Whose Value is it, Anyway?

Why did it take so long for the principle of shareholder value to get a foothold in Germany?

March 15, 2000

Why did it take so long for the principle of shareholder value to get a foothold in Germany?

After the takeover of Mannesmann by Vodafone and now the merger of the country’s two largest banks, German business leaders realize that they have to change their ways. This can be best judged by the gradual acceptance of the concept of shareholder value in the German debate.

Remarkably, the business community — never mind the unions, media, and the politicians — has been hesitant to embrace the shareholder value approach. For years, they preferred the concept of a stakeholder society, in which all economic gains — in theory — are supposed to be distributed evenly between the various constituencies. In practice, the interests of both shareholders and stakeholders (such as employees and communities) often came up short.

To appreciate just how hard a battle is being fought within the rank and file of German business over this issue, just take a closer look at the linguistics of the issue.

Yes, the linguistics. Nothing could be more revealing. There are two ways in which contemporary Germans try to grasp the concept. Neither quite hits the mark. After all, “shareholder value” is evidently a term from the American-dominated MBA world. By comparison, the Germans have never been quick to embrace the hard-nosed principles of capitalism.

Little wonder then that the Germans, steeped in the tradition of a Kant and Schopenhauer, prefer to think more philosophically. Thus they speak of a “shareholder’s value.”

What indeed is the value of a shareholder? Why should everybody slavenly follow the Anglo-Saxon interpretation, which exclusively focuses on the bottom line? Why not turn things around — and ask how important it is for a company to have shareholders? All these important questions are adequately captured in that peculiarly German misconstruction of the term.

But the Germans would not be Germans if they had only one way of re-interpreting the Anglo-Saxon phenomenon of shareholder value. The other variation found among top businessmenand journalists is the marvelous phrase of “shareholder values.”

In other words, there may well be shareholders out there. But we Germans cannot let them shape our society’s life, until we can certify that the “values” these people stand for are at least decent. For if they aren’t, we may be better off holding on to our time-tested German ways, rather than mindlessly succumbing to every innovation sent to these shores from far-away America.

Given these significant linguistic challenges, one thing is hopefully for sure. All these takeovers and mergers will finally help the Germans to get the right concept of shareholder value (!) into their minds.