Corporate governance codes in Europe

The creation and implementation of corporate governance codes (CGCs) is visibly affected by national context. Cultural characteristics of a country have considerable influence on how early a country develops codes of practice, and how many codes it develops. Specifically, we also explored the process of institutionalization of corporate governance best practices, reflected by CGCs in the UK. The UK codification process is distinctively characterized by the comply-or-explain principle, the role of business elites, the large number of CGCs and the unique characteristics of the UK organizational field. Moreover, these particular characteristics intertwined together reflect wider institutional and cultural features of British society. Second, coercive and normative pressures precede mimetic pressure, and the process is initiated by institutions in the core of the profession. Third, in addition to leading institutions, the effective institutionalization requires the involvement of members of the business elite. Fourth, the codification can be seen as density-dependent (existing rules create space for more rules) and represents, to some extent, an effective but not always efficient process. By comparison, in Germany, codes have a different function and meaning: They remind investors of the law, but they do not replace it.