Zara Case Study

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Corporate Ownership & Control / Volume 4, Issue 4, Summer 2007 96
CORPORATE GOVERNANCE: SHAREHOLDERS’ INTERESTS’ AND
OTHER STAKEHOLDERS’ INTERESTS
Elena F Pérez Carrillo*
Abstract
Much of the traditional Company Law doctrine considers that Corporations must be managed to promote, above all, shareholders’ rights. Activities in favour of non-shareholder constituencies such as suppliers, consumers, employees or the Community at large can be perceived as a means of Management to increase its power and personal prestige. Stakeholders’ interests can be interpreted as opposing Shareholders rights to obtain fair revenue for their investment. In this paper, we argue that Shareholders and Stakeholders interests are compatible and both contribute to corporate long term efficiency and progress. It is further argued that it is essential to achieve a wide consensus on how to control Management actions in support of Stakeholders interests. Keywords: Shareholders, Stakeholders, Corporate Social Responsibility, Corporate Social Citizenship, Corporate Social Practices Reporting

*Universidad Santiago de Compostela
1. Introducion
Much of the world’s public attention of the early
years of the XXIst century had it origin in failures
within Big Multinational Corporations such as Enron
or Parmalat, that evidenced that the functioning of
certain elements of late XXst century Corporate
Governance models based on maximisation of
shareholder’s interests, were not able to ensure
sustainable development of Corporation activities1.
Corporate governance through the protection of
a wider set of interests can be regarded as an
alternative way of efficiently conducting Corporate
Governance. Taking into consideration other
stakeholders’ interests is often regarded as fairly
recent in development, and Freeman is generally
cited as its landmark. However neither this idea nor
many of its practices are new. From a philosophical
standpoint it has been related with expansion of
democratic ideas2. From a practical perspective,
1 Questions considered as underlying failures include lack of control by auditors and other gatekeepers, director’s remuneration packages, and other elements organised around the pivotal ideas of short term maximisation of investment and lack of business ethics. Buchholz R.A, and Rosenthal, S B “Social responsibility and Business Ethics” en Frederick RE (Ed), A Companion to

Business Ethics, Massachusetts, Blackwell Publishers, 2002. Sen, A On Ethics and Economics, Blackwell, Oxford, 1987.
2 Taking shareholders’ interests into consideration in the Corporations’’ decision making processes has been linked to a “democratic idea” H Hummels, “Organising Ethics: A
Stakeholder debate”, Journal of Business Ethics, October, Vol 17 (13) 1998, pages 1403-1419. This interpretation is criticized as it is over idealistic and utopic, see D A Gioia, “Practicability, paradigms, and problems in stakeholder theorising”, The Academy of Management Review, Vol 24 (2)1999, pages 228-232. Others

XIXth century chocolate manufacturers in Europe
devised ethics codes and built model factories to the
benefit of their workers, supplied health and adult
education facilities and reduced the length of
working week. In the USA pharmaceutical such as
Merck developed Codes of conduct, which
underlined the Corporation’s goal to serve public
health. These two are just a sample of Corporations’
respect for constituents other than shareholders3.
More recently, academic and practical interest
for “other constituencies” approach to
Corporations’ management has evolved in parallel
with the critics of Corporate Governance theories
that evolve around the maximisation of short-term
revenue to shareholders. It has occupied much of
the academics works in the last decade. Sometimes it
appears “hidden” behind terms such as Corporate
Social Responsibility, corporate citizenship,
corporate accountability, or triple bottom line (of
environmental...
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