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Governance of stakeholder relationships The German and Dutch experience George M.M. Gelauff and Corina den Broeder
CPB Netherlands Bureau for Economic Policy Analysis The Hague, January 1997
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1 Introduction*
This paper forms part of a forthcoming comparative study of the CPB Netherlands Bureau for Economic Policy Analysis, which examines the main strengths and weaknesses of the German and Dutch economies. The main purpose of this study is to learn from experiences abroad. Mutual lessons can point out necessary policy adjustments that enhance future competitiveness, with the paramount objective to safeguard national wealth and wellbeing. To this aim, strong and weak elements of the current situation in both countries are analyzed, as well as the main future trends that correspond with potential threats and opportunities for economic growth. Attention is not only focused on the available production factors, but also, and above all, on the role of institutions in relation to economic performance. Institutions are defined as the set of rules that provide a framework for production, exchange and distribution. Consequently, they range from legal rules to informal agreements. One of the aspects relevant for economic performance is the behaviour and position of the different stakeholders that constitute a firm or are directly related to a firm, and the governance structures that control relationships between stakeholders. Well-known categories of stakeholders are shareholders, creditors, and managers, yet employees, suppliers and consumers are stakeholders as well. The behaviour and position of stakeholders affect national welfare through firm performance, for instance with respect to investment strategies, the structure of finance and the adoption of new technologies. In turn, stakeholder behaviour is influenced by various institutional arrangements. Hence, the core questions addressed in this paper are the following. Which institutions influence the position and behaviour of stakeholders in a business enterprise in Germany and the Netherlands? In what way do these institutions and corresponding behaviour affect firm performance? What lessons can be drawn from the comparison about options to adjust or strengthen national institutional arrangements? To address these questions, first of all the main concepts, an analytical framework and a short overview of the booming literature on stakeholder relationships is presented 1 in Section 2. To clarify these issues, the discussion in Section 2 focuses on two main models of stakeholder relationships, the Anglo-American model and the German model. Concerning Germany and the Netherlands, more detail and nuance is added in the subsequent sections, which delve deeper into the institutional arrangements and the performance of the enterprise sector in the two countries. Section 3 addresses the similarities and differences between Germany and the Netherlands with respect to 1
See Bishop (1994), Blair (1995), Boot (1994), van Damme (1995), Edwards and Fischer (1994), Elston (1994), Guptara (1995), Hart (1995), Jenkinson and Mayer (1992), de Jong (1991), Kaen and Sherman (1993), Kester (1992), Moerland (1995), Monks and Minow (1995), Nickell (1995), OECD (1995a), Pound (1995), Prowse (1994), Shleifer and Vishny (1989), Winter (1994), Yafeh and Yosha (1995).
2 Shareholders stakeholders: a matter of institutions Fout! Bladwijzer or niet gedefinieerd.
relationships between managers, shareholders, and creditors. Section 4 focuses on the interaction between management and employees