The Corporate Governance of Benedictine Abbeys: What can Stock Corporations Learn from Monasteries?

Abstract

The corporate governance structure of monasteries is analyzed to derive new insights into solving agency problems of modern corporations. In the long history of monasteries, some abbots and monks lined their own pockets and monasteries were undisciplined. Monasteries developed special systems to check these excesses and therefore were able to survive for centuries. These features are studied from an economic perspective. Benedictine monasteries in Baden-Württemberg, Bavaria and German speaking Switzerland have an average lifetime of almost 500 years and only a quarter of them broke up as a result of agency problems. We argue that this is due to an appropriate governance structure, relying strongly on the intrinsic motivation of the members and on internal control mechanisms.

Keywords: Corporate Governance, Principal-Agency-Theory, Psychological Economics, Monasteries, Benedictine Order

JEL Classification: D73, G3, L14, Z12