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991. Institutional Change and the Uses and Limits of Path Dependency: The Case of German Finance

Author:
Richard Deeg
Publication Date:
06-2001
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
How can we determine when an existing institutional path or trajectory is ending and being replaced with a new one? How does such a process take place? How can we distinguish between institutional innovation within an existing trajectory and a switchover to a new trajectory or path? This paper explores these questions by examining the pattern of institutional change in the German financial system. The paper advances four theoretical claims: First, that endogenous developments can disrupt an institutional path and lead to a new one. Second, that an event sequence involving a move to a new institutional path may not follow from a contingent event yet may nonetheless be marked by increasing returns processes. Third, that increasing returns in politics are not automatic and must be cultivated by actors in order to be realized. Finally, that the concept of path is still in need of a measurable conceptualization before any further advances in path dependent arguments can be made.
Topic:
Economics and International Trade and Finance
Political Geography:
Germany

992. Corporate Governance in Transition: Ten Empirical Findings on Shareholder Value and Industrial Relations in Germany

Author:
Martin Hopner
Publication Date:
05-2001
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
Within the context of debates over national “varieties” of capitalism, this paper discusses the shareholder value orientation of the 40 largest listed German companies. Three dimensions of shareholder value are distinguished: the communicative dimension, the operative dimension and the dimension of managerial compensation. A shareholder value index compiling data on accounting, investor relations, variable top-management compensation and the implementation of profitability goals makes it possible to compare the shareholder orientations of the companies. The shareholder value phenomenon is explained first by the exposure to markets – the international product market, capital market pressures and the market for corporate control – and, secondly, by internal developments – changing management careers, increasing management compensation and reduced monitoring by banks and corporate networks – which cause external impulses to increase shareholder value to fall on fertile ground. Conflicts over shareholder orientation result in changing coalitions between shareholders, management, and employees. Shareholder value does not make companies opt out of central collective agreements or endanger the existence of employees' codetermination, but it does lead to more market-driven industrial relations.
Topic:
Economics, Industrial Policy, and International Trade and Finance
Political Geography:
Germany

993. An Emerging Market for Corporate Control? The Mannesmann Takeover and German Corporate Governance

Author:
Gregory Jackson and Martin Hopner
Publication Date:
04-2001
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
Corporate governance in Germany is often described as a bank-oriented, blockholder or stakeholder model where markets for corporate control have not played a significant role. This case study of the hostile takeover of Mannesmann AG by Vodafone in 2000 demonstrates how systemic changes during the 1990s have eroded past institutional barriers to takeovers. These changes include the strategic reorientation of German banks from the “house bank” to investment banking, the growing consensus and productivity orientation of employee codetermination and corporate law reform. A significant segment of German corporations are now subjected to a market for corporate control. The implications for the German model are examined in light of both claims by agency theory for the efficiency of takeover markets, as well as the institutional complementarities within Germany's specific “variety” of capitalism. While the efficiency effects are questionable, the growing pressures for German corporations to achieve the higher stock market valuations of their Anglo-American competitors threaten the distributional compromises underlying the German model.
Topic:
Economics, Emerging Markets, and International Trade and Finance
Political Geography:
America and Germany

994. Breaking with Tradition: Service Trade Liberalization in the EU and Germany

Author:
Jette Steen Knudsen
Publication Date:
06-2001
Content Type:
Working Paper
Institution:
Danish Institute for International Studies (DIIS)
Abstract:
This chapter asks why and how services that were not previously thought of as tradable have increasingly been opened up to international competition in EU member states including even in Germany. The chapter contrasts an explanation that focuses on the impact of economic interests with an explanation that focuses on the impact of EU membership. The chapter argues that lobbying by producers or users of services cannot fully explain reform nor does EU membership simply constrain reluctant member state governments to adopt new legislation. Instead the chapter argues that in important service sectors the German government has promoted trade reform even sometimes in the face of strong opposition from providers, consumers, and unions. The chapter maintains that a crucial key to liberalisation is the emergence of a break in government opposition. In particular, the ability of the government to re-interpret services as regular tradable products combined with new regulation to "shelter" exposed groups such as consumers and workers against potential harm. Implications of this claim for future service sector liberalisation are subsequently discussed.
Topic:
Economics and International Trade and Finance
Political Geography:
Europe and Germany

995. Inflation, Monetary Transparency, and G3 Exchange Rate Volatility

Author:
Adam S. Posen and Kenneth N. Kuttner
Publication Date:
07-2000
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
Short-term volatility in G3 bilateral exchange rates has been a fact of life since the beginning of the post-Bretton Woods float. It has been established, surprisingly, that this volatility is not only disproportionately large relative to the variation in relative macroeconomic fundamentals of Germany, Japan, and the United States, but is in fact largely unrelated to them. The apparent disconnect between fundamentals and dollar-yen and dollar-euro exchange rate fluctuations has led to perennial complaints about persistent exchange rate “misalignments,” and their real effects on the G3 (and other) economies, giving rise in turn to recurring proposals for government policies to limit this volatility. The idea that volatility reflects nothing more than the (perhaps rational, certainly profit-seeking) behavior of foreign exchange traders seems to give justification for a policy response. Yet, the disjunction between macroeconomic expectations and the volatility seems to indicate as well that some deviation from domestic monetary policy goals would be necessary to intervene against exchange rate swings.
Topic:
Economics, International Trade and Finance, and Political Economy
Political Geography:
United States, Japan, and Germany

996. East-West Integration and the Changing German Production Regime: A Firm-Centered Approach

Author:
Katharina Bluhm
Publication Date:
12-2000
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
With the opening of Central Eastern Europe German firms have gained access to low labor costs in close geographical proximity. Intense debate about the impact this has had on the “German model” of capitalism has ensued. This paper argues that, in fact, production shifts are taking place in which cost-cutting motives are an important guideline. German firms, however, hesitate to aggressively utilize this new option in their internal domestic labor policy. Rather, firms tend to avoid confrontations with their employees on “job exports”. The necessity of collaboration on both sides of the border, the relative strength of workers in the domestic high-quality production system, and the constraints of industrial relations provide explanations for the moderate behavior. So far, the outcome of the bargained reorganization is that firms gain more labor flexibility, performance-related differentiation, and labor-cost rationalization without challenging the institutionalized long-term employment commitments for their core workforce.
Topic:
Economics and Government
Political Geography:
Europe, Eastern Europe, and Germany

997. “Social Democracy, Globalization and Governance: Why is there no European Left Program in the EU?”

Author:
Christopher S. Allen
Publication Date:
09-2000
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
This paper addresses globalization and governance in the EU by attempting to generate some plausible hypotheses that might explain the policy choices of the 12 out of 15 European democratic left governments. With all of the discussion in recent years of a democratic deficit, and then need to maintain a “social Europe,” why have these governments not produced more explicit left-wing policies?
Topic:
Democratization, Economics, and Government
Political Geography:
Europe and Germany

998. The Legal Construction of Membership: Nationality Law in Germany and the United States

Author:
Mathias Bös
Publication Date:
01-2000
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
The argument of this paper is that several empirical puzzles in the citizenship literature are rooted in the failure to distinguish between the mainly legal concept of nationality and the broader, political concept of citizenship. Using this distinction, the paper analysis the evolution of German and American nationality laws over the last 200 years. The historical development of both legal structures shows strong communalities. With the emergence of the modern system of nation states, the attribution of nationality to newborn children is ascribed either via the principle of descent or place of birth. With regard to the naturalization of adults, there is an increasing ethnization of law, which means that the increasing complexities of naturalization criteria are more and more structured along ethnic ideas. Although every nation building process shows some elements of ethnic self-description, it is difficult to use the legal principles of ius sanguinis and ius soli as indicators of ethnic or non-ethnic modes of community building.
Topic:
Government and Nationalism
Political Geography:
United States, Europe, and Germany

999. Consumer Credit in the European Union

Author:
Nuria Diez Guardia
Publication Date:
02-2000
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
This report analyses the European consumer credit markets and their regulation at European level. Its findings are as follows: European consumer credit markets are characterised by deep national differences and strong market segmentation. The report finds no generalised model of consumer credit from the analysis of statistical data. An Anglo-Saxon consumer credit model cannot be identified. The weight of consumer credit is far higher in the US economy than in the EU countries, including the UK. In the US, the share of consumer loans made by banks is much lower, securitisation of consumer credit assets is very developed and the share of revolving credit is much greater than in the EU countries. Nor is it possible, on account of the large differences in the use of consumer credit observed across EU countries, to identify a European model of consumer credit. Consumer credit is very widely used in Sweden, whereas it is underdeveloped in Greece and Italy. The use of consumer credit reaches comparatively high levels in Germany and the UK and an intermediate level in France and Spain. Lending to consumers is carried out through bank intermediation, crossborder provision is non-existent.
Topic:
Economics and Political Economy
Political Geography:
United States, United Kingdom, Europe, Greece, France, Germany, Spain, and Italy

1000. A friend in need or a friend indeed: Finnish perceptions of Germany's role in the EU and Europe

Author:
Tuomas Forsberg
Publication Date:
01-2000
Content Type:
Working Paper
Institution:
Finnish Institute of International Affairs (FIIA)
Abstract:
Finland is often seen as a country whose view of Germany has traditionally been more positive than that of the average of the European countries. According to an opinion poll that was conducted in 1996, 42 % of the Finns have a positive view, 47 % a neutral and only 6 % a negative view of Germany and Germans. This positive attitude is not only a result of the large amount of cultural and trade contacts or societal similarities, shared Lutheran religion and German roots of Finnish political thinking but derives also from the historical experience that Germany has been willing to help Finland in bad times. Although this view is not necessarily correct when judged against the historical record and although it is not unanimously shared by all Finns, it provides the necessary starting point when assessing Finland's view of Germany in today's Europe.
Topic:
Foreign Policy and Regional Cooperation
Political Geography:
Europe, Finland, and Germany