Corporate governance, institutions, and the spirits of capitalism

Abstract

This chapter begins by contrasting “goodwill” in finance and industrial capitalism, and the evolution of the former in the United States with the latter in Japan. In rejecting the “spirit” of finance capitalism in the 1920s and 1930s, Japanese executives committed themselves to linking efficiency and equity, and laid the foundations for the emergence of the postwar community firm. This historical perspective helps us to understand the reception of finance capitalism#inspired corporate governance reform in the 1990s, and its attempts to reorient Japanese executives to an outward focus on shareholder interests. It also helps us to understand why, despite considerable change to formal institutions – especially legislation – executives remain skeptical over the efficiency (not to mention equity) claims of finance capitalism. At heart they continue to believe that, to deserve greater attention, shareholders should also demonstrate commitment.