Introduction

It is no longer reasonable to think of national corporate governance systems as if they existed in splendid isolation from each other. Businesses and investors have become more willing to shop around the world for opportunities. No doubt the features of national corporate governance systems are one factor that they take into account when deciding where to invest. This fact alone means that each country has to make sure that it does not fall behind in meeting best practice requirements of investors. Failure to do so could make it more difficult for its businesses to raise the capital they need and for their stock exchanges to attract listings. It has been pointed out that for this and other reasons there is a strong tendency for corporate governance systems to copy each other.

This has knock-on effects since national corporate governance arrangements are intimately connected with labour/management outcomes for employees. The UK system's refinement in catering for investor needs has left little room for employee participation in corporate governance. To the extent that the UK system becomes the international norm is there not a serious danger that other national systems, such as that in Germany, will be put under pressure to emulate it to the detriment of employee participation institutions? In other words, efforts to promote employees' reasonable demands will be undermined by a combination of market forces and the spread of an ideology.