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Horse, Cow, Sheep, or 'Thing-In-Itself'? The Cognitive Origins of Corporate Governance in Switzerland, Germany, and the US, 1910s-1930s


  • M. Lüpold
  • Gerhard Schnyder


This paper investigates the origins of the shareholder-orientated corporate governance (CG) model of the US and the stakeholder-orientated model prevailing in continental Europe (exemplified by Switzerland and Germany) for most of the 20th century. We reject the most common theories, which explain cross-national differences in CG models either as the result of a natural evolution, different legal origins, social democratic political power, or openness to trade. We show instead that - starting from fairly similar corporate governance structures in the US and continental European countries during the late 19th century - the crucial period for the emergence of two different corporate governance models was the period from the 1910s to the 1930s. We stress in particular the importance that legal experts and the ideas that they produced played in this process. In fact, during this period, the increasing size of firms and the professionalisation of their management led to new problems, which increasingly challenged existing corporate governance structures and the related individualistic theory of the firm. The diagnoses of this situation and possible remedies formulated by legal scholars informed political decision-makers in times of uncertainty and contributed, in important ways to shaping the different 'paths', which the different countries went down subsequently. While the scholarly debates in all three countries were surprisingly similar, different solutions were finally institutionalised due to differences in the political context.

Suggested Citation

  • M. Lüpold & Gerhard Schnyder, 2009. "Horse, Cow, Sheep, or 'Thing-In-Itself'? The Cognitive Origins of Corporate Governance in Switzerland, Germany, and the US, 1910s-1930s," Working Papers wp383, Centre for Business Research, University of Cambridge.
  • Handle: RePEc:cbr:cbrwps:wp383
    Note: PRO-2

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    References listed on IDEAS

    1. Yuri Biondi & Arnaldo Canziani & Thierry Kirat, 2007. "The Firm as an Entity: Implications for Economics, Accounting, and the Law," Post-Print halshs-00203355, HAL.
    2. repec:hrv:faseco:30728041 is not listed on IDEAS
    3. Yuri Biondi, 2007. "The economic theory of the firm as an entity," Post-Print halshs-00321528, HAL.
    4. Herrigel, Gary, 2007. "A New Wave in the History of Corporate Governance," Enterprise & Society, Cambridge University Press, vol. 8(03), pages 475-488, September.
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    6. La Porta, Rafael & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1997. " Legal Determinants of External Finance," Journal of Finance, American Finance Association, vol. 52(3), pages 1131-1150, July.
    7. Fohlin, Caroline, 2007. "Does Civil Law Tradition and Universal Banking Crowd out Securities Markets? Pre-World War I Germany as Counter-Example," Enterprise & Society, Cambridge University Press, vol. 8(03), pages 602-641, September.
    8. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998. "Law and Finance," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1113-1155, December.
    9. Eric Nowak, 2001. "Recent Developments In German Capital Markets And Corporate Governance," Journal of Applied Corporate Finance, Morgan Stanley, vol. 14(3), pages 35-48.
    10. Leslie Hannah, 2007. "The 'Divorce' of ownership from control from 1900 onwards: Re-calibrating imagined global trends," Business History, Taylor & Francis Journals, vol. 49(4), pages 404-438.
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    More about this item


    Corporate governance; company law; varieties of capitalism; Switzerland; Germany; USA; cognitive approaches; institutional change;

    JEL classification:

    • N21 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: Pre-1913
    • N22 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: 1913-
    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913
    • N24 - Economic History - - Financial Markets and Institutions - - - Europe: 1913-


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