Managerial capitalism posits that dominant CEOs would no longer run businesses but instead hired employees would run the businesses as a new class of professional CEOs. Adolf A. Berle and Gardiner C. Means first make this proposal in their 1932 treatise "The Modern Corporation and Private Property" in which they endorse the idea that owners turn companies over to professional managers.
In his analysis of Stephen Pearlstein's article on American capitalism, Steve Denning of Forbes calls the era after World War II the golden age of managerial capitalism in which trained executives managed large international and national companies which in turn drove innovation and growth. During this era, big business's power was restrained by the combination of the federal government and labor unions. As a result, business was more "gentlemanly" and the business cycle tame.
Richard Martin explains in the Harvard Business Review that a shift in thought away from Berle's and Means' idea of managerial capitalism occured in 1976 when Michael C. Jensen and William H. Meckling published “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure” in the Journal of Financial Economics. In this article, Jensen and Meckling declared the new corporate mantra to be that of “maximizing shareholder value.”