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Varieties of CapitalismThe Institutional Foundations of Comparative Advantage$
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Peter A. Hall and David Soskice

Print publication date: 2001

Print ISBN-13: 9780199247752

Published to Oxford Scholarship Online: November 2003

DOI: 10.1093/0199247757.001.0001

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The Legal Framework for Corporate Governance: The Influence of Contract Law on Company Strategies in Germany and the United States

The Legal Framework for Corporate Governance: The Influence of Contract Law on Company Strategies in Germany and the United States

Chapter:
(p.387) 12 The Legal Framework for Corporate Governance: The Influence of Contract Law on Company Strategies in Germany and the United States
Source:
Varieties of Capitalism
Author(s):

Steven Casper

Publisher:
Oxford University Press
DOI:10.1093/0199247757.003.0012

The chapter examines the key role played by legal frameworks in the construction of the political economy and its relationship to corporate strategy. Germany and the US have different legal systems. Drawing on an analysis of legal challenges associated with supplier network modernization within the automobile industry, the chapter demonstrates how German patterns of non‐market business coordination and highly regulatory laws channel firms towards patterns of corporate strategy associated with incremental innovation, or ‘diversified quality production’, and constrain against more radical innovation strategies. In the US, a more classical legal system combined with predominantly market‐based inter‐firm relations conduces towards radically innovative corporate strategies, but impinge on the establishment of incremental innovation patterns associated with diversified quality production.

Keywords:   corporate strategy, Germany, innovation, legal systems, supplier networks, United States

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