Power must go to those who are paid last.

• Author: Mackey, John
• Position: Book review

From Conscious Capitalism by John Mackey and Raj Sisodia. Copyright [c]2013 by Harvard Business School Publishing Corporation. Published by Harvard Business Review Press (www.hbr.org/books).

OPTIMIZING VALUE for all the interdependent stakeholders does not mean a loss of legal control of the business for the investors. The owners and investors must legally control the business to prevent their exploitation by management and by the other stakeholders. This is because owners and investors are paid last, after everyone else has received goods, services, wages or payment. They are entitled to whatever is left over, the residual profits. Because they are paid last, investors must have legal and fiduciary control of the business to prevent management or other stakeholders from shortchanging them. Investors usually demand these conditions as a requirement for investing their capital in a business.

Since...