The Dutch Works Council from an Institutional Economics Point of View: An Efficient Solution to the Governance Structure Problem?

The aim of this paper is to explain, with the aid of institutional economic theories, why Dutch works councils may contribute to an efficient governance structure. To this end, in this study a sketch will be given of the existing structure, in which the particular Dutch two-tier system plays an important role. After a short discussion of the property rights theory, transaction costs theory and the principal-agent theory, these theories will be applied to the Dutch corporate governance structure and more specifically to employee participation rights. The paper intends to show that works council... Mehr ...