184 Enabling legal interference in corporate governance.

In contrast to the contractual orientation of the partnership perspective, the institutional perspective focuses on the legal nature of corporate governance. The institutional perspective considers the corporation to be constituted by binding corporate legal rules, receiving its license to operate top-down from society and bottom-up from its stakeholders.1 Instead of limiting the partners of the corporation to strategic stakeholders, the institutional perspective extends the constitutional basis of corporations towards all stakeholders, including those without an instrumental value to the strategy of the corporation.2 Any stakeholder with a moral claim to the corporation could be included in the duties of the board, such as neighbouring communities, environmental agencies, vulnerable tort victims, or the non-strategic, long-term interests of customers and employees. Due to the difficulty of predefining and explicitly negotiating those often-conflicting interests, the board becomes the central and autonomous decision-maker in corporate governance established as a mediating hierarch between all interests involved in the corporation.3 Similar to the establishment of public government to govern the wide-ranging interests of society, the board becomes a form of private government oriented towards governing the corporation itself, taking into consideration all of the interests involved.4 As a result, the corporation becomes a legal institution with an overarching interest in its own continued and durable success.5

By considering the corporation as a type of private government similar to the public governance of society through the state, the institutional perspective is able to introduce democratic notions related to the rule of law into corporate governance.6 The most important examples are the role of the articles of association as a type of private constitution (deelrechtsorde), the plurality of the interests involved in corporate decision-making (belangenpluralisme) and an institutional structure of internal checks and balances (structuurregime).7 Instead of being oriented solely towards efficient value creation, the institutional perspective proposes a more fairness-oriented corporate governance governed by the principle of reasonableness and fairness (redelijkheid en billijkheid).8 Through this, the institutional perspective provides a strong ground structure or basic skeleton for any social and ecological corporate governance framework. Its binding legal governance structure allows for the imposition of legislative proposals reforming the structure and orientation of corporate governance.9 As I will demonstrate below, I propose to consider the institutional perspective as the middle perspective capable of integrating the suggestions of both the partnership and ecosystem perspectives.10

Such a central position of the institutional perspective in the integration of insights would reflect and build on its dominant influence in current Dutch corporate law. Viewing the institutional perspective as the starting point for the integration of insights from the other perspectives acknowledges that the institutional view (institutionele opvatting) as it currently exists in Dutch corporate law has already adopted insights offered by the ecosystem perspective (as well as by the partnership perspective). As I argued above, the institutional view (institutionele opvatting) as it exists in Dutch corporate law combines a view of the corporation as both a legal entity (vennootschap) and an operating enterprise (onderneming). 11 As such, the institutional view (institutionele opvatting) combines insights of both the institutional and the ecosystem perspectives as I have presented them in this research. While I proposed to separate these two perspectives for the purpose of further theory development, I argue that ultimately the insights offered by the ecosystem perspective could and should be integrated with the propositions of the institutional perspective. Such integration would closely align with the existing role of the institutional view (institutionele opvatting) in Dutch corporate law and therefore be the most suitable approach for reform.

On its own terms, the institutional perspective provides promising opportunities for the inclusion of social and ecological interests in corporate governance, particularly through formal inclusion in its governance structure and by extending its system of checks and balances. Meanwhile, such opportunities face two equally important caveats in relation to the difficulty in achieving perfect regulation that is able to capture all relevant social and ecological interests as well as the related risk of overburdening the board with too much regulation. These caveats form two sides of the same coin related to the bureaucratic nature of corporate governance proposed by the institutional perspective, providing room for remedies suggested by the partnership and ecosystem perspectives. I will now further consider both of the opportunities offered by the institutional perspective for the inclusion of social and ecological interests and its related caveats.