The separation of directors and managers: A historical examination of the status of managers
ISSN: 1751-1348
Article publication date: 20 March 2019
Issue publication date: 24 April 2019
Abstract
Purpose
The purpose of this paper is to contrast the historical rise of the managerial function and its reception in law. It thus contributes to the debates on the separation of ownership and control, by showing that managers were never recognized in law. As a result, the managerial function was not protected in law.
Design/methodology/approach
This paper brings together management history and the history of UK company law to study the emergence of management in the early twentieth century and the law’s response. The authors bring new historical evidence to bear on the company law reforms of the second half of the twentieth century and, in particular, on the changes inspired by the Cohen Committee report of 1945.
Findings
Scientific progress and innovation were important rationales for the emergence of managerial authority. They implied new economic models, new competencies and wider social responsibilities. The analysis of this paper shows that these rationales have been overlooked by company law. The lack of conceptualization of the management in law allowed reforms after 1945 that gave shareholders greater influence over corporate strategy, reducing managerial discretion and the scope for innovation.
Research limitations/implications
This paper focuses on the UK. Further research is needed to confirm whether other countries followed a similar path, both in terms of the emergence of management and in terms of the law’s approach.
Originality/value
This paper is the first, to the authors’ knowledge, to examine the law’s historical approach to management. It calls for a reappraisal of the status of managers and the way corporate governance organizes the separation of ownership and control.
Keywords
Acknowledgements
The authors would like to thank Patrick Fridenson and John Quail for their extremely helpful comments. They also wish to thank the editor and two anonymous reviewers for their valuable comments and editorial help.
Citation
Segrestin, B., Johnston, A. and Hatchuel, A. (2019), "The separation of directors and managers: A historical examination of the status of managers", Journal of Management History, Vol. 25 No. 2, pp. 141-164. https://doi.org/10.1108/JMH-11-2018-0060
Publisher
:Emerald Publishing Limited
Copyright © 2019, Emerald Publishing Limited