BIROn - Birkbeck Institutional Research Online

    Institutional transplant and American corporate governance: the case of Ferodyn

    Konzelmann, Suzanne J. (2002) Institutional transplant and American corporate governance: the case of Ferodyn. Working Paper. ESRC Centre for Business Research, Cambridge, UK.

    [img]
    Preview
    Text
    CBR_231_Konzelmann_2002.pdf - Published Version

    Download (371kB) | Preview

    Abstract

    This paper examines the relationship between employment relations and American corporate governance using the case of Ferodyn*. In response to difficult industry conditions and sagging performance, American-owned Landis* Steel Corporation and Japanese-owned Daiichi* Steel Corporation jointly financed and built Ferodyn, a state-of-the-art high quality steel finishing facility. Although the joint venture was extremely successful in terms of quality, productivity and industrial relations, it came under severe stress from both external and internal pressures. Ferodyn’s success was moderated by the market in that it was never able to extract a price premium for the quality of steel it produced. At the same time, pressures in the form of corporate governance and the parent / subsidiary relationship were substantial. Institutional investor demands for improvements in short run shareholder value ultimately resulted in the sale of Landis to Maxi-metal*, a global steel conglomerate, committed to a strategy of minimising costs. In this case, the organ transplant provides a useful metaphor: Ferodyn was like a strong and healthy ‘organ transplant’ in a weak and ailing corporate ‘body.’ So long as there were buffers in place to protect it from rejection by its host, Ferodyn could prosper, giving rise to exceptionally high labour standards and quality of life for its employees. In effect, the American system of corporate governance and the nature of power relations in the corporation created antigens that weakened both Landis’s ability to support the joint venture and Ferodyn’s ability to survive in an alien and hostile corporate, industry and macro-economic environment. * Ferodyn, Landis, Daiichi and Maxi-metal are fictitious names.

    Metadata

    Item Type: Monograph (Working Paper)
    Keyword(s) / Subject(s): industrial partnership, co-operation, corporate governance, corporate restructuring, steel industry
    School: Birkbeck Schools and Departments > School of Business, Economics & Informatics > Management
    Research Centre: Corporate Governance and Ethics, London Centre for
    Depositing User: Suzanne Konzelmann
    Date Deposited: 18 Jan 2013 11:50
    Last Modified: 09 Dec 2016 11:07
    URI: http://eprints.bbk.ac.uk/id/eprint/5853

    Statistics

    Downloads
    Activity Overview
    83Downloads
    81Hits

    Additional statistics are available via IRStats2.

    Archive Staff Only (login required)

    Edit/View Item Edit/View Item