Theresa May has backed away from a pledge to require companies to put worker representatives on boards.
Speaking to the CBI's annual conference, Mrs May said firms would not be forced to adopt the controversial proposal.
"This is not about mandating works councils, or the direct appointment of workers or trade union representatives on boards," she said.
Mrs May's pledge had met with a cool response from business lobby groups.
The prime minister said there were "other routes" that used existing board structures, but supplemented by advisory councils or panels.
"It will be a question of finding the model that works," she said.
Mrs May promised to shake-up corporate governance as part of her Conservative Party leadership campaign in July, and repeated the promise at last month's party conference when she said she planned to have "not just consumers represented on company boards, but workers as well".
She said the government would soon publish its plans to reform corporate governance, which would cover firms' accountability to shareholders, executive pay as well as proposals to ensure employees' voices were heard.
Trade unions said they were disappointed by Mrs May's decision.
TUC general secretary Frances O'Grady said: "Theresa May made a clear promise to have workers represented on company boards. The proposals in her speech do not deliver on this.
"This is not the way to show that you want to govern for ordinary working people."
In her speech to business leaders, Mrs May also pledged an extra £2bn a year in funding for scientific research and development by 2020.
Mrs May said: "We will also review the support we give innovative firms through the tax system... because my aim is not simply for the UK to have the lowest corporate tax rate in the G20, but also one that is profoundly pro-innovation."
Corporation tax is already due to fall from its current 20% rate to 17% by 2020.
In the US, president-elect Donald Trump said during his campaign he would seek to cut the federal rate to 15%, but it is understood the Treasury still thinks the UK would be more competitive, once extra US taxes are factored in.
Labour leader Jeremy Corbyn, who will also be speaking to the CBI, will warn against a "mishandled, chaotic Brexit".
He will also call for a more interventionist role for government in industrial policy.
He will expand on Labour's proposal for a national investment bank, which he will argue would "help break the logjam in the British financial system" by lending to small and medium-sized businesses.
He will argue industrial strategy should not be about "picking winners" but should "set the missions, put in place the right institutional framework and support and provide businesses with the opportunities to develop our economy".
The CBI will be happy to gloss over the details, and Fairbairn and Dreschler will be relieved that May at least has toned down some of the anti-business tone she took after she took over as prime minister. Then, she was talking about mandatory representation of workers on boards, while her home secretary, Amber Rudd floated the idea of companies having to say how many foreign workers they employed. Those days seem far off, and the relationship between business and government is much warmer than it was only a few months ago.
Speaking to the CBI's annual conference, Mrs May said firms would not be forced to adopt the controversial proposal.
"This is not about mandating works councils, or the direct appointment of workers or trade union representatives on boards," she said.
Mrs May's pledge had met with a cool response from business lobby groups.
The prime minister said there were "other routes" that used existing board structures, but supplemented by advisory councils or panels.
"It will be a question of finding the model that works," she said.
Mrs May promised to shake-up corporate governance as part of her Conservative Party leadership campaign in July, and repeated the promise at last month's party conference when she said she planned to have "not just consumers represented on company boards, but workers as well".
'Clear promise'
Asked if she had dropped plans for the direct appointment of workers on boards, Mrs May said she had "clarified" that "we want workers' representation on boards", but "there are a number of ways in which that can be achieved".She said the government would soon publish its plans to reform corporate governance, which would cover firms' accountability to shareholders, executive pay as well as proposals to ensure employees' voices were heard.
Trade unions said they were disappointed by Mrs May's decision.
TUC general secretary Frances O'Grady said: "Theresa May made a clear promise to have workers represented on company boards. The proposals in her speech do not deliver on this.
"This is not the way to show that you want to govern for ordinary working people."
In her speech to business leaders, Mrs May also pledged an extra £2bn a year in funding for scientific research and development by 2020.
Mrs May said: "We will also review the support we give innovative firms through the tax system... because my aim is not simply for the UK to have the lowest corporate tax rate in the G20, but also one that is profoundly pro-innovation."
Corporation tax is already due to fall from its current 20% rate to 17% by 2020.
In the US, president-elect Donald Trump said during his campaign he would seek to cut the federal rate to 15%, but it is understood the Treasury still thinks the UK would be more competitive, once extra US taxes are factored in.
Investment bank
Labour leader Jeremy Corbyn, who will also be speaking to the CBI, will warn against a "mishandled, chaotic Brexit".He will also call for a more interventionist role for government in industrial policy.
He will expand on Labour's proposal for a national investment bank, which he will argue would "help break the logjam in the British financial system" by lending to small and medium-sized businesses.
He will argue industrial strategy should not be about "picking winners" but should "set the missions, put in place the right institutional framework and support and provide businesses with the opportunities to develop our economy".
Analysis: Dominic O'Connell, Today business presenter
Like a stressed parent trying to coax a wayward toddler, Theresa May is promising treats for big business - spending on research and development, tax cuts - as long as companies behave themselves. Quite what good behaviour means, for example, is far from clear. Neither Carolyn Fairbairn, the CBI's director general, nor Paul Dreschler, its president, want to give examples of what corporate wrongdoing looks like. Is it breaking the law? That would seem to be the minimum, but what more is required - the eradication of zero-hours contracts, perhaps, or fully-funded pension schemes at all times - is anyone's guess.The CBI will be happy to gloss over the details, and Fairbairn and Dreschler will be relieved that May at least has toned down some of the anti-business tone she took after she took over as prime minister. Then, she was talking about mandatory representation of workers on boards, while her home secretary, Amber Rudd floated the idea of companies having to say how many foreign workers they employed. Those days seem far off, and the relationship between business and government is much warmer than it was only a few months ago.
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