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Journal of Business Ethics

, Volume 71, Issue 4, pp 359–370

First Online: 22 November 2006


Although McMahon offers a potentially valuable extension of Joseph Raz-s conceptualization of authority by distinguishing three different kinds of authority, this paper argues, first, that his account of the conditions and considerations that would justify managerial authority is problematic because it relies on a conception of reasons for action that excludes precisely the kind of rationality that plays an important role in the␣explanation and justification of authority in economic␣organization. This paper explains, second, why McMahon-s thesis of the justificatory similarity of authority in governments and nongovernmental organizations can also be seen to hold for corporate governance of publicly owned firms more specifically. Finally, this paper raises some critical objections against McMahon-s presumption of democratic governance in governments and NGO-s alike. The thrust of these objections is that democratic corporate governance does not make sense in the publicly owned firms because: 1 it will not produce results that are fair or welfare maximizing, and 2 it will undermine the legitimacy of managerial authority in such firms.

Keywordscorporate governance McMahon Raz authority managerial democracy economic theory of the firm J. Hans van Oosterhout holds an M.A. in political science from Leiden University and a PhD in organization theory from RSM Erasmus University, where he is currently an associate professor. His research involves the positive and normative theory of organizations and institutions, with a current emphasis on corporate governance and comparative economic and political organization. Earlier publications have appeared in: Academy of Management Review, Organization Studies, Journal of Business Ethics and Futures.

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Autor: J. Hans van Oosterhout


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