FIRST READ

The common law system, which was developed in England between the 12th
and 13th centuries, makes a wide use of statutes, where is given to judges an
active role in developing rules and judicial cases are considered the most
important source of law. The civil law system, which was developed in France
around the same time, uses designed codes and statutes, thus, judges have a
more limited role of applying the law.

The main point of this paper was to justify that countries with legal systems
based on the common law provide better investor protections and have more
developed financial markets than civil law countries, by presenting evidence that
common law countries experienced faster economic growth than civil law
countries during the period 1960-1992. One idea that I liked was the possibility
that, even though “average quality of rules is similar, (…) common law provides
greater stability and predictability” – page 5. This goes in accordance with some
of the approaches that we have covered during lectures. Among legal traditions,
the legal rules that protect creditors and shareholders are different, with common
law countries being more protective than civil ones. The legal origins of
commercial laws, as an instrument for legal protection of investors, are a strong
predictor of financial market development.

On the other hand, I don’t agree that much with the following statement that
says:” The strongest reason to suspect that legal origin would not be important is
that both traditions do well on the most fundamental questions, providing for
enforcement of property and contract rights”- page 6. In general, civil law
countries have more legal formalism, lower judicial tenure, and abruptly lower
constitutional acceptance of case law, contrarily with common with less formalism
of judicial procedures and higher judicial independence, therefore associated with
more secure property rights and better contract enforcement. As so, these
contrasts make financial and economic issues more efficient in common law
countries than in civil ones, being these last more protective of private property,
which is especially important for financial market development.
 SECOND READ

This paper discusses the qualities and the shortages of the VoC approach,
which is focused on the firm as the key actor and it highlights the importance of
system coordination and the idea of institutional complementarities. Its core
supposition is the implication between correctly calibrated sub-systems (such as
financial system or labour market) and an increase in the performance of the firm
so that the institutional structure of the particular political economy provides firms
with comparative institutional advantages for engaging in specific types of
activities.

The idea that I liked the most was the following: “most innovation process
requires both radical and incremental aspects” – page 11. The incremental
strategy, which focus on creating new products and services, has many
advantages like helping companies remaining competitive. However, there are
also some disadvantages. It is much more difficult to stand out, due to the
competitors; huge marketing expenses became compulsory, as well as the R&D
resources to remain competitive. On the other hand, radical innovation, which is
a riskier approach, has a strategy where the company creates a new market, with
no competitors, having the chance of owning an entire market, at least in the
beginning. And yet, they are not opposite approaches, has an example, the first
iPhone and the first Nikon camera, which had radical innovation strategies at the
beginning, but after that, the market grew and matured because companies
changed to an incremental innovation, improving their products, following users’
needs.
Lastly, I do not agree with the idea: “The term ‘business-systems’ (…) in
an attempt to create a way of systematically analysing different varieties of
capitalism that have developed over the course of the twentieth century based on
the organisation of the firm” – page 8. Here the role of the firm is overestimated,
underestimating the role of politics, labour and the state.