Envisaging an East Asian Model of Corporate Governance: A Developmental State Perspective

Abstract

East Asia’s well-known “developmental state model” has attracted wide attention in development economics, but its connection to corporate governance in East Asia remains understudied. In this paper, I attempt to establish this connection and envisage an East Asian model of corporate governance based on two primary observations. First, I examine how Corporate East Asia performs corporate governance’s two main functions, i.e., protection and coordination, and observe the state’s heightened protective and coordinated roles therein. Second, I propose a typology of state-firm relationship based on two aspects of state intervention, i.e., channels and purposes, which lays down a foundation for observing the relative position of different states and allows further exploration of the form of intervention taken by East Asian developmental states. Acknowledging that this proposed theory of East Asian corporate governance can be reflected in many corporate issues, I pick independent directors as a touchstone for testing the theory. Based on the above observations, I propose an East Asian version of corporate governance theory rooted in the developmental state model in this region, which should open a door for future East Asian studies in comparative corporate governance.