is central in an age of inequality. We argue that it can be reappraised by building upon the case of maritime law. Whereas in corporate law, the board is in charge of allocating the results, maritime stipulates a clear ex ante rule when it allows a captain to sacrifice some goods to save the ship: the historical "rule of general averages" has emerged in Antiquity. It compels the interested parties to bear jointly the costs. This rule makes visible what we call a "partnering effect" of managerial authority and suggests that corporate law, as it currently stands, lacks a conceptualization of managerial discretion and therefore limits the possibility of a fair allocation of results. While management scholars have sought to rethink management theory with a "view from law" (Lan & Heracleous, 2010), we conclude that law could also be discussed with a view from management history.