Ownership is an umbrella term for a varying series of legal rights over particular entities. In the case of private corporate entities, ownership is a mechanism for claiming and clarifying governance rights.

Input: Corporate entity, specified rights of ownership

Output: Specified owner involvement in corporate governance

Background

Modern corporate ownership emerged during the rise of colonial and industrial economies, as a means of managing the complex financial arrangements necessary to capitalize those endeavors.

Lawyers frequently refer to ownership as a “bundle of rights,” suggesting that it is not a fixed or stable phenomenon but one that varies based on design and context.

Feedback loops

Sensitivities

  • Clarifies in precise legal terms the governance claims of owners
  • Typically organizes influence according to stake in the entity to prevent free-riding

Oversights

  • Does not recognize the voices of important non-owning stakeholders
  • May obscure important externalities, such as social and environmental considerations
  • Inapplicable to non-ownable entities, like nonprofit organizations, information commons, and public-sector resources

Implementations

Communities

  • The cooperative business tradition tends to employ ownership rights on a one-person-one-vote basis, rather than the one-share-one-vote model of most other corporate practice

Tools

  • Encode offers “integrations of proven models, legal rules, and methodologies for fully distributing authority and ownership in a purpose-driven business”
  • Upstock “creates tools and shares knowledge that aligns founders, investors, and team members” through equity compensation

Further resources

  • Chassagnon, V., & Hollandts, X. (2014). “Who Are the Owners of the Firm: Shareholders, Employees, or No One?” Journal of Institutional Economics, 10 (1), 47–69.
  • Hansmann, H. (1996). The Ownership of Enterprise. Cambridge, MA: Harvard University Press.
  • Kelly, M. (2012). Owning Our Future: The Emerging Ownership Revolution. San Francisco: Berrett-Koehler Publishers.