ICC Advance Access originally published online on January 3, 2008
Industrial and Corporate Change 2008 17(1):1-27; doi:10.1093/icc/dtm037
Understanding an emergent diversity of corporate governance and organizational architecture: an essentiality-based analysis1
Correspondence: Masahiko Aoki, Department of Economics, Stanford University, Stanford, California 94305, USA. e-mail: aoki{at}stanford.edu
Correspondence: Gregory Jackson, Department of Management, King's College London, 150 Stamford Street, London, SEI 9NH, UK. e-mail: gregory.2.jackson{at}kcl.ac.uk
This article proposes a simple framework for understanding an emergent diversity of linkages between corporate governance (CG) and organizational architecture (OA). It distinguishes discreet modes of their linkage by different combinatorial patterns between three basic assets: managers’ human assets (MHA), workers’ human assets (WHA), and non-human assets (NHA). Using the concept of essentiality of human assets proposed by Hart (1995) and distinguished from that of complementarities, we first propose a new characterization of four known modes of CG-OA linkage: three traditional (Anglo-American, German, and Japanese) and one relatively new (Silicon Valley) models. Then we present empirical evidences of emergent diversity of CG-OA linkages in Japan, which is somewhat at odds with the old Japanese model. We interpret its emergent dominant mode as the path-dependent evolution of a new pattern of essentiality between human assets, made viable by lessening of institutional-complementarity-constraints, which surrounded the traditional Japanese model. We argue that this new mode interpreted in terms of essentiality may have broader applicability beyond Japanese context.