SUSTAINABLE CORPORATE GOVERNANCE: ELEMENTARY MECHANISMS AND IMPLICATIONS FOR ALTERNATIVE LEGAL FORMS

How can a stakeholder make sure that sustainability issues are effectively considered and integrated into management practices? Recent years have witnessed the introduction of alternative corporate forms to address sustainability challenges. However, we lack an integrative framework to make sense of this diversity of legal forms and to analyze their capacity to ensure sustainable management. This article proposes a framework to characterize two elementary mechanisms of sustainable corporate governance. Drawing on two fields of literature—research on social enterprises and studies bridging law and cognitive approaches to corporate governance—we model these mechanisms: (1) the right to control, understood as the right to appoint and dismiss executives; and (2) the right to challenge a management decision based on an established norm. We identify that, for these mechanisms to function, specific legal capacities (the right to act) and competencies (the ability to control and evaluate managerial decisions) are required. The framework contributes to the literature by offering a unified lens to analyze diverse legal corporate forms aiming at sustainable corporate governance, assessing their conditions for effectiveness, and identifying the sticking points, which represent avenues for further exploration in future research. From a theoretical perspective, it highlights the overlooked potential of legal accountability mechanisms in advancing sustainable governance, complementing the control-oriented approaches that dominate corporate governance research.