Corporate Governance Systems: Effects of Capital and Labor Market Congruency on Corporate Innovation and Global Competitiveness

Publication Type

Journal Article

Publication Date

8-2004

Abstract

Drawing on institutional economics, this article addresses how institutional congruence between capital and labor markets influences corporate governance systems, which, in turn, create differences in national corporate innovation and entrepreneurship systems and subsequently global competitiveness. We argue that such institutional congruence cultivates two ideal corporate governance systems. The first ideal type is the market-based system with transactional capital and external labor markets. This corporate governance system facilitates more explorative and revolutionary innovations. The second ideal type is the relationship-based governance system with relational capital and internal labor markets. This system facilitates more exploitative and evolutionary innovations. We wrap up by discussing how institutional adjustments are being pursued for each governance system because each type has advantages and disadvantages that require adjustments. Finally, we present implications that our congruence model suggests for global competitiveness, high-tech management, and public policy regarding national innovation systems.

Keywords

Congruence, Corporate governance systems, Entrepreneurship systems, Global competitiveness, Innovation, Institutional economics

Discipline

Strategic Management Policy

Research Areas

Strategy and Organisation

Publication

The Journal of High Technology Management Research

Volume

26

Issue

2

First Page

293

Last Page

315

ISSN

1047-8310

Identifier

10.1007/978-1-4419-0058-6_4

Publisher

Elsevier

Additional URL

https://doi.org/10.1016/j.hitech.2004.03.008

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