Political Power and Corporate Control: The New Global Politics of Corporate Governance

Political Power and Corporate Control: The New Global Politics of Corporate Governance

by Peter A. Gourevitch, James Shinn
     
 

"Peter Gourevitch and James Shinn brilliantly question the received wisdom about state regulation of corporate governance in this resolutely empirical and resolutely political book. They challenge arguments that countries can't change and that business dominates policymaking, showing that what determines a nation's regulatory system is the particular coalition that

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Overview

"Peter Gourevitch and James Shinn brilliantly question the received wisdom about state regulation of corporate governance in this resolutely empirical and resolutely political book. They challenge arguments that countries can't change and that business dominates policymaking, showing that what determines a nation's regulatory system is the particular coalition that has emerged between workers, owners, and managers. This book should be required reading for students of corporate governance in the United States and beyond."—Frank Dobbin, Harvard University, author of Forging Industrial Policy: United States, Britain, and France in the Railway Age

"Peter Gourevtich and James Shinn are here onto one of the important inquiries of economic development today: To understand how the largest firms are run, why they are owned as they are in different nations, and what explains the variation-some nations with deep stock markets and some without. Much of the academic writing to date focuses on the economics of finance and the underlying legal structure. Get the law right, it's widely thought, and financial markets will flourish. Less attention has been paid to how, whether, and to what extent finance and law are both surrounded by a nation's politics; in short, why it sometimes is so hard to get the law right. Gourevitch and Shinn bring to bear on this subject today's thinking in political science, reaching closer to what seems to be where the basic causes of corporate governance variation around the world lie-not just in economics and law, but in political institutions and preferences."—Mark Roe, Harvard University, author of Strong Managers, Weak Owners: The Political Roots of American Corporate Finance and Political Determinants of Corporate Governance

"This seminal book underlines the vital political importance of corporate governance, a subject typically viewed only from legal and business perspectives. It will become a classic in political economy."—Peter J. Katzenstein. Walter S. Carpenter, Jr. Professor of International Studies, Cornell University

"Many comparative corporate governance studies like to pit bank-based systems against market-based systems, or civil-law against common-law countries. Gourevitch and Shinn make a compelling case that the reality of corporate governance is much too rich and complex to fit into these simple categories. They paint a fascinating picture of the evolution of corporate governance in Asia, Europe, and North America as driven primarily by changing political coalitions and ideologies, pension reform, privatization, and globalization."—Patrick Bolton, Princeton University, coauthor of Contract Theory

"A major contribution by leading scholars of corporate governance, this book brings together insights from economics, political science and law. Highly recommended for anyone interested in the relationship between governance and development, it sheds helpful new light on the key debate about whether and how legal origin is destiny."—Simon Johnson, Sloan School of Management, Massachusetts Institute of Technology

"Political Power and Corporate Control is the first serious, book-length political science treatment of the two-way interaction between corporate form and politics. There is nothing comparable."—Merritt Fox, Michael E. Patterson Professor of Law, Columbia University School of Law

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Product Details

ISBN-13:
9780691133812
Publisher:
Princeton University Press
Publication date:
07/16/2007
Pages:
368
Product dimensions:
6.10(w) x 9.10(h) x 0.90(d)

Meet the Author

Peter A. Gourevitch is Professor of Political Science and founding Dean at the Graduate School of International Relations and Pacific Studies, University of California, San Diego. He is the author of "Politics in Hard Times: Comparative Responses to International Economic Crises" and former coeditor of "International Organization". James Shinn Visiting Professor at Georgetown University's School of Foreign Service, where he teaches courses on technology and foreign policy. Previously he worked in the U.S. State Department's East Asia Bureau and was later a general manager, entrepreneur, and outside director for fifteen years in the high tech industry at various firms including Dialogic, which he cofounded.

Table of Contents

LIST OF ABBREVIATIONS vii

PREFACE xiii

CHAPTER ONE: Introduction and Summary Argument 1

Why Fight about Corporate Governance? 3

Great Variance and the "Great Reversals" 4

Putting the Pieces Together: In Search of a Political Explanation 10

Policy Consequences 12

Plan of Attack 14

CHAPTER TWO: Governance Patterns: What Causes What? 15

Outcomes: Dependent Variables and Patterns of Control 16

Capitalist Economic Policies, Minority Shareholder Protections, and Degrees of Coordination 20

Politics: Preferences and Institutions 22

Conclusion 26

CHAPTER THREE: Framing Incentives: The Economics and Law Tradition 27

Origins of the Debate 28

Incomplete Contracts and Private Order 30

Law and Regulation: Minority Shareholder Protections? Information, Oversight, Control, and Incentives 39

Varieties of Capitalism: Degrees of Coordination in Market Economies 51

Conclusion 55

CHAPTER FOUR: Politics: Preferences and Institutions 57

Mapping Financial Interests on Political Processes: A Causal Model 57

Preferences and Coalitions among Owners, Managers, and Workers 59

Political Institutions: Majoritarian and Consensus Mechanisms 67

Alternative Arguments: Legal Family and Economic Sociology 83

Conclusion 93

CHAPTER FIVE: Preference Cleavages 1: Class Conflict 95

Section 1: Owners and Managers Dominate Workers 96

The Investor Model 96

Analytic Narrative 123

Korea: Changing Institutions, Shifting Preferences 123

Section 2: Workers Dominate Owners and Managers 132

The Labor Power Model 132

Analytic Narrative 140

Sweden: The Exemplar of the Labor Power Model? 140

Conclusion 147

CHAPTER SIX: Preference Cleavages 2: Sectoral Conflict 149

Section 1: Cross-Class Coalitions 149

The Corporatist Model: Workers and Managers Dominate Owners 150

Analytic Narrative 159

Germany: From Corporatist Bargain to a Transparency Coalition 160

Japan: Concentration without Owners 167

The Netherlands: The Evolution of "Poldermodel" Corporatism 177

Section 2: Building Coalitions in Authoritarian Systems 187

The Oligarchy Model: Owners Dominate Workers and Managers 187

Analytic Narratives 189

Russia: Oligarchs and Politics 190

China: "Selectorate-Electorate" Coalition 192

Singapore: Shareholder Protections with "Guided" Democracy 199

Conclusion 203

CHAPTER SEVEN: Preference Cleavages 3: Transparency, Voice, and Pensions 205

Section 1: Workers and Owners Dominate Managers 205

From Class Conflict to Corporatist Compromise 206

Analytic Narratives 228

Chile: Authoritarian Roots of the Transparency Coalition 228

Malaysia: Ethnicity and Democracy in Governance Politics 232

Section 2: Managers Dominate Owners and Workers 237

"Managerism" 237

Analytic Narratives 241

The United States: A Contested Path from Oligarchy to MSP 241

United Kingdom: The Power of Majoritarian Political Institutions? 259

France: Without the State, Who Is in Control? 262

Conclusion 273

CHAPTER EIGHT: Conclusion: Going Forward 277

Questions and Answers: What Explains Variance? 277

Shortcomings and Guideposts for Future Research 285

Conclusion: Fighting over the Governance Debate 287

DATA APPENDIX 297

BIBLIOGRAPHY 313

INDEX 333

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