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

Cover Corporatisn and GovernanceCorporatism is often seen as the way Swiss stakeholders in business and politics handle industrial challenges in a reasonable and flexible way. In this publication Dr Isabelle Schluep Campo and Dr Philipp Aerni argue, 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.

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1 Introduction

  1. Historical background

2.1 The Foundation of ASUAG

2.2 The 1951 “Watch Statute”

2.3 Post World War II economic expansion and the 1961 Watch Statute

  1. Corporatism in Switzerland

3.1 Corporatism embodied in the “Swiss made” label for watches

  1. The crisis of the Swiss watch industry in the 1970s

4.1 Swiss technology commercialized elsewhere

4.2 The role of the Swiss banks

4.2.1 SSIH before the merger
4.2.2 ASUAG before the merger

  1. A merger of unequals: SSIH and ASUAG become SMH

5.1 How a former state monopoly became a private monopoly

5.2 Pretending to be Robin Hood while representing the establishment

5.2.1 Nicolas G. Hayek
5.2.2 Smart Car
5.2.3 Car batteries
5.2.4 Innovation rhetoric
5.2.5 Regulation and securing ownership

  1. The position of the Swiss watch industry in the global market

6.1 The Swiss watch industry at its peak in 2014

6.2 Export crisis of the Swiss watch industry in 2015

6.3 Challenges facing the watch industry

6.3.1 The rise of smartwatches and wearables
6.3.2 The Apple Watch
6.3.3 Inventory problems and short selling
6.3.4 Pending lawsuit
6.4 Strenghtening “Swissness” rules, the usual corporatist response

  1. Market and political power of Swatch Group

7.1 Market power of Swatch Group

7.1.1 Swatch Group market power in production and distribution
7.1.2 Monopoly of Swatch Group in different markets of the watch industry
7.1.3 WEKO’s decision regarding Swatch Group’s market power

  1. The revision of the “Swiss made” regulation

8.1 The revision of the “Swiss made” regulation for watches

8.2 The role of the Federation of the Swiss Watch Industry (FH) in the design of new “Swiss made” regulation for watches

8.3 Impacts of the new “Swiss made” regulation for watches

  1. The Swatch Group: high on reputation, low on corporate governance

9.1. Corporate governance problems

9.2. What Swatch Group and Volkswagen may have in common

  1. Conclusions


1 Share of Swiss watch production in global output of watches and movements

2 Number of workers and manufacturers in the Swiss watch industry

3 Exports of Swiss finished watches and movement blanks, 1944–1982

4 Exports of Swiss clocks and watches and parts, 1988–2015

5 Imports of clocks and watches and parts by Switzerland, 1988–2015

6 Leading companies in the watch market, 2014

7 Development of inventories, Swatch Group, 1999–2015

8 Organization of ASUAG, 1982

9 Swatch Group net sales and profits, 1983 –2012

10 Companies of the Swatch Group

11 ASUAG in numbers, 1973–1982

12 SSIH in numbers, 1971–1982

13 Unemployment rate in the Swiss watch industry, 2008–2016




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