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Compare the shareholder and stakeholder models of corporate governance. Which one strikes a better balance between the objectives of the employment relationship Discuss with reference to two countries of your choice - Essay Example

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Which one strikes a better balance between the objectives of the employment relationship? Discuss with reference to two countries of your choice.
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Compare the shareholder and stakeholder models of corporate governance. Which one strikes a better balance between the objectives of the employment relationship Discuss with reference to two countries of your choice
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Extract of sample "Compare the shareholder and stakeholder models of corporate governance. Which one strikes a better balance between the objectives of the employment relationship Discuss with reference to two countries of your choice"

Download file to see previous pages Two major modes of corporate governance have been reported in the global market: the shareholder model, a system applied in the countries based on the Anglo-Saxon legal system, such as USA and UK, and the stakeholder model, a system used in countries out of the above legal framework, as for example Germany.
In this study the above models of corporate governance are compared. At the same time, the level at which each of these models can secure a balance in regard to the objectives of the employment relationship is explained. In order for the above issues to be made clear reference is made, as examples, to two countries: USA and German. The first of the above countries is known for its support to the shareholder model while the second country promotes the second model of corporate governance, i.e. the stakeholder model. The literature published in this field is presented and evaluated. It is concluded that the stakeholder model is most supportive towards employees’ rights, meaning that the particular model can be valuable in achieving the objectives of employment relationship. Moreover, it has been proved that the changes made on the shareholder model for making this model friendlier for employees have not been quite satisfactory: the shareholder model, despite its alternations, remains a framework that focuses on profits rather than on human relations within each organization.
Corporate governance, as used in modern market, can have two modes depending on the hierarchy of interests of third persons, as these interests are taken into consideration when controlling a business: the shareholder model and the stakeholder model (Brink, 2011, p.331). As a framework, corporate governance indicates the schemes and rules used by corporate investors ‘to control managers for ensuring returns on their investment’ (Xu and Wang, 1997, p.42).
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