The liberal market model of finance,ownership,and governance: An evaluation of its effect on labour

Abstract

This paper examines the theory and evidence of the effect of finance, ownership, and corporate governance on labour and employment, with special reference to the so-called `market-outsider' or liberal market economies. The main finance, ownership, and governance characteristics of these economies are described and briefly compared with those in so-called co-ordinated market economies. A set of predictions of the impact on labour management and employment are outlined. Evidence is presented from comparative studies and from within-country studies, especially of the United Kingdom. It is found that predictions are not clearly borne out, and the paper identifies a set of factors to explain this. These include dispersed ownership, the nature of corporate law, and the public visibility of listed companies.