From Managerial to Contested Control in Germany

Mary O'Sullivan

in Contests for Corporate Control

Published in print June 2001 | ISBN: 9780199244867
Published online November 2003 | e-ISBN: 9780191596735 | DOI:
 From Managerial to Contested Control in Germany

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Like its US counterpart, the characteristic features of the post‐war system of corporate governance in the former West Germany have deep roots in the region's history. Section 7.2 of this chapter analyses the evolution of managerial control in pre‐war Germany and identifies its central institutional foundations as inter‐company shareholding and bank–industry relations. Section 7.3 describes how these institutions persisted in the Federal Republic of Germany (FRG) after the war, although through the institution of co‐determination, the post‐war system of corporate governance was transformed beyond its narrow pre‐war confines into a contested form of organizational control; in shaping control over corporate resource allocation, these social conditions were complemented by institutions––especially the dual system of apprenticeship––that supported the organizational integration of resources in German business enterprises. Section 7.3 further discusses how, on the basis of the system of governance that supported organizational control, German companies achieved considerable success in industrial sectors in which high quality was more important than low cost as a basis for competitive advantage; it also analyses how the type of organizational control that emerged in the post‐war period influenced the distribution of wealth in the economy. The last main section, Sect. 7.4, discusses corporate governance in relation to performance.

Keywords: apprenticeship; bank–industry relations; co‐determination; contested control; corporate governance; corporate performance; Federal Republic of Germany; Germany; history; institutions; managerial control; market competition; organizational control; quality; resource allocation; shareholding; wealth distribution; West Germany

Chapter.  13542 words. 

Subjects: Microeconomics

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