This action might not be possible to undo. Are you sure you want to continue?
Cultural Norms & Company Laws in Europe
1. 2. 3. 4. 5. 6. 7. 8. Important Words Summary Important Statements Further Difficulties Why is this Article Important What questions it asks What questions it answers Missing items
March 2012 . University of Warwick.Author • Associate Professor of Law. UK • Research social and economic background and the impact of company law rules and in competition/convergence between company law systems • Article published in International Journal of Business and Social Science.
and other stakeholders such as consumers. the community and the environment interact with one another.Important words used in article and definitions • Companies or corporations in modern sense often have these 4 characteristics – Separate legal personality – Limited liabilities of the shareholders – Transferable shares – Delegated management • Company law is the study of how shareholders. its board. and the roles and relationships between a company’s management. its shareholders and other stakeholders . creditors. • Corporate governance is "the system by which companies are directed and controlled". employees. directors. It involves regulatory and market mechanisms.
While common law does rely on some scattered statutes. the applicable procedure. it is largely based on precedent. originated from England. continuously updated legal codes that specify all matters capable of being brought before a court. . is generally uncodified.Important words used in article and definitions • Common Law. Also known as case law • Civil Law. developed in continental Europe. and the appropriate punishment for each offense. Countries with civil law systems have comprehensive. This means that there is no comprehensive compilation of legal rules and statutes. meaning the judicial decisions that have already been made in similar cases. in contrast. which are legislative decisions. is codified.
vs femininity – Long-term orientation • Anglo Saxon refer to the Anglophone peoples and societies of Britain.Important words used in article and definitions • Cultural dimensions: – Power Distance – Uncertainty Avoidance – Individualism . and other countries . the United States.vs collectivism – Masculinity .
investors are given the most power in determining corporate policies. the system relies on the capital markets to exert control over the corporation's management. even though past circumstances may no longer be relevant.Important words used in article and definitions • Path dependence explains how the set of decisions one faces for any given circumstance is limited by the decisions one has made in the past. . Since the markets are the primary source of capital. Therefore. • Shareholder primacy is a theory in corporate governance holding that shareholder interests should be assigned first priority. • Market-Based Corporate Governance System is based on Anglo-American law.
Summary The article examined the relationship between company laws and national cultures of four European Union Member States. the UK and Italy. While the level of profit returned to shareholders in British firms is higher than that of those firms in Continental Europe. “The operation of new rules that do not fit culturally maybe difficult … and it may work best if followed by a cultural movement. Key take-aways: • There is a certain degree of convergence of corporate governance practice between the Anglo-Saxon firms (in UK) and the non Anglo-Saxon ones (in Continental Europe). the distinctive underlying values in each nation’s culture deter further adoption and convergence of a “universal” corporate governance practice. France. It explained and explored the diversity of company laws between those nations with regard to their different national cultures. • . namely Germany. it doesn’t necessary means the UK model of corporate governance is the best to be adopted across Europe. However.
• Dimensions of Culture • Convergence or Persistent Diversity – What foster or restrict the convergence of corporate governance practice? – The fact that corporate structures appear similar on paper does not mean that individuals will react in the same way when it comes to making decisions.Structure of the Article & Parts Summary (1/2) • Defining culture • Culture & Law – How legal rules reflected or explained by different cultures. – The very aim of “improving corporate governance‟ is culturally constructed in a way that is reflected in varied national politics. . – Can legal rules change culture? – Strengths & Weaknesses of Stakeholder Model .vs Shareholder Model.
– Though there seems to be a 2-way influence between UK and Continental Europe.Structure of the Article & Parts Summary (2/2) • Company Law Characteristics in Germany. – Each country still has varied legal approaches. • National Histories. – Economic outcomes of different models. Italy. variation in cultures still deter swift convergence. – Relationship between “investors” and their “enterprises”. • Adaptation and Change to Company Law – Speed and direction of change is affected by cultural dimensions. France. as well as different strategies used in each country to reduce agency cost. Culture & Company Law – How each nation has its current company law system. and the UK – Compare different company law model in the 4 countries. • Effective European Corporate Governance .
Cultural dimensions of 4 studied countries Power Distance Uncertainty Avoidance .
Cultural dimensions of 4 studied countries Individualism Masculinity (Mastery) .
II) It will also consider whether it is likely to endure. in the EU political context and under pressure from increasing economic globalisation“ .Important statements “This study will seek to I) explain and explore the diversity of company laws between those nations.
I) Exploration of Diversity “in consideration of individualism as opposed to collectivism. and long-term oriented) are “superior in terms of performance” under normal conditions. 286 . If systems were to converge in crisis times outsider systems may dominate for this reason p. the greatest continuing divide may be between (geographically and politically) ‘core’ Europen countries centred on France and Germany and the ‘outer’ powers of Italy and the UK” The “insiders“ (also more harmony seeking. the outsiders in crisis times.
Difficulty: Are the outsiders really better off? Are there even outsiders? .
swift acceptance of the market model is highly improbable. Path dependency within nations is evident. often privileging other factors than economic „efficiency““ p. 292 .II) Differences likely to last? “Convergence toward the Anglo-Saxon model of corporate governance on that economic basis seems inevitable” BUT „Given the cultural variations.
II) Differences likely to last? „If European political arena acceptance of particular rules seems to be inevitable. differential effectiveness of government agencies. 288 .“ The fact that corporate structures (…) appear on paper to be comparable (…) does not mean that individuals will react the same way when it come to making decisions. Enforcement issues p. courts and other mechanisms may aid persistence of diversity in accordance with varied national cultures.
II) Culture and Law „Where cultural values vary. 284 . uniform rules even across the EU may not be appropriate“ – Culture and Laws are pathdependant to the extent that they ma not be successfully imposed across the EU or be interpreted in extremely different ways p.
Further Difficulties • Unusual grouping of countries based on questionable claims in relation to cultural differences – In addition to the example already given: she implies the UK had a higher score on the masculinity index than Germany: both countries are the same – She classes Germany and the UK together because both are predominately “protestant”. Germany 50/50 .
The UK is at the centre of every idea she develops and implicitly or explicitly considered the factual or ideal role model. .Especially fond of the Market Model – Why is that? .Further Difficulties/ Questions Availability Bias? Patriotism? .
in order to avoid generalization • Critical review of assumptions .Is Hofstedes results appropriate to use in the more globalized world today? • What has been the effect of the recent financial crisis? • The articles contribution remains unclear .Items missing that should have been mentioned • Use of facts and numbers to support her conclusions .
Q&A Thank you! .
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.