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Understanding an Emergent Diversity of Corporate Governance and Organizational Architecture: An Essentiality-Based Analysis

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  • Masahiko Aoki

    () (Economics Department, Stanford University)

Abstract

This article proposes a simple framework for understanding diversity of linkages between corporate governance (CG) and organizational architecture (OA). It distinguishes discreet modes of their linkage by different combinatorial patterns between three basic assets: managers’ human assets (MHA), workers’ human assets (WHA), and non-human assets (NHA). Using the concept of essentiality of human assets proposed by Hart (1995) and distinguished from that of complementarities, we first propose a new characterization of four known modes of CG-OA linkage: three traditional (Anglo-American, German, and Japanese) and one relatively new (Silicon Valley) models. Then we present empirical evidence of emergent diversity of CG-OA linkages in Japan, which is somewhat at odds with the old Japanese model. We interpret its emergent dominant mode as the path-dependent evolution of a new pattern of essentiality between human assets, made viable by lessening of institutional-complementarity-constraints which surrounded the traditional Japanese model. We argue that this new mode interpreted in terms of essentiality may have broader applicability beyond Japanese context.

Suggested Citation

  • Masahiko Aoki, 2007. "Understanding an Emergent Diversity of Corporate Governance and Organizational Architecture: An Essentiality-Based Analysis," Discussion Papers 07-019, Stanford Institute for Economic Policy Research.
  • Handle: RePEc:sip:dpaper:07-019
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    File URL: http://www-siepr.stanford.edu/repec/sip/07-019.pdf
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    References listed on IDEAS

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    1. repec:hrv:faseco:30728046 is not listed on IDEAS
    2. Grossman, Sanford J & Stiglitz, Joseph E, 1980. "On the Impossibility of Informationally Efficient Markets," American Economic Review, American Economic Association, vol. 70(3), pages 393-408, June.
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    4. Steven N. Kaplan & Per Strömberg, 2003. "Financial Contracting Theory Meets the Real World: An Empirical Analysis of Venture Capital Contracts," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 281-315.
    5. 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.
    6. Shleifer, Andrei & Vishny, Robert W, 1997. " A Survey of Corporate Governance," Journal of Finance, American Finance Association, vol. 52(2), pages 737-783, June.
    7. John Parkinson, 2003. "Models of the Company and the Employment Relationship," British Journal of Industrial Relations, London School of Economics, vol. 41(3), pages 481-509, September.
    8. Mari Sako, 2005. "Does Embeddedness Imply Limits to Within-Country Diversity?," British Journal of Industrial Relations, London School of Economics, vol. 43(4), pages 585-592, December.
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    More about this item

    Keywords

    Corporate governance; essentiality; human assets; institutional change; organizational architecture; path dependence;

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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