Introduction

The question of how corporations should be governed to enhance corporate and economic performance has been widely discussed in the last two decades in the USA and the UK, but until recently, the subject of corporate governance has attracted much less attention on the European continent, in Asia, and in other parts of the world. By the late 1990s, however, corporate governance had become a major, and highly contentious, issue in all of the advanced economies and, increasingly, in developing countries as well. International organizations, including the OECD, the World Bank, and the IMF have devoted increasing attention to corporate governance as a topic of global concern. The starting point for the analysis of corporate resource allocation and its governance presented in this book is a concern with the dynamics of enterprise and economic performance, and central to the process through which successful enterprises and economies improve their performance over time, as well as relative to each other, is a phenomenon that can broadly be termed ’innovation’; the term is used here in a general sense to include all activities that enterprises and economies undertake to deliver higher‐quality and/or cheaper products, i.e. it has a distinctly commercial connotation, and in particular, is not reducible to technological novelty. The particular focus of the book is a comparison of the historical development of systems of corporate governance in the USA and Germany, and given the pervasive influence of the US system as a model of corporate governance in contemporary academic and policy debates, an especially detailed historical analysis of the evolution and influence of governance institutions in that country has been done; this reveals the value of the organizational control framework for understanding the economics of corporate governance in the USA, and highlights the serious deficiencies of alternative theoretical treatments of the contemporary US system that have often led to what, in historical perspective, are serious misunderstandings of its essential elements.