The Parallel Worlds of Corporate Governance and Labor Law

This paper engages the concept of transnational law (TL) in a way that goes beyond the by now accustomed usages with regard to the development of legal norms and the observation of legal action across nation-state boundaries, involving both state and nonstate actors. The concept of TL can serve to illustrate a much further-reaching set of developments in norm creation and legal regulation. TL is here understood not only as a body of legal norms, but it is also employed as a methodological approach to illustrate common and shared challenges and responses to legal regulatory systems worldwide. In the case of corporate governance, TL captures the specific regulatory mix of formal, hard, public regulation, on the one hand, and of informal, soft, private regulation, on the other, that characterizes the contemporary evolution of corporate governance norms. Corporate governance norms give testimony of an ongoing search for answers to persisting problems in the organization of the firm, the distribution of power between shareholders, stakeholders, and the firm, as well as the responsibility of the corporation to its environment while-at the same time-reflecting on fundamental changes of the nature of norm creation and legal interpretation. While this approach is likely already to undermine some of the contentions regarding a universal convergence of corporate governance systems towards an outsider-control, shareholder-value-maximization model at the “end of history of corporate law,” its risks lie in the misappropriation of the described processes of private ordering as processes of natural evolution. After all, the shift away from formal law making to processes of societal self-regulation-as reflected in the rise of corporate governance codes, standards, best practices or, in the area of labor law, of codes of conduct and core labor rights-might turn out to be a less fortunate answer to the redistributive and participatory questions that are posed when one views corporate governance in the context of a larger set of welfare state norms, comprising not only company law and securities regulation, but also labor and employment law, industrial relations, and insolvency law. Eventually, a careful study of the transformation of the process of law making and rule enforcement suggests the necessity of taking a broader view on corporate governance than is often the case. Seen against the background of a globalization of economic activity, capital flows, and the erosion of many protective norms and rights-in particular in the area of labor law-the study of transnational corporate governance can contribute to a better understanding of the regulatory challenges of a globalized market economy.