As a scholar who has dedicated the past decade to studying how large public companies interact with society, I welcome Matteo Gatti’s new book with pure enthusiasm. The book is scholarly, rigorous, and reads well. Timely, subtle, and insightful, Corporate Power and the Politics of Change provides a lucid framework for analyzing ongoing scholarly debates about the corporate sector’s role as a form of shadow government.

What makes Gatti’s analysis particularly valuable is his clear-eyed examination of the pressures driving corporate governance from both inside and outside the firm. He neither celebrates nor condemns the phenomenon, but instead anatomizes it with precision. Drawing on legal doctrine and insights from the social sciences, Gatti demonstrates how this shift reflects both internal firm dynamics and external institutional dysfunction. This balanced approach allows him to illuminate the legitimacy challenges that corporate governance faces, including the political and cultural backlash that has emerged in response to corporate social activism.

Large corporations shape employment practices, environmental outcomes, technological infrastructure, and social norms in ways that rival or exceed governmental influence in many domains. Gatti’s analysis also highlights the role of values in corporate governance. When corporations take stances on racial equity, climate policy, or gender rights, they are not simply maximizing shareholder value in any traditional sense. They are making political choices. Gatti shows how corporate governing takes two distinct forms: socioeconomic advocacy, where companies take public stances on contested issues, and government substitution, where they deliver services or protections the state does not provide. This distinction matters because each form raises different questions about legitimacy, accountability, and the appropriate boundaries of corporate power.

Gatti recognizes that when corporations govern, they face scrutiny not just from shareholders and regulators, but from the broader public affected by their quasi-governmental actions.<a href=”https://corp.jotwell.com/when-corporations-govern-matteo-gattis-timely-framework-for-understanding-corporate-power/#easy-footnote-bottom-1-1923″ title=”See Hillary A. Sale, Public Governance, 81 Geo. Wash. L. Rev. 1012, 1013 (2013) (observing that the boundary between “private” corporate decision-making and public accountability has eroded).” target=”_blank”>1 This critical observation points toward a fundamental tension: corporations exercise power that affects multiple constituencies, yet their governance structures remain oriented primarily toward capital providers. However, the backlash against corporate social activism (from both left and right) reflects growing recognition that corporations wield governmental power without democratic mandates.

If corporations govern (if they make decisions affecting racial equity, gender rights, climate policy, and democratic participation), then governance structures that give voice only to capital providers are inadequate to the task. The legitimacy crisis Gatti identifies stems precisely from this mismatch: corporations exercise governmental power while lacking governmental accountability mechanisms. Scholars examining corporate political governance have similarly recognized how corporate engagement with contentious social issues requires new frameworks for understanding sociopolitical decision-making.<a href=”https://corp.jotwell.com/when-corporations-govern-matteo-gattis-timely-framework-for-understanding-corporate-power/#easy-footnote-bottom-2-1923″ title=”See Tom C.W. Lin, The New Corporate Political Governance, 65 B.C. L. Rev. 833, 839-45 (2024) (arguing that modern corporations are politically entangled actors whose governance includes active participation in partisan, ideological, and cultural debates).” target=”_blank”>2

When corporations take on governmental roles, as Gatti shows they increasingly do, the need for governance structures that can accommodate plural interests becomes even more pressing in consideration of both possible harm and great opportunities to supplement governmental intervention in key sectors. In Corporate Governance as Privately-Ordered Public Policy: A Proposal, the late Lynn Stout and I pointed out how “our society can use corporate governance shifts to address, if not entirely resolve, a number of currently pressing social and economic problems. These problems include: rising income inequality; demographic disparities in wealth and equity ownership; increasing poverty and income insecurity; a need for greater innovation and investment in solving problems like disease and climate change; the ‘externalization’ of many costs of corporate activity onto third parties such as customers, employees, creditors, and the broader society; the corrosive influence of corporate money in politics; and discontent and loss of trust in the capitalist system among a large and growing segment of the population.” For the multifaceted objectives that business corporations can pursue at the same time, the matter of societal participation in corporate governance is inherently complex. Gatti’s framework sheds light on what happens when corporations step into governmental roles and organically nurtures the academic debate on solutions, opportunities, risks, guardrails, and models.

Moreover, as Gatti notes, countervailing forces are emerging. When stakeholders from multiple constituencies articulate shared values and coordinate action, they can shift the social context within which corporate decisions are made, potentially influencing outcomes even without formal governance authority. The rise of digital communication technologies and coordinated retail investor action suggests that individual shareholders are finding new ways to exert influence.<a href=”https://corp.jotwell.com/when-corporations-govern-matteo-gattis-timely-framework-for-understanding-corporate-power/#easy-footnote-bottom-3-1923″ title=”See Sergio Alberto Gramitto Ricci &amp; Christina M. Sautter, Corporate Governance Gaming: The Collective Power of Retail Investors, 22 Nev. L.J. 51 (2021).” target=”_blank”>3 Similarly, other stakeholders coordinate their collective action online and outside traditional governance channels. The inherent tension between emerging governance forces and traditional governance models connects to broader questions about how corporate governance might better reflect the diverse values and preferences of those subject to corporate power. This is where the book’s descriptive analysis opens onto prescriptive possibilities.

If corporations are making choices about social policy and collective values, then the relevant question is not merely “what do shareholders want?” but “what values should guide corporate decision-making?” The theoretical implications are profound. In illuminating the phenomenon of corporate governing with such clarity and nuance, Gatti has identified the central challenge facing corporate law and democratic theory in the twenty-first century. The question now is whether we can build governance institutions adequate to that challenge, institutions that can make corporate power legitimate by connecting it meaningfully to the diverse individuals and communities it shapes.

Traditional corporate governance theory assumes stakeholders have monolithic interests determined by their formal relationship to the firm (shareholders want profit maximization, employees want wage maximization, and so forth). But this taxonomy collapses when we recognize that individuals inhabit multiple roles simultaneously and hold values that cut across those roles. A shareholder concerned about climate change does not shed that concern when voting shares; an employee who owns stock through a 401(k) does not view the company solely through either an employee or shareholder lens.

If values and individuals’ preferences become the driver of a new corporate governance paradigm, stakeholders of different categories (e.g., retail investors, consumers, employees, and members of the community proximate to a firm’s production plants) may coordinate globally to uphold superordinate goals such as environmental and social justice or product safety. Superordinate goals and values are set to become paramount in the governance of large public companies, especially consumer-facing firms: boycotts, proxy votes, viral campaigns, and employee walkouts are not merely expressive; they are exercises of governance.<a href=”https://corp.jotwell.com/when-corporations-govern-matteo-gattis-timely-framework-for-understanding-corporate-power/#easy-footnote-bottom-4-1923″ title=”See Carliss N. Chatman &amp; Sergio Alberto Gramitto Ricci, Values Primacy &amp; Total Governance Through Activism, 67 B.C. L. Rev. __ (forthcoming 2026).” target=”_blank”>4

This is where institutional design becomes crucial for business corporations’ legitimacy. We need structures that can make corporate commitments credible and stakeholder influence systematic rather than episodic. Private ordering initiatives that allow stakeholders to coordinate and communicate with corporations; disclosure requirements that enable informed decision-making; governance mechanisms that give stakeholders formal voice. The book’s analysis of government substitution raises additional considerations. When corporations provide health insurance, retirement security, parental leave, or climate leadership because the government does not, they are performing functions traditionally understood as public. This substitution may be pragmatically necessary given governmental dysfunction, but it raises questions about equity and access. Corporate provision of social goods creates winners and losers (those with access to corporate benefits and those without) in ways that governmental provision would not.

These concerns underscore why corporate governance reform matters. If corporations are providing quasi-governmental services, then questions of fairness, inclusiveness, and democratic input become central rather than peripheral. Governance structures that give voice to affected parties could help ensure that corporate substitution for government serves broad social purposes rather than narrow private interests.

Corporate Power and the Politics of Change is essential reading precisely because it forces us to confront corporate power as it actually exists rather than as traditional theory imagines it. Gatti provides the diagnostic clarity we need to grapple with corporations as civic institutions, governmental actors, and political forces. His framework helps us understand both why corporations have taken on these roles and why doing so generates legitimacy crises.

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  1. See Hillary A. Sale, Public Governance, 81 Geo. Wash. L. Rev. 1012, 1013 (2013) (observing that the boundary between “private” corporate decision-making and public accountability has eroded).
  2. See Tom C.W. Lin, The New Corporate Political Governance, 65 B.C. L. Rev. 833, 839-45 (2024) (arguing that modern corporations are politically entangled actors whose governance includes active participation in partisan, ideological, and cultural debates).
  3. See Sergio Alberto Gramitto Ricci & Christina M. Sautter, Corporate Governance Gaming: The Collective Power of Retail Investors, 22 Nev. L.J. 51 (2021).
  4. See Carliss N. Chatman & Sergio Alberto Gramitto Ricci, Values Primacy & Total Governance Through Activism, 67 B.C. L. Rev. __ (forthcoming 2026).