Markets, Corporate Governance and Creative Work Systems: the Case of Ferodyn

This paper examines the difficulties associated with implementing and maintaining a ‘creative,’ human-resource based work system in a market-based system of corporate governance using the case of Ferodyn.* In response to difficult industry conditions and sagging performance, American-owned Landis* Steel Corporation and Japanese-owned Daiichi* Steel Corporation jointly financed and built Ferodyn, a state-of-the-art high quality steel finishing facility. Although the joint venture was extremely successful in terms of quality, productivity and industrial relations, it came under severe stress from both external and internal pressures. Institutional investor demands for improvements in short run shareholder value ultimately resulted in the sale of Landis to Maxi-metal*, a global steel conglomerate, committed to a strategy of cost minimisation. In effect, the American system of corporate governance and the nature of power relations in the corporation served to weaken both Landis and Daiichi’s ability to support the joint venture and Ferodyn’s ability to survive in a hostile corporate, industry and macro-economic environment.