S.W. Douma

The two-tier system of corporate governance

Abstract In recent Brief Cases we have taken up the issue of corporate governance on several occasions. Andrew Campbell and Michael Goold of Ashridge Strategic Management Centre have argued that there are limits to the effectiveness of outside or non-executive directors, whose influence can often make for worse rather than better corporate decisions. In this article, I provide a more positive account of the ‘two-tier’ system of corporate governance that is prevalent in the Netherlands and Germany

Diversification strategy and the roles of the centre

Abstract The corporate centre can perform many roles for its business units. Choosing the correct role or roles is essential for firm performance. The wrong choices could, for instance, lead to excessive overhead costs or undermine entrepreneurship in the business units. The right choices could result in a whole that is worth more than the sum of its parts. In this article, we argue that a firms corporate strategy influences the choices for the roles. We propose certain links between the diversification strategy and the roles the corporate centre performs. Our subsequent empirical study of Dutch firms reveals some striking differences between high-performing and low-performing firms. In general, the high performers have a better fit between their diversification strategy and their corporate centre roles than do the low performers.

TOWARDS A NEW INDUSTRIAL-POLICY

Abstract In the first 25 post-war years a free-trade free-market philosophy dominated the industrial policy of the Netherlands. Then in the 1970s government aid increased sharply—the major part going to declining industries. Now in the 1980s, a new industrial policy is needed which recognizes the openness of the Dutch economy while at the same time stimulates those sectors where the Netherlands has a competitive advantage.