Klaus Heine

European Corporate Laws, Regulatory Competition and Path Dependence

Beyond the well-known discussion in regard to the Cassis de Dijon of the European Court of Justice, implying the mutual recognition of national product regulations, the topic of mutual recognition and regulatory competition has emerged again in the realm of European corporate laws (“Centros” of the ECJ in 1999). Can effective competition among European corporate laws be expected? In the US a broad discussion has developed whether the existing competition process among US corporate laws leads to permanent legal improvements by legal innovations or to a race to the bottom. Beyond this discussion a new point has been raised recently: the possibility and importance of path dependence as a potential problem for the efficacy of competition among corporate laws (lock-ins). For the analysis of this problem we apply the concept of technological paradigms and trajectories to legal rules in corporate law and introduce “legal paradigms,” which direct the search for better legal solutions in certain directions and might be stabilized by certain factors (esp. complementarities to other legal rules) leading to considerable path dependence effects. Our results show that path dependence might play a crucial role for competition among European corporate laws, even if the principle of mutual recognition would be introduced to corporate laws in the EU, implying that competition among European corporate laws might be difficult and sluggish. Consequently the question arises whether additional meta-rules should be established that might mitigate the problem of path dependence and lock-ins in regulatory competition in corporate law.

Organizational Decline - A Synthesis of Insights from Organizational Ecology, Path Dependence and the Resource-Based View

Purpose – The aim of this paper is to propose an integrative framework of organizational decline on the firm-level. Design/methodology/approach – In recent years, there has been a growing number of contributions to the research field of organizational decline from diverse theoretical perspectives and different levels of analysis. In this paper, an integrative framework of organizational decline on the firm-level is proposed that relies on a process perspective, combining insights from organizational ecology, path dependence and the resource-based view. Findings – Different theoretical perspectives are used to explore various aspects of the problem of organizational decline. A theoretical framework as a theoretical perspective is developed to guide research and to interconnect diverse theoretical findings. Based on the suggested framework, two archetypes are distinguished which lead an organization to insolvency: (1) malabsorptive incompetence and (2) maladapted competencies. Originality/value – The proposed framework allows to capture the dynamic process of organizational decline and to identify the triggers driving organizational decline.

Regulatory competition between company laws in the European Union: The Überseering case

The strengthening of choice of law in the field of company law by the recent decision of the European Court of Justice in the Überseering case may lead in the near future to the mutual recognition of national business forms by the EU Member States. This will mean an increase in regulatory competition between company laws. But will this competition necessarily lead to an improvement in the quality of company laws, or could the opposite be the case? What would be the appropriate features of a regulatory framework that would guide a competitive race of company laws to the top and not to the bottom?

Innovation, tort law, and competition

In this paper, we examine the link between innovative activity on the part of firms, the competitive pressure to introduce innovations and optimal damages awards. While innovative activity brings forth valuable new products for consumers, competitive pressure in the ensuing innovation race induces firms to launch innovations too early, thereby raising the likelihood of severe product risks above the optimal failure rate. Introducing innovations too early may call for the application of punitive damages instead of mere compensation of harm caused, in order to decelerate such welfare-reducing innovation races. The optimal tort system is accordingly highly dependent not only on the expected profits and the effectiveness of time delays with respect to reducing expected harm, but also on the competitive environment in which firms operate.

Die Rolle von Qualitätssingnalen -- eine ökonomische und juristische Analyse am Beispiel der deutschen Kapitalschutzvorschriften

* Wir danken Christoph Engel, Christian Kirchner, Erich Schanze sowie den Teilneh mern des Workshops ?Wettbewerb und Entwicklung von Unternehmensstrukturen? an der Juristischen Fakult?t der Humboldt Universit?t zu Berlin im Januar 2005 f?r vielf?ltige Anregungen und Kritik. Abgek?rzt werden zitiert: Aghion/Hermalin, Legal Restrictions on Private Contracts Can Enhance Efficiency: J.L. Econ. Org. 6 (1990) 381-409; Armour, Share Capital and Creditor Protection, Efficient Rules for a Modern Company Law: Mod. L. Rev. 63 (2000) 355? 378; Baird / Gertner/Picker, Game Theory and the Law (1994); Eidenm?ller /Enger?, Rechts ?konomik des Mindestkapitals im GmbH-Recht: GmbHRdsch. 2005, 433-438 (zitiert: Mindestkapital-GmbH); Heine, Regulierungswettbewerb im Gesellschaftsrecht (2003); la cobucci, Toward a Signaling Explanation of Private Choice of Corporate Law: Am. Law Econ. Rev. 6 (2004) 319-344.

Introduction: Company Tax Integration in the European Union – A Necessary Step to Neutralise 'Excessive' Behaviour within the EU?

Company Tax Integration in the European Union – A Necessary Step to Neutralise ‘Excessive’ Behaviour within the EU?

From Books to Content Platforms – New Business Models in the Dutch Publishing Sector

The disruptive effect of digital technology poses particular challenges to the publishing sector. Publishers react to these challenges by developing new business models that embrace digital technology and seek to seize opportunities for new ways of content distribution. Creating digital platforms for the distribution of content, publishers can establish a network that is attractive to contributors (authors) and customers alike. Substantial profit can be derived from the network if it attracts content providers because the database already has a large number of customers and, at the same time, attracts customers because of the large number of content providers. For a profitable digital business model in the publishing sector, it is decisive to trigger this self-reinforcing process of a growing network. To achieve this goal, the traditional focus on marketing decisions based on supply-side factors must be abandoned. It is no longer the successful pre-selection of content and clever bargaining with printers that guarantees a profit, but the creation of a content platform capable of generating the described network effect. Hence, the demand side becomes more important. For the growth of the network, it is indispensable to attract customers as well as content providers. The publisher must create a match between the two groups. As a result, new business models broaden the range of a publisher’s activities. Instead of focusing on the commercialization of individual publications, new business models require a strategy that uses publications strategically to build a user community around the offer of information products. This implies that publishers with new business models become media entrepreneurs with a broad spectrum of information offers and communication channels. The publication of a newspaper, magazine, journal or book no longer constitutes an end in itself. It is only the starting point for a broader offer of related products and services.Considering the initiatives taken by publishers to adapt their traditional business models to the digital environment, the question arises which amalgam of legal protection regimes should be applied to provide a sufficient incentive and reward for the transition to platform-based business models in the publishing sector. Insofar as new business models are not primarily based on the commercialization of individual content but on the exploitation of a publisher’s particular reputation or concept for an information database with added value, this question must not be confined to traditional copyright protection of individual literary and artistic works. By contrast, additional protection regimes in the field of intellectual property enter the picture, in particular trade mark protection and sui generis database rights.

From Individuals to Organizations: The Puzzle of Organizational Liability in Tort Law

Daily routine teaches us that organizational structure matters when mistakes and accidents take place in organizations.1 For example, the safe operation of a train does depend not only on the skills of the engine driver but also on the proper organization of the railway company. This leads to the question whether it is possible to identify the organizational attributes that properly reflect the risk of accidents. And if such attributes can be identified, what are the legal consequences? Can liability rules and legal standards of care effectively address the organizational factors of accident occurrence and induce precautions at the organizational level? These are very topical questions. A striking example is the fatal Washington metro crash of 22 June 2009. The crash made it apparent that organizational deficiencies led to the systemic breakdown of safety management at all levels.2 According to a member of the National Transportation Safety Board (NTSB), the volume of alarms incorrectly detecting the location of trains was very high. But this technical problem was ignored persistently at all levels of the organization. Another NTSB member stated that “this accident was a classic example of an organizational accident”, blaming the metro’s employees, managers and board, as well as the designers and manufacturers of the train-control system. In the aftermath of the accident, the safety regulations for transit systems became tighter.3 But is more regulation the only answer to the mentioned problems?4 Can tort law adequately address these problems? In this article we ask whether it is possible to expand the scope of the economic analysis of tort law by incorporat-

Sicherheit des Finanzsystems

Das Finanzsystem setzt sich aus verschiedenen Teilsystemen zusammen. Da ist zum einen der Geldmarkt, auf dem Geld zu einem bestimmten Preis, dem Geldmarktzins, gehandelt wird. Kreditmarkte ermoglichen den Austausch zwischen einerseits Besitzern von Ersparnissen bzw. Vermogen und andererseits Organisationen oder Personen, die Geld benotigen, um Investitionen zu tatigen. Oder Staaten nutzen dort die Ausgabe von Staatsanleihen, um zusatzliche Staatseinnahmen zu generieren. Auf Kapitalmarkten bieten beispielsweise Aktiengesellschaften zu Finanzierungszwecken Teile ihres Unternehmens in Form von Aktien Anlegern zum Kauf an.

Indexfonds: Zur Leistungsfähigkeit eines innovativen Finanzprodukts

‘Most investors would be considerably better off by purchasing a low expense index fund, than by trying to select an active fund manager who appears to possess a ‘hot hand“’ (MALKIEL 1995, S. 571).