The Political Economy of Corporate Governance in Germany

Research Associate Mary O’Sullivan, of INSEAD and the Center for Industrial Competitiveness at the
University of Massachusetts–Lowell, is investigating systems of corporate governance to find which lead to
successful decisions for individual firms and for an economy as a whole. She believes that success requires a
form of corporate governance that generates conditions that permit cumulative and collective learning, provides
financial commitment to innovative investment, and integrates human and physical resources in the
development and use of technology. She warns that because both the real and financial sectors are in a
continual process of change, a successful system of governance cannot be determined in the abstract. Strategies
that work at one time may not work at another. In her examination of corporate governance in Germany, she
therefore makes a detailed study of postwar German economic history.
According to O’Sullivan, financial commitment to innovative investment in