Stakeholder protection in corporate governance and in the legal system, the founders’ perspective, and the varieties of capitalism

Not necessarily the most appropriate defence of stakeholder interests can be found in the institutions and practice of corporate governance, other specific kinds of legal provisions can be more suitable. In the literature the issue of protection of stakeholder interests (of employees in particular) is generally considered in a static context: how should corporate governance be shaped in relation to existing firms, according in particular to some subjective criteria of fairness and fair play. But in order to exist and to reach a given dimension the firm must be first founded and grow. Thus the propensity to found a firm and finance and manage its growth, and therefore the supply of entrepreneurship, depend, among others, on the extent of founders’ and co-owners’ rights, and thus on the institutions of corporate governance. As shown by Hall and Soskice (2001) the latter, together with the different legal setups, result in different varieties of capitalism, such as broadly speaking the Anglo-Saxon or the continental-European variety, with different characteristics, advantages and disadvantages. Among the disadvantages of the continental European model, not considered by Hall and Soskice, are much higher rates of long-run unemployment.