ABSTRACT
This chapter focuses on primary institutions, outlining how private property rights emerged out of feudal/seigniorial structures in France and Germany. This leads on to the nature of the respective states and their relationship with the legal system. The chapter then looks at the meso-institutions, how primary institutions influenced the organizational forms that business enterprise took, and the nature of corporate governance systems. Rosenthal's The Fruits of Revolution examines why pre-Revolution, ancien regime, 18th-century France could not carry out drainage schemes in Normandy or irrigation schemes in Provence, both of which would have yielded high rates of return. The key period for the creation of German capitalism coincides with the period of creation of the German nation-state. The literature on the split in corporate governance regimes highlights the division between concentrated blockholder shareholding in Germany and France and dispersed ownership in the United Kingdom and the United States.
