Corporate Governance and Employees in Germany: Changing Linkages, Complementarities, and Tensions

RIETI Discussion Paper No. 04-E-008

60 Pages Posted: 1 Jul 2004

See all articles by Gregory Jackson

Gregory Jackson

Freie Universität Berlin

Martin Höpner

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for the Study of Societies

Antje Kurdelbusch

DaimlerChrysler AG

Date Written: January 2004

Abstract

This article examines institutional linkages between corporate governance and labour management in Germany. German corporate governance was characterised by the importance of banks, ownership concentration, long-term investment, and stable corporate networks. This system displayed important complementarities with stable long-term employment, investment in worker training, flexible quality production, low variability and dispersion in pay, and cooperative industrial relations during the post-war period. Since the mid-1990s, corporate governance has changed dramatically - a decline in the role of banks, the unwinding of corporate networks, the rise of foreign and institutional investors, en emerging market for corporate control, and changing careers and compensation of top managers. The paper investigates the resulting introduction of shareholder-value management practices and their impact on employees in large German companies. The findings show that these changes are related to the shrinking of stable core employment and the growth of variable pay. However, such tensions with shareholder value management have not undermined employee codetermination and collective bargaining institutions. Both play an important mediating role between capital market pressures and employment outcomes. The implications for the German "model" of corporate governance are discussed.

Keywords: Corporate Governance, Industrial Relations, Varieties of Capitalism, Production Regimes

JEL Classification: D21, G34, J24, J50, K22, L21, L22, L23, M14

Suggested Citation

Jackson, Gregory and Höpner, Martin and Kurdelbusch, Antje, Corporate Governance and Employees in Germany: Changing Linkages, Complementarities, and Tensions (January 2004). RIETI Discussion Paper No. 04-E-008. Available at SSRN: https://ssrn.com/abstract=503962 or http://dx.doi.org/10.2139/ssrn.503962

Gregory Jackson (Contact Author)

Freie Universität Berlin ( email )

Boltzmannstrasse 20
D-14195 Berlin, 14195
Germany

HOME PAGE: http://www.wiwiss.fu-berlin.de/institute/management/jackson/team/gjackson/index.html

Martin Höpner

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for the Study of Societies ( email )

Paulstr. 3
50676 Koln
Germany

Antje Kurdelbusch

DaimlerChrysler AG ( email )

70546 Stuttgart
Germany

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