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The proposed hypothesis of European corporate governance change is contrasted with existing explanations of corporate governance from a range of academic disciplines. It is argued that, although the hypothesis advanced in the book is based on the rational behavior of social actors, it is not assumed that corporate governance outcomes will necessarily converge on the most “efficient” outcome (e.g., in terms of minimizing the cost of capital for the firm). Nor is it assumed that there is a necessary equality between de jure and de facto corporate governance outcomes (as argued by many legal scholars).

This chapter reviews some of the different ideas which inform current thoughts about what corporate governance is. Doing this provides the context for the arguments in the book. A distinction is drawn between ideas based on economic theories of the firm, and so-called ‘organizational’ theories. The chapter discusses how economic approaches tend to see the firm principally in contractual terms, are guided by assumptions of utility-maximizing self-interested human behaviour, and tend to posit the protection of investors' capital as the ‘corporate governance problem’. Organizational theories by contrast tend to begin with a more complex concept of the firm, allow for other-oriented behaviour, and can conceive the governance of companies as routinely involving multiple relationships. While economic approaches currently predominate in the burgeoning field of corporate governance research, there are many criticisms of their fundamental assumptions. Organizational approaches, tend to be poorly developed theoretically.

The conclusion restates the argument that the legal theory of the firm advanced in the book provides an antidote to dominant economic theories of the firm. At least, a legal theory of the firm provides a needed supplement to economic theories. A legal theory of the firm also provides an interpretive framework that is open to the contributions of other interdisciplinary approaches, including history, philosophy, political theory, and sociology. Pulling together themes from previous chapters, the conclusion argues that legal theory can provide a concrete and flexible account of business firms that allows for a diversity of purposes and values. This legal flexibility—from both the perspective of business participants and the perspective of government—is significantly greater than many people appreciate. A better understanding of the “legal matrix” underlying firms can empower people to change the forms of business enterprise in many different directions in the future.