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In more rigid labour markets, such as Germany and Japan, companies invest a great deal in bespoke, in-house training, which tends to result in more highly skilled labour forces and company-specific skills. These, in turn, are less transferable from one company to another.

Second, the strength of labour unions and country to another. For instance in France, where union rights are extended to all employees regardless of union affiliation, unionization will have a much greater influence on corporate decision-making than in the US or UK, where only union members benefit from collective bargaining agreements, Japanese companies tend to have enterprise unionism, which leads company level and grants a strong voice to employees.

In 2004 for example, employee opposition to job losses prevented the restructuring, via a merger with a foreign partner, of France's financially troubled Alstom, a major producer of ships and trains. In the same year Volkswagen, despite suffering from very high labour costs, had to promise its western German employees job security until 2011 in exchange for a wage freeze until 2007 and more flexible working hours. The company's workers wield considerable power, partly through co-determination rights, which require employees to be consulted on corporate decisions.

(6) Cross-national differences

Corporate governance systems vary by country, as do the roles and power of the five corporate governance players. Figure 1 summarizes these differences for some major countries and types of corporate governance systems: -

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* Contributed by: -
Dr. R. P. Verma,
Ex. H.O.D. & Dean, Commerce and Business Management Dept.,
Arabinda Bhandari,
Strategic Management Researcher,
Ranchi University, Ranchi.