Sen’s capabilities and stakeholders’ entitlements in the firm: A new foundation of corporate governance

Massimiliano Vatiero (Università degli Studi di Trento, and Università della Svizzera italiana)
Magalì Fia (University of Bologna)
Lorenzo Sacconi (Università degli Studi di Milano Statale)

Abstract

This paper presents a novel framework for corporate governance based on Sen's capability approach. We show that the hierarchical structure of a firm and its corporate governance influence the capabilities of stakeholders. Furthermore, we illustrate the connection between capabilities and entitlements, which we term 'capabilities-as-entitlements' within the firm. Additionally, we identify criteria for allocating capabilities in the corporate domain and for resolving potential conflicts among stakeholders' capabilities within firms. Finally, we provide examples of capabilities-as-entitlements and measures of capabilities within firms.

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