Page 129 - Culture Society and the Media

CULTURE, SOCIETY AND THE MEDIA 119
decision-making forum. Second, holders must be able to translate their voting
power into effective representation on the board or that sub-section of it
responsible for key allocative decisions (since each share usually carries one
vote, the largest holders are normally in the strongest position to enforce their
wishes). As a result, economic ownership in large corporations is typically
structured like a pyramid with the largest and best organized voting shareholders
determining the composition of the executive board who formulate policy on
behalf of the mass of small investors who make up the company’s capital base.
Associated Communications Corporation (the parent company of ATV Network)
provides a particularly clear example of this structure. According to the last
published accounts the legal ownership of the company is highly diversified with
some 54.2 million ‘A’ ordinary shares in circulation, divided up among over
thirteen thousand separate investors, mostly in small parcels of between a
hundred and a thousand units. Economic ownership on the other hand is highly
concentrated with the company’s three key executives holding a majority of the
voting shares. The founder and current chairman, Sir Lew Grade, has a total of
27 per cent while the two managing directors hold a further 25 per cent between
them, giving the three men a numerical majority over the other voting
shareholders. However, it is not necessary to hold over 50 per cent of the voting
shares in order to exercise effective allocative control. Where the other main
blocs of voting shares are small and fragmented, a wellorganized individual or
group can assert control with less than 5 per cent.
When we are talking about the relationship between control and ownership
then, we are talking first and foremost about the connections between allocative
control and economic ownership. Unfortunately, as we shall see presently, a
number of commentators have failed to make these crucial distinctions with the
result that there has been a good deal of arguing at cross purposes. Nevertheless,
when the confusions of terminology have been cleared away there remains a
fundamental division of opinion over the relative importance of share-ownership
as a source of command over the activities of the modern corporation and the
general direction of the corporate economy.

FOUR APPROACHES TO CORPORATE CONTROL
Approaches to the control of large corporations can be usefully divided up
according to the general conception of the socio-economic order that underpins
them (capitalism v. industrial society) and the primary focus of their analysis
(whether it emphasizes action and agency or structural context and constraint).
This produces the basic classification of approaches summarized in Table 1.
Action approaches to corporate activity revolve around the concept of power.
They focus on the way in which people, acting either individually or
collectively, persuade or coerce others into complying with their demands and
wishes. They concentrate on identifying the key allocative controllers and
examining how they promote their own interests, ideas and policies. Structural