Banks' Orientation and Performance in Stakeholders-Shareholders Business Systems

Abstract

The role of stakeholder frameworks in the success of business and society has recently become a crucial area of academic research. The purpose of this paper is to show the close compatibility between relatively strong banking industries and the values of stakeholder systems. Since the late 1980's, there has been an ongoing academic debate between the relative strengths of the shareholder and stock market-driven Anglo-Saxon countries, such as the U.S., UK versus the stakeholder and bank-driven countries such as Germany and Japan. In order to better understand either the Japanese or German stakeholder system, there is a need for greater understanding of the role of banks that work with the private corporations in establishing a strong institutions network for the whole country. We follow a qualitative international comparison of successful shareholders systems such as the U.S. and the UK, with successful stakeholder systems such as Japan, Germany, and most of continental Europe. The overall picture of banks governance in different business systems shows that banks have been positively contributing to companies' performance. Therefore, banks can provide an institutional certification and governance process and structure capable of producing and monitoring both the tangible and intangible measures of corporate performance and governance. The results of banks performance associated with their orientations toward corporate stakeholders contribution indicate a very logic and practical perspectives, which concludes banks' support to corporate stakeholders' contribution.

Keywords: Banks' orientation, bank performance, stakeholders, shareholders, international business systems

JEL Classification: G21, G30