Codetermination and Corporate Governance in a Multinational Corporation

Abstract:     
The article analyzes employee codetermination in corporate governance by comparing American and German systems of corporation and labor law and assesses how the systemic differences affect the internal governance of a multinational corporation. It examines what happens when the two systems of corporate law and labor relations merge and consequently come into conflict?as when a German corporation merges with an American corporation to form a truly multinational entity. Using the Daimler-Chrysler merger as an illustration, the article argues that codetermination in a multinational enterprise creates an incentive for managers to appease home country (German) employees at the expense of foreign labor. The prospect for opportunistic alliance among managers, shareholders, and domestic employees suggests that codetermination in a multinational enterprise imposes distributional costs on foreign workers and perhaps also efficiency loss for the corporation.

Working Paper Series