The German system of corporate governance: Characteristics and changes

As Germany enters the 21st century, the traditional system of corporate governance, often referred to as “Deutschland AG”, has come under intense pressure to change. This report seeks to analyze the recent dynamics of the system to assess the extent to which they have already led to an erosion of the traditional characteristics. Many of the distinct features of the German system have shown strong resilience despite the pressure for change, while other features seem to have unraveled quickly. The areas in which these changes appeared to have emerged most profoundly and quickly are in the role of banks and in the role of financial markets. Germany is often cited as a classical case of “non-shareholder value orientation”, whose production-oriented, long-term, risk adverse and consensus-driven values have often been contrasted with the “Anglo-Saxon” approach. The forces currently driving the German political economy towards a shareholder-value orientation can be summarized as follows: State measures to deregulate financial markets; pressure of managers of investments funds and pension funds, in particular from the USA; responses to product-market changes and the internationalization of production. These factors have had an input on all three pillars of the traditional German system: 1. The dominant role of the banks in a complex system of cross-shareholding and in company financing; 2. the system of industrial co-determination; 3. the production- centered, company-centered management system. But the developments are still recent and ambiguous. The question is whether these forces will initiate major and permanent change in the operating principles of the German system or whether they will be superseded by the system’s traditional logic. Our report explores these issues in a preliminary way at a point of time when it is not possible to provide a definite answer to what these changes portend. -- Mit dem Übergang in das 21. Jahrhundert gerät das traditionelle deutsche System der Corporate Governance – oft als „Deutschland AG“ bezeichnet – unter starken Veränderungsdruck. Die vorliegende Untersuchung beschreibt die gegenwärtigen Veränderungstendenzen und analysiert, inwieweit diese bereits zu einer Erosion des traditionellen Systems geführt haben. Einige der Besonderheiten des deutschen Systems haben sich – so wird in der Studie gezeigt – als außerordentlich veränderungsresistent erwiesen, bei anderen Merkmalen zeigt sich ein rascher Auflösungsprozess. Die stärksten Veränderungen sind hinsichtlich der Rolle der Banken sowie der Finanzmärkte zu verzeichnen. Deutschland wird oft als klassischer Fall einer Nicht-Shareholder-Value-Orientierung angeführt, das mit seiner Langfristorientierung und Risikoaversion, seiner Produktionszentriertheit und Konsensorientierung ein Gegenmodell zum angelsächsischen Ansatz darstellt. Die wichtigsten Triebkräfte für Veränderungen des deutschen Modells hin zu einer Shareholder-Value-Orientierung sind zum einen staatliche Maßnahmen zur Deregulierung der Finanzmärkte, Druck von Seiten internationaler Investment- und Pensionsfonds, insbesondere aus den USA, sowie Reaktionen auf die Entwicklungen auf den Produktmärkten und die Globalisierung. Auswirkungen dieses Veränderungsdrucks lassen sich für jede der drei tragenden Säulen des traditionellen deutschen Systems feststellen: 1. die Rolle der Banken im Rahmen eines komplexen Systems der Eigentumsverflechtungen und Unternehmensfinanzierung; 2. das System der Mitbestimmung und 3. die Produktions- und Unternehmenszentrierung des leitenden Managements. Allerdings handelt es sich um recht neue und in ihrer Wirkung kaum abschätzbare Entwicklungen. Die Frage, inwieweit sie zu einem grundlegenden Wandel des deutschen Systems der Corporate Governance führen, muss daher zum gegenwärtigen Zeitpunkt offen bleiben.

‘Real’ versus ‘mental’ food deserts from the consumer perspective – concepts and quantitative methods applied to rural areas of Germany

Developments in food retail in Germany have for decades tended to lead to ever larger retail units, the filling of these units with ever broader and deeper product ranges, and an increasingly oligopolistic market dominated by chain stores. However, as the large chain stores only choose the ‘best possible’ sites according to population density, absolute purchasing power and transport networks, there has been a dramatic thinning out of food-retail facilities in large, particularly rural areas. Has this made it possible to detect supply gaps or, more polemically expressed, food deserts? The term ‘food deserts’, in particular, has achieved a certain amount of acclaim in the Anglo-American context since the 2000s. However, the concept has neither been transferred to nor empirically verified for the German context. In this paper quantitative and qualitative methods are applied to investigate the situation in the rural regions of the most northerly state of Germany (Schleswig-Holstein), in order that food deserts no longer be understood only as ‘real’, tangible and bounded patterns arising from the thinning out of infrastructure but rather as cognitive, perceived patterns (mental food deserts). It is suggested that customer (groups) have long-term and varied shopping predispositions so that diverse groups no longer perceive the loss of supply options and actually create local supply gaps for others through their shopping behaviour. Cluster, discriminant and network analyses are used to complement an inventory of tangible retail facilities with ‘lived’ mental attitudes and shopping behaviour, distinctly broadening the present understanding of food deserts

Characteristics of the European automotive system: is there a distinctive European approach?

"The paper discusses pro and cons concerning the hypothesis of a distinctive European approach regarding its automotive system. Its aim is to develop an international comparison of the structural changes in the international automotive industry. A special focus is laid on the ways of coordinating competencies and knowledge. What are the differences that set the European industry apart from its North American and Japanese competitors in this regard? The paper discusses EU market characteristics and particularities of the European demand structures, the history of specific European approaches in the area of production systems and new forms of work and the recent changes of supplier relations since the 1990s. The analysis shows that the approach taken in the course of the restructuring of the supplier industry in Europe led to the development of specific capabilities related to cross company and interorganisational cooperation in the 1990s which partially explains the successful development of the European auto industry in recent time." (author's abstract)"Das Paper diskutiert das Für und Wider der Hypothese eines besonderen europäischen Entwicklungsweges in der Automobilindustrie. Ziel ist, die gegenwärtigen Umstrukturierungen dieser Industrien mit einer international vergleichenden Perspektive zu erfassen. Im Zentrum steht die Frage nach der Koordination von Kompetenzen und Wissen: Welche Unterschiede lassen sich hier im Vergleich der europäischen Industrie mit der in Nordamerika und Japan feststellen? Die Untersuchung zeigt, dass insbesondere hinsichtlich der Reorganisation der Zulieferbeziehungen ein besonderer europäischer Ansatz entwickelt wurde, der zur Herausbildung spezifischer Formen der unternehmensübergreifenden und interorganisationalen Kooperation geführt hat. Die damit verbundenen Lernprozesse haben zu spezifisch europäischen Konzepten und Kompetenzen geführt, die wesentlich zu der relativ erfolgreichen Entwicklung des Automobilsektors in Europa in den vergangenen Jahren beigetragen haben." (Autorenreferat

German grocery discounters: dynamics and regional impact. The case of Schleswig-Holstein (Germany)

Grocery discount stores have long dominated developments in the German food retail sector, and they continue to grow. This paper discusses the reasons for this long-term success based on internal decision-making parameters such as price, adjustment of product range, choice of location, and size of new stores. The result is significant customer acceptance, but also adverse developments viewed critically in various governance constellations. The paper is based on expert interviews and a comprehensive collection of data on grocery discount stores and supermarkets in the German federal state of Schleswig-Holstein

Corporate governance, innovation, and economic performance: a case study on Volkswagen

"In the debate on globalisation of the financial markets and its effect on corporate governance it is often claimed that the pressure for higher rates of return exerted by institutional investors in the name of shareholder value, has led to a fundamental change of company policy among listed companies. Due to short-term profit orientation and increased dividend pay-outs to investors, the critiques argue, long-term development of the innovation potential of these companies will suffer, and this ultimately will have negative consequences on employment and growth. Since in the 1990s almost all major German companies listed on the stock exchange have declared their commitment to the principles of shareholder value. Hitherto there is little empirical evidence of the consequences of such an orientation on company-internal structures and processes. The present case study on the Volkswagen AG helps to close this gap. Central questions in this study are the following: To what extent have the distinct characteristics of Volkswagen's corporate governance systems changes in response to shareholder value demands? What is the role of the stock market for the company? Have the incentive systems and the systems of target setting and controlling changed to better correspond with shareholder expectations, and what are the effects on investment/ disinvestments decisions and thus on the long-term innovation potential of the firm? And finally, what are the effects on the economic and the financial performance of the company?" (author's abstract)"In der Diskussion über die Globalisierung der Finanzmärkte und der Veränderungen der Corporate Governance wird häufig die These vertreten, dass der von institutionellen Investoren ausgehende, verschärfte Renditedruck und die Verbreitung des Shareholder-Value-Konzepts zu einer stärker kapitalmarktorientierten Unternehmensführung bei den börsennotierten Aktiengesellschaften führen. Damit ist auch die Befürchtung verbunden, eine kurzfristige Gewinnorientierung und vermehrte Gewinnausschüttungen an Investoren könnten zu Lasten der langfristigen Entwicklung von Innovationspotentialen in den Unternehmen gehen und damit letztlich negative Auswirkungen auf Wachstum und Beschäftigung haben. Seit den 1990er Jahren proklamieren auch in Deutschland die großen börsennotierten Unternehmen fast durchgängig die Einführung einer 'wertorientierten Unternehmensführung', d.h. eine stärkere Orientierung am Kapitalmarkt. Bisher existieren noch kaum empirische Studien zu den Auswirkungen einer solchen Orientierung auf unternehmensinterne Strukturen und Prozesse. Die vorliegende Fallstudie zur Volkswagen AG hilft, diese Lücke zu schließen. Zentrale Fragen der Studie sind, welche Rolle das Verhältnis zum Kapitalmarkt für VW spielt und in der Vergangenheit gespielt hat, inwieweit eine Veränderung der Corporate Governance als Resultat der von den Investoren ausgehenden Anforderungen feststellbar ist und wie sich diese ggf. auf die Ziel- und Controllingsysteme sowie die Anreizsysteme für das Management auswirken und welche Folgen dies wiederum auf Investitions- bzw. Desinvestitionsentscheidungen und die Entwicklung der langfristigen Investitionspotentiale des Unternehmens hat." (Autorenreferat

Food waste and shopping behaviour – quantitative household investigations based on local case studies from Germany

The connection between food waste and grocery shopping behaviour is investigated using a regional example from Ger- many. Quantitative surveys apply the food waste related lifestyle concept and multivariate analysis methods to identify four different attitude groups related to dealing with food in private households. The shopping patterns of these groups display a high degree of congruence with the attitude patterns. The retail formats and the food products purchased in them are investigated as the original source of food waste in private households, and waste-prone product types and reasons for disposal are explored. It is possible to identify the particular susceptibility of individual product groups to food waste, and also differences in the handling of food and food waste between the segmented groups of individuals. Originally fresh products dominate food waste. This can be linked to the material origins of these products that are pur- chased in both so-called alternative shops and in conventional retail formats. The identification of the attitude groups and behavioural groups allows relevant demographic structures that are not immediately obvious to be deduced. This can provide target groups for educational measures, for which reliance on a one-dimensional approach is insufficient

Characteristics of the European automotive system: Is there a distinctive European approach?

The paper discusses pro and cons concerning the hypothesis of a distinctive European approach regarding its automotive system. Its aim is to develop an international comparison of the structural changes in the international automo-tive industry. A special focus is laid on the ways of coordinating competencies and knowledge. What are the differences that set the European industry apart from its North American and Japanese competitors in this regard? The paper discusses EU market characteristics and particularities of the European de-mand structures, the history of specific European approaches in the area of production systems and new forms of work and the recent changes of supplier relations since the 1990s. The analysis shows that the approach taken in the course of the restructuring of the supplier industry in Europe led to the devel-opment of specific capabilities related to cross company and interorganisational cooperation in the 1990s which partially explains the successful development of the European auto industry in recent time. -- Das Paper diskutiert das Für und Wider der Hypothese eines besonderen euro-päischen Entwicklungsweges in der Automobilindustrie. Ziel ist, die gegenwärti-gen Umstrukturierungen dieser Industrien mit einer international vergleichenden Perspektive zu erfassen. Im Zentrum steht die Frage nach der Koordination von Kompetenzen und Wissen: Welche Unterschiede lassen sich hier im Vergleich der europäischen Industrie mit der in Nordamerika und Japan feststellen? Die Untersuchung zeigt, dass insbesondere hinsichtlich der Reorganisation der Zu-lieferbeziehungen ein besonderer europäischer Ansatz entwickelt wurde, der zur Herausbildung spezifischer Formen der unternehmensübergreifenden und interorganisationalen Kooperation geführt hat. Die damit verbundenen Lernpro-zesse haben zu spezifisch europäischen Konzepten und Kompetenzen geführt, die wesentlich zu der relativ erfolgreichen Entwicklung des Automobilsektors in Europa in den vergangenen Jahren beigetragen haben.

Effect of zooplankton-mediated trophic cascades on marine microbial food web components (bacteria, nanoflagellates, ciliates)

To examine the grazing effects of copepod-dominated mesozooplankton on heterotrophic microbial communities, four mesocosm experiments using gradients of zooplankton abundance were carried out at a coastal marine site. The responses of different protist groups (nanoflagellates, ciliates) and bacterioplankton in terms of abundance and additionally, for bacteria, diversity, production, and exoenzymatic activity, were monitored during 1 week of incubation. Independent of the initial experimental abiotic conditions and the dominating copepod species, zooplankton caused order-of-magnitude changes in microbial functional groups in a clear community-wide four-link trophic cascade. The strongest predatory effects were observed for protist concentrations, thus generating inverse relationships between mesozooplankton and ciliates and between ciliates and nanoplankton. Copepod grazing effects propagated even further, not only reducing the abundance, production, and hydrolytic activity of bacterioplankton but also increasing bacterial diversity. The overall strength of this trophic cascade was dampened with respect to bacterial numbers, but more pronounced with respect to bacterial diversity and activity. High predation pressure by heterotrophic nanoflagellates, realized at the highest copepod abundance, was probably the underlying mechanism for these structural changes in the bacterial assemblages. Our results thus suggest a mechanism by which changes in higher trophic levels of marine plankton indirectly affect prokaryotic assemblages and microbially mediated ecosystem functions

China's changing role in industrial value chains - and reverberations on industrial actors in Germany

"Im Zentrum des Papers steht die Frage nach der Position Chinas in der neuen internationalen Arbeitsteilung, die sich gegenwärtig als Folge der zunehmenden Fragmentierung von Wertschöpfungsketten und der Verlagerung von Arbeit im Zuge der Globalisierung herausbildet. Dabei wird von der Beobachtung ausgegangen, dass in China gegenwärtig ein äußerst dynamischer Industrialisierungsprozess stattfindet und sich die weltweiten industriellen Direktinvestitionen in hohem Maße auf China konzentrieren. In einer vergleichenden Untersuchung von Entwicklungen in der Automobilindustrie und der InfoCom-Industrie wird den folgenden vier Fragen nachgegangen: Erstens werden Unterschiede in der Entwicklungsdynamik und in den Strategien der Unternehmen der beiden Industrien betrachtet. Zweitens wird nach den Anforderungen hinsichtlich der Kompetenzen gefragt, die von den multinationalen Unternehmen an ihre Standorte in China und ihre Zulieferstrukturen gestellt werden, untersucht. Drittens werden Unterschiede in der 'Einbettung' der neuen Standorte multinationaler Konzerne in China untersucht. Von besonderem Interesse ist in diesem Zusammenhang die Entstehung territorial integrierter Produktionscluster und die Rolle von Industrieparks. Viertens geht es um die Frage, welche Konsequenzen sich aus der Entwicklung in China für Akteure und Standorte in Deutschland ergeben." (Autorenreferat)"The paper addresses the position occupied by China in the new international division of labour now developing as value chains become increasingly fragmented and work is relocated in the context of globalisation. China is currently experiencing an extremely dynamic industrialisation process, and worldwide foreign direct investment in industry is concentrating strongly in the People's Republic. A comparative study of developments in the automotive and infocom industries examines a number of issues. Firstly, differences in development dynamics and corporate strategy in the two industries are examined. Secondly, the demands multinational companies make of their locations in China and their supplier structures are investigated. Thirdly, differences in the 'embedding' of the new multinational company locations in China are investigated. Particularly interesting is the development of territorially integrated production clusters and the role of industrial parks. The fourth issue to be looked at is the impact of developments in China on actors and locations in Germany." (author's abstract