The translation of corporate governance changes across national cultures: the case of Germany

Abstract

Contrasting systems of corporate governance persist internationally but are subject to regulatory and firm-level institutional change. Such changes may be viewed as organisational innovations, often imported from the USA in the face of different national cultures. This paper analyses the implications of national culture for the translation of innovations, and provides case study illustrations of regulatory and firm-level governance changes experienced in Germany. These illustrations demonstrate that the diffusion of both kinds of change has been subject to substantial translation that is consistent with German national culture. Journal of International Business Studies (2005) 36, 42–61. doi:10.1057/palgrave.jibs.8400109

Corporate governance and national institutions: A review and emerging research agenda

“…Outside the U.S., executive stock options often contradict prevailing institutionalized norms and coalitions of interest (Bruce et al, 2005;Buck & Sharhrim, 2005). When investors rely on reputational considerations rather than formal equity-based incentives in evaluating the probability of self-serving behavior of managers, the presence of executive share options would have relatively lower weight in terms of the firm's expected cost of capital (Bhagat, McDevitt & McDevitt, 2010).…”

Culture and Corporate Governance: The Influence of Language and Religion in Switzerland

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“…Doidge et al (2007) find that country characteristics explain the variation of a firm's governance better than firm characteristics can. The convergence process is hampered by factors at the firm level, but also at the institutional and the national level (Aguilera and Jackson 2003;Denis and McConnell 2003;Buck and Shahrim 2005;Yoshikawa et al 2007).…”

“…Some researchers thus claim that culture may play an important role in corporate governance practices around the world (Bebchuk and Roe 1999;Buck and Shahrim 2005;Clarke and dela Rama 2006;Aguilera and Jackson 2010). International organizations such as the World Bank, the IMF, the OECD or large pension funds such as CalPERS share this view (see Licht 2001).…”

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