Corporations as a Commons: A Solution to Short-Termism in Modern Capital Markets

Corporations as a Commons: A Solution to Short-Termism in Modern Capital Markets

Simon Deakin in his chapter for the Oxford Handbook of corporation focused on the evolution of the concept of corporate personality in English law. According to the author the mutation of this concept can be inscribed in a broader one: the origins and evolution of industrialized market economies. The concept of corporate personality can be seen as the evolution of previous legal forms including “partnerships” and “trusts” and this was necessary to perform certain economic activities. These economic activities were mainly two: entity shielding and capital lock-in, the latter being a consequence of the former. Entity shielding can be defined as the separation between the shareholder’s assets and the corporation’s assets. In this way the company’s assets are protected by the claims of shareholders’ creditors. Entity shielding though is very important also for another reason, because it prevents shareholders to withdraw their shares of firm assets at will. Without entity shielding creditors not only would have to assess the firm’s business prospects but also the shareholders’ personal dealings. Entity shielding therefore reduces drastically information costs, but not only. This mechanism also reduces the costs of monitoring among co-owners.

As we can see in this phase the law has changed in order to adapt to economic interests. But considering the rise of industrial market economies as the only pressure for the rise of corporate personality does not tell the whole story. There were other drivers that lead to the creation of this concept such as concerns related to risks towards third parties. The concept of corporate personality was essential for pursuing the attempt to co-opt the business firm to the realization of certain goals of social policy, through taxation and regulation, thereby giving a legal expression to the concept of corporate responsibility. In fact, corporate personality can only be understood if we consider other legal sectors like employment law and taxation law, not only company law.

Corporate personality makes the corporation a distinct legal entity which cannot be owned. Nevertheless, corporations are still considered the equivalent of the shareholders’ interests. This was legitimated by the Principal-Agent theory which sees managers as agents of the shareholders. This theory though misrepresents the true nature of corporate personality itself: the fact that the corporation as such cannot be owned. “This is to say that the firm, understood as the enduring organizational structure which combines human and physical assets to produce a surplus, cannot be owned by any single individual or group” (Deakin, 2019). The firm’s assets vest in the corporation which, as a legal person, cannot be the object of a direct ownership of claim. The absence of a single ownership claim over the totality of assets and relationships, that constitute the essence of the firm, assures the survival of the entity itself. Therefore, a corporation can be better understood as a commons in which there are multiple overlapping claims that need to be reconciled through rules that are mutually agreed upon all the parties involved. Just like natural resources though, the firm is not “ownerless”. Shareholders’ right in their shares give them certain property-like claims over the surplus generated by the firm in the form of dividends. Similar income rights though belong to the workers and creditors. Just like natural commons risk depletion, also the firm’s resources may encounter the same problems in fact, within corporations, there are rules to prevent this. An example of this could be the lock-in mechanisms described earlier which make it hard for shareholders to remove the firm’s working capital as long as it is a going concern.

In the last part of the chapter Deakin explains how the studies of Elinor Ostrom can be applied to the governance of corporations. First of all, it is important to stress the fact that commons do not have to be understood as open access. Empirical research shows that enduring natural commons all have certain rules that determine who can access and how. Furthermore, another essential aspect that is fundamental for the preservation of commons is limits on the right of alienation in order to avoid overexploitation. These aspects hold true also for the corporation. We can clearly see that there are limits on the right of alienation and they manifest within the different capital lock-in rules that prevent the exploitation of common pool resources. Also, the overlapping proprietary claims discussed above reassemble the access problem analyzed by Elinor Ostrom. Another aspect that is crucial for the preservation of a common are the institutional arrangements that regulate the various property rights. Ostrom et al have elaborated eight design principles for a functioning governance of a common that according to Deakin can be applied to the corporate structure. Commons research points towards a model of corporate law that is based upon a multi-stakeholder governance scheme of the corporation against the predominant shareholder-centric governance approach. It also highlights the value of allowing self-regulatory norms to be elaborated within the corporation.

The commons-based governance approach presented by Deakin could be used to tackle a very important issue: short-termism in capital markets. If we identify the corporation only with the interests of the shareholders, it is plausible to assume that mangers will try to obtain the highest number of profits in the shortest amount of time. This will lead to short-term investments which aim at gaining profits as soon as possible. This tendency though poses at least two threats. One for the corporation itself, the other for society itself. Let’s start by discussing the former. We must start by saying that short-termism has a cost. The elimination of short-termism could result in a level of output that is 20% higher than would otherwise be the case (Davies et al. 2014). This means that abandoning short-termism should be in the interest of the company itself. Many of the most promising sectors such as clean energy, pharmaceuticals, biotech and new technologies require patient investment. These sectors need to overcome many obstacles in order to deliver solutions to the market and therefore require patient financing. It is interesting to note for example that in the United State almost 75% of the revolutionary drugs were funded in public sectors labs (Mazzucato, 2013). This is because generally public investment is not tied to the aim of generating short-term profits. Not only short-termism affects the company itself, but it also affects society as whole. The fact that new sectors that could deliver groundbreaking solutions and could generate positive impacts for society are not attractive for investments is a constrain on innovation and a loss of social wealth. But there are other ways in which a shareholder-centric approach undermines companies and society. Let’s start by a concrete example. In 2011 the pharmaceutical corporation Pfizer not only distributed 6.2 billions in dividends but also spent 9 billions to purchase its own stocks in order to boost the gains of shareholders (Ibid). These mechanisms have been used by other big players in the pharmaceutical sector in fact, in this sector there has been a reduction in the funds destinated to R&D while there has been an increase in the funds dedicated to the purchase of their own stocks (Ibid). In this way less money is invested in the production of goods that in the long run can be more profitable for the company and society itself. Furthermore, in this way stocks fail to deliver reliable information on the true value of the company. Other adverse consequences that shareholder-centric corporations may cause to society and other corporations derive from takeovers. While more extensive research needs to be done on the consequences of friendly takeovers it can be said that hostile takeovers, which is when a company is willing to acquire another company despite the objection of the board of directors of the targeted company, lead the targeted company to under invest therefore undermining its performance (Canoy et al, 2000). This for example can lead to a loss of jobs and a general reduction of output.

A commons-based approach to the governance of the corporation could help to overcome these issues. Taking into account the interest of other stakeholders such as managers and employees could help to focus more on the performance of the corporation and tie the shareholders to long term goals. Furthermore, such an approach could benefit society as a whole. It is therefore interesting to study more in detail the possible policy solutions to avoid short-termism and regulate takeovers. These two policy fields could help to rebalance power relations among stakeholders and pave the way for the conceiving of the corporation as a common.


  • S. Deakin, The Corporation as Commons: Rethinking Property Rights, Governance and Sustainability in the Business Enterprise, Queen’s Law Journal, 2019.
  • R. Davies, A.G. Haldane, M. Nielsen & S. Pezzini, Measuring the costs of short-termism, Journal of Financial Stability, 2014.
  • M. Canoy, Y. E. Riyanto & P. van Cayseele, Corporate Takeovers, Bargaining and Managers’ Incentives to Invest, Managerial and Decision Economics Vol. 21, No. 1
  • Mazzucato, M. The entrepreneurial state: Debunking public vs. private sector myths, Penguin Economics, 2015

EUARENAS: A Luiss and LabGov project received a (new) Horizon2020 funding

EUARENAS: A Luiss and LabGov project received a (new) Horizon2020 funding

Luiss is the recipient of a European funding under the Horizon 2020 program (call H2020-SC6-GOVERNANCE-2018-2019-2020 (GOVERNANCE FOR THE FUTURE), for their project as a partner in “EU.ARENA.S – Cities as Arenas of Political Innovation in the Strengthening of Deliberative and Participatory Democracy”.

The project aims to experiment in different European cities (Reggio Emilia, Gdansk, Budapest and Voru) new forms of participatory governance that will transform cities into real laboratories for European citizenship. A transdisciplinary combination of law, business & policy competences, which is a fundamental component to stimulate the creation of new forms of economic participation and democratization, lies at the heart of the project. The Luiss’ research unit will contribute to different Work Packages and will lead the WP that will be dedicated to the definition of the work methodologies for the pilot projects in the above mentioned four cities, the WP that will create new legal and public policy instruments functional to the pilot projects and the WP dedicated to the measurement of the impact. Furthermore, two of the involved cities (Reggio Emilia and Gdansk) are already actively collaborating in engaged research’ projects in which Luiss LabGov.City is involved in: the “Reggio Emilia Collaboratory”, QUA – Quartiere Bene Comune (Neighborhood as a commons), and the Urbact transfer network “Civic eState”.

Immagine che contiene edificio, esterni, strada, vecchio

Descrizione generata automaticamente
Credits to Comune di Reggio Nell’Emilia, picture of Luca Gilli

Technological and digital tools are widely understood as key assets for sustainable and inclusive urban development. The city of Reggio Emilia (Italy) put in place a policy strategy aimed at developing an inclusive, collaborative, creative city by relying on the enabling features of digital tools and infrastructures. The Tech and the city approach adopted and experimented by the city government in Reggio Emilia builds on the most advanced theories on urban co-governance, the city as a commons, or “co-cities” theory. The City as a Commons approach is based on the cooperation of public, private, knowledge, social and civic actors (the so-called quintuple helix), established and regulated through public-community and public-private-community partnerships agreements enabling sustainable innovations and scientific experimentations in the city. This approach entails a strong focus on the valorization of local know-how and the recognition of community stewardship rights (rights of use, co-management, co-ownership) over urban critical assets and infrastructure, the so-called urban commons. These two elements are considered key ingredients to trigger inclusive urban sustainable development, especially in deprived neighborhoods.

The “neighborhood as a commons” program was the first policy tool forged to implement this approach and initiated in 2015 neighborhood labs as co-design moments that take place in neighborhood social centers to define urban innovation projects with the actors of the neighborhood. The aim is to close at the end of the co-design process citizenships pacts that set terms, conditions, investments to device the sustainable innovation projects. Within the neighborhood as a commons program, Reggio Emilia has used a scientific methodology to put in place a wide variety of community-based urban innovation and experimentation projects both in the historical center and in the more peripheral neighborhoods of the city. The most successful one is the Coviolo Wireless initiative which has successfully developed broadband infrastructures in an underserved neighborhood, extending broadband access to city inhabitants, and providing social and economic development opportunities by turning the neighborhood community centers into hotspots and managers of the digital infrastructure.

Luiss team is coordinated by Christian Iaione (Director of the MSc in Law, Digital Innovation and Sustainability, LabGov.City co-director and Luiss BILL Executive Director) and Luca Giustiniano (Director of the Master in Global Management and Politics and Luiss Clio Director).

Fernando Christian Iaione
Christian Iaione
Director of the MSc in Law, Digital Innovation and Sustainability”, co-director of LabGov.City and vice-director of BILL)
Luca Giustiniano
Luca Giustiniano
Director of the MSc in Global Management and Politics and director of the CLIO – Center for research on Leadership, Innovation and Organisation

The team is also composed by Elena De Nictolis (Adjunct Professor and Postdoctoral Fellow, Department of Political Science, LUISS University, program), Alessandro Piperno (Researcher at Luiss Guido Carli University and LabGov.City), Alessandro Antonelli ( Teaching Assistant at Luiss Guido Carli University). Federica Muzi, Tommaso Dumontel, and Alessandro Ciro Cimmino (students and members of LabGov’s team) collaborating on the project.

EUARENAS: Luiss e LabGov si aggiudicano un (nuovo) finanziamento Horizon2020

Il 21 Gennaio alle ore 10:00 si è tenuto il primo Kick-off meeting di EUARENAS –  Cities as Arenas of Political Innovation in the Strengthening of Deliberative and Participatory Democracy. In Questa giornata sono stati presi in esame gli obbiettivi di EUARENAS per poi analizzare l’obbiettivo di ciascun work package. La giornata si è terminata alle ore 17:00. Il 22 gennaio, sempre alle ore 10:00, è cominciata la seconda giornata del Kick-off meeting. In questa giornata sono stati analizzati gli altri WPS mettendo a fuoco i loro obbiettivi. La giornata si è conclusa alle 17:00, nella parte finale del meeting sono state prese in considerazioni eventuali problematiche e necessità.

Kick-off meeting di EUARENAS

Luiss si è aggiudicata un prestigioso finanziamento europeo nell’ambito del programma UE Horizon 2020 per la ricerca e l’innovazione sulla call H2020-SC6-GOVERNANCE-2018-2019-2020 (GOVERNANCE FOR THE FUTURE) con il progetto “EU-ARENA.S Cities as Arenas of Political Innovation in the Strengthening of Deliberative and Participatory Democracy”.

L’obiettivo del progetto è sperimentare in diverse città europee (Reggio Emilia, Danzica, Budapest e Voru) nuove forme di partecipazione democratica che possano trasformare le città in veri e propri laboratori di cittadinanza europea. L’approccio del progetto si basa sulla combinazione di competenze law, business & policy necessarie per stimolare e combinare la nascita di forme di partecipazione democratica e democrazia economica.

L’unità di ricerca Luiss contribuirà in diversi Work Packages e sarà leader del work package che definirà le metodologie di lavoro dei progetti pilota nelle quattro città, di quello deputato a forgiare nuovi strumenti giuridici e di politica pubblica serventi rispetto a questi progetti pilota e, infine, di quello dedicato alla misurazione dell’impatto. In aggiunta, due delle città coinvolte, Reggio Emilia e Danzica, sono città che già collaborano attivamente con progetti di ricerca nei quali il team Luiss LabGov.City è coinvolto, quali “Collaboratorio Reggio Emilia” e QUA- Quartiere Bene Comune a Reggio Emilia e il transfer network Urbact “Civic eState” nel caso di Danzica.

Gli strumenti digitali sono considerati degli elementi fondamentali per uno sviluppo urbano sostenibile ed inclusivo. La città di Reggio Emilia ha avviato una strategia che mira alla sviluppo di una città inclusiva, solidale e creativa tramite strumenti ed infrastrutture digitali. L’approccio “Tech and the City” è fondato sulle teorie più avanzate di co-governance, in particolare sul modello delle co-città elaborato da LabGov.City che vede le città come beni comuni. Questo approccio vede la collaborazione di attori pubblici, privati, della conoscenza, e civici (organizzati e non) come un requisito fondamentale per la gestione delle risorse urbane. Questo tipo di collaborazione è definito modello della quintupla elica. Tale approccio, inoltre, si concentra sulla valorizzazione del know how locale e sul riconoscimento delle comunità come beneficiari e gestori chiave delle risorse urbane.

Il programma “neighbourhood as a commons” è stato il primo strumento di policy per mettere in pratica l’approccio delle co-città. L’obbiettivo è quello di elaborare dei veri e propri patti cittadini con l’obbiettivo di creare strumenti di policy, legali ed economici al fine di dar vita a progetti che siano al contempo sostenibili ed innovativi. Uno dei progetti più importanti da menzionare è “Coviolo Wireless initiative” che ha portato alla creazione di un’infrastruttura per la band larga in un quartiere svantaggiato garantendo una connessione internet ai cittadini ed inoltre ha fornito opportunità di sviluppo tramite la gestione diretta dei cittadini di tale infrastruttura.

Il team Luiss è coordinato da Christian Iaione (Direttore del Corso di Laurea Magistrale Law, Digital Innovation and Sustainability”, co-direttore di LabGov.City e vicedirettore di BILL) e Luca Giustiniano (direttore del Corso di Laurea Magistrale in Global Management and Politics e direttore del CLIO – Center for research on Leadership, Innovation and Organisation),

Il team di ricerca sarà composto da: Elena De Nictolis (professoressa associata e ricercatrice post-dottorato presso il dipartimento di scienze politiche all’università Luiss Giudo Carli), Alessandro Piperno (ricercatore presso l’università Luiss Guido Carli e LabGov.City), Alessandro Antonelli (teaching assistant presso l’università Luiss Guido Carli). Collaboreranno sul progetto Federica Muzi, Tommaso Dumontel e Alessandro Ciro Cimmino (membri del team di LabGov).

Is Christmas the Jolly Season when it comes to Energy Consumption? 

Is Christmas the Jolly Season when it comes to Energy Consumption? 


This brief article concentrates on Christmas’ energy consumption increase due to the use of decorations and specific appliances for the season. After a brief introduction on the impact on the CO2 levels of such increase, four tips on energy-efficient alternatives are provided. The proposed options span from considering to switch to less-consuming LED light bulbs up to more innovative solutions such as solar energy powered Christmas lights. The last section hence concentrates on the new emerging technologies developed to save energy during the Christmas holidays. These include flexible and adaptable solar panels for Christmas lighting and Smart Illumination Control systems which help to save energy by automatically turning on and off decorative lights. We conclude by underlining that Christmas should not be jolly only for us but also for the planet itself.


Christmas is indeed the season to be jolly but not when it comes to energy consumption. As a matter of fact, Christmas holidays are characterized by a sharp rise of energy consumption which leads to higher emissions of CO2 (Balestreri, 2018). During Christmas time, energy consumption increases by 30% due to a major use of decorations and appliances (Ibid). To better understand the intensity of this phenomenon, let’s consider the fact that in the US, for example, Christmas decorations account for 6.63 billion kilowatt-hours of electricity consumption. With this in mind, consider that El Salvador’s annual electricity consumption accounts for 5.35 billion kilowatt-hours, Ethiopia’s one for 5.30 billion while Tanzania’s one for 4.81 billion (Moss & Agyapong, 2015).


The research methodology approach of this article is based on the collection and analysis of papers, articles and data. Our aim is not to solve the problems related to the Christmas lights’ energy consumption, but rather to provide a report with information about the topic and data showing common trends across the world and to suggest effective solutions, which already exist, to mitigate the problem. Moreover, to give consistency to the study, we gather shared solutions between countries, thus combining both a quantitative and qualitative analysis of the problem.


 During Christmas holidays, it is easy to forget about being energy-conscious as we light up our homes. However, according to our research, several useful tips can help us in saving energy consumption also during the holidays. Firstly, switching to LED lights leads to two main advantages: a 90% reduction in electricity compared to regular Christmas decorations and a duration set between 50.000 and 200.000 hours. Secondly, adopting a timer would allow programming when to switch the lights on and off avoiding energy waste. Furthermore, choosing fiber optic decorations can improve energy consumption rates. Indeed, this type of technology uses a single light source that flows through a fiber cable extending the light beam across the area covered by the cable, allowing much more efficiency and savings. Finally, the adoption of solar energy powered Christmas lights work with no need of a switch: they turn on when it gets dark, and stay on for 8-10 hours.


Having seen the existing practical solutions to the problem, we also deem appropriate to analyze the underlying innovative and emerging technologies developed to save energy during the Christmas holidays. Solar-powered lighting systems utilize one or more solar energy gatherers to generate electricity that is then stored in a battery to power, for example, outdoor Christmas tree’s lights. This lighting system uses flexible solar panels, this means that they can assume various shapes, for example, the form of a star that can be placed at the top of a Christmas tree. On the other hand, Smart Illumination Control systems help to save energy by automatically turning on and off the Christmas lights. Blachere Illumination has integrated this system with its BIOPRINT, a LED illumination light made of completely recyclable biodegradable material, meaning that, when disposed, no unwelcomed carbon footprint is left behind.


This article began by showing the relevance of the issues related to the rise of energy consumption due to Christmas lights. Later on, tips on how to mitigate this issue have been provided, especially underlying the most innovative ones. Finally, in the discussion session, we went deeper into the functioning of the most innovative solutions. We believe that Christmas should be jolly not only for us but also for the planet itself.

This article has been written by the students of the Luiss new Msc in Law, Digital Innovation and Sustainability in the context of the class of Law and Policy of Innovation and Sustainability taught by Professor Christian Iaione. The cluster “Energy” is composed of the following students: Sofia Brunelli, Tommaso Dumontel, Josette Gonzales, Federica Muzi, and Riccardo Negrini.


G. Balestrieri, 2018, “Natale fa impennare i consumi elettrici, ma le luci a Led salvano l’ambiente”, Business insider italia

T. Moss & P. Agyapong, 2015, “US Christmas lights use more energy than entire countries”,

Constellation, 2015“10 easy ways to save energy during the holidays”, Blog

X. Juan, L. Jin, D. Xiu-xiang, 2018, Design of LED energy-saving lights in holiday night landscape: a case study on Christmas night landscape in Jinan Parc 66, Shandong Jianzhu University.

N. L. Ballarini, R. J. Ballarini, 2007, Solar-powered lighting system, US Patent.

K. Hogan, Future Home Tech: 8 Energy-Saving Solutions on the Horizon,