Mechanisms of Institutional Change in German Capitalism. The Transformation of Corporate Governance Regulation

In the debate on the convergence of Rhenish capitalism towards the Anglo-Saxon model there is a growing consensus on the emergence of hybrid institutional configurations which combine elements of both systems. Our paper traces the mechanisms & driving forces leading to varying degrees of convergence with Anglo-Saxon standards & institutions by comparing the changes in two areas of German corporate governance regulation, namely internal corporate governance & accounting. Whereas existing institutions were coupled with Anglo-Saxon elements in the case of internal corporate governance ("layering"), traditional standards & institutions were substituted for new ones in the case of accounting ("displacement"). We argue that the varying degree of convergence can be explained by the different preferences of key national actors, such as companies & trade unions, in the two cases & the varying exogenous pressures for reforms. Our study highlights the importance of a meso-level analysis of causal mechanisms for the explanation of institutional change in modern capitalism. Adapted from the source document.