Entrepreneurial States

Entrepreneurial States: Reforming Corporate Governance in France, Japan, and Korea

Yves Tiberghien
Copyright Date: 2007
Edition: 1
Published by: Cornell University Press
Pages: 280
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  • Book Info
    Entrepreneurial States
    Book Description:

    In Entrepreneurial States, an innovative examination of the comparative politics of reform in stakeholder systems, Yves Tiberghien analyzes the modern partnership between the state and global capital in attaining structural domestic change. The emergence of a powerful global equity market has altered incentives for the state and presented political leaders with a "golden bargain"-the infusion of abundant and cheap capital into domestic stock markets in exchange for reform of corporate governance and other regulatory changes.

    Drawing on extensive archival research and interviews with policy and corporate elites in Europe and East Asia, Tiberghien asks why states such as Korea and France have embraced this opportunity and engaged in far-reaching reforms to make their companies more attractive to foreign capital, whereas Japan and Germany have moved forward much more grudgingly. Interest groups and electoral institutions have their impacts, but by tracing the unfolding dynamic of reform under different constraints, Tiberghien shows that the role of political entrepreneurs is critical. Such policy elites act as mediators between global forces and national constraints. As risk takers and bargain builders, Tiberghien finds, they use corporate reform to reshape their political parties and to stake out new policy ground. The degree of political autonomy available to them and the domestic organization of bureaucratic responsibility determine their ability to succeed.

    eISBN: 978-0-8014-6244-3
    Subjects: Political Science

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. List of Tables and Figures
    (pp. ix-x)
  4. Preface and Acknowledgments
    (pp. xi-xxiv)
  5. 1 Political Entrepreneurs and the Corporate Restructuring Dilemma
    (pp. 1-29)

    Corporate restructuring involves high political risks in stakeholder or coordinated economies.¹ These systems integrate a complementary set of industrial organizational features (large groups, cross-shareholdings), stable employment practices, bank-centered corporate finance, and welfare corporatism that set them apart from the more liberal systems in the United States and the United Kingdom. The liberal Anglo-Saxon systems contained radically different practices, in particular, direct financing through capital markets, dispersed corporate ownership, and more flexible labor markets. The contrast is one between stakeholder capitalism and investor capitalism (Dore 2000).

    Corporate restructuring in its far-reaching manifestation affects key pieces of these systems. Most important, it...

  6. 2 A Story of Change and Divergence
    (pp. 30-63)

    What explains the variation in national responses to the golden bargain, even among relatively similar economies? Why have Korea and France been able to go further in reforming their economic structure than Japan?

    The degrees of strategic political autonomy and options for effective bureaucratic delegation define the reform capacity of political entrepreneurs as they mediate the incentives of the golden bargain. In this chapter, I systematically analyze the components of this argument and present aggregate comparative data on all three countries that clearly demonstrates the linkage between political autonomy and reform outcome. In particular, I provide overall data to measure...

  7. 3 France: Effective but “Shameful” Reforms
    (pp. 64-103)

    France is the kingdom of invisible reforms. It has the ability to generate low-visibility yet fast-flowing structural change ahead of its societal alignments. France acts first and justifies second. There is a great French paradox: despite a majority anti-globalization discourse and strong popular support for the social contract, French governments (of all political colors) have been actively engaged in reforming the French economic structure, facilitating its global economic performance, and modernizing its corporate regulatory framework. Despite its success at adapting to globalization, France remains opposed to it at the gut level. On this deep French contradiction, former finance minister Dominique...

  8. 4 Japan: Of Change and Resistance
    (pp. 104-155)

    Since the mid-1990s, under new global incentives, Japan has responded with a transformed political discourse focused on the necessity of structural reform and with some significant institutional change. However, the actual change has remained selective and has kept the major pillars of Japan’s system in place: What explains this relative endurance of the core institutional structure in Japan, despite a sweeping change of discourse? Why has Japan taken a more partial and limited course than France and Korea, as it faced the new incentives of the golden bargain?

    By the late 1990s, it was common knowledge that Japan was stuck...

  9. 5 Korea: Systemic Transformation
    (pp. 156-179)

    It is no secret that the Korean miracle crashed in December 1997, and that Korea had to accept stringent conditions in exchange for an IMF bailout. Likewise, the relative speed and depth of structural reforms in Korea in the wake of the financial crisis are now well known and analyzed.¹ The resumption of rapid economic growth in the years 1999–2003, after the deep recession of 1998, has proven the effectiveness of Korean structural reforms. The centrality of corporate restructuring, or “chaebol reforms,” to the process of post-1997 reforms is also well understood.² Most analysts of the Korean financial crisis...

  10. 6 Political Entrepreneurs and the Great Transformation of the Automobile Industry
    (pp. 180-205)

    This chapter brings the analysis to the level of the firms and focuses on the implications on the ground of the variety of national responses to the golden bargain. It focuses on one major industry that is both economically significant and politically salient in all three countries: the automobile industry. The size and stakes involved in this industry are so high that all governments (including the U.S. and UK governments) have intervened in the process of automobile restructuring at one point or another. However, the French, Japanese, and Korean governments ended up intervening very differently and using different tools.


  11. Conclusion: From Social Contract to Golden Bargain?
    (pp. 206-222)

    In the late 1990s, many OECD countries engaged in far-reaching corporate structural reforms. While these reforms may appear to be mere technical measures or legal revisions, their cumulative effect amounts to a major transformation of the post-1945 industrial and social contract. Corporate structural reforms are measures instigated by the state to facilitate the process of corporate restructuring and to bring flexibility and reactivity into the industrial structure. They aim to increase the competitiveness of the economy and ensure long-term growth. In most cases, structural reforms have happened discreetly and have not been the object of electoral debates during important elections....

  12. Appendix Evaluation of Corporate Reform Intensity in France, Japan, Korea, and Germany
    (pp. 223-232)
  13. References
    (pp. 233-248)
  14. Index
    (pp. 249-256)