Problems and while the circumstances described can give top management control of a large corporation, this does not mean that the top managers make all the decisions in such corporations. Unlike a small business, in which decision making is dominated by one or a few people, large corporations employ large numbers of specialists in areas such as marketing, product design, finance, personnel, law, data processing and so on. The role of top management is not so much to make decisions in these people’s areas as it is to set down plans and objectives for the corporation, and to select and organize people and to coordinate their efforts, establishing an environment in which they can work effectively, making the maximum contribution to the corporation with their skills and knowledge. Such people – called the “technostructure” by economist John Kenneth Gaibraith and “knowledge workers” by Peter Drucker, the management theorist – are vital to the success of the large corporation, and the art (or task) of the top manager is to utilize them effectively. This explains the high mobility of chief executive officers, many of whom move quite freely between corporations in different industries, and between corporations and top positions in government agencies. It also explains the fact that, whereas the loss of its president would likely be a catastrophe for a small business, the loss of the chief executive officer or a large corporation often goes almost unnoticed of the stock market and in the operations of the company, because it is the chief executive officer’s job has been done well, the company will continue to function effectively until a replacement is selected. In this sense, then, it can be argued that the key to effective corporate decision-making lies in the middle-level specialists of its “technostructure” and, while it cannot be said that these people control the corporation, it also cannot be denied that their knowledge and expertise gives them great influence over its decisions.
A “proxy” is a legal instrument whereby a shareholder in effect delegates to another person authority to vote on his or her behalf, either according to specific directions or as the person holding the proxy sees fit. Usually, proxies are solicited by and given to people representing the management of the corporation, as noted above. Occasionally, however, a dissident group of shareholders will attempt to use proxies to gain control of the corporation, setting off a “proxy war” in which it and the management compete for the proxies of the shareholders (and thus control of the corporation).
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