Changes in corporate governance of German corporations: convergence to the Anglo-American model?
AbstractThis paper examines the many changes which have transformed the German system of corporate governance during the last seven odd years. It concludes that it is in the process of converging towards the Anglo-American system and that this has fundamentally affected the way strategic decisions are made in firms. Large, internationally oriented companies are particularly affected. But the notion of shareholder value and its many behavioural effects are gradually spreading also to other parts of the economy. Consequently, the distinctive logic, which had underpinned the German variety of capitalism during most of the post-war period, is eroding. This transformation is affecting also labour and industrial relations in negative ways. The argument is empirically substantiated with data about recent trends in capital markets, banks and firms. The paper theoretically examines institutional change, focussing on the notions of system logic and institutional complementarity. It examines both external sources of change and internal powerful actors who promote the process of transformation. The notion of hybridisation of the German business system is examined but is rejected in favour of a trend towards convergence. Convergence is not seen as a functional necessity, nor is it viewed as inevitable.
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Bibliographic InfoPaper provided by ESRC Centre for Business Research in its series ESRC Centre for Business Research - Working Papers with number wp259.
Date of creation: Mar 2003
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Corporate governance; capital markets; German variety of capitalism; institutional change.;
Find related papers by JEL classification:
- B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Institutional; Evolutionary
- G30 - Financial Economics - - Corporate Finance and Governance - - - General
- J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
- P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies
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- Simon Deakin & Richard Hobbs & David Nash & Giles Slinger, 2002. "Implicit contracts, takeovers and corporate governance: in the shadow of the city code," ESRC Centre for Business Research - Working Papers wp254, ESRC Centre for Business Research.
- Deeg, Richard, 2001. "Institutional change and the uses and limits of path dependency: The case of German finance," MPIfG Discussion Paper 01/6, Max Planck Institute for the Study of Societies.
- Streeck, Wolfgang, 2001. "The transformation of corporate organization in Europe: An overview," MPIfG Working Paper 01/8, Max Planck Institute for the Study of Societies.
- S. Deakin & R. Hobbs & S. Konzelmann & F. Wilkinson, 2001. "Partnership, Ownership and Control: The Impact of Corporate Governance on Employment Relations," ESRC Centre for Business Research - Working Papers wp200, ESRC Centre for Business Research.
- Christel Lane & Jocelyn Probert, 2003. "Globalisation and Its Impact on Competitiveness: the Case of the British and German Pharmaceutical Industry," ESRC Centre for Business Research - Working Papers wp262, ESRC Centre for Business Research.
- Marlene Davies & Bernadette Schlitzer, 2008. "The impracticality of an international “one size fits all” corporate governance code of best practice," Managerial Auditing Journal, Emerald Group Publishing, vol. 23(6), pages 532-544, July.
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