Corporate Governance Systems
Corporate Governance Systems
We can define Corporate Governance as the institutionalized patterns of control and decision making within corporations. Corporate Governance is only part of the larger economic context in which firms operate that includes, for example, macroeconomic policies and the degree of competition in product and factor market. The Corporate Governance framework also depends on the legal, regulatory, and institutional environment. In addition, factors as business ethic and corporate awareness of the environmental and social interests of the communities in which a company operates can also has an impact on its reputation and its long-term success.
This paper outlines the main characteristics of the American, German and Japanese corporate governance model, including the coming challenges for the last two ones. It also mentioned the last work of the Latin America Corporate Governance institutions. At the end, the Solvay Company case is analyzed.
1 Characteristics of the American, German and Japanese models
Germany and Japan are considered to have similar “stakeholder” models of corporate governance accommodating and promoting both the financial commitment of capital and industrial citizenship for labor. Financial commitment involves dependence on the specific enterprise to generate returns as well as on the ability to control appropriation of those returns. Industrial citizenship refers to status rights and obligations that are reciprocal between the rights of workers and the obligations of employers and asymmetric in addressing the unequal power of the two parties in exchange.
Japanese and German managers learned to draw upon a stock of trust and commitment in building long-term organizational capacities for high-skill and high-quality production. This way, each stakeholder exercises a contingent voice in corporate governance. This is far different to the liberal model predominant in the United States.
The American corporate...
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