This premise is the basis of a new book by Yvan Allaire and Mihaela Firsirotu, A Capitalism of Owners, reviewed today in the Globe and Mail.
In an era where companies must be flexible and strive for change, the authors say corporate leaders face a stressful paradox. The more competitive the markets for goods and services, the more businesses need time to adapt, innovating and putting in place new strategies (as Ms. Nooyi was attempting) without speculators breathing down their necks.Exactly my point. Taking a more theoretically grounded approach to the analysis, I would argue that, according to Valence Theory, most shareholders are not even members of the organization; how on earth could they be considered “owners” qualified to participate in decision making? Indeed, the company’s customers have stronger, more pervasive ties to the organization and would theoretically be better qualified to contribute to good decision making on behalf of all constituencies.
“Yet, in these very times of a raging competitive battle, contemporary financial markets, the supposed ‘company owners,’ pile on widely held publicly listed companies, bullying them for short-term results and then exit the stock en masse, leaving the place to speculators, financial jackals, and buzzards,” the authors note.
Note the phrase “supposed” owners. Under capitalism, ownership belongs to the holders of shares. But the authors question whether today’s stockholders are share owners or share flippers, speculating on the market. They note that in the 1960s, a share was held, on average, for seven years by its owner. Today, on the New York Stock Exchange, shares are held for less than a year – roughly the level at the time of the 1929 market crash, the authors note. Other major exchanges have seen a similar transformation.
We all know the problem with absentee landlords. Owner capitalism is equivalently problematic, and far more pernicious in its effects on society in general.