Steward Ownership
* Research Report: STEWARD OWNERSHIP. Rethinking Ownership in the 21st Century. Purpose Network
Contextual Citation=
Colin Mayer on the the corporation of the future:
"There are three themes that are really emerging in the current discussions about corporations.
Those are
1. purpose, ensuring purpose,
2. ownership and the nature of ownership that‘s contributive to the delivery of that purpose and
3. governance and the way in which the management of companies is aligned to the delivery of that purpose.
Those are the three key elements that are emerging." (http://purpose-economy.org/wp-content/uploads/2017/07/Purpose_Steward_Ownership_Rethinking_Ownership-in-the-21st-Century.pdf)
Summary
"This booklet is a research publication put together for entrepreneurs, business leaders, investors and anyone with an interest in building a better economy. We start with an interview with Colin Meyer, a well respected Oxford professor who sets the historical and philosophical context for our exploration into alternate ownership (Page 10). Form there, we have a brief call for ownership experimentation by Albert Wegner, a well known Venture Capitalist, advocate of Basic Income and economic thinker (Page 22).
Following that, you will find resource specifically addressing the topic of “steward-ownership” - an ownership form with a long history as a solution for companies to enshrine their purpose at their core. In this section, you will find case studies of companies that have lasted generations, weathered economic collapses and conflicts, created significant profits and continually innovated on their core businesses (Page 26).
Accompanying them you will find an interview with Thomas Bruch, the CEO in 5th generation of the German family owned company GLOBUS with 43.000 employees (Page 34). His personal experiences are powerful and pragmatic windows into the ideas presented here.
This booklet is produced by the Purpose Network, which is dedicated to helping companies stay independent and missions driven for the long term."
Typology
The booklet discusses five forms in more detail:
- Bosch 42: The Trust-Foundation Model
- Waschbär 46: The Golden Share Model
- John Lewis 50: Trust-Partnership Model
- Metis 56: Perpetual Purpose Trust and Employee Ownership
- Drogeriemarkt 60: Single-Foundation Model
Interview
With Colin Mayer:
* What are corporations for? Why do they exist?
Colin Mayer: Corporations exist to perform functions that benefit the customers or communities of the corporations. And that reflects the origins of corporations. The first named corporation was established in Rome to undertake public functions during the first few centuries AD. The roman concept of corporation was designed to undertake public work and it was then adopted subsequently by the Roman Catholic Church. And in each case they had a specific designed function. The public works of corporations included the building of public buildings, roads, the provision of public services. Also one of the earliest known forms of cooperation is the university.
* Public goods as we would call it today.
CM: Yes, exactly. And in the case of the catholic church it was literally to run and provide the administration. In the case of the universities it was to provide education. And in the middle-ages it was part of the formation of the guilds overtaking trading functions, providing training for people working in those guilds.
* So, by stating this, you take an opposing perspective to well-known statements such as “The purpose of a company is to maximize its own profits“. You wouldn‘t agree to this, would you?
CM: No, not at all. The purpose of a company is to perform functions that will benefit to communities, societies, customers and in the process of doing that the owners of a company generate profits but profits are not as such the objective of a corporation.
* What are profits for then?
CM: Profits are there to provide the incentives for those who put up the capital for the business to do so, it is the reward for doing so. But just as those who work for the company should be rewarded for doing so. That does not make the maximization of profits the objective of the company. The objective of the company is to deliver things that will benefit to others and just in the process to make profits."
History
From the interview with Colin Mayer:
* Interestingly enough today not many people have the impression that this is the purpose of corporations that exist. How was this back in the old days in Rome? Did this work there already? Did the companies really work for the public benefit? Why so? What was different?
CM: What is different about companies of Rome and such established in middle ages was that they were established under license. So they had a fundamental purpose to fulfil those public functions. In the case of the medieval guilds it was to perform the roles in terms of the delivery of particular services. In the case of the medieval companies they got the licence from the king, the monarchy and then subsequently from parliament. So, for example corporations in the 18th and 19th century, 18th century in particular, which built railways and canals did so under licences from parliament. So the corporation up until the 19th century was essentially licenced by government or monarchies to perform its functions with a clearly defined public purpose behind them. What changed that was really the establishment of the colonies in the United States. The colonies were established as corporations. So, for example Massachusetts, Pennsylvania etc. were established as corporations. And then in turn they committed others to establish corporation within those states. And so emerged the freedom to incorporate and became a feature of corporation during the 19th century. And thereafter the distinct public function of a corporation was no longer the case.
* That‘s interesting. And during this period of licensing how was the ownership structure of these companies?
CM: So, there were public subscriptions much along the lines of what we have today. So, to take another example, the East Indian Company, which was one of the largest companies of its time in the world, had public outside subscribers and so the notion of there being shareholders was well-established. But the difference was, that those companies although they had shareholders, had to perform this public function. So, in history the fundamental purpose of the company was to fulfil its licenced condition. And as part of that, it would then generate the profits. So that‘s why I‘m saying: the underlying notion of corporations was not to maximize its profits.
Management Rights, not Ownership Rights
* Was the East Indian Company the first company that actually had shareholders in the sense, that people who did not work in the company owned it?
CM: Well, it was not the first. I mean, for example, there was the Russian Company or the Hudson Bay Company, which were established to undertake trading activities. They all had that same notion of their being a purpose and objective of the establishment of a corporation and then had shareholders who invested in them. Now, if you look at other ones, the uniSo, in history, the fundamental purpose of the company was to fulfil its licenced condition. And as part of that, it would then generate the profits. So that‘s why I‘m saying: the underlying notion of corporations was not to maximize its profits.
* If we split the term ‘ownership‘ or ‘property‘ into a bundle of rights including the ability to govern, to receive the profits, to sell it, inherit it or even destroy it, then as I understand, the college fellows inclusively hold the right to govern.
CM: Yes, they have if you like ‘management rights‘ but not ‘ownership rights‘. This particular was an important element to the corporation because what the companies like the Russian Company did was it took the notion of the guild – they had this ‚ministeric‘ role, they were just purely ministering the activities like merging or trading – but then it fused into the notion of having capital and being able to raise more capital. So the real invention behind things like The East Indian Company is to take the notion of a guild as administration and to fuse into that the notion of being able to raise capital. And that‘s what really gives rise to the distinctive feature of corporation; it is that combination of capital and administration." (http://purpose-economy.org/wp-content/uploads/2017/07/Purpose_Steward_Ownership_Rethinking_Ownership-in-the-21st-Century.pdf)