Voluntary Co-determination Produces Sustainable Competitive Advantage

Margit Osterloh, Bruno Frey and Hossam Zeitoun

Chapter 12 in Corporate Social Responsibility and Corporate Governance, 2011, pp 332-352 from Palgrave Macmillan

Abstract: Abstract The importance of firm-specific knowledge for a company’s sustainable competitive advantage is well established in the knowledge-based theory of the firm. However, the impact of corporate governance design on firm-specific knowledge investments is underexplored. We assess existing co-determination systems in Europe and their impact on firm performance; then we discuss voluntary co-determination as a new corporate governance design that fosters firm-specific knowledge investments, intrinsic work motivation, efficient monitoring, and board diversity while lowering transaction costs. Our analysis indicates that shareholders can increase their company’s value by adopting customized co-determination rules.

Keywords: Corporate Governance; Firm Performance; Organizational Citizenship Behavior; Psychological Contract; Supervisory Board (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:pal:intecp:978-0-230-30211-2_12

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DOI: 10.1057/9780230302112_12

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