When corporatism leads to corporate governance failure : the case of Swiss watch industry

Abstract

Corporatism is often seen as the way Swiss stakeholders in business and politics handle industrial challenges in a reasonable and flexible way. The following publication argues, however, that the emergence of corporatist structures in the Swiss watch industry has often encouraged rent-seeking and collusion at the expense of the creation of new markets through innovation. This legacy makes it currently difficult for the industry to effectively respond to new technological challenges and changing societal preferences in the global watch business. The report draws on archival sources, accessible since 2015, that were extensively discussed in the Swiss print media in early 2016. They provide increasing evidence of corporate governance failure in the 1983 merger of SSIH (Société suisse pour l’industrie horlogère) and ASUAG (Allgemeine Schweizerische Uhrenindustrie AG) that led to today’s Swatch Group. The merger, induced by the involved Swiss banks, was portrayed as a necessary step to save the two allegedly bankrupt watch companies. Yet, the archival sources show that ASUAG had already been successfully restructured and was ready to conquer global markets with its new product, the Swatch.