Institutional Differences Between the British and German Economic Models: Corporate Sector and Labour Market
The aim of this paper is to compare some of the significant institutional differences between the British and German economic models. This paper builds on a methodological framework developed by institutional economics. Comparative research carried out in this paper focuses on three institutional fields in both market economies: control of management, corporate finance and labour market. In the UK, we can find evidence suggesting an important role of the market for corporate control, exerting pressure on management to deliver good corporate performance. On the other hand, in Germany, we find an important role of banks that exert direct control over firm´s management and its strategic decision-making. As for corporate finance, British companies tend to make use of highly liquid financial markets and short-term finance, whereas German companies form strategic partnerships with banks which provide them with long-term credits. Lastly, labour market in the UK is more flexible compared to German labour market as its labour law favours short-term contracts, unemployment benefits are less generous and the power of trade unions to protect workers is limited.
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Volume (Year): 2012 (2012)
Issue (Month): 1 ()
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References listed on IDEAS
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- Goergen, Marc & Manjon, Miguel C. & Renneboog, Luc, 2008.
"Recent developments in German corporate governance,"
International Review of Law and Economics,
Elsevier, vol. 28(3), pages 175-193, September.
- Goergen, M. & Manjon, M.C. & Renneboog, L.D.R., 2004. "Recent Developments in German Corporate Governance," Discussion Paper 2004-014, Tilburg University, Tilburg Law and Economic Center.
- Goergen, M. & Manjon, M.C. & Renneboog, L.D.R., 2004. "Recent Developments in German Corporate Governance," Discussion Paper 2004-123, Tilburg University, Center for Economic Research.
- John Armour & Simon Deakin & Suzanne J. Konzelmann, 2003. "Shareholder Primacy and the Trajectory of UK Corporate Governance," British Journal of Industrial Relations, London School of Economics, vol. 41(3), pages 531-555, 09.
- John Armour & Simon Deakin & Suzanne J. Konzelmann, 2003. "Shareholder Primacy and the Trajectory of UK Corporate Governance," Working Papers wp266, Centre for Business Research, University of Cambridge. Full references (including those not matched with items on IDEAS)
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