Capital Unbound? The Transformation of European Corporate Governance

This article represents a first attempt to analyse the forces at work in the transformation of European corporate space, at both the national and supranational levels. In doing so, it consciously combines a comparative with an international political economy perspective and argues against analyses which minimize the role of domestic institutions and understand the contemporary transformation of European capitalism solely in terms of globalization-driven, neo-liberal convergence. After discussing the existing variety of Europe's national capitalisms, we argue that a number of mechanisms are inducing change- competitive pressures on producers; the liberalization and integration of financial markets; the growing role of international actors; and the equally potent role of non-economic domestic actors in internalizing external pressures. We analyse their effects in three critical areas: corporate governance, especially in terms of the balance of power between 'stakeholders' and shareholders; the relationship between the 'public' and 'private'; and the balance between capital and labour in the 'networked' (and especially the 'Germanic') systems. Despite these common pressures, we argue that although the differences between national systems will be modified in a market-liberal direction, this will not result in convergence for the following reasons. Domestically, elites will not promote change to a degree where it will undermine their own power and positions; path dependence and the lock-in effects of historical development create formidable pressures for continuity; and competitiveness will depend on the adjustment rather than abandonment of those structures and policies which have delivered efficiency in the past. As far as external pressures are concerned, international competition and the implementation of European monetary union are as likely to reinforce existing relationships as they are to break them down, while the creation of a new regulatory environment for European capitalism linking supranational with national rules still permits considerable scope for diversity