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Early and late adoption of American-style executive pay in Germany: Governance and institutions


  • Chizema, Amon


Employing the theoretical perspective of neo-institutional change, this paper identifies the characteristics of early and late adoption of executive stock options (ESOs) in German firms. The paper contributes to the debate over the convergence/divergence of corporate governance systems, adding to the literature on institutional change by demonstrating the reaction of intra-organizational actors to macro-level changes. The study finds that there is employee resistance to the adoption of ESOs in the early stages, and older firms, embedded in traditional practices, prefer to maintain the status quo. Prior adoption of shareholder value oriented practices helps to smooth the way for subsequent adoptions for both early and late adopters. The full convergence of corporate governance systems is still not imminent.

Suggested Citation

  • Chizema, Amon, 2010. "Early and late adoption of American-style executive pay in Germany: Governance and institutions," Journal of World Business, Elsevier, vol. 45(1), pages 9-18, January.
  • Handle: RePEc:eee:worbus:v:45:y:2010:i:1:p:9-18

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    References listed on IDEAS

    1. Gerhard Cromme, 2005. "Corporate Governance in Germany and the German Corporate Governance Code," Corporate Governance: An International Review, Wiley Blackwell, vol. 13(3), pages 362-367, May.
    2. Henry Hansmann & Reinier Kraakman, 2000. "The End Of History For Corporate Law," Yale School of Management Working Papers ysm136, Yale School of Management, revised 01 Feb 2001.
    3. 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.
    4. Peter Steane & Michael Christie, 2001. "Nonprofit Boards in Australia: A Distinctive Governance Approach," Corporate Governance: An International Review, Wiley Blackwell, vol. 9(1), pages 48-58, January.
    5. Zulima Fernández & María Jesús Nieto, 2006. "Impact of ownership on the international involvement of SMEs," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 37(3), pages 340-351, May.
    6. Dore, Ronald, 2000. "Stock Market Capitalism: Welfare Capitalism: Japan and Germany versus the Anglo-Saxons," OUP Catalogue, Oxford University Press, number 9780199240616.
    7. Yasuhiro Arikawa & Hideaki Miyajima, 2005. "Relationship Banking and Debt Choice: evidence from Japan," Corporate Governance: An International Review, Wiley Blackwell, vol. 13(3), pages 408-418, May.
    8. Carruthers, Bruce G., 1995. "Accounting, ambiguity, and the new institutionalism," Accounting, Organizations and Society, Elsevier, vol. 20(4), pages 313-328, May.
    9. Trevor Buck & Azura Shahrim, 2005. "The translation of corporate governance changes across national cultures: the case of Germany," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 36(1), pages 42-61, January.
    10. Sadao Nagaoka, 2005. "Determinants of the Introduction of Stock Options by Japanese Firms: Analysis from the Incentive and Selection Perspectives," The Journal of Business, University of Chicago Press, vol. 78(6), pages 2289-2316, November.
    11. Marianne Bertrand & Sendhil Mullainathan, 2001. "Are CEOs Rewarded for Luck? The Ones Without Principals Are," The Quarterly Journal of Economics, Oxford University Press, vol. 116(3), pages 901-932.
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    Cited by:

    1. Schmid, Stefan & Dauth, Tobias, 2014. "Does internationalization make a difference? Stock market reaction to announcements of international top executive appointments," Journal of World Business, Elsevier, vol. 49(1), pages 63-77.
    2. Engel, Pascal J. & Hack, Andreas & Kellermanns, Franz W., 2015. "Setting the right mix—Analyzing outside directors’ pay mix in public family firms," Journal of Family Business Strategy, Elsevier, vol. 6(2), pages 130-140.
    3. Hüttenbrink, Alexander & Oehmichen, Jana & Rapp, Marc Steffen & Wolff, Michael, 2014. "Pay-for-performance – Does one size fit all? A multi-country study of Europe and the United States," International Business Review, Elsevier, vol. 23(6), pages 1179-1192.
    4. Gregory Jackson, 2016. "Toward a Conceptual Framework for Understanding Institutional Change in Japanese Capitalism: Structural Transformations and Organizational Diversity," Working Papers halshs-01643921, HAL.
    5. Shin, Donghoon & Seidle, Russell & Okhmatovskiy, Ilya, 2016. "Making the foreign familiar: The influence of top management team and board of directors characteristics on the adoption of foreign practices," Journal of World Business, Elsevier, vol. 51(6), pages 937-949.
    6. repec:eee:iburev:v:26:y:2017:i:5:p:991-1008 is not listed on IDEAS


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