Capital Markets - News and analysis

Today's Neue Zuercher Zeitung has an interesting article by Bruno S. Frey and Emil Inauen about the corporate governance of Benedictine monasteries, which belong to the world's most induring institutions. They show that intrinsic motivation and internal control mechanism have lead to tremendous sustainability of the organizations. Outside regulation is not very strong.

We have had a post about the work of Prof. Frey (together with M. Osterloh) in July 2008:

The Corporate Governance of Benedictine Abbeys: What can Stock Corporations Learn from Monasteries? By Katja Rost, Emil Inauen, Margit Osterloh and Bruno S. Frey, University of Zurich, June 2008

Paper abstract:

"The corporate governance structure of monasteries is analyzed to derive new insights into solving agency problems of modern corporations. In the long history of monasteries, some abbots and friars lined their own pockets and convents were undisciplined. Monasteries developed special systems to check these excesses and therefore were able to survive for centuries. These features are studied from an economic perspective. Benedictine monasteries in Baden-Württemberg, Bavaria and German speaking Switzerland have an average lifetime of almost 500 years and only a quarter of them broke up as a result of agency problems. We argue that this is due to an appropriate governance structure relying strongly on the intrinsic motivation of the members and on internal control mechanisms."

Related:

MarketObservation: World's most enduring institutions, June 3, 2007