Understanding an Emergent Diversity of Corporate Governance and Organizational Architecture: Essentiality-Based Analysis

29 Pages Posted: 15 Apr 2007 Last revised: 29 Sep 2009

See all articles by Masahiko Aoki

Masahiko Aoki

Stanford University

Gregory Jackson

Freie Universität Berlin

Date Written: August 1, 2007

Abstract

This article proposes a simple framework for understanding an emergent diversity of linkage between corporate governance (CG) and organizational architecture (OA). It distinguishes discreet modes of their linkage by different combinatorial patterns between three basic assets: managers' human assets (MHA), workers' human assets (WHA), and non-human assets (NHA). Using the concept of essentiality of human assets proposed by Hart (1995) and distinguished from that of complementarities, we first propose a new characterization of four known modes of CG-OA linkage: three traditional (Anglo-American, German, and Japanese) and one relatively new (Silicon Valley) models. Then we present empirical evidences of emergent diversity of Japanese CG-OA which is somewhat at odds with the old Japanese model. We interpret its emergent dominant mode as the path-dependent evolution of a new pattern of human assets essentiality, made viable by lessening of institutional-complementarity-constraints which surrounded the traditional Japanese model. We argue that this new mode interpreted in terms of reciprocal essentiality may have broader applicability beyond Japanese context.

Keywords: Corporate governance, essentiality, human assets, institutional change, organizational architecture, path dependence

JEL Classification: G34, D02, P51, D23, J24, Z13

Suggested Citation

Aoki, Masahiko and Jackson, Gregory, Understanding an Emergent Diversity of Corporate Governance and Organizational Architecture: Essentiality-Based Analysis (August 1, 2007). Rock Center for Corporate Governance Working Paper No. 38. Available at SSRN: https://ssrn.com/abstract=980385 or http://dx.doi.org/10.2139/ssrn.980385

Masahiko Aoki (Contact Author)

Stanford University ( email )

E314 Encina Hall
Stanford, CA 94305-6015
United States
415-723-3975 (Phone)
415-725-5702 (Fax)

HOME PAGE: http://www.stanford.edu/~aoki

Gregory Jackson

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

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