1 Answer | Add Yours
The validity of this statement depends to a tremendous degree on the size of the corporation in question. It also depends to some extent on the ownership structure.
In general, the larger the corporation is, the less likely its owners are to truly run it. This is because it is practically impossible for one person to actually be involved to any great degree with the everyday workings of a huge business. The larger the corporation is, the more it is going to need a bureaucracy to run it. In such cases, the owners will, at best, only be able to provide a general direction for the firm while the bureaucracy does the actual job of running the day-to-day operations.
The owners will really have a hard time running the corporation if it is owned by a large number of stockholders. If there is one single majority owner, it will be much easier for that person to run the firm than it would be for a larger group.
I do not think it matters if owners are given more control. I would say that it is sufficient to have a clear chain of command with a clearly identifiable person or group who can be held responsible for the firm’s actions. It does not matter so much whether that person is the owner or “just” a CEO.
We’ve answered 318,978 questions. We can answer yours, too.Ask a question