Business Ethics and Corporate Governance, Second Edition

THE LIMITS OF CORPORATE POWER

Millstein and Katsh assert that there are definite restraints for corporates exercising unbridled power as opined by Ralph Nader. They expostulate five basic theories that guide the state for exercising control over the behaviour of corporations. First, states have the inherent and inalienable political right to charter laws and regulations, limiting de jure what the corporation does and how it is done. Second, corporates face de facto limitations in the laws of supply and demand operating through the market mechanism and the profit motive. The free play of market forces and the competitive markets for goods and services, of course, are ensured through the state putting in place anti-trust and securities’ regulation. ...