Contracts, Markets, and Laws in the US and Japan
Edited by Zenichi Shishido
Comments on Part I: complementarity
Complementarity is an important concept in my field of specialization, organizational economics (see Brynjolfsson and Milgrom, 2012, for an up-to-date overview of complementarity in organizations). It should be important for the study of “enterprise law” as defined as the entire range of private contracts and public regulations governing the relationship of different capital providers (see the ‘Introduction’ to this volume by Shishido). It is in particular relevant for Part I: complementarities among various employment, personnel and workplace practices have been extensively examined in the economics and management literature. The theme of Part I, incentive bargaining between employees and management, is also closely related to complementarities between various practices for employees and corporate governance (Aoki, 1994). Pagano and Volpin (2005), cited in Chapters 2 and 4, point out theoretically a possibility of alliance between employees and incumbent managers against potential raiders, and show that labor_management alliance is formed if the managers’ incentive to maximize shareholder value is weak, and under that condition employment policy is likely to be used by the managers only if employees are sufficiently well protected by law. Tirole (2006, Chapter 1) conjectures that one reason why shareholder-value maximization is less controversial in Anglo-Saxon countries than in continental Europe and Japan is that negative externalities imposed by shareholder control on other stakeholders _ in particular, employees _ are smaller in the former countries, due to general training and flexible labor markets.
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