IngentaConnect Negotiated shareholder value: the German variant of an Anglo-Amer...

Author: Vitols, Sigurt¹

Source: Competition and Change, Volume 8, Number 4, December 2004 , pp. 357-374(18)

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Abstract:

In comparative political economy it has become commonplace to distinguish between two types of corporate governance systems. In shareholder systems, influence over company management is concentrated with institutional investors holding small percentages of companies' shares. In stakeholder systems, influence is shared between large shareholders, employees, the community and suppliers and customers. This paper contributes to the literature addressing recent changes in the German variant of the stakeholder system by proposing a few new concepts. On the level of institutions, it is argued that the stakeholder system is not being replaced by a shareholder system in Germany. Rather, an augmented stakeholder system is emerging through the inclusion of institutional investors in the old stakeholder coalition of interests. On the level of practice, it is argued that negotiated shareholder value is being adopted in Germany. This German variant of shareholder value is distinct from Anglo-American practice because major changes implementing shareholder value must be negotiated within the augmented stakeholder coalition. As a result, performance incentives for employees tend to be less strong than is the case in the USA and UK.

Keywords: Corporate governance; Shareholder value; Varieties of capitalism; Stakeholder model

Document Type: Research article

DOI: 10.1080/1024529042000304400

Affiliations: 1: Social Science Research Center Berlin (WZB) Reichpietschufer 50 D-10785 Berlin Germany

Negotiated shareholder value: the German variant of an Anglo-American practice