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Corporate Governance Systems: Effects of Capital and Labor Market Congruency on Corporate Innovation and Global Competitiveness

In: New Frontiers in Entrepreneurship

Author

Listed:
  • Robert E. Hoskisson

    (Rice University)

  • Daphne Yiu

    (Chinese University of Hong Kong)

  • Hicheon Kim

    (Korea University)

Abstract

Drawing on institutional economics, this article addresses how institutional congruence between capital and labor markets influences corporate governance systems, which, in turn, create differences in national corporate innovation and entrepreneurship systems and subsequently global competitiveness. We argue that such institutional congruence cultivates two ideal corporate governance systems. The first ideal type is the market-based system with transactional capital and external labor markets. This corporate governance system facilitates more explorative and revolutionary innovations. The second ideal type is the relationship-based governance system with relational capital and internal labor markets. This system facilitates more exploitative and evolutionary innovations. We wrap up by discussing how institutional adjustments are being pursued for each governance system because each type has advantages and disadvantages that require adjustments. Finally, we present implications that our congruence model suggests for global competitiveness, high-tech management, and public policy regarding national innovation systems.

Suggested Citation

  • Robert E. Hoskisson & Daphne Yiu & Hicheon Kim, 2009. "Corporate Governance Systems: Effects of Capital and Labor Market Congruency on Corporate Innovation and Global Competitiveness," International Studies in Entrepreneurship, in: David B. Audretsch & Giovanni Battista Dagnino & Rosario Faraci & Robert E. Hoskisson (ed.), New Frontiers in Entrepreneurship, chapter 0, pages 67-93, Springer.
  • Handle: RePEc:spr:inschp:978-1-4419-0058-6_4
    DOI: 10.1007/978-1-4419-0058-6_4
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