Chapter

Coordination and Institutions: France and Germany Compared

Michel Goyer

in Contingent Capital

Published in print October 2011 | ISBN: 9780199578085
Published online January 2012 | e-ISBN: 9780191731051 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199578085.003.0005
Coordination and Institutions: France and Germany Compared

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This chapter illustrates how the disparities in the investment allocation of short-term investors in France and Germany reflect the differences in the institutionally based process of coordination. The coordination of activities is shaped by firm-level institutional arrangements that results in different restructuring strategies. The organization of the workplace in France is characterized by the concentration of power in top executives that, in turn, provides for a better fit with the preferences of short-term investors. The weakness of organized labor inside the firm facilitates the implementation of short-term-oriented restructuring schemes. In contrast, the institutional arrangements of German companies provide employees with voice and quasi-veto power over important corporate decisions. The coordination of activities in German firms is characterized by the involvement of the bulk of employees, thereby resulting in lengthier negotiations. The implementation of strategies of shareholder value in Germany does not fit well with the short-term horizon of impatient investors.

Keywords: France; Germany; innovative capabilities; varieties of capitalism; work organization

Chapter.  12231 words. 

Subjects: Corporate Governance

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