The Governance of Benedictine Abbeys from an Economic Perspective

Compared to other institutions, Benedictine monasteries show an extraordinary stability. We use a dataset of all Benedictine abbeys that ever existed in Bavaria, Baden-W¿rttemberg and German-speaking Switzerland to determine their lifespan and the reasons that led to their closures. The studied monasteries show an average lifetime of almost 500 years and only a quarter of them dissolved as a result of agency problems. Governance mechanisms are then analyzed in detail. We argue that the success of Benedictine monasteries is due to an appropriate governance structure that strongly relies on internal control mechanisms. By analyzing monasteries from an economic perspective, a new approach is offered to understand these monastic institutions and their role as pioneers of governance. The theoretical foundations are based upon principal agency theory, psychological economics, as well as embeddedness theory