Varieties of Institutional Investors and National Models of Capitalism: The Transformation of Corporate Governance in France and Germany

This article examines the rise of foreign ownership in France and Germany. I argue that the firm-level institutional arrangements of workplace organization constitute the most significant variable to account for the greater attractiveness of French firms over their German counterparts to short-term, impatient capital—namely, hedge and mutual funds. I demonstrate how key notions of the Varieties of Capitalism perspective—institutional interaction, institutional latency, and the distinction between institutional framework and the mode of coordination that follows from these institutions—provide important theoretical insights to account for the different structures of foreign ownership in France and Germany.