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The History Of Team Production Theory, Ron Harris
The History Of Team Production Theory, Ron Harris
Seattle University Law Review
In this short Essay, the author consider the team production theory developed by Margaret Blair and Lynn Stout1 from a historical perspective, in three senses. First, does the theory fit the historical use of the corporate form? Second, can it explain the development of corporation law doctrines? And third, can we place the development of the theory as such into the intellectual history of corporation theories at large? The author will state my bottom line up front: while the Article finds the team production theory insightful and useful for my historical research, for teaching corporation law, and for thinking about …
Balance And Team Production, Kelli A. Alces
Balance And Team Production, Kelli A. Alces
Seattle University Law Review
For decades, those holding the shareholder primacy view that the purpose of a corporation is to earn a profit for its shareholders have been debating with those who believe that corporations exist to serve broader societal interests. Adolph Berle and Merrick Dodd began the conversation over eighty years ago, and it continues today, with voices at various places along a spectrum of possible corporate purposes participating. Unfortunately, over time, the various sides of the debate have begun to talk past each other rather than engage with each other and have lost sight of whatever common ground they may be able …
Lobbying, Pandering, And Information In The Firm, Adam B. Badawi
Lobbying, Pandering, And Information In The Firm, Adam B. Badawi
Seattle University Law Review
In their classic and insightful article on team production in corporate law, Margaret Blair and Lynn Stout identify the minimization of rent-seeking as one of the chief benefits of vesting ultimate authority over a firm with the board of directors. In their analysis, this problematic rent-seeking arises when parties need to divide the gains from production after the fact. The squabbling that is likely to ensue may threaten to eat away most, or all, of the gains that come from productive activity. If parties know that this sort of rent-seeking will occur, they may not engage in productive activity in …
The Boundaries Of "Team" Production Of Corporate Governance, Anthony J. Casey, M. Todd Henderson
The Boundaries Of "Team" Production Of Corporate Governance, Anthony J. Casey, M. Todd Henderson
Seattle University Law Review
We examine the cooperative production of corporate governance. We explain that this production does not occur exclusively within a “team” or “firm.” Rather, several aspects of corporate governance are quintessentially market products. Like Blair and Stout, we view the shareholder as but one of many stakeholders in a corporation. Where we depart from their analysis is in our view of the boundaries of a firm. We suggest that they overweight the intrafirm production of control. Focusing on the primacy of a board of directors, Blair and Stout posit a hierarchical team that governs the economic enterprise. We observe, however, that …
Team Production & The Multinational Enterprise, Virginia Harper Ho
Team Production & The Multinational Enterprise, Virginia Harper Ho
Seattle University Law Review
Margaret Blair and Lynn Stout’s path-breaking article, A Team Production Theory of Corporate Law, advances a dual thesis: first, that team production theory does a better job than its competitors (in particular, principal–agent theory) of explaining the advantages of the public corporation and key features of corporate law; and second, that, as a matter of corporate law, corporate boards are charged with advancing the collective interest of all the contributors to the corporate enterprise rather than the shareholders’ interests alone. Its central insight is that the role of the independent, or insulated, corporate board is to serve as a “mediating …
The Team Production Model As A Paradigm, Brian R. Cheffins
The Team Production Model As A Paradigm, Brian R. Cheffins
Seattle University Law Review
Margaret Blair and Lynn Stout suggested a few years after the publication of their 1999 Virginia Law Review article, A Team Production Theory of Corporate Law, that their team production model was poised to emerge as part of a new corporate law “paradigm.” In so doing, they specifically invoked Thomas Kuhn’s well-known analysis of scientific revolutions. This Article revisits Blair and Stout’s team production theory by offering a critique of their claim that their model is destined to become a new corporate law paradigm in the Kuhnian sense. In so doing the Article draws upon key corporate law theories and …
A Theory Of The Just Corporation, Ronit Donyets-Kedar
A Theory Of The Just Corporation, Ronit Donyets-Kedar
Seattle University Law Review
In their seminal article A Team Production Theory of Corporate Law, Margaret Blair and Lynn Stout hold that the modern corporation is best understood in terms of team production. Challenging the principal–agent model, Blair and Stout offer an analysis that considers the various stakeholders of the corporation as members of a team. Accordingly, they suggest, the purpose of corporate law is to provide a response to the problems created by collective production processes, in particular those pertaining to the distribution of profits stemming from the cooperation. According to Blair and Stout, the solution to this problem is to be found …
Buying Teams, Andres Sawicki
Buying Teams, Andres Sawicki
Seattle University Law Review
The Sixth Annual Berle Symposium reflects on Margaret Blair and Lynn Stout’s classic article: A Team Production Theory of Corporate Law. Blair and Stout recast the modern law of public corporations through the lens of the team production theory of the firm. Here, I apply Blair and Stout’s insights—emphasizing the value of team production, independent monitors, and intellectual property rights—to a novel corporate transaction structure: the acqui-hire. In an acqui-hire, a publicly owned technology firm wants to add a start-up’s engineers. Instead of simply hiring them, though, it buys the start-up, discards most of its assets, and retains the start-up’s …
Team Production Theory And Private Company Boards, Elizabeth Pollman
Team Production Theory And Private Company Boards, Elizabeth Pollman
Seattle University Law Review
In their path-breaking article, A Team Production Theory of Corporate Law, Margaret Blair and Lynn Stout provided a new theory of the board of directors in a corporation. Drawing on the economic theory of team production, Blair and Stout argued that the board of directors serves as a mediating hierarchy for the firm as a whole, encouraging firm-specific investments from team members and reducing shirking and opportunistic behavior. While Blair and Stout provided a dramatically different view of the corporation from the conventional principal-agent account, they also delineated limitations to their proposed theory. Most importantly, they suggested that the …
Testing The Normative Desirability Of The Mediating Hierarch, Zachary J. Gubler
Testing The Normative Desirability Of The Mediating Hierarch, Zachary J. Gubler
Seattle University Law Review
In their influential article, A Team Production Theory of Corporate Law, Professors Margaret Blair and Lynn Stout explained how corporate law might be viewed as an attempt at solving what is known as the team production problem. At its core, this problem has to do with the opportunistic behavior that arises when multiple economic actors make investments—whether of labor, capital, or otherwise—in a business venture where these investments are said to be “firm specific” because they cannot be easily withdrawn and redeployed in other projects. The problem is how to construct a governance regime that will create incentives for the …
Team Production And Securities Laws, Urska Velikonja
Team Production And Securities Laws, Urska Velikonja
Seattle University Law Review
In the seminal paper that this symposium celebrates, A Team Production Theory of Corporate Law, Margaret Blair and Lynn Stout made two related points. First, that Delaware law does not require shareholder primacy in public corporations. Rather, the broad deference afforded to the decisions of predominantly independent corporate boards of directors is consistent with a contrary theory, that of team production, or, as they call it, “the mediating hierarch” theory. The fundamental role of the board of directors is to mediate between the interests of various stakeholders that contribute to the corporation’s output. As a result, Delaware courts have repeatedly …