Governing for Social Welfare: A Corporate Governance Perspective

This paper presents a historical perspective on corporate governance (CG) by showcasing its relationship with social welfare (SW), specifically in the context of the sustainable transition. We describe how the evolution of CG theory and practice over the last decades mirrors the changing outlook on SW within the management field. In this manner, we bring to the fore an overlooked dimension of CG. Our analysis begins with the origins of CG as espoused within agency theory, its focus on economic efficiency and its promise of trickle-down effects promoting SW. Next, we present the stakeholder agency perspective on CG, its conceptualization of a multipurpose organization, and its implications for SW. Our discussion then goes on to explore different ways in which corporations have attempted to advance SW – such as through a focus on corporate social responsibility (CSR), the recent emphasis on environmental, social and governance (ESG), and the revisiting of corporate purpose – and their involvement in the sustainable transition.