ABSTRACT
Delegation of decision-making is common in both political and corporate
life. Shareholders delegate decision-making to managers, who, in turn, can delegate this to lower management. Delegation raises questions of respon-
sibility and liability. The same issues arise in democracies, where people
choose leaders to develop and execute strategy. Corporations can be con-
sidered shareholder democracies: ‘Democracies can be defined as that insti-
tutional arrangement for arriving at political decisions which realizes the
common good by making the people itself decide issues through the elec-
tion of individuals, who are to assemble in order to carry out its will.’
(Schumpeter, 1974: 250). Schumpeter’s definition involves the election of decision-makers and discussion as essential features of democracy, but
democracy can also involve a single decision-maker. This happens in direct
democracy, where a single leader is chosen by acclamation. He can discuss
his strategies with a council (of elders) or with private advisors. Direct
democracy differs from representative democracy, where people are chosen
to represent a certain group and assemble in councils. Representative
democracy can take several forms; people can either be chosen by lot or
by the ballot box. Election by lot occurred in the old republics of Greece and medieval Italy, where political parties were absent, and people were
organized by neighborhood and/or guild. Party democracy is a relatively
new phenomenon. Old republics were either direct or corporatist democ-
racies. Corporations feature elements of direct democracy, when leaders are
chosen by acclamation from a single nomination. Political and corporate
executives can either have tenure or a definite time in office with limits on
re-election. Directly elected leaders, who were chosen by the people at pop-
ular gatherings at public squares had tenure. They could stay in office until they failed. CEOs also have tenure until they fail. Directly elected leaders
usually had duality, they were both chief executive and head of state
(chairman of the board).
