Corporate Governance Between Shareholder and Stakeholder Orientation: Lessons From Germany. (April 2017)

• Record Type: Journal Article
• Authors: Bottenberg, Konstantin; Tuschke, Anja; Flickinger, Miriam
• Is Part Of: Journal of management inquiry. Volume 26:Number 2(2017:Mar.)
• Page Start: 165
• Page End: 180
• Publication Date: 2017-04
• Subjects: stakeholder theory -- stakeholder management -- shareholder value -- corporate governance -- Germany; Management -- Periodicals; Organizational behavior -- Periodicals; 658.005
• DOI: 10.1177/1056492616672942
• Languages: English
• ISSNs: 1056-4926

Abstract

It is highly debated whether corporations should primarily follow a shareholder or a stakeholder principle. This article addresses the debate with a closer look at Germany's current conceptualization of corporate governance. Despite the introduction of shareholder-oriented practices such as moderate amounts of stock-option pay and more transparent accounting standards, the German corporate governance system is considered to be a prototype of stakeholder orientation. Critics of this system claim that strong obligations to stakeholder interests are a drawback for German firms when competing internationally. However, if applied thoughtfully, an institutionally anchored stakeholder management can also have a number of advantages. We point to selected advantages of a stakeholder-oriented system, including the active integration of stakeholder knowledge, increased commitment for strategic decisions, and a longer term view on performance. Acknowledging potential problems arising from a stakeholder orientation as well as its unique benefits, we call for a "modern" stakeholder value system.