Institutional complementarities among corporate ownership, employment protection and innovation: the Swiss case
The corporate ownership of listed corporations is more concentrated in the majority of continental European countries and more dispersed in Anglo-Saxon countries. This is a well-established stylized fact in academic literature on corporate ownership (La Porta, Lopez-de-Silanes, Shleifer and Vishny 1998; La Porta, Lopez-de-Silanes, and Shleifer 1999; Franks and Mayer 1995; Tirole 2006, Franks et al. 2009; Denis and McConnel 2003 and Becht and De Long 2005). These differences in the development of financial markets and corporate ownership structure across countries are explained by the so-called legal origin theory advanced by Shleifer and his co-authors in a series of papers (La Porta et al. 1998, 1999, 2008).
Nevertheless according to data coming from La Porta et al. (1999), the Swiss case can be considered a counterexample of such a theory: a civil law system as the Swiss one is related to a kind of corporate ownership more similar to that of the US or the UK (which are common law systems) than that of other (neighbouring) civil law systems like Austria, France, Germany, and Italy. Our work originates from this observation and wants to propose an explanation applying and extending the approach based on institutional complementarities as coming from original works of Roe (2003, 2006), Hall and Soskice (2001), Aoki (2010), Pagano and Belloc (2009 and 2013) and Pagano (2012).
In this respect, Swiss corporate governance represents an exception with respect to European continental nations for three reasons: corporate ownership is not dominated by blockholders, workers’ protections are low, and innovation is largely radical (i.e., it causes substantial shifts in product lines or the development of completely new products, as in the chemical, pharmaceutical, and medical sectors). The reason in accordance with the institutional complementarity theory is that these three institutional domains – corporate ownership, labour protection and innovation – co-evolve. The aim of our research is to prove that the Swiss case is consistent with such an explanation.