Stakeholder Capitalism at Chrysler
The pending "surgical bankruptcy" of Chrysler (which sounds clean and painless, except perhaps for the patient) will bring big changes to the company's corporate structure, as I point out in the Guardian today:
The new Chrysler will look vastly different from the old, and not just because it will be smaller. The United Auto Workers will own a 55% stake in the company in return for concessions worth billions of dollars. The US government will own 8% percent, and Canada will own another 2%. Fiat will be given three seats on the board, and will be able to earn up to a 15% stake in the company if it hits certain benchmarks, including producing a 40-mile-per-gallon vehicle in a US factory.And for those who object to government and unions having a say in how the company is managed, it's worth pointing out that the feds stepped in when Chrysler had nowhere else to turn for capital.
This new corporate governance model, with government and unions involved, shifts Chrysler from shareholder capitalism to a different model called stakeholder capitalism. In shareholder capitalism, return on investment is paramount. Management considers other stakeholders such as workers and suppliers as tools to earn a profit.