A Political Perspective on Business Elites and Institutional Embeddedness in the UK Code‐Issuing Process

12 Pages Posted: 12 Oct 2013

See all articles by Ilir Haxhi

Ilir Haxhi

University of Amsterdam Business School

Hans van Ees

University of Groningen

Arndt Sorge

University of Potsdam - Economics and Social Sciences

Date Written: November 2013

Abstract

Manuscript Type. Perspective.

Research Question/Issue. What is the role of institutional actors and business elites in the development of UK corporate governance codes? In the current paper, we explore the UK code‐issuing process by focusing on the UK actors, their power and interplay.

Research Findings/Insights. Our findings indicate, first, that the comply‐or‐explain principle, intertwined with the rich issuance of codes, reflects the diversity and permissiveness of British society and its ability to absorb contested corporate practices in a way that manages to preserve the status quo. Second, the UK business elites preserve their position in the corporate arena by using the principle of good governance, including the possibility to deviate from best practices, as an instrument of neutralizing institutional change. Third, the UK institutional and societal embeddedness gives carte blanche to elites to use corporate governance practices to serve their own interest.

Theoretical/Academic Implications. By emphasizing the strategic behavior of business elites embedded in the UK institutional configuration, we offer a political perspective on the national contextuality of the code‐issuing process. The worldwide diffusion of codes should not dissimulate their cross‐national contested nature. Codes reflect potential redistribution of power among institutional actors and business elites as well as the struggle over corporate resources between corporate actors (i.e., shareholders and managers) in maintaining their status quo.

Practitioner/Policy Implications. Practitioners should perceive codes as having different meanings depending on national contexts and national political constituencies. Codes reflect constellations of actors such as managers, shareholders, regulators and others, whose approach to codes and strategic interests are at least as important to know and understand as the verbatim content of codes.

Keywords: Corporate Governance, Corporate Governance Codes, Institutional Embeddedness, Business Elites, United Kingdom

Suggested Citation

Haxhi, Ilir and van Ees, Hans and Sorge, Arndt, A Political Perspective on Business Elites and Institutional Embeddedness in the UK Code‐Issuing Process (November 2013). Corporate Governance: An International Review, Vol. 21, Issue 6, pp. 535-546, 2013. Available at SSRN: https://ssrn.com/abstract=2339343 or http://dx.doi.org/10.1111/corg.12036

Ilir Haxhi (Contact Author)

University of Amsterdam Business School ( email )

Plantage Muidergracht 12
Amsterdam, 1018 TV
Netherlands

Hans Van Ees

University of Groningen ( email )

Department of Economics
P.O.Box 800
9700 AH Groningen
Netherlands

Arndt Sorge

University of Potsdam - Economics and Social Sciences ( email )

Potsdam
Germany

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