Low structure, high ambiguity: selective adaptation of international norms of corporate governance mechanisms in China

Abstract

This paper examines the selective adaptation of international norms of corporate governance and mechanisms in China in the past two decades as China moved from the state-planned economy to the market economy. From the adoption of the concept of corporate legal personality and limited liability to the two-tier board structure (the board of directors and the supervisory board), to the introduction of independent director system and directors fiduciary duties and shareholders right to sue for wrong done to the company (derivative action) or damage to their right personally (personal action), there are ample examples of selective adaptation of international (mostly German and Anglo-American) norms or mechanisms in China. Whilst selective adaptation seems to be the best way forward, this paper concludes that there are still areas of concern in institutional capacity building which needs to be addressed in order to make selective adaptation works.