Corporate Governance Between Shareholder and Stakeholder Orientation: Lessons From Germany

Bottenberg, Konstantin; Tuschke, Anja and Flickinger, Miriam (2017): Corporate Governance Between Shareholder and Stakeholder Orientation: Lessons From Germany. In: Journal of Management inquiry, Vol. 26, No. 2: pp. 165-180

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.

• Item Type: Journal article
• Faculties: Munich School of Management
• Subjects: 300 Social sciences > 330 Economics
• ISSN: 1056-4926
• Alliance/National Licence: This publication is with permission of the rights owner freely accessible due to an Alliance licence and a national licence (funded by the DFG, German Research Foundation) respectively.
• Language: English