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

Robert E. Hoskisson (), Daphne Yiu and Hicheon Kim
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Robert E. Hoskisson: Rice University
Daphne Yiu: Chinese University of Hong Kong
Hicheon Kim: Korea University

Chapter Chapter 4 in New Frontiers in Entrepreneurship, 2009, pp 67-93 from Springer

Abstract: 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: Labor Market; Corporate Governance; Capital Market; Venture Capital; Governance System (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:spr:inschp:978-1-4419-0058-6_4

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

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