BUSINESS ETHICS AND SUSTAINABILITY
ASYNCHRONOUS ACTIVITY - 16.04.2021
DIFFERENT MODELS OF CORPORATE GOVERNANCE
1. Anglo - American Model
This Anglo-American model focuses on the stock market as the central element of the
system of governance. Most of the larger, publicly owned companies source their capital
on the market, and in these countries shareholding is in the hands of multiple investors
with the result that shares are broadly dispersed, ownership is frequently changed, and
goals emphasize profitability and shareholder value. In this model, ethical concerns from
the shareholder’s perspective arise mainly around
the proper functioning of market mechanisms and the market-related patterns of
corporate governance. Typical ethical problems would be insider trading or manipulated
accounting statements. In a broader perspective, the Anglo-American model clearly
assigns a dominant role to shareholders, and consequently the major criticisms of
the shareholder-oriented model of managerial capitalism discussed in Chapter 2 would
apply to this approach.
2. Continental European Model
Under this model of governance, corporations tend to be embedded in a network
of a small number of large investors, among which banks play a major role.
Within this network of mutually interlocking owners, the central focus is typically
the long-term preservation of influence and power. The Anglo-American model,
employees typically have no say at all in the control of the firm. One could argue,
therefore, that the continental model of capitalism is to some extent a European
manifestation of the stakeholder theory of the firm, with corporations being expected to
serve wider goals than just those of investors. From the perspective of individual
shareholders, however, major ethical concerns derive from the fact that the system
of ownership prefers the interests of big, mostly corporate shareholders and the interests
of many other actors who have no direct ownership rights in the corporation rather than
the individual investor.
3. Asian Model
An interesting example of how these different trends blend into each other can be found
in the Indian approach to corporate governance, which on the one hand is similar to the
continental European model (as it is based on large block holdings of majority investors),
but on the other hand also demonstrates elements characteristic of the Anglo-American
approach. This development is particularly encouraged by comparatively large numbers
of foreign investors. The russian case, furthermore, is interesting in particular for the
phenomenon of owner-managers, often referred to as ‘oligarchs’, who amassed large
parts of privatized former state-owned industries in the Boris Yeltsin era of the 1990s.
With owners being managers at the same time, considerable conflicts of interest might
obviously arise.