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In the previous
video, we focused

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on how the corporation is
changing in the United States.

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But what about corporations
around the world?

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Turns out there's quite
a bit of variation

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both across countries
and over time.

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So let's take a
brief tour of what's

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happening in other places.

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Corporations in the United
Kingdom, Canada, Australia

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tend to follow the US model of
putting shareholder value very

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high in their priorities.

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But they haven't
gone quite as far.

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For example, CEOs aren't paid
as much in those countries

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as in the United States.

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So the gap between CEO
pay and average worker pay

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isn't nearly as much as we
have in the United States.

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But some other countries, like
Germany and Norway and Sweden,

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have tended to take much more
of a multiple stakeholder

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view of the firm and
its responsibilities.

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We can best see this
as the way companies

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are organized in Germany.

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So let's take a look at Germany.

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In Germany, the
board of supervisors,

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equivalent to boards of
directors in the United States,

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is made up of large
representatives

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of large financial institutions
and representatives

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of employees, sometimes equal
numbers and sometimes different

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percentages.

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But employees play a role
in corporate governance

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directly in Germany.

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At the workplace level, there
are consultative bodies called

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works councils, elected bodies
elected by blue collar workers,

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production workers, white
collar workers, managers,

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and supervisors, all
there to provide advice

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to the company on its human
resource and employment

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practices.

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And in fact, the company has
to listen to the works council

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when it makes changes
in employment policies.

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Then corporations are also
very active in training,

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working together at the original
level with vocational schools

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and with labor to build
apprenticeship programs so

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that they have an
adequate supply of workers

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for today's economy and
for tomorrow's technology

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and economy.

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So in Germany and in
European countries,

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you tend to see much more
of the corporation taking

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a responsible role for
these kinds of activities.

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Let's look at another
example, Japan.

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Japan has corporate boards that
have basically three groups.

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First, they have the
investors, the banks.

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Secondly, they have suppliers
and the network of suppliers

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that firms have long
term relationships with.

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And third, they have internal
corporate executives.

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And in fact, often the
most influential executive

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in Japanese corporations
sitting on these boards

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is the human resource executive.

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And that's one of
the reasons why

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we see longer term
employment security

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part of the Japanese tradition.

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We see much more investment
in training and development

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of employees from within.

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Now these practices
are changing.

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Japan's economy
has been struggling

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to adapt to a more
innovative, flexible economy.

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And so some corporations open
to international competition

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have moved more toward the
American model in recent years.

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So nothing is cut in stone.

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Changes happen from time to
time as the economy changes.

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Here's another example, Korea,
also in the throes of change.

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Korea also has a long history
of very large corporations, very

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paternalistic, long term
employment security.

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But as Korea has made
a very strong effort

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to become more flexible,
more innovative,

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some of these
traditions are changing.

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And that's led to
lots of conflict

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over the appropriate role
of the corporation in Korea.

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So there is a country that
is in the throes of change.

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We'll have to wait and
see how it plays out.

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Some companies in
various countries

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have charted their own
course, independent of what

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the government is doing.

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For example in Brazil,
there's a very famous company

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called Semco that in the
1980s, a new CEO took over

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by the name of Richard Semler.

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And he helped grow that
company from about $2 million

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in revenue to over $200
million in about a decade.

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And what did he do?

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He said let's democratize
the organization.

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Let's let workers
shape their own jobs.

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Let's let workers
help us to figure out

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how we can expand
into new industries

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and diversify this
company and become

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part of the world economy.

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And in fact he's been
recognized for his leadership

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and his vision by the
World Economic Forum, which

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described him and gave
him an award as one

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of the global
leaders of tomorrow.

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Likewise in Finland, a
company by the name of Nokia,

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known well in the
telecommunications industry

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and in the phone business, had
a very difficult time adjusting

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to changes in its markets.

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And so it's had to restructure
and lay off a lot of workers.

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But as it did so,
it decided that it

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would allow workers to take
some of the product development

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ideas that they had been working
on and some of their own ideas

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for new directions
for the company

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and start their own companies.

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And they would support
these employees

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during this transition period.

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So you can see
that companies can

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shape their own corporate
governance arrangements, even

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within a national government.

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Well, what can we learn
from this very quick survey

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around the world
of how corporations

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structure themselves?

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I think there are two lessons.

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First, there's no one best way.

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The American mantra of
profits over everything else

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isn't necessarily
copied around the world.

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There are different approaches.

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And the second
thing to recognize

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is that these all have to
adapt over time to changes

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in the economy, to changes
in the workplace issues

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that we are facing.

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And so we can change our
corporate governance policies,

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even within a country,
when necessary.

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And so I think
this is good news.

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It means there is
no one best model.

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It means that we
can adapt over time.

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And it means that we have some
choice over how we structure

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the role of the corporation in
response to its shareholders

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and other stakeholders
in society.

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So let's get on with
thinking about what

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role do we want the
corporation in our society

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to play today and tomorrow.