Competition and Cooperation in Corporate Governance: The Effects of Labor Institutions on Blockholder Effectiveness in 23 European Countries

Abstract

We provide an analysis of the costs and benefits of blockholding in Europe, where it is a dominant, but certainly not universal, corporate governance strategy for shareholders of publicly listed firms. We find that the effectiveness of blockholding is conditioned by the specific labor institutions that distinguish European countries from the rest of the world, and that these institutional effects involve both competition and cooperation between blockholders and collective labor interests. We also find that relational blockholders are better able to cope with, or benefit from, these institutional effects than arm's-length blockholders. Empirically, we use advanced meta-analytic methods on a total sample of 748,569 firm-year observations, derived from 162 studies covering 23 European countries.

Are Family Firms Good Employers?

“…Evidence that family firms are not generous employers (that is, are worse organizational stewards) has important implications for economies in which labor market failures limit job mobility (Dreher & Cox, 2000). Our findings also differ starkly with earlier studies that report more positive accounts of employment practices in family firms (e.g., Bammens, Notelaers, & Van Gils, 2015;Cennamo et al, 2012;Miller & Le Breton-Miller, 2006;Pittino et al, 2016;van Essen, van Oosterhout, & Heugens, 2013). Rather, our evidence indicates that family firms are initially agentic toward the workforce (that is, they are worse organizational stewards than nonfamily firms), and become even more agentic over time.…”

“…Our study is situated in Belgium, and naturally reflects the country-specific employment regulations, such as legal protection of employment, collective labor action, employee involvement in firm decision making, and unionization. While this prevented us from exploring institutional variations (van Essen et al, 2013), this shortcoming should be weighed against the opportunity to explore labor practices in a large longitudinal sample for which the same labor market regulations apply. The fact that we test for intra-national variance (Flanders vs Wallonia) does, however, provide some assurance that some institutional influences have been taken into account.…”

Does the Diversification–Firm Performance Relationship Change Over Time? A Meta‐Analytical Review

“…In those cases where a primary study did not provide product‐moment correlations, we used partial correlations as our effect size measure (for this approach, see van Essen et al, ). Partial correlations were computed as , where t is the t ‐statistic and df relates to degrees of freedom (Greene, ).…”

Survival of the fittest: an evolutionary approach to an export-led model of growth

“…The questions examined: (1) decision-making; (2) adjusting employment; (3) wage setting; (4) role of labour unions; (5) participation of workers in risk sharing; (6) participation of workers in decision-making; (7) internal training; and (8) on-the-job training. First, we addressed the choice about the separation of strategic function (usually given to top management), day-to-day decisions (which are usually in the hands of middle and lower management levels), the control function, which is in the hands of company owners (Wheelen & Hunter, 2010), and related agency problems and relationships between managers, owners and workers (stakeholders) (Aoki, 1984;Van Essen, Oosterhout, & Heugens, 2012). Related to this, we examine the bargaining process between managers and employees (including bargaining over employment and wages), which also provides information on unions, labour restructuring models, core employees groups, and wage levels (reservation wage, collective bargaining wage, firm's wage level) (Ehrenberg, Brewer, Gamoran, & Willms, 2001).…”