The Role of MNCs in the Convergence of Corporate Governance

The paper attempts to explore the role of MNCs in the convergence of corporate governance systems. By introducing a theoretical model that accounts for three levels of analysis (systems, institutions, actors) the paper extends previous work on system convergence which concentrated either on firms and actors or on systems of corporate governance. It is argued that foreign subsidiaries with a low degree of autonomy enhance system convergence by introducing corporate governance practices common in the corporate governance system the headquarter of the MNC is located in. Mimetic processes among companies in the country of the subsidiary boost the spread and the institutionalization of corporate governance practices and, therefore, heighten the chance of system convergence.