Negotiated Shareholder Value: The German Version of an Anglo-American Practice

WZB Markets and Political Economy Working Paper No. SP II 2003-25

35 Pages Posted: 29 Feb 2004

See all articles by Sigurt Vitols

Sigurt Vitols

WZB Berlin Social Science Center

Date Written: December 2003

Abstract

In comparative political economy it has become commonplace to distinguish between two types of corporate governance systems. In shareholder systems, influence over company management is concentrated with institutional investors holding small percentages of companies' shares. In stakeholder systems, influence is shared between large shareholders, employees, the community, and suppliers and customers. This paper contributes to the literature addressing recent changes in the German variant of the stakeholder system by proposing a few new concepts. On the level of institutions, it is argued that the stakeholder system is not being replaced by a shareholder system in Germany. Rather, an augmented stakeholder system is emerging through the inclusion of institutional investors in the old stakeholder coalition of interests. On the level of practice, it is argued that negotiated shareholder value is being adopted in Germany. This German variant of shareholder value is distinct from Anglo-American practice because major changes implementing shareholder value must be negotiated within the augmented stakeholder coalition. As a result, performance incentives for employees tend to be less strong than is the case in the US and UK.

Keywords: Corporate governance, shareholder value, Varieties of capitalism

JEL Classification: G3, J5, P5

Suggested Citation

Vitols, Sigurt, Negotiated Shareholder Value: The German Version of an Anglo-American Practice (December 2003). WZB Markets and Political Economy Working Paper No. SP II 2003-25. Available at SSRN: https://ssrn.com/abstract=510062 or http://dx.doi.org/10.2139/ssrn.510062

Sigurt Vitols (Contact Author)

WZB Berlin Social Science Center ( email )

Reichpietschufer 50
D-10785 Berlin
Germany

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