By: Thomas W. Joo
Although previously ignored in assessing the interplay between
corporate governance and racial disparities in the workplace, the
role of corporate structures, business practices, and the corporate
law regime is integral to that very analysis. The implications
of workplace interactions play a crucial role in determining
perceptions of interracial activity, as well as allocating the
distribution of power, wealth and prestige among racial groups.
Although corporate regulation has enjoyed recent political
popularity following Enron, current hostilities toward
race-conscious remedial law fails to provide a legitimate basis for
improvement in the near future.
Two conflicting theories are presented by the author for
initiating corporate change: shareholder participation and
management discretion. The first, referred to by the author as
democratic aspirationalism, seeks to influence corporate behavior
through the mechanisms of corporate democracy, that is, through
shareholders’ legal avenues of participation in corporate
governance. The Second, referred to as hierarchical realism,
seeks corporate change with the understanding that notwithstanding
the rhetoric of corporate democracy, the board of directors and the
top executive officers, not shareholders, wield the real power in a
corporation.
Shareholder empowerment holds little potential for achieving
racial justice in corporate conduct. Additionally, Government
intervention is an unlikely solution, particularly given the
ideological tendencies of our current federal government.
Surprisingly, the existing system, which concentrates power and
discretion in the board of directors and executive officers, holds
greater potential than shareholder majoritarianism or government
regulation. This is not to say that corporate hierarchs have a
more developed sense of moral responsibility than ordinary
shareholders do. Nor does it mean that the existing corporate
governance system is an ideal technique used to make corporations
responsive to racial issues. In reality, dependence on management
discretion is probably the worst possible method—except for all the
others.