The Cross-National Diversity of Corporate Governance: Dimensions and Determinants

In this article, we develop a theoretical model to identify and explain the diversity of corporate governance across advanced capitalist economies. Our sociological approach is inspired by actor-centered institutionalism in stressing the interplay of institutions and firm-level actors. This model bridges the gap between undersocialized agency theory approaches and oversocialized views of institutional theory. In particular, we examine: (1) how a country's property rights, financial system, and inter-firm networks will shape the role of capital; (2) how a country's representation rights, union organization, and skill formation will influence the role of labor; and (3) how a country's management ideology and career patterns will affect the role of management. In the discussion, we explore how different configurations of institutions support different sorts of interactions among capital, labor and management in corporate governance. We illustrate the different patterns of conflict and coalitions among stakeholders around three axes: class conflicts, insider-outsider conflicts, and accountability conflicts. This approach has strong implications for studying issues of internationalization and the potential convergence of corporate governance in light of the interdependencies, complementarities and tensions between institutions within various national settings.