To own or not to own: Theoretical ambiguity and managerial confusion in corporate ownership models

The firm’s objective has shifted from profit maximisation for shareholders to value creation for all stakeholders, raising the question of whose interest should guide firms. Shareholder and instrumental stakeholder approaches argue that firms exist to satisfy the desires of shareholders who own them. In contrast, the normative stakeholder approach focuses on creating value for all stakeholders, not clearly identifying shareholders as owners of either the company or its shares. The paper analyses the ownership’s concept, exploring whether practitioners oriented to shareholder or instrumental stakeholder theories have a clearer understanding of ownership than those following the normative stakeholder approach. A Siegel-Tukey test based on a survey of 203 executives shows that the former group displays a greater consistency in understanding ownership. A ‘matrix of theoretical consistency’ is introduced to thematise how coherence among firms’ objectives, nature, and ownership supports practical effectiveness. As an unclear definition of owners can lead managers to take unbalanced decisions, significant implications for corporate governance scholars and practitioners are provided.