1.3 History and culture

It is my view that law in general, particularly corporate governance practice, is determined to a large extent by the history and the culture of the country concerned. It is easier to understand the practice of corporate governance of a country if one has an understanding of its history and culture.

The three country chapters therefore start with sections on their history and culture. For example, it is important to note that in 1600 the English East India Company had strong shareholder influence and directors that could be dismissed by the shareholders. In the same period, shareholders in the Dutch East India Company (the "VOC") had very little influence and the directors were well-protected.

It tells you something about the US approach to corporate governance if you realize that the first American corporations had powerful boards.

The cultural aspects of corporate enterprises are of special interest. Education, history, practical circumstances and many other factors determine boardroom culture. It is revealing to take note of what directors of a nation really think their culture is and how they like to think of their culture. Of course, generalizations can always be debated, descriptions of culture may apply often but not to all persons, and in each country there will be exceptions to the general rule. Still, the manner of governance of companies in a country is to a large extent determined by its culture and does not normally change very rapidly. American directors, often Masters of Business Administration, are good at swift and effective implementation and execution. In the US business is often approached in an academie way. There is a strong tradition of entrepreneurs and a belief in free enterprise. British directors, who have often enjoyed a broad education, are creative in board meetings: they listen, they like brainstorming and are good at drafting with nuance. They like to think they are pragmatic and they often are. Dutch directors, many of whom are engineering, law or economics graduates are practical and have good knowledge of languages and a liking for transparency, which gives them the capacity to work internationally.

Going through the history of corporate governance we see important changes in the UK since 1992, in the US since 2002 and in the Netherlands since 2004. The three systems are to some extent gradually converging, but differences will remain because of dissimilar legal traditions and cultures.

In sub-sections 2.1.1, 3.1.1 and 4.1.1 I will give the key features of the corporate culture of each of the countries.