Sanford M Jacoby

University of California, Los Angeles | UCLA · History Management Public Policy

The origins of shareholder primacy, its impact on the workplace, and the future of corporate governance in the US.

The essay reflects on the history of shareholder primacy and labor and draws out implications for the present. It's a draft that for a symposium on my recent book, Labor in the Age of Finance, to appear in Comparative Labor Law & Policy Journal.

Work Better, Live Better considers the visual media used by employers to align worker attitudes with business objectives from the 1920s through the 1950s. The intent was to erode support for labor unions and the New Deal and to promote diligence on the job. The psychological manipulation of workers is well-trod territory for historians. Fresh in Da...

Grzegorz Kwiatkowski is a Polish poet and musician. Here he reflects on the violence perpetrated in Poland during the Second World War, and the dualities of the Polish experience. Is it possible for art to reckon with the darkness, free of melodrama and kitsch?

This chapter examines the evolution of labor's financial turn, wherein union funds relied on the cookbook to find common ground with other investors and to raise returns on their holdings. In several industries — including hospitals, hotels, and building services — unions drew on experiences to mount corporate campaigns that incorporated shareholde...

This chapter cites economists Raghuram Rajan and Luigi Zingales, who published the article “Great Reversals,” in which they showed that financialization has ebbed and flowed over time. The chapter discusses these waves, which are industrialization (1890–1929), the New Deal (1933–1973), and neoliberalism (1974–present). Financialization waxed during...

This chapter explains how private equity rode the easy-credit wave associated with financialization. A different opportunity arose after the financial crash as bank employees became traumatized as their employers tottered and offered labor, specifically the Service Employees International Union (SEIU), another group of prospective members. The chap...

This chapter recounts the pace of financial development that quickened under President Bill Clinton, and like Prime Minister Tony Blair, he sought to challenge the libertarian drift set in motion by their predecessors. Clinton and Blair's “Third Way” preserved a role for government as a market buffer, though less generous than what Franklin D. Roos...

This chapter begins with the demise of Bear Stearns in March 2008, which was a dress rehearsal for events that would take place five months later, when the global financial system verged on a meltdown. Lehman Brothers went bankrupt; Bank of America had to rescue Merrill Lynch; Berkshire Hathaway did the same for Goldman Sachs; and Freddy Mac and Fa...

This chapter analyzes proxy access, which became the holy grail for union and public pension funds and gave shareholders the right to nominate directors and place their names alongside the board's choices. It talks about energizing the drive for proxy access, which started when shareholders became furious that boards had failed to protect their int...

Since the 1970s, American unions have shrunk dramatically, as has their economic clout. This book traces the search for new sources of power, showing how unions turned financialization to their advantage. The book catalogs the array of allies and finance-based tactics labor deployed to stanch membership losses in the private sector. By leveraging p...

This chapter highlights “The Great CEO Pay Heist,” wherein the magazine Fortune noted in 2001 that four of the five most highly paid CEOs had received average annual compensation of $274 million during the previous five years. One of them was Disney's Michael Eisner, who received a ten-year pay package worth $252 million, in addition to a $90 milli...

This chapter recounts the transformation in stock ownership that was underway during the 1970s, wherein pension plans bulked up their holdings, followed by mutual funds. Come the following decade, the public plans, epitomized by the California Public Employees' Retirement System (CalPERS), began to flex their muscles. The chapter highlights how Cal...

The ‘sharing economy’ epitomized by Airbnb and Uber has challenged business, labor, and regulatory institutions throughout the world. The arrival of Airbnb and Uber in Japan provided an opportunity for Prime Minister Abe’s administration to demonstrate its commitment to deregulation. Both platform companies garnered support from powerful government...

The 'sharing economy' epitomized by Airbnb and Uber has challenged business, labor, and regulatory institutions throughout the world. The arrival of Airbnb and Uber in Japan provided an opportunity for Prime Minister Abe's administration to demonstrate its commitment to deregulation. Both platform companies garnered support from powerful government...

This article is an historical analysis of the U.S. labor movement’s shareholder activism during the 2000s, which was based on their pension-plan assets. During the previous decade, corporate governance had tilted to give shareholders greater voice in corporate decisions. The protagonists were public pension plans such as CalPERS. Come the 2000s, th...

The globalization of capital markets since the 1980s has been accompanied by a vigorous debate over the convergence of corporate governance standards around the world towards the shareholder model. But even before the financial and economic crisis of 2008/2009, the dominance of the shareholder model was challenged with regard to persisting divergen...

Introduction: We live in an era of financialization. Since 1980, capital markets have expanded around the world; capital shuttles the global instantaneously. Shareholder concerns drive executive decision-making and compensation, while the fluctuations of stock markets are a source of public anxiety. So are the financial scandals that have regularly...

US institutional investors are a key actor helping to diffuse shareholderprimacy precepts overseas, including Japan. This study focuses on CalPERS, the public pension fund that is one of Japan's largest foreign equity investors. Using original sources, the article shows how CalPERS transferred to Japan the activist tactics and governance principles...

The third quarter of the twentieth century was a golden age for labor in the advanced industrial countries, characterized by rising incomes, relatively egalitarian wage structures, and reasonable levels of job security. The subsequent quarter-century has seen less positive performance along a number of these dimensions. This period has instead been...

This paper considers the association between financial development and labor-market outcomes such as risk and inequality. The relationship is not straightforward, however. It is mediated by politics at the national and corporate levels. Politics spurs financial development, which sets in motion countervailing efforts to restrain the effect of finan...

The new institutional labor economics is a promising development, but it has faults that could be remedied by an infusion of theoretical and methodological insights from the old institutional approach. This claim is illustrated by a critical analysis of three key concepts: asset specificity, defefrred rewards, and opportunism. The essay concludes w...

The history of employee attitude testing in American industry is presented as an example of how behavioral science has been used by management as a tool for solving industrial relations problems. Developed in the twenties, worker attitude surveys were widely used during the late thirties and after World War II to improve employee relations and empl...

For many purposes, the economic impact of unions is better measured by the proportion of union wages in total payrolls rather than by the proportion of unionized employees in the overall workforce. We use recently available Current Population Survey data to generate estimates of the former. We also show that published data from the Survey on median...

Through a case study of a large industrial company (TRW), this paper examines the history and functioning of independent local unions (ILUs). TRW's ILU plant wages were about the same as those at affiliated union plants and higher than those at nonunion plants. The premium explains why TRW and other companies discarded ILUs in favor of a “new” nonu...

A growing literature discusses the convergence of national systems of corporate governance. Fostering convergence are activist institutional investors, especially from the United States. The following is a case study of one institutional investor - the giant pension fund, CalPERS - and its efforts to change governance in Japan over the past 15 year...

Is there one best way to run the modern business corporation? What is the appropriate balance between shareholders, executives, and employees? These questions are being vigorously debated as layoffs, scandals, and restructurings rattle companies around the world. The common assumption is that globalization is merging the varieties of corporate capi...

U.S. institutional investors are a key actor helping to diffuse shareholder-primacy precepts overseas, including to Japan. This study focuses on CalPERS, the public pension fund that is one of Japan's largest foreign equity investors. Using original sources, the article shows how CalPERS transferred to Japan the activist tactics and governance prin...

Icarus in the Boardroom: The Fundamental Flaws in Corporate America and Where They Came From. By SkeelDavid. New York: Oxford University Press, 2005. viii + 250 pp. Index, notes. Cloth, $25.00. ISBN: 0-195-17471-2. - Volume 79 Issue 3 - Sanford M. Jacoby

These days, Americans seem to take their corporate governance model for granted. Shareholder interests are now all that matter. But the author traces the history of corporate governance to show that such models change over time. And they are different in other nations, such as Japan. In his view, American-style corporate governance has resulted in...

Based on an original survey of senior human resources (HR) executives, this paper provides empirical data for a comparison of HR management structures and practices in Japan and the United States. In both countries, the headquarters HR function has shrunk and employment decisions have become more decentralized in recent years. However, because the...

This essay discusses various aspects of corporate organization in Japan and the United States. First it examines some concrete empirical questions, such as relative differences in decentralization of decision-making, and in outsourcing. Next it turns to more theoretical and historical questions to do with the meaning of embeddedness (in what sense...

These days, Americans seem to take their corporate governance model for granted. Shareholder interests are what matter. But this essay traces the history of corporate governance to show that such models change over time. And they are different in other nations, such as Japan. I argue that American-style corporate governance has resulted in wage ine...

Based on data from an original survey of senior HR executives in Japan and the United States, this paper provides empirical data for evaluating institutional convergence. In both countries, the headquarters HR function has shrunk and that employment decisions have become more decentralized. However, because the pace of change has been more rapid in...

Those who view Europe as having insufficient geographic mobility often draw a comparison to the United States, where mobility is higher. But the disparity in mobility is not an innate characteristic differentiating European and U.S. labor markets. Rather, mobility rates have fluctuated over time in the United States and Europe in response to change...

We investigate the changing structure of Japanese and US companies and ask whether there are signs of national convergence in corporate organization. We present three types of evidence to address this question: longitudinal data, cross-sectional survey data and structural equation models (SEM). The models are ideal types of Japanese and US companie...

Deftly blending social and business history with economic analysis, Employing Bureaucracy shows how the American workplace shifted from a market-oriented system to a bureaucratic one over the course of the 20th century. Jacoby explains how an unstable, haphazard employment relationship evolved into one that was more enduring, equitable, and career-...

Those who view Europe as having insufficient geographic mobility often draw a comparison to the United States, where mobility is higher. But the disparity in mobility is not an innate characteristic differentiating European and U.S. labor markets. Rather, mobility rates have fluctuated over time in the United States and in Europe in response to cha...

Labor Markets and Firm Benefit Policies in Japan and the United States. Edited by Seiritsu Ogura, Toshiaki Tachibanaki, and David A. Wise. Chicago: The University of Chicago Press, 2003. Pp. ix, 400. $99.00 - - Volume 64 Issue 3 - SANFORD M. JACOBY

This essay surveys economic thought in Britain and the United States to assess the influence that economists have had on developments in the marketplace and in government (and also to show reverse causation; economic thinking is less free of historical circumstances than economists appreciate). Next it examines whether recent Anglo-American develop...

If innovative work practices improve performance, why does the intensity of their adoption vary substantially across establishments? Following a lead suggested by some sociological studies, the authors empirically investigate the role of social networks (ties to other organizations) in the organizational learning associated with diffusion of innova...

This article analyzes what happened to independent local unions (ILUs), also known as company unions, since 1935. After providing a statistical analysis of ILU membership since 1935, the article looks at the factors that shaped membership trends: changes in labor law, the characteristics of ILUs, worker attitudes toward ILUs, and employers' industr...

According to many pundits, we are living in a “high-risk society,” a kind of postmodern frontier economy (Mandel 1996). Workers are being advised to take care of themselves and their kin because government, unions, and corporations are unwilling to shoulder as much risk as in the past. Public programs such as Social Security and Medicare are in fis...

Pundits of globalization predict the eventual demise of the stakeholder corporate governance model found in Europe and Japan and its replacement by the Anglo-American shareholder model. Were this to occur, it would sharply change the relationship of employees to their employer in many parts of the world. Yet it's not obvious that convergence is ine...

Despite corporate downsizing and the rise of Silicon Valley, career-type employment practices remain prevalent in the United States. Evidence to support this claim is drawn from a variety of data on employee tenure and mobility; job creation and job quality; employer responses to labor-market tightness; and benefit and pay structures. Yet while car...

A re current employer practices qualitatively different from those of the recent past? This is the issue dividing Peter Cappelli and myself. Unlike Cappelli, I do not think that the institutions of the postwar U.S. labor market have undergone a structural transformation, certainly nothing so drastic as to warrant an obituary. Social scientists regu...

A major issue currently being debated in the U.S. is whether to allow employers to establish works councils, employee committees, or other representational systems not permitted under the current labor laws. I bring economic, political, and historical analysis to bear on this issue and recommend an experimental relaxation of current law proscribing...

The new international economy is today the single most important factor shaping relations between employers, unions, and governments in the world's advanced industrial societies. While companies compete in global markets with firms around the world, workers remain fixed in each country and are influenced by local the customs and mores. This book ex...

Recent studies of job tenure raise the question of the appropriate duration statistic to use in historical research. This article compares duration measures and examines their empirical and theoretical implications for historical research on employment tenure. Using a variety of data from the late nineteenth and early twentieth centuries, we find t...

The rate of leucine C-2 incorporation into glutamine was compared in control and septic rats. Female Sprague-Dawley rats (n = 46, 210-260 g) were fed parenterally for 3 days and then randomized into two groups (control and septic). Sepsis was induced by the injection of 10(10) live Escherichia coli/kg on day 4 into the septic group. Rats in each gr...

Recent studies of job tenure raise the question of the appropriate duration statistic to use in historical research. This article compares duration measures and examines their empirical and theoretical implications for historical research on employment tenure. Using a variety of data from the late nineteenth and early twentieth centuries, we find t...

The mechanism for the development of hypertriglyceridemia during gram-negative sepsis was studies by examining the liver production and clearance of very-low-density lipoprotein (VLDL) triglyceride (TG). To assess the liver output and peripheral clearance the kinetics of VLDL-TG were determined by a constant intravenous infusion of (2-³H) glycerol...

This study of company unionism at Thompson Products (today TRW) calls into question the usual characterization of company unions as uniformly ineffectual and short-lived. The company unions examined in this study were fostered and overseen by Thompson's managers with the undoubted purpose of keeping national unions out of the company's work force....

This paper uses a variety of data sources to document the effect of long-term contracts (LTCs) on wage dispersion. The paper first shows that LTCs are responsible for the decrease in wage dispersion observed as labor markets tighten; absent LTCs (as in most other advanced nations outside North America), this effect does not exist. The paper next ex...

Carnitine metabolism was studied in rats that were injected i.v. with 8 X 10(7) live colonies of E. coli per 100 g body weight or physiological saline. All rats were fasted after injection to equalize differences in food intake. Twenty-two hours following E. coli injection serum total carnitine, free carnitine, and acyl carnitine of septic rats inc...

This study investigated the etiology of fat infiltration of the liver during total parenteral nutrition. We measured the content of liver lipids, serum lipids, liver lipogenic enzymes, rates of in vivo fatty acid synthesis, and carcass composition in rats during continuous intravenous (iv) and intragastric (ig) feeding of two diets containing eithe...

The effects of long-term moderate food restriction were assessed in lean and obese male Zucker rats. A 30% reduction in food intake from 5 to 68 wk of age resulted in parallel lowering of body weight in both lean and obese rats compared to their respective ad libitum-fed control groups. In lean rats, epididymal and retroperitoneal fat pad weights a...

Despite recent interest in the history of the American worker, relatively little attention has been paid to the evolution of corporate employment and labor relations practices, particularly in the nonunion sector. In this article, Professor Jacoby examines the employee attitude testing program at Sears, Roebuck and Company and places it in a larger...