The Promise Of Codetermination: An Attractive Option For New Zealand Companies?

Abstract

Codetermination is a corporate governance model that gives workers the right to elect board-level employee representatives. The model exists in 19 European jurisdictions, with the German model being the most wellknown and densely researched. Unlike general stakeholder-centric objectives that simply encouragedirectors to consider the interests of stakeholders, codetermination mandates the representation of a critical stakeholder – employees – at the highest level of corporate governance. The model has been associated with various economic and non-economic benefits, including increased firm efficiency, improvements in information sharing between employees and senior management, the enhancement of firm-specific skills and the promotion of employee interests. While codetermination has recently received attention from certain policymakers and academics in the United Kingdom, Canada, Australia and the United States, the model has not yet been closely examined in New Zealand. This paper explores the model's operation in Germany and Sweden, its proven and potential benefits, its compatibility with pre-existing industrial relations structures in New Zealand and its ability to address New Zealand-specific contemporary challenges. Ultimately, it is argued that codetermination's benefits, both theoretical and empirically tested, render it worthy of emulation in the New Zealand context.