Linking Corporate Power to Corporate Structures
| Date | 01 March 2013 |
| Author | Andrea Boggio |
| Published date | 01 March 2013 |
| DOI | 10.1177/0964663912458447 |
| Subject Matter | Articles |
Article
Linking Corporate
Power to Corporate
Structures: An
Empirical Analysis
Andrea Boggio
Bryant University, USA
Abstract
Corporations are contested legal entities. Many see them merely as vehicles for financial
and business elites to acquire and maintain unfettered power. In this paper, I look at the
relationship between corporate power and corporate structures, and argue that cor-
porate power is importantly located in the exploitation of the principles of separate
personality of corporate entities and shareholder limited liability. Courts’ unwillingness
to pierce the corporate veil and to extend the liability of parent company/principal to the
acts of a subsidiary/agent contributes to enabling the creation and exploitation of
corporate networks. This is particularly problematic when the corporate creditors are
tort victims, who do not assent to limited liability through voluntary transactions. The
argument is supported by empirical evidence of the strategies of three asbestos firms to
avoid accountability for their tortious conduct. These strategies were curbed only by
recourse to criminal law by holding corporate personnel directly responsible for their
corporate activities in question and by boycott and political mobilization.
Keywords
Corporate law, limited liability, asbestos compensation, off shoring, tort creditors,
corporate power, transnational corporations
Corresponding author:
Andrea Boggio, Department of History and Social Sciences, Bryant University, 1150 Douglas Pike, Smithfield,
RI 02917, USA.
Email: aboggio@bryant.edu
Social & Legal Studies
22(1) 107–131
ªThe Author(s) 2012
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DOI: 10.1177/0964663912458447
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Corporate Power and Tort Creditors
Corporations are contested legal entities (Fleming and Spicer, 2007; Bose and Lyons,
2010). Some consider corporations to be necessary ingredients for the flourishing of pri-
vate ventures. Others are critical of their role in society. A strand of critiques in particular
sees them as vehicles for financial and business elites to acquire and maintain unfettered
power. Canadian legal scholar Joel Balkan talks about corporations’ pathological pursuit
of profit and power, and states that corporations now govern society (Bakan, 2005: 25).
Corporations’ power and influence are further seen as a threat to ‘the expectations of cos-
mopolitan democracy’(Macleod and Lewis, 2004: 77), especially considering that trans-
national corporations ‘remain largely unaccountable within international law for human
rights abuses’(Farnsworth, 2010: 165). In The Assault on Social Policy, Roth (2002: 33)
defined the corporate-dominated systems as ‘corpocracies’. Echoes of this position can
certainly be found in the voices of the Occupy Movement, which since 2011 has
highlighted the link between corporations and rising inequality, decreasing mobility, and
rampant economic insecurity in the United States and elsewhere.
In this paper, I look at the relationship between corporate power and corporate struc-
tures, and argue that corporate power is importantly located in the exploitation of the
principles of separate personality of corporate entities and shareholder limited liability
(Blumberg, 2000: 301–304). Courts’ unwillingness to pierce the corporate veil and to
extend the liability of parent company/principal to the acts of a subsidiary/agent contri-
butes to enabling the creation and exploitation of corporate networks. This is particularly
problematic when the corporate creditors are tort victims as they often prone to be vul-
nerable subjects both because they do not assent to limited liability through voluntary
transactions (Alexander, 1992: 390) and because they may have suffered significant
bodily harm. Corporations’ incentive to avoid accountability for tort liabilities generated
by their operations stems from corporations’ primary object, which is to ‘safeguard or
promote the fundamental needs of business’ (Holden and Lee, 2009: 329). The tort
victim/corporate entity offers an opportunity to (a) study corporate power that under-
mines the expectations of democracy and (b) investigate the role that corporate law has
played in generating opportunities for corporations to acquire, maintain, and exercise
such power. Is the corporate structure in itself a resource that corporations can use to
acquire, maintain and exercise power and influence? The argument is supported by
empirical evidence of the strategies of three asbestos firms to avoid accountability for
their tortious conduct. These strategies were curbed only by recourse to criminal law
by holding corporate personnel directly responsible for their corporate activities in
question and by boycott and political mobilization.
What is power? Power is a complex and contested concept. As Lukes (2005: 30)
pointed out, it is certainly ‘ineradicably value-dependent’ as ‘its very definition and any
given use of it, once defined, are inextricably tied to a given set of (probably unacknow-
ledged) value-assumptions that predetermine the range of its empirical application’.
Mindful of this methodological premise and the inability to articulate all value-
assumptions that frame my research, I only sketch the operative definition of power that
I have used to frame the case studies and analyse empirical evidence. This definition is
based on Lukes’s account of power as a three-dimensional concept. This view sees
108 Social & Legal Studies 22(1)
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