European style of corporate governance at the crossroads

Abstract:

This article examines the basic principles of the continental European style of corporate governance, and its evolution in the context of the globalisation of financial markets. By stressing the role of worker involvement, shareholder value, as an (economic) theory of the firm, as a practice and as an ideology, is critically assessed. Also, the thesis of national models' convergence is rejected, in favour of an approach rooted in 'institutional complementarities'. To sustain and illustrate our main conclusions, recent developments in France and Germany are studied. Finally, the current building up of a regulatory framework in the European Union - characterized by a model of corporate governance based on workplace democracy - is analysed.