Varieties of Capitalism and the Learning Firm: Contemporary Developments in EU and German Company Law - A Comment on the Strine-Bainbridge Debate About Shared Values of Corporate Management and Labor

Research in corporate governance and in labour law has been characterized by a disjuncture in the way that scholars in each field are addressing organizational questions related to the business enterprise. While labour has eventually begun to shift perspectives from aspirations to direct employee involvement in firm management, as has been the case in Germany, to a combination of \u27exit\u27 and \u27voice\u27 strategies involving pension fund management and securities litigation, it remains to be seen whether this new stream will unfold as a viable challenge to an otherwise exclusionary shareholder value paradigm. At the same time, recent suggestions made by Delaware Chancery Court Vice Chancellor Strine, to dare think about potentially shared commitments between management and labor - and UCLA\u27s Stephen Bainbridge\u27s response - underline the viability - and, the contestedness - of attempts at moving the corporate governance debate beyond the confines of corporate law proper. While such a wider view had already famously been encouraged by Dean Clarke in his 1986 treatise on Corporate Law (p. 32), mainstream corporate law does not seem to have endorsed this perspective. This paper takes the questionable divide between management and labor within the framework of a limiting corporate governance concept as starting point to explore the institutional dynamics of the corporation, hereby building on the theory of the innovative enterprise, as developed by management theorists Mary O\u27Sullivan and William Lazonick. Largely due to the sustained distance between corporate and labour law scholars, neither group has effectively addressed their common blind spot: a better understanding of the business enterprise itself. In midst of an unceasing flow of affirmations of the finance paradigm of the corporation on the one hand and \u27voice\u27 strategies by labour on the other, it seems to fall to management theorists to draw lessons from the continuing co-existence of different forms of market organization, in which companies appear to thrive. Exploring the conundrum of \u27risky\u27 business decisions within the firm, management theorists have been arguing for the need to adopt a more sophisticated organizational perspective on companies operating on locally, regionally and transnationally shaped, often highly volatile market segments. Research by comparative political economists has revealed a high degree of connectivity between corporate governance and economic performance without, however, arriving at such favourable results only for shareholder value regimes. Such findings support the view that corporate governance regimes are embedded in differently shaped regulatory frameworks, characterized by distinct institutions, both formal and informal, and enforcement processes. As a result of these findings, arguments to disassociate issues of corporate governance from those of the firm\u27s (social) responsibility [CSR] have been losing ground. Instead, CSR can be taken to be an essential part of understanding a particular business enterprise. It is the merging of a comparative political economy perspective on the corporation with one on the organizational features, structures and processes of the corporation, which can help us better understand the distribution of power and knowledge within the \u27learning firm\u27

Executive remuneration in the EU: comparative law and practice

Executive pay practices are currently a "cause celebre" of corporate governance in the media, among regulators, in the marketplace, and in academia, in the US, the UK, and Europe. The purpose of this paper is to examine the approaches taken across Europe to the regulation of executive pay practices in listed companies. The outstanding feature of the regulation of executive pay across Europe is the extent to which it reflects the interconnection between pay and corporate governance. This link is expanded on in Part B with respect to the different rules found across European legal systems and how they address/prioritize the concerns which executive pay potentially raises. The role of public regulation is relatively important for disclosure of executive pay, while best practices and private codes generally have some impact on the way in which executive compensation is set for listed companies. On the whole, there is some convergence in continental Europe towards the Anglo-American model. The merits of full disclosure of executive remuneration are increasingly acknowledged in corporate governance codes and reports, while the use of remuneration committees is on the rise in the Continent. The research data on reported pay practices for 2001 among FTSE Eurotop300 companies reveal a reliance on performance-based pay generally and a somewhat variable adoption of share options programmes and other equity-based incentive contracts, which are generating difficulties in dispersed ownership systems. The executive pay problem may therefore be a particular cost of dispersed ownership, and the particular legal and policy responses, which are widely debated a specific feature of Anglo-American corporate governance. Nonetheless, the faultline between both systems, which is evident from the different approaches European states have taken, calls for particular care in the adoption of pan-European reforms but also in the transplanting of reforms based on the Anglo-American experience