Stakeholder governance: on overcoming the problems in the traditional narrative of capitalism

There is a ‘stakeholder turn’ in the debate about corporate governance (CG). Both academics and practitioners are increasingly turning away from the shareholder primacy view of governance in favor of a stakeholder approach that revolves around joint value creation. But what, exactly, are the problems of the shareholder primacy view for joint value creation? And how might a stakeholder approach avoid these problems? We confront these questions by extending recent work on stakeholder governance that sees the crux of governance as finding solutions to collective action problems and has turned to Ostrom’s design principles as a guide to solving these problems. We use Ostrom’s design principles to diagnose some of the fundamental problems that the shareholder primacy view of CG has imported from the traditional neoclassical economics narrative of capitalism, and we discuss how a stakeholder approach to governance can avoid them.