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Charter Markets; corporate law; Delaware; Embeddedness


This article provides a history of the legal debates over the corporate charters in the American context starting with a famous dispute, originating in a series of contesting law review articles in the 1970s. A brief literature review will recount the academic arguments that have provided the intellectual support for sustaining Delaware’s primacy over corporate law-making in the face of constant attack. By understanding the debates that have sustained Delaware’s ability to lead the American competition for incorporation, this article provides insight into what is regarded as the most important legal instrument for maintaining status quo for actual social relationships within the American corporation: the “market for incorporation”. However, the article will draw attention to the growing skepticism over Delaware’s ability to generate optimal corporate law. This skepticism is most clearly evident in the federal government’s growing willingness to design and to pursue corporate law policies in the face of corporate governance scandal, notwithstanding the fact that corporate law in the United States is “state law”. The consequences of these developments are at present subject to scrutiny and discussion. In sum, this article provides an example of how shifts in law-making networks outside of the firm holds the potential to shift the embeddedness of behavior of social relationships inside the firm.