Inside the Black Box: Corporate Laws and Theories

Abstract

This article argues, first, that new theoretical ways of thinking about companies are coming to the fore and, second, that these new ways of thinking are finding their way into some aspects of company law and regulation. Snider's device of tracking the emergence of new ideas as `journey from academic journal to economic policy to law' is employed in support of the article's main argument. In particular, it is submitted that the idea of the firm as a `nexus of contracts' is being replaced by the idea of the firm as a `behavioural entity'. While management and economics theorists have gone `inside the black box' in order to ask different questions and produce better theories, the law has arrived there via a much more pragmatic route. However, recent developments in two areas of company law and regulation, corporate criminal responsibility in the UK and Australia and corporate governance in the UK, can be seen in terms of a move away from a focus on the individual decision maker and towards the concept of corporate culture.