Brian Cheffins is S. J. Berwin Professor of Corporate Law and Richard Williams is Hogan Lovells University Lecturer in Corporate Law at the University of Cambridge. This post is based on their recent paper.
At first glance, team production theory and U.K. company law are ships passing in the night. The team production model of corporate law, a highly influential theory that debuted in a 1999 Virginia Law Review article by Margaret Blair and Lynn Stout, has as its defining feature the idea that the board of directors of a company operates as a mediating hierarchy tasked with balancing the interests of a corporation’s various constituencies in a manner that addresses the challenges associated with fostering “team production” in a corporate setting. They hypothesized that team production would occur most effectively in a publicly traded company if no one constituency affiliated with the company enjoyed dominant influence over the board. U.K. company law, however, is widely perceived as exhibiting exactly this feature, ascribing a dominant role to shareholders. In our working paper Team Production Across the Waves we show that U.K. corporate governance features a stronger degree of board centrality than would be anticipated with a legal framework that seems to be resolutely shareholder-friendly. In this instance, then, team production theory travels well.
