Contests for Corporate Control

Abstract

This book is based on detailed historical research in the USA and Germany, and represents a challenge to current orthodoxy on corporate governance. It is a challenging and informed examination of the links between the general business environment and the operations, decisions, and organizations of firms. The author also explores the links between corporate governance and innovation. The eight chapters are: Innovation, resource allocation, and governance; Transforming the debates on corporate governance; The foundations of managerial control in the USA; The post‐war evolution of managerial control in the United States; Challenges to post‐war managerial control in the USA; US corporate responses to new challenges; From managerial to contested control in Germany; and The emerging challenges to organizational control in Germany.

History repeats itself: The failure of rational choice models in corporate governance

“…The compatibility of shareholder maximization and long-term sustainability of the firm, and indeed that of an entire economy, deserves a thorough discussion. Lazonick and O'Sullivan (2000) and O'Sullivan (2000) identify the significant shortcomings of the shareholder maximization version of corporate governance, and question whether this in fact improves the long-term performance of corporate enterprises. 5 The rate of return on corporate stock may be a poor measure of a firm's performance, especially over longer periods, and also tends to neglect the discussion on other stakeholders.…”

Claiming too much, delivering too little: testing some of Hofstede’s generalisations

“…National level data obscures considerable within-country variation. There is a vast body of empirical data depicting such variation within countries (see, for example, Goold and Campbell, 1987;Weiss and Delbecq, 1987;Tsurumi, 1988;Kondo, 1990;O'Sullivan, 2000;Yanagisako, 2002;Lenartowicz et al, 2003;Camelo et al, 2004;Crouch, 2005;Streeck and Thelen, 2005;Thompson and Phua, 2005). Goold and Campbell (1987) describe three different 'styles' of planning and control by U.K. based, large, diversified companies, and so on.…”

The Institutional Construction of Firms

“…On the whole, the more owners and managers share their authority with a wide range of skilled workers and reward their contributions to improving firm performance, the more effective such organisational learning is likely to be. Thus, where long term membership of the firm is largely restricted to managerial employees, as in the dominant US corporation described by Chandler (1976;1990) and others (O'Sullivan, 2000), such organisational learning is likely to be less widespread and effective than in their Japanese equivalents that extended such commitments to many male manual workers (Fujimoto, 2000).…”

“…The combination of market owner control and limited employer-employee commitment is exemplified by the dominant US corporation for much of the twentieth century, according to Chandler (1990) and others (e.g., O'Sullivan, 2000). Many of these companies had a fragmented shareholder base and developed a large managerial infrastructure for coordinating different activities through formal routines that generated considerable economies of scale and scope.…”

“…The combination of liquid capital markets, legal and other restrictions on managers' ability to develop strong defensive measures against hostile takeovers, and fragmented shareholdings in outsider-based financial systems can result in a strong market for corporate control that limits investor-manager commitments and reduces the credibility of long term career incentives (O'Sullivan, 2000;Tylecote and Conesa, 1999). Where capital is impatient and volatile it is difficult to convince skilled employees to become committed to the long-term development of a particular firm's organisational capabilities.…”